Management and Control System
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MANAGEMENT AND CONTROL SYSTEM FOR THE IMPLEMENTATION OF THE FINANCIAL MECHANISM OF THE EUROPEAN ECONOMIC AREA AND THE NORWEGIAN FINANCIAL MECHANISM (2009 – 2014) FOR BULGARIA
1 List of abbreviations
AA Audit Authority AEUFEA/the Audit of EU Funds Executive Agency Agency ATCFOPD Audits of Territorial Cooperation Funds and Other Programmes Directorate CA Certifying Authority CC Cooperation Committee CoM Council of Ministers DPP Donor Partnership Programmes EEA European Economic Area EEA FM European Economic Area Financial Mechanism NFM Norwegian Financial Mechanism EFTA European Free Trade Association EU European Union FMC Financial Mechanism Committee FMO Financial Mechanism Office CCU Central Coordination Unit MF Ministry of Finance MoU Memoranda of Understanding NFD National Fund Directorate NFP National Focal Point NMFA Norwegian Ministry of Foreign Affairs BCPFI Bilateral cooperation Programmes and Financial Instruments PO Programme Operator PPL Public Procurement Law MC Monitoring Committee StC Steering Committee VAT Value Added Tax
2 CONTENT 1. OBJECTIVES, LEGAL FRAMEWORK AND PRIORITY AREAS 1.1 Objectives 1.2 Legal Framework 1.3. Programme areas 2. INSTITUTIONAL FRAMEWORK 2.1. Institutional framework at the level of the Donor states. 2.2. Institutional framework for management of the EEA FM and the NFM at national level 2.2.1 National Focal Point 2.2.2 Certifying Authority 2.2.3. Audit Authority 2.2.4. Monitoring Committee 2.2.5 Programme Operators 2.2.6 Cooperation Committees 2.2.7. Steering Committees (optional) 3. IMPLEMENTATION OF THE PROGRAMMES UNDER THE EEA FM AND THE NFM 3.1. Programme Agreement and Programme Implementation Agreement 4. TECHNICAL AND FINANCIAL IMPLEMENTATION OF PROGRAMMES 4.1. Management and Control Systems at programme level 4.2 Certification of expenditure the European Economic Area Financial Mechanism 2009-2014 and the Norwegian Financial Mechanism 2009-2014 4.3. Cash flow process 4.4. Accounting 5. MODIFICATION OF PROGRAMMES 6. MONITORING OF AND REPORTING ON THE IMPLEMENTATION OF PROGRAMMES 6.1. Monitoring at project level 6.2. Monitoring and reporting at programme level 6.3 On-the-spot monitoring of the NFP 6.4 External monitoring 7. REPORTING 7.1 Reporting obligations of the PO 7.2 Reporting obligations of NFP 8. EVALUATION 9. AUDIT TRAIL 10. IRREGULARITIES 10.1. Irregularities – main principles 10.2. Reporting of irregularities 11. INFORMATION AND PUBLICITY 12. AUDIT
3 12.1. Description of procedures for monitoring the implementation of recommendations and corrective measures resulting from audit reports 12.2. Description of the procedures (where appropriate) for the supervision of the work of other audit bodies under the responsibility of the Audit Authority 12.3. Annual audit report and closure declaration
1. OBJECTIVES, LEGAL FRAMEWORK AND PRIORITY AREAS
1.1.Objectives
The overall objectives of the EEA FM and the NFM 2009-2014 are to contribute to the reduction of economic and social disparities in the European Economic Area and to the strengthening of bilateral relations between the Donor States and Bulgaria through financial contribution available in the following priority sectors: - Environmental protection and management; - Climate change and renewable energy; - Civil society; - Human and social development; - Protecting cultural heritage; - Green industry innovation; - Research and scholarship; - Justice and Home Affairs; - Promotion of decent work and tripartide dialogue.
1.2 Legal Framework
This Management and Control System for the implementation of the EEA and Norwegian Financial Mechanisms 2009-2014 for Bulgaria shall be read with conjunction with the following documents which constitutes the legal framework of the EEA and Norwegian Financial Mechanisms 2009-2014: - the Agreement between the Kingdom of Norway and the European Union on a Norwegian Financial Mechanism for the period 2009 – 2014 and Protocol 38b to the EEA Agreement on the EEA Financial Mechanism (2009 - 2014); - The Regulation on the implementation of the Norwegian Financial Mechanism 2009 – 2014 and the Regulation on the implementation of the EEA Financial Mechanism 2009 – 2014; - The Memorandum of Understanding on the implementation of the Norwegian Financial Mechanism 2009 – 2014 and the Memorandum of Understanding on the implementation of the EEA Financial Mechanism 2009 – 2014; - Any regulations adopted by the Donors in accordance with the Regulations.
1.3. Programme areas
In accordance with Article 2.1 of the Regulation the Donor states and Bulgaria have agreed the following programme areas to be financed under the EEA FM and NFM 2009- 2014:
4 EEA Financial Mechanism 2009 – 2014 Integrated Marine and Inland Water Management; Biodiversity and Ecosystem Services; Energy Efficiency and Renewable Energy; Funds for NGOs; Children and Youth at Risk; Public Health Initiatives; Conservation and Revitalisation of Cultural and Natural Heritage; Scholarships.
Norwegian Financial Mechanisms 2009-2014: Green Innovation; Global fund for decent work and tripartite dialogue; Capacity Building and Institutional Cooperation; Public Health Initiatives; Domestic and Gender-based violence; Schengen Cooperation and Combating Cross-border and Organised Crime, incl. Trafficking and Itinerant Criminal Groups; Judicial Capacity building and Cooperation/Improvement of the efficiency of justice; Correctional Services including Non-custodial Sanctions;
In accordance with the signed Memorandums of Understanding Bulgaria receives grant support at the total amount of € 126.6 million (€ 78.6 million under the EEA FM and € 48.0 million under the Norwegian Financial Mechanism 2009 – 2014). The net amount of the allocation made available to Bulgaria under the EEA FM 2009 – 2014 is € 72.705.000 over the period running from 1 May 2009 to 30 April 2014 inclusive. The net amount of the allocation made available to Bulgaria under the NFM 2009 – 2014 is € 44.400.000 over the period running from 1 May 2009 to 30 April 2014 inclusive.
2. INSTITUTIONAL FRAMEWORK
The institutional framework for the management, implementation, monitoring and control of the implementation of the EEA FM and NFM was set up in compliance with the provisions of the Regulations on the Implementation of the EEA FM and the NFM (2009 – 2014), Chapter 4 and with the provisions of Annex A to the Memorandums of Understanding concerning the Implementation of the EEA FM and the NFM (2009-2014) signed between Bulgaria and the Donor states.
2.1. Institutional framework at the level of the Donor states.
EEA Financial Mechanism Committee (FMC) and The Norwegian Ministry of Foreign Affairs
The decision-making authority for the EEA Grants is the Financial Mechanism Committee (FMC). The FMC is established by the Standing Committee of the EFTA
5 States and consists of representatives of the ministries of foreign affairs of Iceland, Liechtenstein and Norway. The Norwegian Ministry of Foreign Affairs is the decision- making authority for the Norway Grants.
Financial Mechanism Office
The Financial Mechanism Office assists the FMC and the NMFA in managing the EEA FM and the NFM 2009-2014. The FMO, which is administratively a part of the European Free Trade Association (EFTA), is responsible for the day- to-day implementation on behalf of the FMC and NMFA and serve as a contact point.
2.2. Institutional framework for management of the EEA FM and the NFM at national level
National management and Control Structures under the EEA FM and NFM 2009-2014 are regulated in the Art. 4.2 of the Regulations as well as in the Annexes A of the Memorandums of Understanding on the Implementation of the EEA FM and NFM 2009 – 2014. The functions and responsibilities of the designated entities, the allocation of functions within each entity as well as the mechanisms and procedures for their interaction are described in detail below: 1 2.2.1 National Focal Point
Central Coordination Unit Directorate ” within the Administration of the Council of Ministers acts as the National Focal Point under the EEA FM and NFM 2009-2014. Director of CCU performs the functions of the Head of the National Focal Point. The majority of the tasks of the National Focal Point will be concentrated in the “Bilateral Cooperation Programmes and Financial Instruments” (BCPFI) Department while programming and communication will be performed by other departments within the CCU Directorate, such as “Strategic planning and programming” and “Information and Communication” in close coordination with the BCPFI.
The National Focal Point has the overall responsibility for reaching the objectives of the EEA FM and NFM as well as for the implementation of the financial mechanisms in the Republic of Bulgaria.
The NFP represents Bulgaria in its relations with the FMC/NMFA regarding the implementation of the EEA FM and NFM (2009 – 2014) and bears the full responsibility for: - Implementation of the Memorandums of Understanding; - the management, control and coordination of the EEA FM and the NFM in Bulgaria; - reaching the objectives of the EEA FM and the NFM;
The role, functions and responsibilities of the NFP encompass the following:
6 1. Ensures overall management and coordination of the process of programming, monitoring and reporting of the implementation of the programmes specified in Annexes B to the MoUs;
2. Ensures that the necessary mechanism, systems and measures are in place to allow for the highest degree of transparency, accountability and cost efficiency, as well as the principles of good governance, sustainable development, gender equality and equal opportunities;
3. Provides methodological guidance to the Programme Operators on the development and implementation of the programmes financed under the EEA FM and the NFM;
4. Prepares and disseminates to the PO guidance and information on horizontal issues, incl. on the implementation of horizontal policies relevant to the programmes;
5. Participates in the programming process under the separate programme areas as: participates in working meetings and events dedicated to programme preparation; provides expert opinion (incl. after a consultation with the FMO, where necessary) with regard to compliance with the Regulations, MoUs and other strategic documents, relevant to the programmes; observes that all requirements of the FMO and the donor states are duly met by the POs; promotes active partnership between PO and designated DPPs incl. through the use of the bilateral funds; approves and signs the agreed Programme Proposals after their signature by the PO and the DPP (where applicable); Formally submits the Programme Proposals through DORIS to the FMO; Coordinates the process of revision of the programme proposals and provision of additional information at the request of the FMO until final programmes’ approval by the FMC/NMFA;
6. Concludes a Programme Agreement (Annex 10 to the Regulations) with the FMC/NMFA for each approved programme setting out the terms and conditions of the operation of the programme as well as the roles and responsibilities of the parties;
7. Prepares and submits for approval to the FMC/NMFA a draft Programme Implementation Agreement based on the above said Programme Agreement and the MoU;
8. Concludes a Programme Implementation Agreement, following its approval by the FMC/NMFA, for each approved programme with the PO, setting out the terms and conditions of the operation of the programme, the roles and responsibilities of the parties, incl. any obligations valid after the programme has been completed.
7 9. Performs regular monitoring of the programmes’ implementation with regard to: compliance with the provisions of the Regulations; progress towards the programmes’ objectives and outcomes according to agreed indicators and financial requirements specified for the programmes; identification of significant deficiencies/deviations and problems in the implementation of the programmes and undertaking of corrective actions (necessary and compatible with the Regulations) from the competence/at the level of the NFP; (incl. justified programme modifications; actions necessary and compatible with the Regulation, including verifies the quality and content of any documents provided to the FMC/NMFA by the PO through the NFP and requests the necessary modification to such documents.
10. Establishes and chairs the Monitoring Committee for the EEA FM and the NFM and guides its work;
11. Reviews the annual reports of the Programme Operators to ensure that programmes are being implemented in accordance with the plans developed at the outset and that progress is made towards achievement of expected programmes’ outcomes and objectives.
12. Organises the Annual meetings (as per art. 2.3 of the regulations) between the FMC/NMFA and the NFP;
13. Prepares Strategic Report on the implementation of the EEA FM and the NFM in compliance with Art. 2.2 of the Regulations and an updated report for the Annual meeting;
14. Manages the TA and Bilateral Fund at National level, prepares and submits to the FMO for approval a Work Plan and Implementation System for the operation of the BF;
15. Prepares and submits irregularity reports and reports on follow-up with regard to reported irregularities;
16. Secures the overall coordination and interaction of the EEA FM and NFM with the EU Structural funds and other donor programmes, in cooperation with competent national bodies;
17. Ensures compliance with the Information and Publicity requirements in Annex 4 to the Regulations. (through its own information and publicity activities as well as by promoting fulfillment of the information and publicity obligations by the Programme Operators.)
Structure of the NFP. Distribution of tasks and responsibilities
Head of the NFP
8 - Manages, coordinates and controls the activity of the NFP; - Signs the Programme Agreements with the FMC/NMFA and the Programme implementation Agreements with the Programme Operators; - Signs the grant agreements with the Project Promoters under the Bilateral Fund at national level; - Signs the Strategic Report prepared by the NFP for the Annual meeting; - Signs official correspondence addressed to the FMC/NMFA, FMO, the Programme Operators and other relevant institutions in Bulgaria and in the Donor States; - Chairs the Monitoring Committee.
“ Bilateral Cooperation Programmes and Financial Instruments” Department coordinates the National Focal Point functions and performs the majority of tasks of the National Focal Point. The BCPFI Department consists of one Head of Department and 9 experts, 5 of which are directly involved in the implementation of the functions of the NFP. The functions and responsibilities of the BCPFI Department encompass the day-to-day activities related to the implementation of the FMs and support to the Head of the NFP. For that purpose the following internal organization and distribution of responsibilities has been established:
Sectoral experts (5) – responsible leading sectoral expert have been designated for each Programme area. The sectoral experts occupy the following positions: - 3 state experts; - 2 senior experts. The Sectoral experts perform day-to-day activities in line with the responsibilities and tasks of the NFP, incl.: - Maintenance of operational contacts with Programme Operators; - review of any programme related documentation provided by the PO, provision of analysis, comments, expert advice and opinion; - Participation in the Cooperation Committee meetings, working meetings and events dedicated to programme preparation and implementation; Expert opinion and comments with regard to compliance of the programmes with the Regulations, MoU and other strategic documents and observes that all requirements of the FMO and the donor states are duly met by the POs; - Assistance for the submission of the programme proposals through DORIS to the FMO and for the process of revision of programme proposals and provision of additional information provided at the request by the FMO; - Prepare and propose methodological guidance for the Programme Operators on the development and implementation of the programmes financed under the EEA FM and the NFM - Preparation and coordination of the Programme Agreements and the Programme Implementation Agreements - Expert opinion on the proposed initiatives to be financed by the bilateral fund on national level in the respective programme areas;
9 - Performs regular monitoring of the programmes’ implementation with regard compliance with the provisions of the Regulations; progress towards the programmes’ objectives and outcomes according to agreed indicators and financial requirements specified for the programmes; identification of significant deficiencies/deviations and problems in the implementation of the programmes and undertaking of corrective actions (necessary and compatible with the Regulations) from the competence/at the level of the NFP; (incl. justified programme modifications; verifies the quality and content of any documents provided to the FMC/NMFA by the PO through the NFP and propose corrective measures necessary and compatible with the Regulation. - Reviews the annual reports of the Programme Operators to ensure that programmes are being implemented in accordance with the plans developed at the outset and that progress is made towards achievement of expected programmes’ outcomes and objectives.. - Provision of input to the Strategic Report based on the review and analysis of the corresponding Annual Reports; - Organization of the Annual Meetings; - Assistance for the organization of the Monitoring Committee for the EEA FM and NFM and preparation of the documents for discussion; - Secures the overall coordination and interaction of the EEA FM and NFM with the EU Structural funds and other donor programmes, in cooperation with competent national bodies; - Participation in Selection Committees as observers; - Proposals for the initiation of corrective actions from the competence of the NFP; - Assistance for promoting active partnership with the Donor States through organization and participation in meetings with DPPs, representatives of the Donor States, Embassies or other institutions; - Support and participation in publicity event under the EEA FM and NFM at national and programme level; - Maintenance of database of information and documentation (exchanged correspondence and other programme related documentation); - Prepare and submit the irregularity reports and reports on follow-up with regard to reported irregularities; - Coordinate the risk assessment at programme level and elaborate the risk assessment at national level. - Ensures that state aid issues are tackled for all programme areas in the process of preparation and approval of programme proposals and in the phase of implementation (call for proposals and approval of projects), incl. on the basis of expert opinion provided by the Ministry of Finance; - Management of the TA and Bilateral fund at national level in accordance with the Work plan and the Implementation System for the operation of the BF:
10 Prepare the Interim Financial Reports and annual report for the TA and BF at national fund based on the information provided by the Certifying and Audit Authority; Prepare Annual and Final report for TA and the information for the Strategic report for BF at national level; Coordinate the process of approval of initiatives proposed by the respective institutions for financing under the BF; Assist for the preparation of tender documentation for the respective tender procedures foreseen under the TA fund; Coordinate the process of external verification of expenditures under the TA fund and BF.
For each programme a substitute of the main responsible expert will be designated.
The BCPFI Department is supported by experts from the “Information and Communication” Department in implementing the following activities: - Prepare the Communication Strategy, coordinate the implementation of the foreseen events; - Organise meetings with the POs to coordinate the activities foreseen under the Communication Plans of the respective programmes; - Maintain Internet-sites www.eeagrants.bg , www.norwaygrants.bg and facebook page with regular information on the implementation of the EEA FM and Norwegian FM in Bulgaria.
The BCPFI Department is supported by experts from the “Strategic Planning and Programming” Department in implementing the following activities:
- - Coordinate the implementation of the target as per MoUs for 10% of the allocation under all programme areas to go towards improvement of the situation for the Roma population; -
The sectoral experts report to the Head of Department. The Head of Department reports to the Director of CCU Directorate as Head of the NFP.
In addition, the following external experts will be hired: - accountants – experts from the Financial Directorate of the Council of Ministers to be in charge of the financial management and reporting of the Technical Assistance and Bilateral Fund; - a verificator –independent external expert/s hired through a civil contract or through a service contract for the purposes of verification of expenditures under the TA and BF;
11 - ad-hoc experts that will be hired in case some specific expertise (technical, legal, communication, etc.) is needed. The structure described above has been set up to ensure clear line of subordination and reporting obligations, division of responsibilities and to secure substitution of experts that allows continuity and constantly high quality of execution of the functions of the NFP. 2.2.2 Certifying Authority The National Fund Directorate (NF) shall act as the Certifying Authority (CA) under the EEA FM and NFM 2009-2014 as designated in Annex A, National management and control structures, of the Memoranda of understanding on the implementation of the EEA FM and NFM 2009-2014. The NF is an administrative unit within the Ministry of Finance in the Republic of Bulgaria.
The organizational structure of the Certifying Authority and specific responsibilities of relevant departments
The organizational structure of the CA represents the clear definition and division of the functions of the entities involved in management and control under the EEA FM and NFM 2009-2014 and the allocation of functions within the CA.
The specific responsibilities of the Departments responsible for the management of the EEA FM and NFM 2009-2014 within the National Fund Directorate are described below, namely:
Certification and Financial Management under Cohesion Fund Department (including financial control and liquidity management functions):
The role and responsibilities of the Department are defined in the internal functional record as well as in the Procedure Manual in line with Art. 4.5 of the Regulations on the implementation of the EEA FM and NFM 2009-2014 such as to: 1. Certify and submit to the FMC/NMFA the interim financial reports and final programme reports according to the schedule set out in the Regulations on the implementation of the EEA FM and NFM 2009-2014, in particular that; the summary of eligible expenditure submitted by the Programme Operator is in conformity with the supporting documents; the supporting documents have been examined and found to be authentic, correct and accurate;
the summary of eligible expenditure is based on verifiable accounting, which is in compliance with generally accepted accounting principles and methods;
the reporting expenditure falls within eligibility criteria under the Regulations on the implementation of the EEA FM and NFM 2009-2014;
the eligible expenditure is incurred as part of the implementation of the respective Programme in accordance with the programme agreement;
12 sufficient audit trail is ensured and
the national co-financing allocated to the project has been paid within the deadline stipulated in paragraph 5 of Article 8.1 of the Regulations on the implementation of the EEA FM and NFM 2009-2014.
2. Submit to the FMC/NMFA a forecast of likely payment applications according to the schedule set out in the Regulations on the implementation of the EEA FM and NFM 2009-2014; 3. Verify the correctness of the declared interest (if any); 4. For certification purposes take into account the results of all audits carried out by the Audit Authority; 5. Maintain accounting records in computerised form expenditure declared to the FMO; 6. Ensure that payments are transferred to the POs (within 15 working days after reception of the payment ordered by FMO); 7. Organise and maintain a financial records; 8. Budgeting the necessary funds as part of the annual budget procedure; 9. Ensure that amounts recovered and amounts withdrawn following cancellation of all or part of the financial contribution for a programme or project are reimbursed to the FMC/NMFA within three months of the decision taken according to Article 12.2 of the Regulations (in case that the financial corrections are imposed by the FMC/NMFA) 10. Ensure the establishment and maintenance of a separate bank account dedicated to the EEA FM and NFM 2009-2014; 11. Establish working and reporting procedures and instructions as well as methodology support to POs.
Accounting Department:
The Department maintains accounting information in computerised form of expenditure declared to the FMC/NMFA prior to the closure of a programme including:
1. Maintenance of the accounting system of the NFD by registering the movements on the bank account, cash and non cash operations as well as carries out all standard control activities and crosschecks in order to ensure that the accounting records are correct ( correct numbers), timely and true (the correct accounting accounts were used), as well that they are in compliance with the applicable national legislation and/or standards; 2. Preparation of a methodology for the accounting of operations of the NFD in relation to the management and control of the funds granted; 3. Preparation of standard entries, applicable by the Programme Operators for the operations under the Programmes and for defining the deadlines and formats for providing reporting information; 4. Execution of the responsibilities of the NFD in regards to the annual budget procedure.
13 2.2.3. Audit Authority
Description of the main tasks of the Audit Authority
The date and form of the formal designation authorizing the Audit Authority to carry out its functions
Memorandum of understanding on the implementation of the European Economic Area Financial Mechanism 2009- 2014; Memorandum of understanding on the implementation of the Norwegian Financial Mechanism 2009- 2014; Law for Internal Audit in the Public Sector; Organic Rules of Audit of EU Funds Executive Agency; Ordinance No H – 2/24.03.2009 of the Minister of Finance stipulating the procedures for conducting, coordination and harmonisation of specific audit activities under funds and programmes of the EU.
Specification of the functions carried out by the Audit Authority
Audit Authority for the EEA Financial Mechanism 2009-2014 and the Norwegian Financial Mechanism 2009-2014 is Audit of European Union Funds Executive Agency (AEUFEA) to the Minister of Finance of the Republic of Bulgaria. The AEUFEA is a second-level spending unit of budget credits at the Minister of Finance and is managed by an executive director. The AEUFEA activity is conducted in line with the internationally accepted auditing standards and in compliance with the national legislation, the applicable EU regulations and international agreements for receiving of funding from the European Union, incl. the Regulation on the implementation of the Norwegian Financial Mechanism 2009-2014, Regulation on the implementation of the European Economic Area (EEA) Financial Mechanism 2009-2014, Memorandum of understanding on the implementation of the EEA Financial Mechanism and Memorandum of understanding on the implementation of the Norwegian Financial Mechanism, to which the Republic of Bulgaria is a signatory. The Audit Authority performs the tasks described in respective regulations, in particular: Regulation on the implementation of the EEA Financial Mechanism 2009-2014, in particular Article 4.6 and Article 4.8. thereof; Regulation on the implementation of the Norwegian Financial Mechanism 2009-2014, in particular Article 4.6 and Article 4.8 thereof. The Audit Authority performs its tasks according its audit methodology, described in Manual for Audit of EU Funds (Audit Manual). The Audit Manual provides audit methodology for audit of all programmes financed by EU funds (namely European Regional Development Fund, Cohesion Fund, European Social Fund and European
14 Fishery Fund) and others, incl. for the EEA Financial Mechanism and the Norwegian Financial Mechanism.
Organisational structure
The tasks of the Audit Authority for the EEA Financial Mechanism 2009-2014 and the Norwegian Financial Mechanism 2009-2014 are performed by AEUFEA. The Agency is headed and represented by an executive director, who is responsible for the work of the Audit Authority. Given below is a brief description of the internal organisation of the AEUFEA and the directorates that perform the tasks of the Audit Authority for the aforementioned programmes. The AEUFEA has 4 directorates covering individual areas of expertise, i.e. specialized administration, and in addition has an administrative services directorate. According to the Organic Rules of AEUFEA (last amended as of 19 January 2016), the Agency consists of 72 employees (incl. executive director and directors of directorates), of which 63 are employed in the specialized administration: Audits of EU Regional Policy Funds Directorate, Audit of EU Social Affairs, Education and Fishery Funds Directorate, Audits of Territorial Cooperation Funds and Other Programmes Directorate and Legal Support of the Audit Activity Directorate. The Audits of Territorial Cooperation Funds and Other Programmes Directorate (ATCFOPD) consist of 12 auditors, incl. the director. This directorate is responsible for auditing of EEA Financial Mechanism and the Norwegian Financial Mechanism, territorial cooperation programmes, Erasmus + and other programmes, finances by EU. Audit activities concerning the EEA Financial Mechanism and the Norwegian Financial Mechanism are managed by the director of the directorate and an assigned audit team leader. Each year, depending on the activities/audits to be performed and availability of resources, presented in Agency’s annual audit plan, auditors are allocated to audit teams for specific audit assignments. The number of auditors in each audit team might vary depending on the scope and the complexity of the engagement. Audit teams perform compliance assessment engagements, audits on operations/projects and system aydits. Systems audits cover the effective functioning of the management and control systems set up within structures/bodies responsible for implementation of programmes. Audits on operations/projects cover (mainly, but not exclusively) the compliance and appropriateness of the accounting information as well as the legality, regularity and eligibility of the transactions. Quality control of the audit activity, incl. quality control on audit engagements under the EEA Financial Mechanism and the Norwegian Financial Mechanism is performed by the audit team leader, the director of ATCFOPD, the director of the Legal Provision of the Audit Activity Directorate – if appropriate, and by the executive director of the Agency.
Arrangements for ensuring independence
15 The AEUFEA is an autonomous body. The tasks of the Audit Authority were assigned to it by virtue of Law for Internal Audit in the Public Sector, Organic Rules of AEUFEA, adopted by the Council of Ministers Decree 346/30.12.2008 (last amended as of 19.01.2016), and Ordinance № H – 2/ 24.03.2009 of the Minister of Finance. The AEUFEA is functionally independent from the other bodies involved in the management and control system of EEA Financial Mechanism 200-2014 and Norwegian Financial Mechanism 2009-2014 (e.g. National Focal Point, Certifying Authority, Programme Operators and the beneficiaries) in Bulgaria and in addition is organisationally and functionally separate from such bodies. The AEUFEA decision- making and reporting lines are independent. According Article 7 of Organic Rules of AEUFEA the Agency is managed and represented by the Executive Director. The Executive Director solely has the ultimate responsibility for approving and signing annual audit reports and opinions. The audit activities of the Agency are performed according to internationally accepted auditing standards and requirements of the Regulation on the Implementation of the Norwegian Financial Mechanism 2009-2014 and the Regulation on the implementation of the EEA Financial Mechanism 2009-2014. No other tasks but audit engagements are performed by the Agency. No interference is allowed in the work of AEUFEA auditors in performing their obligations in the audit process (planning, fieldwork and reporting). Government/Administrative units could not interfere with AEUFEA auditors’ work in performing their duties. In addition to organisational independence, the AEUFEA further ensures its professional independence by expanding the knowledge of auditors, and through professional training and skill enhancement. Thus the AEUFEA maintains its professional level as auditing institution. According to Ethical Rules of Agency’s staff, auditors should strive not only to be independent of audited bodies and other interested groups, but also to be objective in dealing with the issues and topics under review. It is essential that auditors are independent and impartial. Independence of auditors should not be distorted by personal or external interests in all matters related to audit activity. For example, independence might be affected by external pressure or influence on auditors; prejudiced behavior of auditors to persons, audited units, projects or programmes; from previous employment / business relationships which could cause conflicts of interests. The auditors are obliged to refrain themselves from expressing an opinion on any matters of interest for them. In order to further ensure the independence, all AEUFEA’s auditors, involved in activities for EEA Financial Mechanism 2009-2014 and Norwegian Financial Mechanism 2009- 2014 sign declaration for the absence of a conflict of interests, confidentiality and impartiality.
Required qualification or experience
AEUFEA’s auditors have experience in the audit area, incl. audit of pre-accession funds, audit of Structural Funds, the Cohesion Fund, the European Fishery Fund, and others. In addition, according to Art. 45, para 2 of the Law for Internal Audit in the Public Sector,
16 audit team leaders must have at least two years’ experience in the field of audit of EU funds. In accordance with Art. 19, para 2, p.1-4 of the Law for Internal Audit in the Public Sector and job descriptions developed by AEUFEA, only persons who meet the following requirements for education, training and experience may be appointed as auditors: have a university education and obtained Bachelor or Master degree; their specialty is economics, law, engineering; professional experience in internal control and / or auditing and / or legal and / or accounting and / or engineering. In accordance with Art. 45, para 2 of the Law for Internal Audit in the Public Sector AEUFEA’s auditors should be certified as internal auditors in the public sector by the Minister of finance or should possess other internationally accepted internal audit certificates (CGAP, CIA etc.). In order to enhance the qualification, all auditors each year implement their personal training plan. The Training plan, approved by the Executive director, includes detailed information for the trainings planned for each auditor - subject of the training, trainers, number of days, period of the year, etc.
Council of Ministers
Deputy Prime Minister of Ministry of Finance EU Funds Management and Economic Policy
Deputy Minister of Finance responsible for financial Head of NFP management of EU Funds Director of Central Coordination Unit Directorate
National Focal Point Audit Authority Certifying Authority Central Coordination Unit Audit of EU Funds National Fund Directorate Directorate Executive Agency Bilateral Cooperation Programmes and Financial Instruments Department
Preparation and submission of irregularity reports
17 2.2.4. Monitoring Committee
The NFP establishes a Monitoring Committee for the EEA FM and the NFM. The MC is chaired by the Head of the NFP and its membership includes representatives of institutions, involved in the management of the programmes at national level (NFP, CA, AA), POs, social partners and regional authorities. The FMC/NMFA is also invited to attend the meetings of the MC as an observer.
The MC follows the implementation of the programmes in view of verifying the effectiveness and quality of performance through: - periodical review of progress made towards achieving the objectives of the EEA FM and the NFM on the basis of documents submitted by the NFP and Programme Operators; - examination of the results of implementation, particularly the achievement of the planned outputs as well as the progress towards the expected outcomes and objectives set for the programmes; - review of the Strategic Report prepared by the NFP and adoption of an opinion for its approval, reflected in the Minutes of the meeting and presented for information at the Annual meetings; - issues proposals to the NFP for revision of examination of the implementation framework in Annexes A to the MoU, likely to make possible the attainment of the objectives of the EEA FM and the NFM.
2.2.5 Programme Operators
The following entities have been designated as Programme Operators in accordance with the MoUs concerning the implementation of the EEA FM and the NFM 2009 – 2014:
BG 01 Technical Assistance and Bilateral Fund – managed by the NFP; BG 02 Integrated Marine and Inland Water Management – Ministry on Environment and Waters, DPP – Norwegian Environment Agency; BG 03 Biodiversity and Ecosystem Services - Ministry of Environment and Waters, DPP - Norwegian Environment Agency; BG 04 Energy Efficiency and Renewable Energy – Ministry of Energy, DPP - Norwegian Water Resources and Energy Directorate (NVE), Norway; BG 05 NGO Fund – Open Society Institute (PO selected by the FMO) in partnership with the Workshop for Civic Initiatives Foundation; BG 06 Children and Youth at Risk – Ministry of Education and Science, DPP – Council of Europe; BG 07 Public Health Initiatives (EEA and NFM) – Ministry of Health, supported by Operational Programme “Good Governance ” Directorate within the Administration of the Council of Ministers. Programme Partner - World Health Organisation;
18 BG 08 Cultural Heritage and Contemporary Arts – Ministry of Culture; BG 09 Scholarship Fund – Ministry of Education and Science, DPP – the Icelandic Centre of Research – RANNIS (Iceland), the National Agency for International Education Affairs – AIBA (Liechtenstein ) and the Norwegian Centre for International Cooperation in Higher Education – SIU (Norway). SIU is lead Donor Programme Partner; BG 10 Green Industry Innovation – Innovation Norway, in accordance with Art. 5.13 of the Regulation. BG 11 Capacity Building and Institutional Cooperation – “OP “Good Governance ” Directorate at the Council of Ministers, DPPs – Norwegian Association of Local and Regional Authorities (KS) and Norwegian Barents Secretariat; BG 12 Domestic and Gender Based Violence – Ministry of Interior, DPP - Council of Europe; BG 13 – Schengen Cooperation and Combating Cross-border and Organised Crime, incl. Trafficking and Itinerant Criminal groups – Ministry of Interior, DPP - the Council of Europe and the Norwegian Police Directorate (POD); BG 14 Judicial Capacity Building and Cooperation/Improvement of the efficiency of justice – Ministry of Justice, DPP - Council of Europe; BG 15 - Correctional Services including Non-custodial Sanctions – Ministry of Justice, DPP- Council of Europe;
The main responsibilities of the PO are described in detail in Art. 4.7 of the Regulations concerning the Implementation of the EEA FM and the NFM 2009 - 2014.
The obligations of the PO at the programming stage encompass: - preparation of a draft Programme Proposal, in close cooperation and consultation with the DPP (for the Donor Partnership Programmes) and relevant stakeholders in the sector and submission it to the NFP for preliminary review and comments – within 7 months following the date of signature of the respective MoU; - provision of feedback, additional information and documentation, requested by the FMO in the course of programme’ review within the deadlines set by the FMO; - ensuring that the NFP is kept informed on all correspondence exchanged with the DPP and the FMO in the programming process in order to streamline dissemination of information and avoid duplication of requests addressed to the FMO.
The obligations of the PO towards the NFP, CA and FMC/NMFA with regard to monitoring, reporting and irregularities are described in the respective sections below.
2.2.6 Cooperation Committee
The PO of a Donor Partnership Programme establishes a Cooperation Committee (CC), consisting of representatives of the PO and the DPP as members, the NFP, FMC/NMFA and Norwegian Embassy as observers. The CC may include extended membership if the involvement of representatives of key stakeholders in the sector is considered essential for the successful implementation of the programme. In the latter case avoidance of conflict of interest shall be guaranteed.
19 The tasks of the CC include: - Advising on the preparation of the programme proposals; - Advising on selection criteria and the texts of the calls for proposals; - Advising on possible project partners from the donor states; - Reviewing progress made towards achieving the outcomes and objectives of the programme; - Examining the results of the implementation of the programme; - Reviewing the annual programme reports; - Advising the PO of any revision of the programme likely to facilitate the achievement of the programme’s expected outcomes and objectives.
2.2.7. Steering Committees (optional)
A Steering Committee may be established by the PO as an additional structure with the purpose to carry out technical review of the progress in projects’ implementation, to identify potential problems and take measures to avoid double funding.
The CC and StC shall work closely together, by holding back-to-back meetings and electing observers for each others’ work. To ensure division of responsibilities, no voting members in both committees shall overlap.
3. IMPLEMENTATION OF THE PROGRAMMES UNDER THE EEA FM AND THE NFM
3.1 Programme Agreement and Programme Implementation Agreement
The actual implementation of approved programmes starts after the concluding of Programme Agreement between the NFP and FMC/NMFA and Programme Implementation Agreement between the NFP and POs. The above said agreements cover:
3.1.1 Programme Agreement (template attached in Annex 10 of the Regulation) - the terms and conditions of the operation of the programmes; - the roles and responsibilities of the parties. - financial information, incl. financial breakdown, eligibility of expenditures; - modifications of programme; - post-completion obligations; - terms and conditions for suspension of payments and termination of the Programme Implementation Agreement.
3.1.2 Programme Implementation Agreement - the terms and conditions of the operations of the programme; - the roles and the responsibilities of the parties; - financial information, incl. financial breakdown, eligibility of expenditures; - modifications of programme; - post-completion obligations;
20 - terms and conditions for suspension of payments and termination of the Programme Implementation Agreement.
4. TECHNICAL AND FINANCIAL IMPLEMENTATION OF PROGRAMMES
The technical and financial implementation of programmes is carried out strictly in accordance with the corresponding Programme Agreement and Programme Implementation Agreement and relevant Regulation on the implementation.
The Programme Operators bear the full responsibility for the implementation of the programmes in accordance with the principles of economy, efficiency and effectiveness. They are in charge of: - preparation and announcement of the call for proposals, incl. development of application packages; - organization and conduct of the selection process; - organization and conduct of the grant award process, signature of project contracts with successful project promoters; - monitoring of projects’ implementation; - technical and financial verification; - preparation of Annual report to be submitted to the NFP and FMC/NMFA; - reporting to the NFP of irregularities at programme and project level; - management of the bilateral funds at programme level and the complementary actions.
4.1. Management and Control Systems at programme level
Within four months from the submission of the first Interim Financial Report the POs shall submit to the Audit Authority and to the NFP a draft detailed description of the management and control systems of the PO, approved by the Head of the PO that covers the requirements of Art. 4.7 of the Regulations on the implementation of the EEA FM and the NFM 2009-2014 including: - the system for verification of payment claims; - the audit and monitoring systems; - the system for preventing, mitigating, detecting, reporting on and remedying irregularities; - the system established to maintain an audit trail of all supported activities.
The Audit Authority shall issue an opinion on the compliance of the implementation system of the programme operator with the Regulations and the generally accepted accounting principles within one month from receipt of the detailed description.
Within six months from the submission of the first interim financial report the NFP shall submit to the FMC/NMFA the detailed description of the management and control system of the Programme Operator together with a report and opinion issued by the Audit Authority.
21 4.2 Certification of expenditure the European Economic Area Financial Mechanism 2009-2014 and the Norwegian Financial Mechanism 2009-2014
4.2.1. Definition of the certification process: a process through which the CA gains reasonable assurance that the expenditure reported by PO in Part A and Part B of the IFR for the respective period are eligible and in accordance with the Regulations on the implementation of the EEA FM and NFM 2009-2014, applicable EU and national legislation as well as that the procedures applied and control activities performed are in line with the management and control systems set up at national level As a result of the control activities carried out by the entities concerned, with the submission of the interim financial reports and final programme reports the CA declares to the FMO eligibility of expenditure incurred. The stages of the certification process include confirmation of expenditures incurred and proposed by the POs and their certification by the CA. For the purpose of the certification of expenditure POs and CA establish organisational structures at PO level and CA respecting functional separation of responsibilities and duties between parties and experts involved in the implementation of the Programme. The certification process is realized through the IFRs filled in by the POs in DoRIS and their subsequent submission by the CA to FMO through the system after proper verification of the reported circumstances. 4.2.2. The horizontal aspect of the certification process includes performing controls and reviews on certification by experts in relevant departments in the CA. The CA applies written rules and procedures elaborated in the procedural manual for the implementation of the EEA FM and NFM 2009-2014, endorsed by the Head of CA. The procedural manual of the CA ensures sound financial management and control of the funds under the EEA FM and NFM 2009-2014. The CA certifies to the FMO through DoRIS the expenditure incurred by PO and included in the interim financial reports and final programme reports taking into account of the results of: - controls and procedures performed by the POs during the verification process for ensuring and confirmation of the correctness and regularity of the expenditure incurred and the accuracy of the information reported under the EEA FM and NFM 2009-2014; - controls and procedures performed by the NFP in line with the progress made and quality achieved during Programmes’ implementation; - desk review of the documentation provided; - on-the-spot-checks performed by the CA; - audits carried out by the AA and other public audit bodies. The CA envisages carrying out regular on-the-spot checks and ad-hoc checks, if necessary. The CA shall conduct the on-the-spot checks under two programmes per year based on a risk basis taking into account progress of the programme, experience of the PO, deficiency identified under the programme, irregularities and other indicators if relevant. If necessary the CA may perform additional on-the-spot checks or checks at the level of project promoter (PP).
22 CA shall notify the PO in advance about an envisaged on-the-spot check. The notification shall include information on the projects included in and the scope of the on-the-spot check. The result from the on-the-spot check performed shall be elaborated in a report, which shall include findings (if any) and recommendations to the PO. PO shall submit comments and additional information in accordance with the deadlines set by the CA. The CA will take account of the results from the on-the-spot check as well as of the additional information provided by the PO in the certification process. CA’s written procedures on the financial management and control of the funds under the EEA FM and NFM 2009-2014 include: - procedure for review of interim financial reports and final programme reports in relation to certification of expenditures included in the reports; - procedure for setting up limits for payment to POs ensuring that the funds received under EEA FM and NFM 2009-2014 are transferred to the POs within 15 working days from the reception date. The procedures are applied by execution of control checks set up in relevant checklists. 4.2.3 The vertical aspect of the certification process is based on the separation of duties and responsibilities between the various parties – PP, PO and CA. The verification of expenditure by the PO is based on the documentation provided by the PP and the reviews and controls performed in line with the provisions of the Regulations on the implementation of the EEA FM and NFM 2009-2014. The procedures for review and control carried out by the PO are applied in accordance with the checks, envisaged in the internal rules and procedures of the programmes, incl. Management and Control Systems formally endorsed by the Head of the PO. The NFP and CA may provide comments on the internal rules and procedures of PO in relation to the fulfillment of the respect of the principles of economy, efficiency and effectiveness set out in the Regulations on the implementation of the EEA FM and NFM 2009-2014. The PO’s rules and procedures and the actual inspections and control activities performed by the PO as a minimum is necessary to comply with the following requirements which are basis for establishing of a reasonable assurance necessary to certify expenditure under the EEA FM and NFM 2009-2014: - PO shall carry out on-the-spot checks on a sample basis in line with Art. 4.7 (e) of the Regulations on the implementation of the EEA FM and NFM 2009-2014. On- the-spot checks are carried out: at the site of the projects for monitoring the physical progress of the project activities and the level of achievement of set objectives; and/or at the PP and its partners for review of original supporting documents and other documentation held to prove sound management and control system at project level. Through the on-the-spot verification the PO ensures the quality of the implementation of the programme and verifies the project’s progress towards expected outcomes. The results from the on-the-spot verification are taken into account by the PO for the summary of eligible expenditure reported to the CA and as part of the monitoring of the sustainability of the project and the PP’s full commitment and ability to implement the project.
23 PO elaborates an annual plan of the on-the-spot checks envisaged for the current year including information on the name and the identification number of the projects and the planned period of execution of the on-the-spot checks. The PO shall submit the annual plan of the on-the-spot checks envisaged for the current year to the CA and to the NFP by December 31 at the latest. - In line with Art. 4.7 (f) of the Regulations on the implementation of the EEA FM and NFM 2009-2014 the PO conducts annual monitoring of a sample of projects, selected based on risk assessment and including random samples. Through the annual monitoring the PO ensures the quality of the implementation of the programme and verifies the project’s progress towards expected outcomes. The results from the annual monitoring are taken into account by the PO for the summary of eligible expenditure reported to the CA and as part of the monitoring of the sustainability of the project and the PP’s full commitment and ability to implement the project. - PO carries out adequate desk review of reported documentation and check for the authenticity, correctness and accuracy of all supporting documents (receipted invoices, and/or alternatively by accounting documents of equivalent probative value) for costs incurred under the project, which ensures achievement of full conformity between the documents and the summary of eligible expenditure incurred/paid by the PO to the CA. PO performs verification of the real implementation (goods are delivered or service and works are performed) as well as compliance with the scope of the project (tender documents, contract, specific rules of the programme etc.). - The PO shall inform the CA if a decision is taken to apply paragraph 3 of Art. 7.13 of the Regulations on the implementation of the EEA FM and NFM 2009-2014 concerning verification of expenditure incurred by project partners. - PO performs necessary control activities ensuring that summary of eligible expenditure paid by PO under the Programme and reported to CA falls within the provisions and the eligibility criteria set out in Chapter 7 of the Regulations on the implementation of the EEA FM and NFM 2009-2014, the Programme, the Programme implementation agreement concluded between the NFP and the PO, the calls for proposals organised by the PO in accordance with Art. 6.3 of the Regulations on the implementation of the EEA FM and NFM 2009-2014, the Project contract concluded between the PO and the PP and other eligibility rules and guidelines of the donor states. - PO defines in Management and Control Systems at Programme level the process of expenditure reporting established at Project Promoters’ level; specific rules regarding the eligibility of expenditures and their proper verification as well as the reimbursement from PO of the incurred and reported expenditure by the PPs. - In accordance with the requirements set out in Art. 4.7 (l) and Art. 8.8 of the Regulations on the implementation of the EEA FM and NFM 2009-2014 PO ensures transparency and availability of documents that provide sufficient audit trail for the financial contributions from the EEA FM and NFM 2009-2014 and the national budget as reported in the summary of eligible expenditure to the CA. PO ensures that all the supporting documents regarding expenditure and audits on the Programme are kept either in the form of originals or in versions certified to be in
24 conformity with the originals on commonly accepted data carriers in order to provide adequate audit trail. PO also ensures that the documents shall be kept available for the FMC/NMFA, the EFTA Board of Auditors and the CA for a period of at least three years following the FMC/NMFA’s approval of the final programme report. In performing on-the-spot checks, the CA experts shall have full access to all information, documents, persons, locations and facilities, public or private, relevant to the process of certification or the verification and to the object of on-the-spot check. - In accordance with Art. 8.2, paragraph 4. of the Regulations on the implementation of the EEA FM and NFM 2009-2014 interim financial reports shall be submitted by the CA to the FMC/NMFA according to the following schedule: (a) on, or before, 15 March for payments to be made by 15 April; (b) on, or before, 15 July for payments to be made by 15 August; (c) on, or before, 15 November for payments to be made by 15 December. Eligible expenditures of a programme are: 1. Expenditures incurred directly by the Programme Operator (under fixed budget lines), in particular: expenditure related to the preparation of a programme proposal; management costs of the Programme Operator; expenditure of funds for bilateral relations at national and/or Programme level; expenditure for complementary action of the Programme Operator; expenditure for technical assistance; others 2. Payments made from the PO to the Project Promoters.
Expenditures reported in the IFR (Part A “Incurred expenditure”) to FMO shall include the total amount of the funds incurred by the PO in the respective period, namely: 1. The total amount of payments made under p.1after applying of control procedures established related to verification. 2. The total amount of payments under p.2, that shall consist of: The amount of payments incurred/paid to PP/projects on verified expenditure; The amount of payments incurred/paid to the PP/projects in the respective period as advance payments to PP (in case the payment conditions are fulfilled) The total amount of incurred/paid expenditures by PO to the PP in the reported period shall be included in the IFR.
In order to process to FMO the interim financial reports through DoRIS in due time and carry out the certification procedure in accordance with the effective and efficient management and control system that has been established in the CA, the PO shall submit the interim financial reports to the CA according to the following schedule: (a) on, or before 25 February for interim financial reports that are due for submission to the FMC/NMFA on, or before, 15 March; (b) on, or before 25 June for interim financial reports that are due for submission to the FMC/NMFA on, or before, 15 July; (c) on, or before 25 October for interim financial reports that are due for submission to the FMC/NMFA on, or before, 15 November.
25 PO shall ensure that each interim financial report is accompanied by a register of projects under which PO has included verified and incurred expenditure in the interim financial report. The register of verified and paid by PO expenditure under the projects shall contain as a minimum the following information: ID number and name of the project, budget, contracted amount, amount of incurred and verified expenditure, reimbursed by PO under the project in the reporting period, total amount of verified and incurred by PO expenditure under the project for the period since the beginning of the implementation of the project, as well as all advance payments paid from PO to the PP (including expenditures incurred, related to activities carried out by the DPPs, CoE and WHO).The register shall also contain relevant information on the verified and incurred expenditures by PO under the fixed budget lines of the Programme for management of the Programme and under the Funds for bilateral relations and complementary actions at programme level etc. PO shall ensure that the information in the attached register corresponds to the information in the interim financial report (Part A) with regard to expenditure incurred directly by PO under the Programme together with the funds reimbursed from PO to the PP, that has been actually incurred under the Programme. CA reserves the right to request additional information from PO/NFP within a reasonable deadline determined by the CA and/or return the interim financial report and/or the register of verified and incurred expenditure under the projects in cases of discrepancies. The register of verified and incurred expenditure under the projects shall be submitted from the PO to the CA signed electronically no later than the date of submission of the interim financial report. The requirement for submission of the register of verified and incurred expenditure under the projects shall not be valid if the reporting database maintained by PO allows sufficient access to the CA to export project-specific and programme-specific financial information on the budget, contracted amounts, paid expenditure/disbursement, verified expenditure and other information of the programme and projects. - In accordance with Art. 5.12 of the Regulations on the implementation of the EEA FM and NFM 2009-2014 the PO shall, through the CA, submit a final programme report to the FMC/NMFA and the NFP as described in Annex 9 of the Regulations. In the line with the set purpose of the report PO shall provide in the final programme report: (a) an overall assessment of the implementation of the programme, including comparison to the plans set out in the programme proposal and any lessons learned; (b) an assessment of the programme’s contribution to the overall objective and outcomes of the programme area upon completion of all projects and the closure of the programme; (c) overview of irregularities and measures taken to remedy these; (d) specific details in respect of meeting and/or adapting financial plans; (e) financial information, including a calculation of the final balance.
In accordance with paragraph 2 of Art. 5.12 of the Regulations the CA shall certify the financial annex to the final programme report in accordance with Art. 4.5 of the Regulations and shall forward the report to the FMC/NMFA within three months of the completion of the last project under the programme, and not later than 30 April 2017, unless extensions under paragraphs 4 or 5 of Art. 7.14 have been granted.
26 The PO shall submit the final programme report to the CA 20 calendar days before the deadline of submission the report to the FMC/NMFA as provided in paragraph 2 of Art. 5.12 of the Regulations. - In line with Art. 7.15 of the Regulations on the implementation of the EEA FM and NFM 2009-2014 the PO shall elaborate sufficient monitoring and control mechanisms and procedures in order to ensure that projects that involve investment in real estate and/or land (including renovation) are operational for at least five years after the PO’s approval of the project completion report and that the real estate and/or land is used for the purpose of the project as described in the project contract. - For other projects PO determines the period of minimum post-completion operation, ensures its description in the call for proposals and includes it in the project contract. PO ensures that the determination of this period is guided by the aim of promoting the sustainability of the project and of ensuring that the financial support provided to the project generates the maximum benefits to its target group and beneficiaries. - PO shall ensure elaboration and implementation of procedures on prevention, detection and correction of cases of double financing under the projects. PO’s relevant procedures will ensure that the analysis of the risk of double financing at all stages of project implementation including project proposal evaluation. - With reference to Art. 4.8 of the Regulations on the implementation of the EEA FM and NFM 2009-2014 PO shall ensure that the set up management and control system includes detailed description and implementation of reporting and monitoring procedures for preventing, mitigating, detecting, reporting on and remedying irregularities and for the recovery of amounts unduly paid. A summary of irregularities under the projects shall be submitted from the PO to the CA signed electronically no later than the date of submission of the interim financial report containing as a minimum the following information: ID number and name of the project, irregularity, debt. - In case the co-financing rate laid down in the Programme and/or the Programme Agreement is covered by the budget of the Project Promoter the PO and the NFP shall ensure that the Programme Implementation Agreement concluded between them clearly states the co-financing committed by the PPs and the responsibility of the PO to verify real disbursement during the programme implementation. - The PO shall provide information by electronically signed documents on the audit reports as well as the status of implementation of the audit recommendations following audits performed no later than the date of submission of the interim financial report. A copy of audit reports by the Audit Authority and EFTA Board of Auditors/FMC/NMFA under the programme shall be provided to the CA within 5 days after reception. - A copy of annual audit report setting out the findings of the audits carried out during the previous 12 month-period of each year pursuant to article 4.6, p 1, (e), (i) shall be requested by the CA from the AA in order to ensure the fullness of the information as regard the audits conducted during the calendar year. - At the latest by 31 January, 30 April, 31 August and 30 November each year, the POs shall send to the CA, in a format provided in Annex 7 of the Regulations a
27 justified forecast of likely payment applications for the remainder of the current financial year and subsequent financial years. - The POs shall comply with the Information and Publicity Requirements set out in Annex 4 to the Regulations. It shall provide information on the existence, the objectives, and the implementation of the programme, as well as on the cooperation with Donor State entities. The POs shall ensure in line with Art. 4.7 of the Regulations, p.1 (c), (k), (r) and p.3 that: The expenditure declared by PP has actually been incurred and are in compliance with the Regulations, the relevant programme agreement and the applicable national and EU Law; For projects financed under the EEA FM and NFM 2009-2014 PP maintain a separate accounting system or an adequate code; The PP are fully committed to implement the projects with the necessary capacity; The PP fulfil their information and publicity obligations in accordance with the Information and Publicity Requirements in Annex 4. The POs shall ensure that advance payments to the Project Promoters are adequately guaranteed. 3.4. Regarding the certification of expenditure under the Technical Assistance & Bilateral Funds at National Level the NFP is responsible for setting up of a management and control system for the verification of expenditure incurred under the various measures and activities under both grant schemes. The vertical and horizontal aspects of the certification process are based on the establishment of organisational structures in the parties – NFP, CA and AA, that ensure independence and functional separation of duties and responsibilities on the implementation of the various measures and activities from the duties and responsibilities between the parties on the implementation of the EEA FM and NFM 2009-2014. Certification process under Technical Assistance & Bilateral Funds at National Level applies identical principles and requirements as described which is the basis for gaining of reasonable assurance necessary to certify expenditure under the Technical Assistance & Bilateral Funds at National Level of the EEA FM and NFM 2009-2014. The elaboration and implementation of procedures for review and control carried out by the NFP in the process of verification of expenditure are applied by execution of control checks set up in relevant checklists where applicable and are described in detail in the internal rules and procedures formally endorsed by the Secretary General of the CoM. In addition the NFP shall: - following FMC/NMFA`s decision on a programme in accordance with article 5.3 of the Regulations submit to the CA a copy of the relevant programme decision and the annexes thereto where the maximum amount of the programme grant, the programme grant rate and the estimated eligible cost of the Programme are specified; - notify and submit in a timely manner a copy of the signed programme agreement concluded between the FMC/NMFA and the NFP and programme implementation agreement concluded between the NFP and the PO and any approved modifications according to article 5.9 of the Regulations.
4.3. Cash flow process Servicing bank for EEA FM and NFM 2009-2014 is Bulgarian National bank (BNB).
28 The incoming funds from EEA FM and NFM 2009-2014 in EUR are received in a separate bank account for each FM in BNB and are automatically exchanged in Bulgarian leva using fixed ratio (1 EUR = 1.95583 leva). The co-financing provided by the CA also is lodged in that account. The whole sum for each FM is transferred to the account for limits of the respective FM. Ministry of Finance opens 10-digit codes in SEBRA (system for electronic budget payments) for each programme area, by which payments will be made under the respective FM.. For the programme areas, financed by both FMs two 10-digit codes are opened. Every PO and the NFP for the TA&Bilateral Fund takes the necessary steps for opening of a bank account which corresponds to the respective 10-digit code. Within 15 days after receipt of funds from the FMO the CA puts limits for payments on the applicable 10-digit codes in SEBRA and the POs may order payments, which should be approved technically in SEBRA by an authorized person in the CA. According to the Article 8.7 of the Regulation on the implementation of the European Economic Area (EEA) Financial Mechanism 2009-2014 any interest generated should be declared to the FMC/NMFA within three calendar months after year-end. Since 1997 when the BNB Governing Council took a decision all the current accounts opened in the BNB (which is the case of the EEA FM and NFM accounts) are not interest bearing. Because of that fact paragraph 2 of Article 8.7 of the Regulations is not applicable and POs should not take the steps described in it. For fulfilling its obligations concerning yearly declaring of the interest generated CA will prepare and send declarations to the FMC/NMFA with zero interest generated. According to the decision of the BNB Governing Council, all the current accounts (which is the case of the EEA FM and NFM accounts) are not interest bearing. EEA FM/NFM Flow of funds
Account for receipt of funds Account for 10-digit code in limits Account FM EEA / SEBRA + account NFM (EUR)
CA CA (account (account holder) Limit with approval Programme operator Beneficiary BGN holder) BGN of payments (BGN) (BGN)
National co- financing (BGN) 4.4. Accounting Scope: In the accounting system should be reported the receivables from the FMO under the programmes and the corresponding co-financing, ensured by the State Budget, the transactions and operations of putting limits for payments, payments under the programmes as well as the recovered funds by the Beneficiaries.
29 The accounting system ensures analytical financial reporting depending on the source of financing-FMO commitments and national co-financing contribution. Positions and responsibilities: The accounting records are within the responsibilities of the accountants and the control of operations is under the responsibility of the respective Senior Accountant or Head of Department. Accounting system:Accounting of transactions is done in the accounting system SAP. Each accounting record entered in the system corresponds to a relevant primary document, that is accounted and referenced with the respective signature.The accounting registers are clearly defined (numbered). Entries in the accounting balance are posted to the ledger, broken down in accordance with the chart of accounts number. To ensure protection of accounting information, the access to the accounting software is controlled by user password. The system allows different access levels depending on the functions, responsibilities and authorities of the users. Full access to the system is defined only to the accountants. The rest of the staff, which is only supposed to use the system information, is defined in the system with read-only rights. Chart of accounts: For the accounting purpose related to Financial Mechanism of EEA and Norwegian Financial Mechanism, the responsible authorities must use an analytical Chart of accounts based on the Chart of Accounts, applicable for the state enterprises, approved by the Minister of Finance. Consolidation: For the purposes of the reporting to the relevant authorities the National Fund Directorate is responsible for consolidation of the accounting information of POs and acts as a consolidation unit in line with the requirements of the applicable guidelines of the Ministry of Finance. The Programme operators must report to the NF Directorate all expenditures made on monthly and quarterly basis in relevant reports under United Budget Classification (UBC) following the instructions given by the State Treasury Directorate of the Ministry of Finance as well as through periodic trial balances and balance sheet. Accounting Organization at Programme operators (POs) level The POs are responsible for the elaboration of an accounting policy in compliance with the national legislation and the specific requirements of the application of the rules, set in the Regulation of Financial Mechanism of EEA and Regulation of Norwegian Financial Mechanism. Prior application, the POs submit the Accounting policy to the NF Directorate for information and comments, if such. The POs apply a Chart of accounts, based on that, set by the NF Directorate. The POs ensure that all information is recorded in the accounting system on the basis of Typical Accounting Entries developed and provided by the NF Directorate. The POs ensure that all primary documents and/or documents with equivalent probative value are transmitted to the respective officer, responsible for the accounting process and all recorded documents are numbered with a system identification number. The POs ensure cross-referencing of each document, which shall consist of number of the account debited, amount in BGN (incl. the analytical level, where applicable) and number of the account credited, amount in BGN (incl. the analytical level, where applicable). The POs ensure as a minimum the following documented accounting reconciliations: Reconciliation of the financial statements vs. accounting information; Monthly reconciliation of records of balance of limits vs. the information in SEBRA;
30 In case of corrective accounting operations, the POs apply a correction procedure, showing the nature of the correction and the reasons causing it. Reporting: The POs prepare reports for cash execution under the UBC on the basis of the accounting information. The reports under the UBC shall be submitted by the 3rd working day after the end of the reporting month for the monthly reports and by the 5th working day after the end of the reporting period for the quarterly reports in an electronic format to the address [email protected] singed with an electronic signature according to the Electronic document and electronic signature Act. The POs prepare and submit to the NF Directorate a Trial Balance and a Balance Sheet, that should be send up to the 15th working day following the reporting quarter with exception of the annual financial statement for which the deadlines are further defined. POs send to the the NF Directorate a Trial Balance, generated by the accounting system SAP for a monthly reconciliation of turnover and balances, up to the 10th working day after the end of the reporting period. The POs informs the NF Directorate on the results of the monthly reconciliation of the balance of limits and on potential variances between the information in SEBRA system and the accountancy of the POs not later than the 7th working day of the month following the reporting period. The NF Directorate has the right to request additional accounting information, which shall be submitted by the POs within 5 working days from the date of the request. SAP Application: The POs records in the SAP system all transactions related to the programmes, financed with the funds from the National Fund. Each POs is defined in the SAP system with a separate company code, allowing the input of information for the respective programme/s. The Head of the PO sends a written request to the NF Directorate for setting up in the system of user’s profiles for the staff of the respective institution.The setting up, amendment and deletion of user’s profiles in the system, as well as all activities related to the system administration, are within the competence of the Ministry of Finance. The administration of SAP, including the training of the newly recruited staff is carried out by the Ministry of Finance. The accounting period in the SAP system is closed on the 7th working day of every month, following the respective reporting period, automatically by the SAP administration team at the Ministry of Finance. The re-opening of already closed reporting periods is carried out upon request in an electronic format from the Head of the POs to the NF Directorate. Upon receipt of the request from the POs for re-opening of already closed accounting periods, the SAP administration team carries out the required actions by the end of the working day, following the day of the request’s receipt. The re-opened accounting period upon request of the POs will be closed again by the SAP administration team on the 7th working day of the month or at the last working day of the month during which the request for re-opening is received – whichever deadline is earlier.
5. MODIFICATION OF PROGRAMMES
Programmes may be modified in one or more of the following cases:
31 - in order to respond to unforeseen events; - to take into account the conclusions of the review of the implementation framework at the annual meetings; - in order to take into account conclusions from evaluations; - to introduce amendments necessary to enhance the impact of the programme or to mitigate risks and implementation difficulties.
Procedure for programme modification
Initiated by the PO
1. The PO prepares and submits to the NFP justified request for modification of the programme with relevant supporting documents, incl. detailed description of the likely impact of the proposed modification on the budgets, outputs, outcomes, indicators and risk assessment. 2. The NFP reviews the request for modification and provides its feedback (provisional approval or request for additional infromation) within 10 working days. 3. Upon provisional approval of the requested modification, the NFP submits the request to the FMC/NMFA and notifies the PO; 4. The FMC/NMFA in consultation with the NFP makes an assessment as to whether the proposed modification represents a substantial change (such that affects overall objective or the outcome of the programme or conflicts with recommendations and comments of the EC as part of screening of the programme proposal) that would require screening by the European Commission (art.5.10). 5. The FMC/NMFA shall assess the proposed modification and in case of positive opinion, FMO issues a consolidated draft version of the Programme Agreement Annexes which is submitted electronically, via Doris, for approval of the NFP. 6. The modification shall be considered as formally approved after accepting by the NFP of the new version of the Annexes to the Programme Agreement in Doris. The new approach towards programme modification formalisation, described in p. 5 and 6 was established by the FMO Guidelines, submitted to the NFP on 15 August 2013. 7. The NFP shall ensure that the PO is duly informed on the approved modification and that it is formally noted at the annual meeting.
Initiated by the NFP
In cases where the programme modification leads to reducing the programme’s budget/grant awarded to the programme, the NFP may initiate reallocation of the funds available as a result of the programme modification to other approved programmes.
The request shall be consulted and agreed with the Programme Operators of all programmes that would be concerned by such reallocation.
32 The agreed request shall be submitted with a respective justification to the FMC/NMFA for approval. Such allocation must be completed and formalised no later than 31 October 2014.
The PO receiving the funds shall allocate the funds in accordance with art. 6.9 of the Regulations.
6. MONITORING OF AND REPORTING ON THE IMPLEMENTATION OF PROGRAMMES
Monitoring at project level is a full responsibility of the Project promoters and the PO.
Monitoring at programme level is a responsibility of the PO and the NFP.
Monitoring at the level of achievement of the objectives and outcomes at the level of the EEA FM and the NFM is a responsibility of the NFP.
6.1 Monitoring at project level
Monitoring and evaluation at project level is based on relationship between goals, inputs, underlying actions, results and actual impacts of the project. The monitoring process is performed by the Project promoters and the PO through the following instruments: -Periodic progress reports; -Conducting on-the-spot checks; - Assessing the administrative capacity of beneficiaries; - Assessment of results achieved under the defined indicators; - Regular coordination meetings; - Meetings of the Monitoring Committee; - Independent monitoring and evaluation at project level;
6.2. Monitoring and reporting at programme level
Monitoring at programme level by the NFP has the objectives to verify programme’s progress towards defined objectives and outcome on the basis of agreed indicators. - Technical and financial progress towards approved timeline and financial plan; - Progress towards achievement of indicators; - Degree of achievement of expected outcomes.
The monitoring takes place on the basis of: - participation in the Cooperation Committees and Steering Committees (where such are envisaged to be established) and ad-hoc working/technical meetings; - Annual Report, reports from on-the-spot monitoring carried out by the PO, etc.; - Regular monitoring; - on-the-spot monitoring.
33 In case that the monitoring performed by the PO has detected problematic issues and given rise to corrective actions, the NFP will require follow-up on the implementation of the corrective actions agreed.
6. 3 On-the-spot monitoring of the NFP
NFP will perform on-the-spot monitoring on a sample of projects across the programmes, as the selection will be made with the following considerations: - all pre-defined projects from the MoUs; - all pre-defined projects approved by the FMO under the procedure for programmes’ approval; - Large projects selected as a result of Calls for Proposals, for which difficulties with implementation have been identified in the framework of the respective Steering Committees and/or Cooperation Committees; - - A sample of at least 10% of other projects selected on a random basis; - The special funds managed by the PO – bilateral funds, complementary actions, use of management.
The on-the-spot monitoring will cover: review of relevant documentation; review of delivered and installed equipment, construction/reconstruction activities, other evidence for implementation of activities with regard to their specificity.
The NFP will give at least one week notice to the PO and the project promoters about planned on-the-spot visits. The NFP is entitled to carry out also on-the-spot checks without preliminary notification. Within 10 working days after its on-the-spot monitoring visit, the NFP prepares a monitoring checklist (Annex 1) which provides findings and recommendations for corrective actions, if considered necessary.
6.4 External monitoring Without prejudice to the monitoring carried out by the NFP or the PO, the FMC or/and NMFA may select programmes for external monitoring. The FMC or/and NMFA shall inform the NFP and the PO about any planned monitoring two weeks in advance.
EFTA Board of Auditors 1. The EFTA Board of Auditors may conduct audits of all programmes and projects funded by the EEA FM 2009-2014 as well as the management of the EEA FM 2009-2014 in the Bulgaria. The Beneficiary States’ representatives shall, upon request, accompany the auditors and provide them with all the necessary assistance. 2. The EFTA Board of Auditors shall, except in urgent cases, give two weeks’ notice to the FMC/NMFA and the NFP concerned before an audit is carried out.
The Office of the Auditor General of Norway The Office of the Auditor General of Norway may conduct audits of all programmes and projects funded by the NFM
34 2009-2014 as well as the management of the NFM 2009-2014 in Bulgaria. The NFP’s representatives shall, upon request, accompany the auditors and provide them with all the necessary assistance.
Audits and on-the-spot verifications arranged by the FMC 1. Without prejudice to the audits carried out by the Audit Authority, the FMC/NMFA may arrange audits and on-the-spot verifications of programmes and projects, and to verify the effective functioning of the management and control systems in Bulgaria. The NFP’s representatives shall, upon request, accompany the authorised representatives of the FMC and provide them with all necessary assistance. 2. The FMC/NMFA shall, except in urgent cases, give two weeks’ notice to the NFP and the PO concerned before an audit or on-the-spot verification is carried out. 3. The NFP and the PO shall be given an opportunity to provide comments to an audit report before it is finalised.
Access For monitoring purposes and in the context of received complaints / signals, POs are obliged to provide NFP with information / documentation, related to the implementation of the respective program within the specified deadline. The persons performing audits or on-the-spot verifications according to this chapter shall upon request be granted prompt, full, and unimpeded access to all information, documents, persons, locations and facilities, public or private, relevant to the audit or the verification. Such access shall be subject to the applicable limitations under national legislation of the Beneficiary State. The auditors shall enjoy the same rights as those extended to equivalent authorities of the Beneficiary State itself.
7. REPORTING
7.1 Reporting obligations of the PO
Final date of eligibility of expenditures for projects: This date is stated in the project contract. This date can be no later than 30 April 2016 for non-extended projects, 30 September 2016 for projects under the scholarship programmes, and no later than 30 April 2017 for extended projects
Annual Programme Report
The PO shall submit to the NFP by 15 January on each calendar year a draft Annual Report prepared in accordance with the requirements of art.5.11, paragraph 1 of the Regulations. The NFP shall provide its comments and proposals on the report within 10 working days. The revised version of the report is subject to final consultation with the NFP before being submitted, via Doris, to the FMC/NMFA by 15 February of the respective calendar year.
Final Programme Report
35 The PO shall submit a draft Final Report to the NFP for comments within two months from the completion of the last project but not later than 31 May 2017 for non-extended programmes and 31 January January 2018 for extended programmes. The NFP shall provide comments within 5 working days. Revised version of the Final Report shall be submitted to the CA for certification of the financial annex to the report with a copy to the NFP no later than 20 calendar days before the deadline for submission of the report to the FMC/NMFA as provided in paragraph 1 of Art. 5.12 of the Regulations (no later than 28 February 2018) In case of projects that received an extension and were not reported as completed in the Final Report will be followed a strict approach described in Article 7.14.6 of the Regulation .A Programme is completed when the Donors have approved the final programme report (FPR) (Article 5.12.3) and all the outstanding financial obligations have been settled. According to Article 5.12.2 of the Regulations, the final programme report must be forwarded to the Donors by the Certifying Authority within three months of the completion of the last project under the programme (i.e. approval of the last project by the PO), and not later than two months after the final date of eligibility of programme management costs.
7.2 Reporting obligations of NFP
In accordance with Art. 2.2 of the Regulations the NFP is obliged to submit to the FMC/NMFA by 31 March on each calendar year a Strategic Report (Annex 3 to the Regulations) on the implementation of the EEA FM and the NFM 2009 – 2014. No later than 31 January each year, the Certifying Authority shall provide summary of the expenditures incurred under each programme.
The Strategic Report shall be based on information provided in the Annual Reports submitted by POs and shall furthermore provide: - an assessment of the contribution of the EEA FM and the NFM 2009-2014 towards the reduction of social and economic disparities in Bulgaria; - an assessment of the contribution of the EEA FM and the NFM 2009-2014 towards strengthening of bilateral relations with the Donor States; - an assessment of the efficiency and the effectiveness of the national management and control structures established Bulgaria; - information on preparation and subsequent implementation and progress of the programmes within the programme areas set out in the implementation framework, including financial figures; - the results of audits, reviews and evaluations carried out, and the plans for audits, reviews and evaluations for the next reporting periods; - the results of monitoring carried out and the monitoring plan for the next reporting period; - a summary of actual outputs and an assessment of progress towards expected outcomes for each programme;
36 - an assessment of the implementation of the communication strategy, in accordance with the Information and Publicity Requirements ; and - a summary of irregularities detected and the measures taken as well as a summary of complaints received under the complaint mechanism referred to in Article 11.8 of the Regulations.
The Strategic Report shall provide the basis for the discussions at the Annual Meeting and shall be subject of approval by the FMC/NMFA at the meeting.
Final Strategic Reports shall be prepared by the NFP and submitted to the FMC/NMFA within six months of the FMC/NMFA approval of the last final programme report, but not later than30 June 2018. ).
8. EVALUATION
Evaluation will be used as a management tool to support assessment of the relevance, efficiency, effectiveness and impact of the programmes, the degree of achievement of expected outcomes as well as the decision making process concerning the need to undertake corrective actions, incl. programmes’ modifications and reallocation of funds between programmes with the purpose to improve overall programmes’ performance.
In accordance with Art.9.1 of the Regulations the NFP is responsible to secure that programmes are subject to evaluation. Envisaged in the framework of BG 01 Technical Assistance and Bilateral fund at national level is the conduct of at least two comprehensive evaluations of the two financial mechanism as well as horizontal/thematic evaluations across programme areas. An evaluation plan is to be elaborated by the NFP and presented as a part of the Strategic Report to be approved at the Annual meeting.
Evaluations will encompass the following stages:
1. Preparation of Terms of Reference and organization of a public procurement procedure for contracting external (independent) evaluator; 2. Conduct of the evaluation and delivery of draft evaluation report; 3. Submission of the draft evaluation report to the NFP for comments; 4. The NFP shall disseminate the draft evaluation report to all relevant stakeholders (FMC/NMFA, PO, CA, AA, other relevant institutions, the Monitoring Committee) – to be provided within 10 working days; 5. Consolidated comments shall be provided by the NFP to the external evaluator within 15 working days from the submission of the draft report; 6. Final version of the evaluation report to be submitted to the NFP within 10 working days from the submission of consolidated comments; 7. The NFP shall disseminate the final evaluation report, incl. recommendations, to all relevant stakeholders and will schedule a Debriefing meeting for discussing the recommendations; 8. The final evaluation report will be submitted to the FMC/NMFA.
37 9. AUDIT TRAIL
With the purpose of securing the implementation of the principles of sound management and in compliance with the requirements of Art.4.1, paragraph (g) of the Regulations, the entities responsible at national level will ensure proper keeping and archiving of all documentation, related to the management of the programmes, and in particular: All official correspondence exchanged between the above said entities and any other bodies, engaged in the management of the programmes or having competences on issues directly relevant to the programmes’ implementation; Correspondence exchanged through e-mail of official character, directly concerning programme management issues; All official and e-mail correspondence exchanged with the FMO; Minutes from the sessions of the Monitoring Committee; Minutes from the sessions of the Annual meetings; All documentation related to reporting obligations, verification of expenditures and payments/transactions made with regard to the TA and BF; All monitoring reports, incl. from on-the-spot monitoring and all audit reports; All documentation related to selection of contractors under the TA.
10. IRREGULARITIES
10.1. Irregularities – main principles
The NFP and the Programme Operators shall make every effort possible to prevent, detect, and nullify the effects of any cases of irregularities in accordance with Chapter 11 of the Regulations for implementation of the EEA Financial Mechanism and Norwegian Financial Mechanism 2009-2014. Any suspected and actual cases of irregularities shall be investigated promptly and efficiently, and properly remedied, including making any financial corrections that may be appropriate. Unduly paid amounts shall be recovered and reimbursed in accordance with the Regulation and the programme agreements. The definition of irregularity is in accordance with Art. 11.2 of the Regulation.
10.2. Reporting of irregularities
In accordance with Annex A of the Memoranda of Understanding for the implementation of the EEA Financial Mechanism and the Norwegian Financial Mechanism, the National Focal Point shall perform the functions of a national public entity responsible for the preparation and submission of the irregularity reports in accordance with Art. 11.3 of the
38 Regulation. The National Focal Point shall designate an irregularity officer responsible for the preparation and submission of irregularity reports.
The Programme Operators shall report to the National Focal Point on all irregularities, their investigation and any remedies taken. The Programme Operators shall designate expert(s) responsible for the coordination with the NFP and reporting of irregularities in order to ensure rapid, accurate and full reporting.
The National Focal Point shall perform immediate and regular reporting to the FMO on all suspected and actual cases of irregularities.
Regular Reporting of irregularities
The regular reporting is based on reports by all Programme Operators that shall be received not later than one month of the end of the respective quarter. The National Focal Point shall submit the irregularity report to the FMO within two months of the end of the respective quarter describing any suspected and actual cases of irregularities discovered during the respective quarter and which have been subject of a primary administrative or judicial finding. In case there are no irregularities detected during the reporting period the NFP should inform the FMO of this within the same deadlines. Together with each report on new irregularities the National Focal Point shall report to the FMO on the progress made in the investigation and remedy of the previously reported irregularities. This information should be presented by the respective Programme Operators to the NFP within one month after the end of the respective quarter.
Immediate Reporting of irregularities
The NFP shall report immediately to the FMO all suspected and actual cases of irregularities when any of the following applies: They involve allegations of an act or omission which constitutes a criminal offence under the national legislation, such as corruption, fraud, bribery or embezzlement; They indicate the presence of serious mismanagement affecting the use of the financial contribution or They pose an immediate threat to the successful completion of the project, due to the amounts in proportion to the total project costs, their gravity or any other reason.
The responsible experts of the Programme Operators should report to the National Focal Point immediately after detecting the suspected or actual case of irregularity.
All experts within the Programme Operators and all experts within the National Focal Point shall be obliged to submit signals to the respective administrative structures after detected or suspected irregularity. The Irregularity officers of the Programme Operators should be responsible for preparation of Irregularity report. The Irregularity reports should be approved by the Programme Operators and sent to the National Focal Point immediately. When the suspected irregularity concerns the Programme Operator or the Irregularity Officer the
39 experts of the respective administrative structure shall be obliged to submit signal directly to the National Focal Point.
All administrative structures shall be responsible to grant access for submission of signals for irregularities within their official internet sites.
An option for complaints about suspected non-compliance with the principle of good governance and irregularity (“irregularity button”) shall be made available at the NFP web-site.
Reporting on irregularities upon request
The National Focal Point shall report upon request from the FMO within one month on irregularities described in Art. 11.7 of the Regulation: a) cases where the irregularity consists solely in the failure to implement a project, in a whole or in part, owing to the bankruptcy of the Project Promoter; b) cases brought to the attention of the Programme Operator, National Focal Point or the Certifying Authority by the Project Promoter voluntarily and before detection of any of them, whether before or after the payment of the project grant related to the irregularity; c) cases which are detected and corrected by the Programme Operator, National Focal Point or Certifying Authority before any payment to the Project Promoter if the project grant and before inclusion of the expenditure concerned in an interim financial report or final programme report.
In above cases the Programme Operators or the Certifying Authority shall present the respective information within 15 days from the NFP letter informing on the FMO request.
The irregularity officer of the National Focal Point/Programme Operators should maintain a register of all cases of irregularities and all signals of irregularities. Information of irregularities on the basis of which a procedure for registering of irregularities could be launched can be: a) a signal outside from the institutions – e.g. external control entities, FMO, media, individuals etc.; b) a signal within the institutions – e.g. from internal control entities, internal audit, officials as a result of checks performed in accordance with the respective requirements etc.
The complaint review procedure performed by the NFP is as follows:
Upon receiving a complaint about irregularities, the Head of the NFP assigns the irregularity officer to check the data contained in the complaint and establish the presence or absence of irregularity. In relation with the complaint a correspondence to the Programme Operator and/or the other competent authorities shall be prepared to request an opinion on the reported irregularity.
40 The answer shall be reviewed by the irregularity officer and the expert in charge of the respective programme area. If considered necessary, the opinion shall be consulted with a lawyer and a financial expert. In case there are any issues to be clarified a monitoring-on-the-spot can be conducted to establish all the facts related to the reported irregularity.
In case the claimed circumstances are confirmed by the respective checks as well as in accordance with the definition of irregularity the procedure for registering and reporting of irregularity should be launched.
In case the claimed circumstances are not confirmed by the respective checks as well as in accordance with the definition of irregularity the irregularity shall not be reported. In this case the irregularity officer and the expert in charge of the respective programme area shall prepare feedback to the person having submitted the signal/complaint that shall be presented for signature by the Head of the NFP.
NFP shall submit feedback to the person having submitted the signal/complaint within three months of the date of its submission.
Where the irregularity could be classified as suspicion of fraud the signal to the Prosecution office shall be sent.
The irregularity report should be prepared in three originals – one for the irregularity dossier and the remaining two – for the National Focal Point. The irregularity report is in a format as per Annex 5 of the Regulations.
The Programme Operators shall be responsible for organizing the process for timely submission of information for the purposes of the accounting of the cases of irregularities with financial impact.
The Programme Operator shall inform the National Focal Point and the Certifying Authority on the irregularities that have been accounted. The Programme Operators shall officially request from the Project Promoters the reimbursement of all amounts under registered irregularities and/or unduly paid amounts. The Programme Operators may deduct the unduly paid amount, including the interest, from the subsequent amounts for which the Project Promoter is allowed.
In case the Project Promoter cannot recover the amounts within the said deadline, the Programme Operators shall inform the National Revenue Agency for the necessity to take actions for collection of receivables in accordance with the applicable procedure in the national legislation. The receivables that occur as a result an administrative act are public state receivables and shall be collected in accordance with the Tax-Insurance Procedure Code.
41 The receivables that occur as a result of a contract are private state receivables and they shall be collected by the National Revenue Agency in accordance with the Civil Procedure Code. In case the Project Promoter and the National Revenue Agency recover the due amounts, the Programme Operator shall present to the National Focal Point and the Certifying Authority written information on the recovered amounts. The Programme Operators shall present additional information related to irregularities or fraud upon request by the NFP, Certifying Authority and Audit Authority. The registering of irregularities and recovery of unduly spent amounts under the Technical Assistance and the Bilateral Fund shall be performed by the National Focal Point. All correspondence related to irregularities should be copied to the Certifying Authority that shall recover the unduly paid amounts to the FMO.
11 . INFORMATION AND PUBLICITY The main activities of the NFP with regards to securing the information and publicity widespread of the support received under the EEA Financial Mechanism and the Norwegian Financial Mechanism are described in the Communication Strategy prepared by the NFP and approved by the FMO.
The Programme Operators shall inform the NFP at least two weeks in advance for any public events, organised under the programme and shall invite representatives of the NFP for participation. Information and photos on all public activities shall be provided to the NFP for publication on the internet.
The designated Communication Officer for every Programme shall provide the NFP with information on the level of implementation of the Communication Plan for the respective programme and shall coordinate future steps and ideas on fulfilling the information and publicity requirements.
The NFP shall be informed and provided with electronic or hard copy of any information regarding the programme, that is published in the media. Information regarding the different Programme Areas shall be made available with a link directing to the respective internet site of the Programme Operator for the respective programme.
The NFP shall be provided with samples of all publicity materials printed by the Programme Operators.
The appropriate contact details will be provided, including information on the National Focal Point, in order to facilitate the submission of questions regarding the Financial Mechanisms. When answering general questions regarding the mechanisms, the information is put together by the NFP and where needed, the information is communicated with the other involved parties.
42 Aiming for a better visibility of the programmes, the Communication Officers designated by the Programme Operators shall participate in networking sessions with the NFP in order to determine the next steps that are to be taken when fulfilling the information and publicity obligations.
12. AUDIT 12.1. Description of procedures for monitoring the implementation of recommendations and corrective measures resulting from audit reports
The follow-up procedures for monitoring the implementation of recommendations and corrective measures are described in details in the AEUFEA’s Audit Manual. The last, amended version of the Audit Manual is approved by the Executive Director of the Agency in March 2016. The follow-up procedures for monitoring the implementation of recommendations and corrective measures are briefly summarised below: After the completion of the fieldwork, a preliminary audit report is prepared. A deadline for submission of comments by the auditees is given. The preliminary report is presented to the head of the audited entity with a protocol that has to be signed by the audit team leader and the head of the audited entity. The protocol shall include the date of submission of the audit report, since the time available for submitting written opinion on the report by the audited entity starts from that date. The final audit report is prepared after receiving the written comments (if any) from the audited entity (after expiration of the deadline given) and reflects the eventual amendments in the preliminary audit report upon analysis of the comments of the audited entity. These comments are included in a separate section in the final audit report. The final audit report contains an additional section where an overall conclusion on the auditees’ comments is presented. The Audit Authority performs follow up of implementation of recommendations given to the audited entity. Should the report contains findings and recommendations that require action from the auditee to rectify shortcomings, the Audit Authority conducts a follow-up audit as a planned audit engagement for follow-up, or if appropriate, within the next audit engagement at the institution/body in question. The Audit Authority issues the annual audit report and opinion based on the audit results and the status of implementation of recommendations given (rectification of the shortcomings). In addition, in order to ensure prevention, detection and correction of errors and irregularities, the AA includes information on irregularities, detected in audits under its responsibility, in its reports and provides the respective information to the respective entity designated for preparation and submission of irregularities reports (the National Focal Point, according the Memorandum of understanding on the implementation of the European Economic Area Financial Mechanism 2009- 2014 and the Memorandum of understanding on the implementation of the Norwegian Financial Mechanism 2009- 2014).
43 12.2. Description of the procedures for the supervision of the work of other audit bodies under the responsibility of the Audit Authority, if applicable
Audit authority envisages to perform the audit activity as provided in Article 4.6, para 1 of the Regulations, without using outsourcing options. If there is need for specific expertise or additional capacity, the AEUFEA may engage experts or outsource audit engagements. Such activities will be financed by technical assistance project BG01 “Technical assistance fund and bilateral relations at national level”, co-financed by the EEA FM and NFM 2009 - 2014. The Audit Authority is responsible for the quality of the implemented activities in cases of hiring of external auditor and must guarantee that the work of the external auditor: • is in line with the internationally accepted auditing standards; • is in line with the Audit Strategy; • is in line with the regulatory frame and • can be of use for the annual audit report and opinion.
The Audit Authority, in line with the internationally accepted auditing standards, the Guidance note on the concept of reliance on the work of other auditors of DG “Regional Policy” of the European Commission and following the approved methodology of AEUFEA, will follow the procedures in order to guarantee that the quality of work of the external auditors is acceptable and adequate and that the audit is made in line with the internationally accepted auditing standards.
The Audit Authority carries the final responsibility for the quality of the audit activities, the annual audit report and opinion. The strategic audit planning of the audit activities their coordination, as well as the issuance of annual audit report and opinion, shall not be delegated and the responsibility for the implemented audit activities and the made audit conclusions remain with the Audit Authority.
12.3. Annual audit report and closure declaration
With regard to the requirements of Article 4.6, paragraph 1 (e) of the Regulations by 31 December each year from 2012 to 2017 the Audit Authority should present to the FMC/NMFA the following documents: annual audit report setting out the findings of the audits carried out during the previous 12 month-period ending on 30 June of the year concerned as well as any shortcomings found in the systems for the management and control of the programme. The first report shall be submitted by 31 December 2012 and shall cover the period up to 30 June 2012. The information concerning the audits carried out after 1 July 2017 shall be included in the final audit report supporting the closure declaration; an opinion on the basis of the controls and audits that have been carried out as to whether the management and control system functions effectively, so as to provide a reasonable assurance that statements of actual expenditure incurred presented to the FMC/NMFA are correct and as a consequence reasonable assurance that the underlying transactions are legal and regular;
44 a closure declaration assessing the validity of the application for payment of the final balance claimed in the final programme report, at the latest by 31 December 2018. The annual audit report contains information about the extent of the work performed, the implemented audits of the systems and audits of the operations (projects), information about findings and recommendations, and the implementation of recommendations from previous years, and conclusions about whether the management and control system is functioning effectively so as to provide sufficient assurance that statements of actual expenditure incurred presented to the FMC/NMFA are correct and, as a consequence reasonable assurance that the transactions forming the basis for issuing the audit opinion are legal and regular. 13. Amendment and complement of the Management and Control Systems The Management and Control Systems of the EEA Financial Mechanism and the Norwegian Financial Mechanism 2009-2014 could be amended and complemented in case of a justified need to carry out the change. The change is reflected in the Management and Control Systems by the National Focal Point and approved by the Head of the National Focal Point.
45