Coordinated control of funds earmarked for financing projects carried out under the Operational Programme for Cross-Border Cooperation Czech Republic - Republic of Poland 2007-2013
INTRODUCTION
The emerging community of the people of Europe is the driving force behind cross-border cooperation as an integral part of the wider territorial cooperation that has been part of our lives for the last 20 years.
So let this community give the opening statement on this joint report by the two highest control institutions of neighbouring countries:
"185 million EU citizens (37% of the population) live in border areas.
These areas are usually underdeveloped and peripheral territories, often remnants of darker parts of Europe's history.
The main objective of cross-border cooperation is to help mitigate the existence of borders as administrative, legal and physical barriers, and to further facilitate the development of the dormant potential of border regions.
The programmes cover different border regions: some cover coastal areas, other inland borders within the EU or borders shared with candidate countries.
Most of the programs are bilateral, but some include more than two neighbouring countries."
The programmes last for seven years and a total of EUR 5.7 billion is earmarked for them from the EU budget.
"The programmes include the following activities: repair and reconstruction of cross-border roads, cycling trails and bridges, investments in cross-border waste management systems, health facilities, research centres, flood control measures, etc., joint management of natural sites or the development of tourist destinations, development of common services for the local population, advice on employment issues, the creation of thematic networks and clusters for innovation.
Support from the programme is provided on condition that organisations from both sides of the border (such as regional authorities, universities or SMEs) come together to implement projects based on the needs of the border region.
Representatives of cooperating regions, relevant ministries and other local partners meet regularly and decide which projects to be supported.
This system should lead to a sustainable form of cooperation even after the programme itself has ended.
The funds shall be provided on condition that the project partners from both sides of the border cooperate in a way that fulfils at least two of the following four characteristics: joint preparation, joint implementation, joint staff, joint funding."
Within the framework of the partnership, the tasks and responsibilities for the preparation, implementation, funding and control of the activities of the project are clearly defined and distributed to the relevant partners.
The main attributes of the partnership include: joint choice of management partner, joint project preparation and application, conclusion of a joint partnership agreement signed by all partners, assuming overall responsibility for the implementation of the project by the lead partner, the overall support payments are accepted by the lead partner and carry out their transfer to the relevant project partners.
Eligible projects carried out on the territory of the regions and voivodeships adjacent to the common border may be supported.
OBJECTIVES AND SCOPE CONTROL
On 11 December 2007, the European Commission (EC) approved the Operational Programme of Cross-Border Cooperation Czech Republic – Republic of Poland 2007-2013 (OPPS ČR-POL).
The implementation of the operational programme was allocated €258,187,467.
The total sum included a contribution from European funds (ERDF) totalling €219,459,344 (85%), which must be exhausted by the end of 2015.
Financial data on the use of EU funds from the Operational Programme for Cross-Border Cooperation The Czech Republic - Republic of Poland 2007-2013 at the end of 2013 is presented in the following table:
The agreement on cooperation between the Supreme Audit Institutions of the Czech Republic (SAO) and the Republic of Poland (NIK) was concluded by the presidents of both offices on 27 February 2013 following previous mutual negotiations at the meetings of the heads of the Supreme Audit Institutions of the Visegrad Four, Austria and Slovenia, held in Lovasberény, Hungary, in September 2012.
The aim of the cooperation was to examine whether the implementation of the operational programme is carried out in accordance with the legislation and with binding programming documents or agreements, whether the management and control system operates reliably, whether the objectives of the operational programme are being achieved and that the selected projects are implemented in accordance with the specified conditions of the support provided.
This cooperation took the form of a parallel check, in which the control authorities, on the basis of their statutory mandate, independently examined topics the content of which had been jointly discussed in advance.
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The inspection carried out also contained elements of a performance audit.
Selected topics were examined on a sample of projects for project partners on both sides of the border.
The results of the checks carried out were the audit findings published in the usual manner by both authorities.
On the basis of the two control conclusions set out in the Annex, this Joint Report was drawn up.
The joint control sample selected included six projects (Annex 1) which fall within the area of aid 1.1 - Strengthening transport accessibility and support area 2.2 - Promoting the development of tourism.
Prior to the start of the audit, the absorption of funds from these two areas of support accounted for more than 60% of the funds reimbursed to beneficiaries by the end of 2012 for all projects carried out throughout the OPPS CR-POL.
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In addition to controlling a joint sample of six projects, the SAO audited another 13 projects and NIK two others (all in the area of support 1.1 and 2.2).
The funds paid to the beneficiaries of the ERDF aid, which were audited by the SAO and the NIK, totalled EUR 25 362 174 (SAO) and EUR 8 450 784 (NIK).
The audited volume of appropriations represented 41 % of all funds paid to beneficiaries of aid from aid areas 1.1 and 2.2.
MAIN CONCLUSION CONCLUSIONS
Both inspections independently carried out by the SAO on the Czech side and NIK on the Polish side showed that the level of irregularities identified did not exceed the level of significance.
The implementation of the OPPS ČR-POL, including the functioning of the management and control system and the implementation of selected projects, was successful.
The audited persons who were part of the management and control system have taken steps to limit the risk of misuse of funds and the non-use of ERDF funds provided.
Evidence of the effectiveness of the implemented projects under the operational programme is a high level of achievement of the objectives set, which was also supported by the results of the survey of the societal evaluation of project implementation.
SUMMARY OF RESULTS OF CONTROLS
A. Evaluation of the control and control system
The coordinated approach made it possible to carry out a check of the management and control system of the OPPS ČR-POL implemented by the following institutions in both countries: the managing authority (Ministry for Regional Development of the Czech Republic), the National Coordinator (Ministry for Regional Development POL) and Controllers (Centre for Regional Development and Voivodeship).
At the same time, the coordinated audit made it possible to evaluate the tasks and functions carried out by the Joint Technical Secretariat and the Monitoring Committee.
During the evaluation of the management system, the audit focused on the activities carried out in connection with the setting and performance of the function of the managing authority and the national coordinator, in particular in the context of setting the objectives of the programme and monitoring of the progress achieved, evaluation activities and annual reports, assessment, evaluation, selection and approval of project applications, the absorption of the programme funds and the fulfilment of the obligation to publish correct, complete and up-to-date information on subsidies, as well as the control activities of the managing authority, setting up the performance of activities and outputs from audits of the entrusted audit entity and with the system of reporting and monitoring of irregularities and its compliance, at the same time, the coordination of tasks and cooperation between the institutions involved in the CRL.
Furthermore, the activities of the competent authorities in the area of risk analysis and the drawing up of project implementation control plans were examined and the evaluation of project applications carried out by independent evaluators was assessed.
The examination of the control system included a review of administrative and on-the-spot checks, which allowed the approval of, for example, the supply of goods and co-financed services, the eligibility of expenditure submitted for reimbursement, while the compliance of the disbursement of these funds and related activities (or parts thereof) with EU national and EU legislation.
Significant deficiencies were identified by the SAO's audit in the area of publication of correct, complete and up-to-date information on the subsidies provided.
In the area of evaluation and approval of projects, the risk of non-transparency of this process has been identified.
Other deficiencies were identified in the area of setting up monitoring indicators and setting up the irregularity reporting system.
Based on these findings, the Supreme Audit Office assessed the control and control system implemented by the managing authority as partially effective.
The irregularities identified by the NEV relating to the functioning of the management and control system in Poland in relation to violations of existing laws and rules have not been assessed as significant.
These discrepancies had an impact only on individual projects and did not have a significant impact on the implementation of the entire OPPS CR-POL.
Despite the identified discrepancies, NIK assessed the functioning of the system positively.
B. Evaluation of project results
The audit did not show a contradiction between the indicators and the objectives set for each project and those defined by the operational programme.
The expected results were achieved in all projects audited, the funded activities were carried out and the indicators (measurable parameters) set out in the project applications of the operational programme were met.
The audit conclusions are in line with the result of the survey of the societal evaluation of the implementation of the projects described below in the text.
An important aspect that the SAO and the NIK have paid attention to in their conclusions is the limited possibility of objective evaluation of the fulfilment of the projected results of individual projects with regard to the objectives of individual projects and at the same time the objectives of the whole operational programme.
At the initiative of the Supreme Audit Chamber, a poll conducted in the summer of 2013 at the site of the implementation of projects selected for the joint control sample.
The survey and its evaluation were carried out by the School of Higher Vocational Education in Nysa (Poland).
In agreement with the Supreme Audit Office, the investigation was carried out on both sides of the border between 2,820 respondents, both with the public in Poland in relation to a part of the project carried out by Polish project partners and with the Czech public in relation to a part of the project carried out in the Czech Republic.
The survey mainly concerned the appropriateness, quality, exchange of information, use of funds and the societal function of projects, including investments made.
The number of respondents for individual projects is given in Annex 2.
The assessment of the responses from the survey indicated that the overall societal evaluation of the projects was good and reached 4.8 points (on a scale with a maximum of 8 points), meaning that the results of the projects were positively perceived by the majority of respondents both with regard to the objectives and other parameters mentioned in the project applications.
According to respondents, the projects examined fulfilled the criteria expressed in the operational programme.
Respondents also noted the positive impact of investments on improving the quality of transport and tourism infrastructure, transport accessibility, tourist attractiveness, business conditions, quality of life of citizens and restoring contacts between residents of the border region.
On the other hand, the overall assessment of the responses indicated a certain difference between the actual level of achievement of the objectives/parameters (actual impact rate) and the level of the expected respondents.
This difference applies to the evaluation of the results of individual projects, where in some cases there is a significant difference.
The results of the survey were in line with the views of participants in panel discussions (target groups) carried out under the NIK control on the Polish side, who pointed to the need for project implementation and confirmed their positive public acceptance and the fulfilment of expected results.
C. Evaluation of the legality of the projects audited
For the beneficiaries of the aid, the compliance of the project with the timetable and content of the project application was examined, the fulfilment of the stated objectives and purpose of the project, the fulfilment of binding monitoring indicators, the management of changes in projects, the handling of any project revenue, the fulfilment of the obligation of separate accounting records of project transactions, compliance with the ban on the financing of projects from other EU sources, the implementation of the project partnership and compliance with its conditions, the fulfilment of mandatory publicity concerning in particular the dissemination of awareness of the sources of financing of projects from the EU, compliance with the eligibility conditions of project expenditure, the collection of suppliers and the verification of deliverables on the basis of public contracts awarded.
The total financial value of shortcomings by qualified SAO and NIK as ineligible for EU funding was estimated at €85 094.
However, this amount did not exceed the specified level of materiality relating to the total controlled volume of appropriations for the sample of projects.
Despite the discrepancies found, the SAO and NIK evaluated the implementation of selected projects positively by the beneficiaries of the aid.
In most cases, the commitments resulting from the conditions of the aid were duly fulfilled by the beneficiary.
The funds earmarked for the implementation of the audited projects were spent in accordance with EU and national law regulations.
Nevertheless, seven of the eight beneficiaries audited by NEVs were found to have irregularities in the implementation of in-kind and financial obligations.
These were individual cases of non-systemic nature and concerned, in particular, inconsistent preparation of project documentation and breach of public procurement rules, which did not have an impact on the choice of supplier or the supply of contractually agreed works.
Only in one of all NIK-controlled projects can the irregularity found, relating to non-compliance with reporting obligations, be assessed as ineligible expenditure, amounting to PLN 43 003 (of which €8,231 financed by the ERDF).
On the other side of the border, the SAO identified ineligible expenditure of CZK 2 098 053 in three of the 19 audited projects (of which €76,863 financed by the ERDF).
Irregularities included non-delivery of paid material and work or expenditure for the modernisation of a property owned by a person who had no link to the project either as a beneficiary of the aid or as a project partner.
RECOMMENDATIONS
The joint recommendation of the SAO and the NIK concerns the improvement of the monitoring system in particular with regard to the consistent setting of proper monitoring indicators for all specific objectives of the priority axis of the operational programme.
In general, efforts must also be made to identify such indicators at both programme and project level, which will allow for a more reliable verification of the implementation of the identified impacts.
Notes and recommendations resulting from the checks carried out on both sides of the border are included in the separate control conclusions of the SAO and the NIK on CDs.
COMMUNICATION
The report was prepared in Czech, English and Polish and signed by the Presidents of the Supreme Audit Institutions of the Czech Republic and the Republic of Poland.
