Coordinated control of funds earmarked for financing projects implemented under the Operational Programme Cross-Border Cooperation Czech Republic - Republic of Poland 2007 - 2013
INTRODUCTION
The developing community of Europe's people is driving 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 us allow this community to give the opening word to this joint report by the two supreme audit institutions of the neighbouring countries:
185 million EU citizens (or 37% of the population) live in border areas.
These areas are usually underdeveloped and peripheral territories, often remnants of the darker parts of Europe's history.
The main objective of cross-border cooperation is to help alleviate the existence of borders as administrative, legal and physical barriers and to further help develop the dormant potential of border regions.
The programmes cover different border regions: some cover sea basins, others inland borders within the EU or borders shared with candidate countries.
Most programs are bilateral, but some involve more than two neighboring countries.
The programmes run for seven years and have a total budget of €5.7 billion from the EU budget. EUR.
The programmes include the following activities: repair and reconstruction of cross-border roads, cycle paths and bridges, investment in cross-border waste management systems, health facilities, research centres, flood control measures, etc., joint management of natural sites or development of tourist destinations, development of common services for the local population, advice on employment issues, creation of thematic networks and clusters for innovation.
Support from the programme is granted 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 to decide which projects will be supported.
This system should lead to a sustainable form of cooperation even after the programme itself has come to an end.
Funding is provided on condition that project partners from both sides of the border cooperate in a way that fulfils at least two of the following four features: joint preparation, joint implementation, joint staff, joint funding.
Within the partnership, the tasks and responsibilities for the preparation, implementation, financing and control of the project activities are clearly defined and allocated to the relevant partners.
The main attributes of the partnership include: the joint selection of the lead partner, the joint preparation of the project and the application, the conclusion of a joint partnership agreement signed by all partners, the assumption of overall responsibility for the implementation of the project by the lead partner, the total payments of support are received by the lead partner and transferred to the relevant project partners.
Eligible projects carried out in the territory of regions and voivodeships adjacent to the common border may be supported.
OBJECTIVES AND SCOPE OF 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).
€258 187 467 was earmarked for the implementation of the operational programme.
The total amount included a contribution from the European Funds (ERDF) totalling €219 459 344 (85%), which must be spent by the end of 2015.
Financial data on the use of EU funds from the Operational Programme Cross-Border Cooperation Czech Republic - Republic of Poland 2007 - 2013 at the end of 2013 are presented in the following table:
The cooperation agreement between the supreme audit institutions of the Czech Republic (SAO) and the Republic of Poland (NIK) was concluded by the presidents of both SAIs on 27 February 2013 after previous mutual negotiations at the meeting of the heads of supreme audit institutions of the Visegrad Four, Austria and Slovenia, which took place in September 2012 in Lovasberény, Hungary.
The aim of the cooperation was to examine whether the implementation of the operational programme is carried out in accordance with legal regulations and with binding programming documents or agreements, whether the management and control system works reliably, whether the objectives of the operational programme are achieved and whether the selected projects are implemented in accordance with the conditions of the support provided.
This cooperation took the form of a parallel check, in which the audit authorities independently examined, on the basis of their statutory mandate, subjects the content of which had previously been jointly discussed.
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The audit also included elements of a performance audit.
Selected topics were tested on a sample of projects by project partners on both sides of the border.
As a result of the checks carried out, the audit conclusions were published in the usual manner by both offices.
On the basis of the two audit conclusions set out in the Annex, this Joint Report has been produced.
The selected common control sample comprised six projects (Annex 1) which fall under aid area 1.1 - Strengthening transport accessibility and support area 2.2 - Support for tourism development.
Prior to the start of the audit, the utilization of funds from these two areas of support represented more than 60% of the funds reimbursed to the beneficiaries by the end of 2012 from the ERDF for all implemented projects within the whole OPIE CR-POL.
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In addition to the audit of a common sample of six projects, the SAO audited another 13 projects and the NIK audited two others (all from the support area 1.1 and 2.2).
Funds paid to ERDF beneficiaries audited by the SAO and the NIK amounted to a total of € 25 362 174 (SAO) and € 8 450 784 (NIK).
The audited volume of funds represented 41% of all funds paid to beneficiaries of aid areas 1.1 and 2.2.
MAIN CONTROL CONCLUSIONS
Both audits carried out independently by the SAO on the Czech side and the NIK on the Polish side showed that the level of irregularities identified did not exceed the materiality level.
The implementation of the OPIE CR-POL, including the functioning of the management and control system and the implementation of selected projects, was successful.
The auditees, who were part of the management and control system, took steps to limit the risk of incorrect use of funds and non-use of ERDF funds.
Evidence of the effectiveness of the implemented projects under the Operational Programme is the high level of fulfilment of the set objectives, which was supported by the results of the survey of the social evaluation of project implementation.
SUMMARY OF CONTROL RESULTS
The A. Evaluation of the management and control system
The coordinated approach made it possible to carry out an audit of the management and control system of the OPPS CR-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 the auditors (Centre for Regional Development and Voivodship).
At the same time, the coordinated audit made it possible to evaluate the tasks and functions carried out by the JTS and the Monitoring Committee.
During the evaluation of the management system, the audit focused on the activities carried out in connection with the setting up and performance of the functions of the managing authority and the national coordinator, in particular in relation to the setting of the objectives of the programme and the monitoring of the progress achieved, the evaluation activities and annual reports, the assessment, evaluation, selection and approval of project applications, the use of programme funds and the fulfilment of the obligation to publish correct, complete and up-to-date information on grants, the control activities of the managing authority, the setting of the performance of the activities and the results of the audits of the delegated audit body and the system of coordination and monitoring of irregularities.
Furthermore, the activities of the competent authorities in the area of risk analysis and the establishment of control plans at the site of project implementation were examined and the evaluations of project applications carried out by independent evaluators were assessed.
The examination of the control system included a review of the administrative and on-the-spot checks carried out, which allowed the approval of e.g. supplies of goods and co-financed services, the eligibility of expenditure submitted for reimbursement, as well as the compliance of the disbursement of these funds and related activities (or parts thereof) with national and EU legislation.
Significant shortcomings were detected by the SAO audit in the area of publishing correct, complete and up-to-date information on the provided subsidies.
In the area of project evaluation and approval, the risk of non-transparency of the process was identified.
Other weaknesses were found in the setting of monitoring indicators and in the setting of the irregularity reporting system.
Based on these findings, the Supreme Audit Office (SAO) assessed the control and management system implemented by the MA as partially effective.
Irregularities identified by the NIK concerning the functioning of the management and control system in Poland in relation to violations of the applicable laws and rules were not assessed as significant.
These discrepancies had an impact only on individual projects and did not have a significant impact on the implementation of the whole OPIE CR-POL.
Despite the irregularities identified, the NIK assessed the functioning of the system positively.
B. Evaluation of project results
The audit did not show any discrepancy between the indicators and objectives set for individual projects and those defined by the operational programme.
In all audited projects, the expected results were achieved, the funded activities were implemented and the indicators (measurable parameters) set out in the operational programme project applications were met.
The audit conclusions are in line with the results of the survey of the social evaluation of project implementation described below.
An important aspect to which the SAO and the NIK paid attention in their conclusions is the limited possibility of objective evaluation of the fulfilment of the expected results of individual projects with regard to the objectives of individual projects as well as the objectives of the entire operational programme.
On the initiative of the Supreme Audit Chamber, a public opinion survey was carried out in the summer of 2013 in the place of implementation of projects selected for the joint audit 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 survey was carried out on both sides of the border between 2,820 respondents, both among the public in Poland in relation to the part of the project implemented by Polish project partners and among the Czech public in relation to the part of the project implemented in the Czech Republic.
The survey mainly covered the suitability, quality, exchange of information, use of funds and the societal function of the projects, including the investments made.
The number of respondents per project is shown in Annex 2.
The examination of the survey responses indicated that the overall social evaluation of the projects was good at 4.8 points (on a scale with a maximum of 8 points), which means that the results of the projects were positively perceived by the majority of respondents both in terms of objectives and other parameters specified in the project applications.
According to the respondents, the projects examined met the criteria expressed in the OP.
Respondents also noted the positive impact of investments on improving the quality of transport and tourist infrastructure, transport accessibility, tourist attractiveness, business conditions, quality of life of citizens and the re-establishment of contacts between the inhabitants of the border region.
On the other hand, the overall evaluation of the responses indicated a certain difference between the actual level of achievement of the objectives/parameters (actual impact rate) and the level expected by the 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 opinions of the participants of the panel discussions (target groups) carried out in the framework of the NIK audit on the Polish side, who pointed out the need to implement the projects and confirmed their positive reception by the public and the fulfilment of the expected results.
The C. Evaluation of legality of audited projects
In the case of the beneficiaries, the compliance of the factual and timely implementation of the project with the timetable and content of the project application was examined, the fulfilment of the set objectives and purpose of the project, the fulfilment of binding monitoring indicators, the management of changes in projects, the handling of any project revenues, the fulfilment of the obligation of separate accounting records of project transactions, compliance with the prohibition of financing projects from other EU sources, the implementation of the project partnership and compliance with its conditions, the fulfilment of the mandatory publicity concerning, in particular, the dissemination of awareness of the sources of financing projects from the EU, compliance with the conditions for the eligibility of project expenditures, the selection of contractors and the verification of the delivered performances on the basis of public contracts.
The total financial value of the shortcomings of the SAOs and NIKs qualified as expenditure ineligible for EU funding was found to be €85,094.
However, this amount did not exceed the established materiality level related to the total audited amount of funds for a sample of projects.
Despite the discrepancies, the SAO and the NIK evaluated the implementation of the selected projects by the beneficiaries positively.
In most cases, the commitments under the terms of the aid were properly implemented by the beneficiaries.
The funds earmarked for the implementation of the audited projects were spent in accordance with EU regulations and national law.
However, seven of the eight beneficiaries audited by NIK were found to have irregularities in the fulfilment of material and financial commitments.
These were individual cases of a non-systemic nature and concerned in particular inconsistent preparation of project documentation and breaches of public procurement rules, but did not affect the choice of contractor or the delivery of contracted works.
In only one of all projects audited by the NIK can the irregularity found, which concerned non-compliance with reporting obligations, be classified as ineligible expenditure, amounting to PLN 43 003 (of which EUR 8 231 financed by the ERDF).
On the other side of the border, the SAO identified ineligible expenditures amounting to CZK 2,098,053 in three of the 19 audited projects (of which EUR 76,863 were financed by the ERDF).
Irregularities included non-delivery of paid materials and works or expenditure for the modernisation of a property owned by a person who was not linked to the project either as a beneficiary or as a project partner.
RECOMMENDATIONS
The joint recommendation of the SAO and the NIK concerns the improvement of the monitoring system, especially with regard to the consistent determination of proper monitoring indicators for all specific objectives of the priority axis of the Operational Programme.
In general, efforts should also be made to establish indicators at programme and project level that allow more reliable verification of the achievement of the impacts identified.
Comments and recommendations resulting from inspections carried out on both sides of the border are included in separate audit conclusions of the SAO and the NIK on CD.
COMMUNICATIONS
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.
