Coordinated control of funds earmarked for the financing of projects implemented under the Operational Programme for Cross-Border Cooperation Czech Republic - Republic of Poland 2007-2013
Introduction
The developing community of European citizens 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 past 20 years.
So let this community give an opening statement on this joint report by the two supreme audit institutions of neighbouring countries:
"185 million EU citizens (or 37% of the population) live in border areas.
These areas are usually underdeveloped and peripheral territories, often a remnant 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 develop the dormant potential of border regions.
The programmes cover different border regions: Some cover maritime areas, others inland borders within the EU or borders shared with candidate countries.
Most of the programmes are bilateral, but some involve more than two neighbouring countries. "
The programmes last for seven years and receive a total of €5.7 billion from the EU budget.
"The programmes cover the following activities: Repairs 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, employment advice, creation of thematic networks and clusters for innovation.
Support from the programme is provided on the condition that organisations from both sides of the border (such as regional authorities, universities or small and medium-sized enterprises) come together to implement projects that are based on the needs of the border region.
Representatives of the 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 ended.
Funding shall be 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 characteristics: Joint preparation, joint implementation, joint staff, joint financing. "
Within the partnership, the tasks and responsibilities for the preparation, implementation, financing and control of project activities are clearly defined and allocated to the relevant partners.
The main attributes of the partnership include: Joint selection of the lead partner, joint preparation of the project and the application, conclusion of a joint partnership agreement signed by all partners, taking overall responsibility for the implementation of the project by the lead partner, total support payments are received by the lead partner and transferred to the relevant project partners.
Eligible projects carried out on the territory of regions and provinces 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 for Cross-Border Cooperation Czech Republic - Republic of Poland 2007-2013 (Opps ČR-POL).
€258,187,467 has been earmarked for the implementation of the operational programme.
The total amount included a contribution from European funds (ERDF) totalling €219,459,344 (85%), which must be used up by the end of 2015.
Financial data on the implementation of EU funds from the Operational Programme for Cross-Border Cooperation Czech Republic - Republic of Poland 2007-2013 at the end of 2013 are 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 after previous mutual discussions at the meeting of the heads of the 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 check whether the implementation of the operational programme was carried out in accordance with legislation and with binding programming documents or agreements, whether the management and control system was functioning reliably, whether the objectives of the operational programme were being achieved and whether the selected projects were being carried out in accordance with the conditions laid down for the support granted.
This cooperation took the form of a parallel check, in which the supervisory authorities independently examined, on the basis of their legal mandate, topics the content of which had been discussed jointly in advance.
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The audit also included elements of a performance audit.
The selected topics were examined on a sample of projects with project partners on both sides of the border.
As a result of the checks carried out, the audit findings were published in the usual way by both authorities.
On the basis of the two control conclusions set out in the Annex, this joint report has been produced.
The selected joint control sample included six projects (Annex 1) which fall under aid area 1.1 - Strengthening transport accessibility and aid area 2.2 - Promoting tourism development.
Prior to the start of the audit, the disbursement of funds from these two support areas represented more than 60% of the funds paid to beneficiaries by the end of 2012 from the ERDF for all implemented projects across Opps ČR-POL.
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In addition to the audit of a joint sample of six projects, the SAO audited another 13 projects and NIK another two (all in the field of support 1.1 and 2.2).
The funds paid to the ERDF beneficiaries, which were audited by the SAO and NIK, amounted to a total of €25,362,174 (SAO) and €8,450,784 (NIK).
The audited amount represented 41% of the total amount paid to beneficiaries in 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 level of significance.
The implementation of Opps ČR-POL, including the functioning of the management and control system and the implementation of selected projects, was successful.
The audited entities, which were part of the management and control system, took steps to reduce the risk of misapplication of funds and non-use of ERDF funds.
Evidence of the effectiveness of the projects carried out under the operational programme is the high level of achievement of the objectives set, which was also supported by the results of a survey of the social evaluation of the implementation of the projects.
Summary OF THE RESULTS OF CONTROL
A. Evaluation of the management and control system
The coordinated approach made it possible to check the management and control system of Opps ČR-POL implemented by the following institutions in both countries: The managing authority (Ministry of Regional Development of the Czech Republic), the national coordinator (Ministry of 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 Joint Technical Secretariat and the Monitoring Committee.
During the evaluation of the management system, the audit focused on the activities carried out in relation to 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 progress made, evaluation activities and annual reports, the assessment, evaluation, selection and approval of project applications, the absorption of programme funds and the fulfilment of the obligation to publish correct, complete and up-to-date information on subsidies, the control activities of the managing authority, the setting up of the performance of activities and outputs from audits of the entrusted audit body and the system for reporting and monitoring irregularities and its compliance, while at the same time the coordination of tasks and cooperation between the institutions involved in Opps ČR-POL was examined.
In addition, the activities of the competent authorities in the area of risk analysis and the drawing up of control plans at the site of implementation of projects 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 administrative and on-the-spot checks, which allowed for 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 identified by the SAO audit in the area of publishing correct, complete and up-to-date information about the subsidies provided.
In the area of project evaluation and approval, a risk of lack of transparency in this process has been identified.
Further weaknesses were found in the setting of monitoring indicators and in the setting of the irregularity reporting system.
On the basis of these findings, the Supreme Audit Office assessed the control and management system implemented by the Managing Authority as partially effective.
The irregularities identified by the NIK, which related to the functioning of the management and control system in Poland in relation to violations of applicable laws and rules, were not considered significant.
These irregularities only had an impact on individual projects and did not have a significant impact on the implementation of the entire Opps ČR-POL.
Despite the identified irregularities, the NIK assessed the functioning of the system positively.
Evaluation of the results of projects
The audit did not show a discrepancy between the indicators and the objectives set for each project and those defined by the operational programme.
In all the projects audited, the expected results were achieved, the funded activities were implemented 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 social evaluation of the implementation of the projects described below.
An important aspect that the SAO and NIK paid attention to in their conclusions is the limited possibility of an objective evaluation of the implementation of the expected results of individual projects with regard to the objectives of individual projects and at the same time the objectives of the entire operational programme.
On the initiative of the Supreme Audit Chamber, a public opinion poll was 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 for the public in Poland in relation to the part of the project carried out by Polish project partners and for the Czech public in relation to the part of the project carried out in the Czech Republic.
The survey covered in particular the suitability, quality, exchange of information, use of resources and social function of the projects, including the investments made.
The number of respondents per project is set out in Annex 2.
The assessment of the survey responses indicated that the overall social evaluation of the projects was good, reaching 4.8 points (on a scale with a maximum of 8 points), meaning that the results of the projects were viewed positively by the majority of respondents, both with regard to the objectives and other parameters set out in the project applications.
According to the respondents, the projects examined met the criteria set out in the operational programme.
Respondents also noted the positive impact of investments on improving the quality of transport and tourism infrastructure, accessibility, tourist attractiveness, business conditions, quality of life of citizens and the renewal of contacts between residents of the border region.
On the other hand, the overall assessment of the responses indicated some difference between the actual level of achievement of the objectives / parameters (actual level of impact) and the level expected by the respondents.
This difference relates 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 the panel discussions (target groups) carried out in the framework of the NIK inspection on the Polish side, who pointed out the need to implement the projects and confirmed their positive public acceptance and the fulfilment of the expected results.
C. Evaluation of the legality of the audited projects
The beneficiaries were checked for compliance of the material and time implementation of the project with the schedule and content of the project application, the fulfilment of the stated objectives and purpose of the project, the fulfilment of binding monitoring indicators, the management of changes in the projects, the handling of any project revenue, the fulfilment of the obligation to keep separate accounts of project transactions, compliance with the ban on financing 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 conditions of eligibility of project expenditure, the selection of contractors and the verification of the deliverables on the basis of public contracts awarded.
The total financial value of the shortcomings of the qualified SAO and NIK as expenditure ineligible for EU funding was found to be €85,094.
However, this amount did not exceed the established level of materiality related to the total amount of funds audited for the sample of projects.
Despite the irregularities found, the SAO and NIK evaluated the implementation of the selected projects positively by the beneficiaries.
In most cases, the commitments under the terms of the aid were duly fulfilled 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 out of the eight beneficiaries audited by the NIK were found to be in breach of their material and financial obligations.
These were individual cases of a non-systemic nature and related in particular to the inconsistent preparation of project documentation and breaches of public procurement rules, which did not, however, affect the choice of contractor or the supply of contractually agreed works.
In only one of the projects audited by the NIK can an irregularity found relating to 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, in three of the 19 projects audited, the SAO identified ineligible expenditure amounting to CZK 2,098,053 (of which €76,863 financed by the ERDF).
Irregularities included the failure to deliver paid materials and works, or the cost of upgrading a property owned by a person who had no connection 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 establishment 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 for more reliable verification of the implementation of the identified impacts.
The notes and recommendations resulting from the checks carried out on both sides of the border are included in the separate audit conclusions of the SAO and NIK on CD.
Communiqué
The report was written in Czech, English and Polish and signed by the presidents of the supreme audit institutions of the Czech Republic and the Republic of Poland.
