Coordinated control of funds to finance projects implemented under the Operational Programme for Cross-Border Cooperation Czech Republic - Republic of Poland 2007-2013
Introduction
The developing 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.
Let us therefore give this Community an introductory word on this joint report of the two Supreme Audit Institutions of neighbouring countries:
"185 million EU citizens (i.e. 37% of the population) live in border areas.
These areas are usually underdeveloped and peripheral areas, often a relic of darker parts of Europe's history.
The main objective of cross-border cooperation is to help to alleviate the existence of borders as administrative, legal and physical barriers and to further help to develop the napping 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 programmes 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 from the EU budget. Eur.
"Programmes shall include the following activities: repair and reconstruction of cross-border roads, cycle paths and bridges, investments in cross-border waste management systems, medical facilities, research centres, flood measures, etc., joint management of natural sites or the development of tourist objectives, development of joint services for the local population, employment advice, 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 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.
The funds 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 framework of the partnership, the tasks and responsibilities for the preparation, implementation, financing and control of the project activities are clearly defined and distributed to the relevant partners.
The main attributes of the partnership include: joint selection of the lead partner, joint preparation of the project and application, conclusion of a joint partnership agreement signed by all partners, taking over the overall responsibility for the implementation of the project by the lead partner, total payments of support accepted by the lead partner and transferring them to the relevant project partners.
Eligible projects carried out in the territory of the regions and voivodeship adjacent to the common border may be supported.
OBJECTIVES AND SCOPE OF CONTROL
On 11 December 2005, the Council adopted Joint Action The European Commission (EC) approved the Operational Programme for Cross-Border Cooperation czech republic – Republic of Poland 2007-2013 (OPPS CR-POL).
€258,187,467 has been 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 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 the Cooperation of 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 December 2004. In September 2012, following previous negotiations at the Heads of SAEs of the Visegrad Four, Austria and Slovenia held in Lovasberen, Hungary, on 25 February 2013.
The aim of the cooperation was to verify 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 is functioning reliably, whether the objectives of the operational programme are achieved and whether the selected projects are implemented in accordance with the specified conditions of the aid granted.
This cooperation took the form of a parallel control, in which the control authorities independently examined, on the basis of their statutory mandate, topics the content of which had been jointly discussed in advance.
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The audit carried out also included elements of the performance audit.
The selected topics were examined on a sample of projects with project partners on both sides of the border.
The checks carried out resulted in control conclusions published normally by both authorities.
On the basis of the two control conclusions set out in the Annex, this joint report was produced.
The selected joint control sample included six projects (Annex 1) which fall under aid 1.1 — Strengthening transport accessibility and support area 2.2 — Promoting the development of tourism.
Prior to the start of the inspection, the use of funds from these two areas of support accounted for more than 60 % of the funds paid to beneficiaries by the end of 2012 from the ERDF for all implemented projects throughout the OPPS CR-POL.
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In addition to checking the joint sample of six projects, the SAO checked the other 13 projects and NIK checked two other projects (all from the support area 1.1 and 2.2).
The funds paid to the beneficiaries of ERDF support, which were controlled by the SAO and NIK, totalled €25,362,174 (SAO) and €8,450,784 (NIK).
The amount of funds audited represented 41 % of all appropriations paid to beneficiaries of aid from areas 1.1 and 2.2.
MAIN CONTROL CONCLUSIONS
Both independently carried out by the SAO on the Czech side and NIK on the Polish side showed that the level of the irregularities identified did not exceed the level of materiality.
The implementation of OPPS ČR–POL, which includes the operation 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 reduce the risk of misuse of funds and the non-use of erdf funds.
Proof of the effectiveness of the implemented projects under the operational programme is the high level of achievement of the stated objectives, which was also supported by the results of the survey of the social evaluation of the implementation of the projects.
SUMMARY OF THE RESULTS OF THE INSPECTION
A. Evaluation of the control and control system
The coordinated approach made it possible to carry out a check of the control 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 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 review focused on activities carried out in connection with the setting 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 made, the evaluation activities and annual reports, the assessment, evaluation, selection and approval of project applications, the implementation of the programme's funds and the fulfilment of the obligation to publish correct, complete and up-to-date information on the subsidies , together with the control activities of the managing authority, the setting of activities and the results from the audits of the audit body and the system of reporting and monitoring of irregularities and its compliance, coordination of tasks and cooperation between the institutions involved in the OPPS CR-POL was also verified.
Furthermore, the activities of the competent authorities in the field of risk analysis and the drawing up of control plans at the site of project implementation were examined and the evaluation of project applications carried out by independent evaluators was assessed.
The verification of the control system included a review of the administrative and on-the-spot checks which allowed the approval of e.g. the control system. the supply of goods and co-financed services, the eligibility of expenditure submitted for reimbursement, and at the same time the compliance of the disbursement of such funds and the related activities (or parts thereof) with national and EU legislation.
Significant deficiencies were identified by the SAO's control in the area of publishing 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 was identified.
Other shortcomings were identified in the area of setting up 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 detected by NIK concerning the functioning of the management and control system in Poland in relation to infringements of the laws and rules in force were not assessed as significant.
These irregularities had an impact only on individual projects and did not have a material impact on the implementation of the whole OPPS CR–POL.
Despite the identified irregularities, NIK evaluated the functioning of the system positively.
B. Evaluation of project results
The check did not show a discrepancy between the indicators and the objectives set for each project and those defined by the operational programme.
In all audited projects, the expected results were achieved, the activities financed were implemented and the indicators (measurable parameters) set out in the operational programme project applications were met.
The conclusions are in line with the result of the survey of the social evaluation of the implementation of projects described below in the text.
An important aspect, which the SAO and NIK have addressed in their conclusions, is the limited possibility of objectively assessing the implementation of the project expected results with regard to the objectives of individual projects as well as the objectives of the entire operational programme.
On the initiative of the Supreme Control Chamber, an opinion poll was conducted in the summer of 2013 at the place of implementation of projects selected for the joint control sample.
The survey and its evaluation was carried out by the School of Higher Vocational Education in Nyse (Poland).
In agreement with the Supreme Audit Office, the investigation was carried out on both sides of the border between 2,820 respondents, both to the public in Poland in relation to the part of the project carried out by Polish project partners and the Czech public in relation to the part of the project implemented in the Czech Republic.
The survey mainly concerned the suitability, quality, exchange of information, the use of funds and the social function of projects, including investments implemented.
The number of respondents for each project is set out in Annex 2.
The assessment of the survey responses indicated that the overall social evaluation of the projects was good and was 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 with regard to the objectives and according to other parameters given in the project applications.
According to the respondents, the projects examined met the criteria expressed in the operational programme.
Respondents also noticed the positive impact of investments on improving the quality of transport and tourist infrastructure, transport accessibility, tourist attractiveness, business conditions, the quality of life of citizens and the restoration of contacts between residents of the border region.
On the other hand, the overall assessment of responses indicated a certain difference between the actual level of achievement of the targets/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 views of the participants in the panel discussions (target groups) carried out under the NIK control 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 controlled projects
For the beneficiaries, the compliance of the project in kind and time with the schedule and content of the project application was verified, the fulfilment of the objectives and purpose of the project, the fulfilment of binding monitoring indicators, the management of changes in projects, the management of any project revenue, the fulfilment of the obligation to separate accounting of project transactions, compliance with the prohibition of 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 EU project funding, compliance with the eligibility conditions for project expenditure, the selection of suppliers and the verification of the supplies delivered on the basis of the public contracts awarded.
The total financial value of the deficiencies of qualified SAO and NIK as expenditure ineligible for EU funding was found at €85 094.
However, this amount did not exceed the established materiality level relating 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 to the beneficiaries.
In most cases, the obligations resulting from the conditions of the aid were properly fulfilled by the beneficiary.
The funds for the implementation of the audited projects were spent in accordance with EU and national law.
However, seven of the eight beneficiaries of the aid audited by NIK were found to be irregularities in the fulfilment of material and financial commitments.
These were individual cases of a non-systemic nature and concerned particularly inconsistent preparation of project documentation and breaches of public procurement rules, but which did not affect the choice of supplier or the supply of contractually agreed works.
In only one of all NIK-controlled projects, the irregularity found concerning non-compliance with reporting obligations can be assessed 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 expenditure of CZK 2,098,053 (of which €76,863 financed by the ERDF) in three of the 19 projects audited.
Irregularities included the failure to deliver the material paid and the work or expense of upgrading the 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, in particular with a view to consistently establishing sound monitoring indicators for all specific objectives of the operational programme priority axis.
In general, it is also necessary to seek to establish such indicators at programme level as well as projects, which will allow for a more reliable verification of the fulfilment of the identified impacts.
The notes and recommendations resulting from the checks carried out on both sides of the border are included in the SAO and NIK's separate cd control conclusions.
Communiqué
The report was prepared in Czech, English and Polish and signed by the Presidents of the Supreme Control Institutions of the Czech Republic and the Republic of Poland.
