Coordinated control of funding for projects implemented under the Operational Programme of Cross-Border Cooperation Czech Republic - Republic of Poland 2007-2013
INTRODUCTION
The emerging community of the people of Europe 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.
Let this Community give an opening statement on this joint report of the two supreme audit institutions of the neighbouring countries:
"185 million EU citizens (37% of the population) live in border areas.
These areas are usually underdeveloped and peripheral, often a remnant of the 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 help develop the dormant potential of border regions.
The programmes cover different border regions: some cover coastal areas, others inland borders within the EU or borders shared with candidate countries.
Most programmes are bilateral, but some include more than two neighbouring countries. "
The programmes last seven years and are allocated a total of EUR 5.7 billion from the EU budget.
"The programmes include the following activities: repair and reconstruction of cross-border roads, cycling paths and bridges, investment in cross-border waste management systems, healthcare facilities, research centres, flood prevention 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 cluster
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 is over.
The 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 features: joint preparation, joint implementation, joint staff, joint financing. "
Within 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, assumption of overall responsibility for the implementation of the project by the lead partner, total payments of support are received by the lead partner and their transfer to the relevant project partners.
Eligible projects carried out on the territory of regions and regions 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 - Polish Republic 2007-2013 (OPPS CR-POL).
€ 258 187 467 has been allocated 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 exhausted by the end of 2015.
The financial data on the use of EU funds from the Operational Programme of Cross-Border Cooperation Czech Republic - Polish Republic 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 following previous mutual meetings at the Heads of the Supreme Audit Institutions of the Visegrad Four, Austria and Slovenia held in Lovasbereny, Hungary in September ary 2012.
The aim of the cooperation was to check whether the implementation of the operational programme is in accordance with the legislation and binding programming documents or agreements, whether the management and control system is reliable, whether the objectives of the operational programme are achieved and whether the selected projects are implemented in accordance with the specified conditions of the support provided.
This cooperation took the form of a parallel check whereby, on the basis of their statutory mandate, the audit authorities independently examined topics the content of which had been discussed together in advance.
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The audit carried out also included elements of the performance audit.
Selected topics were examined on a sample of projects by project partners on both sides of the border.
The checks carried out resulted in audit findings published in the usual manner by both offices.
On the basis of the two audit conclusions set out in the Annex, this joint report was established.
The selected joint control sample included six projects (Annex 1) falling within aid area 1.1 - Enhancing transport accessibility and aid area 2.2 - Support for tourism development.
Prior to the start of the audit, the use of funds from these two support areas 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 OPPS CR-POL.
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In addition to checking the joint sample of six projects, the SAO inspected another 13 projects and NIK checked two more (all in the area of aid 1.1 and 2.2).
The funds paid to the beneficiaries of the ERDF aid, which were controlled by the SAO and NIK, totalled €25,362,174 (SAO) and €8,450,784 (NIK).
The audited amount represented 41% of all funds paid to aid beneficiaries in aid areas 1.1 and 2.2.
MAIN CONTROL CONCLUSIONS
Both checks 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 relevance.
The implementation of OPPS CR-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.
Evidence of the effectiveness of the implemented projects under the operational programme is the high level of achievement of the set 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
AND. Evaluation of the management and control system
The coordinated approach enabled the control of the management and control system of OPPS CR-POL implemented by the following institutions in both countries: the managing authority (Ministry of Local Development of the Czech Republic), the national coordinator (Ministry of Regional Development POL) and the controllers (Centre for Regional Development and Province).
At the same time, the coordinated audit enabled the evaluation of the tasks and functions carried out by the Joint Technical Secretariat and the Monitoring Committee.
During the evaluation of the management system, the control 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 setting the objectives of the programme and monitoring progress made, evaluation activities and annual reports, assessment, evaluation, selection and approval of project applications, by drawing on the Programme's resources and fulfilling the obligation to publish correct, complete and up-to-date information on subsidies; in addition to the control activities of the managing authority, the setting of the performance of the activities and the output from the audits of the delegated audit body and the reporting and monitoring system of irregularities and their compliance, coordination of tasks and cooperation between the institutions involved in OPPS CR-POL has also been examined.
Furthermore, the activities of the competent authorities in the area of risk analysis and the drawing up of control plans at the site of project implementation have been examined and the evaluation of project applications carried out by independent evaluators has been assessed.
The verification of the control system included a review of administrative and on-the-spot checks, which allowed the authorisation of, for example, the supply of goods and co-financed services, the eligibility of expenditure submitted for reimbursement, and the consistency of the disbursement of such funds and associated activities (or parts thereof) with national and EU legislation.
Significant shortcomings were identified by the SAO's audit of the publication of correct, complete and up-to-date information on the subsidies provided.
The evaluation and approval of projects identified a risk of lack of transparency in this process.
Other deficiencies were identified in the monitoring indicator settings and in the irregularity reporting system settings.
Based on these findings, the Supreme Audit Office assessed the control and management system implemented by the managing authority as partially effective.
The irregularities identified by NIK concerning the functioning of the management and control system in Poland in relation to infringements of applicable laws and rules were not assessed as significant.
These irregularities only affected individual projects and did not have a significant impact on the implementation of the entire OPPS CR-POL.
Despite the irregularities identified, NIK assessed the functioning of the system positively.
B. Evaluation of project results
The check did not show a contradiction between the indicators and objectives set for each project and those defined by the operational programme.
All audited projects achieved expected results, financed activities were implemented and indicators (measurable parameters) set out in the project applications of the operational programme were met.
The audit conclusions are consistent with the outcome of the survey of social evaluation of the implementation of the projects described in the text below.
An important aspect to which the SAO and NIK have paid attention in their conclusions is the limited possibility of an objective evaluation of the achievement of the projected results of each project, taking into account the objectives of each project and the objectives of the entire operational programme.
On the initiative of the Supreme Chamber of Auditors, an opinion poll was conducted in summer 2013 at the place of 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 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 with the public in Poland in relation to the part of the project implemented by Polish project partners and with the Czech public in relation to the part of the project implemented in the Czech Republic.
The survey concerned in particular the suitability, quality, exchange of information, use of funds and social function of the projects, including investments made.
The number of respondents per project is set out in Annex 2.
The assessment of the survey responses indicated that the overall societal evaluation of the projects was good and amounted to 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 respect to the objectives and with respect to the other parameters set out in the project applications.
According to the 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 tourist infrastructure, transport accessibility, tourist attractiveness, business conditions, quality of life of citizens and renewed contacts between residents of the border region.
On the other hand, the overall assessment of responses indicated a distinction between the actual level of achievement of the objectives/parameters (actual impact rate) and the level expected by 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 of the panel discussions (target groups) carried out in the context of the NIK check on the Polish side, who pointed out the need to implement the projects and confirmed their positive public acceptance and fulfilment of the expected results.
C. Evaluation of the legality of audited projects
The compatibility of the project's substantive and timely implementation with the timetable and content of the project application has been examined for the beneficiaries, further verify the achievement of the stated objectives and purpose of the project, the fulfilment of binding monitoring indicators, management of changes in projects, handling of possible project revenues, fulfilment of the obligation to separate accounting records of project transactions, compliance with the ban on funding for projects from other EU sources, implementation of the project partnership and compliance with its conditions; the implementation of mandatory publicity on, in particular, the dissemination of awareness of sources of funding for EU projects; compliance with the eligibility conditions for project expenditure, selection of suppliers and verification of the performance delivered on the basis of the procurement awarded.
The total financial value of the shortcomings of the qualifying SAO and NIK as expenditure ineligible for EU funding was found at €85,094.
However, this amount did not exceed the determined level of materiality related to the total audited amount for the sample of projects.
Despite the observed irregularities, the SAO and NIK evaluated the implementation of selected projects positively by the beneficiaries.
In most cases, the obligations arising from the conditions of the aid to the beneficiary were properly fulfilled.
Funds for the implementation of controlled projects have been spent in accordance with EU regulations and national law.
Nevertheless, seven of the eight aid beneficiaries audited by NIK were found to have irregularities in the fulfilment of material and financial obligations.
These were individual cases of a non-systemic nature and concerned in particular inconsistent preparation of project documentation and breaches of public procurement rules, which did not have an impact on the choice of contractor or the supply of contractually agreed works.
In only one of the NIK-controlled projects, the identified irregularity related to non-compliance with reporting obligations can be assessed as an ineligible expenditure of PLN 43,003 (of which EUR 8,231 financed by the ERDF).
On the other hand, the SAO identified ineligible expenditure of CZK 2,098 053 in three of the 19 projects audited (of which €76,863 was financed by the ERDF).
The irregularities included the failure to deliver the material and work paid for or the expense of modernising the property owned by a person who was not linked 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 a view to the consistent establishment of proper monitoring indicators for all specific objectives of the priority axis of the operational programme.
In general, it is also necessary to endeavour to identify indicators at programme level as well as projects that allow more reliable verification of the implementation of the impacts identified.
The notes and recommendations resulting from the checks carried out on both sides of the border are included in the SAO and NIK separate audit conclusions on CDs.
COMMUNIQUÉ
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 Polish Republic.
