Structural Funds in IrelandStructural Funds in Ireland

Financial management, Financial management, control & audit - Ireland control & audit - Ireland

Dermot Byrne Head of Unit

ERDF (& Cohesion Fund) Financial Control Unit, Ministry of Finance, Ireland

OPEN DAYS – Brussels, 13 October 2005

OverviewOverview

Background to Structural Funds in Ireland 2000/06

Current financial control and audit model in Ireland

Contrast Interreg and ERDF structures

Changes & challenges for future

Ireland 1985-2005Ireland 1985-2005

1985 2005Debt/GNP ratio: 131% 30%

Unemployment: 18% 4.4%

Population 4.04m – most rapidly expanding population in Europe annual increase of 1.6% / EU average 0.3%

Average GDP growth 1997-2003 = 7.6% GDP growth of 5% per annum in 2004, 2005 Average EU 15 growth < 2.5%

Per capita GDP second highest in Europe after Luxembourg

National Development PlanNational Development Plan2000-20062000-2006

Border, Midland & Western Region (OBECTIVE 1)

Southern & Eastern Region(OBJECTIVE 1 in transition)

National Development Plan 2000/06National Development Plan 2000/06Operational ProgrammesOperational Programmes

EU Total €m €m

Economic and Social Infrastructure 1,491* 26,020Employment and Human Resources 901 14,200 (no ERDF)Productive Sector 282 7,340Southern & Eastern Region 572 5,380Border, Midlands & Western Region 400 4,094PEACE 106 141Technical Assistance 5 10

3,757 57,185

* Includes approx. €570m from Cohesion Fund

Paying Authority

ERDF Cascade Structure

Intermediate Body

Ireland

Managing Authority

Final Beneficiary

Final Recipient

Ministry of Finance

Regional Assembly or Government Ministry

Government Ministry or Agency

Local Authority or State Agency

Private firm receiving grant aid

Regulation 438/2001Regulation 438/2001

Audit function(Article 10)

Independent verification of (a) Management & Control Systems (b) Expenditure declarations

in order to give an opinion/assurance on the effectiveness of (a) M&C Systemsand (b) accuracy of expenditure declarations & supporting records.

ex-post:(a) Systems audits (b) Minimum 5% verification (audit)

Management & Control Systems(Article 4)

Systems (structures & procedures)to ensure the delivery of products and services co-financed by EU, ensure compliance with national and Community rules (eligibility, public procurement etc). Systems should include on-the-spot checks.

ex-ante:authorisation, segregation of duties, accounting, physical, Including written procedures

DG Regio Audit

Paying Authority

ERDF Financial management, control and audit structure

Intermediate Body

ERDF Financial Control Unit

Internal Audit

Internal Audit

Managing Authority

Internal Audit

Final Beneficiary

Internal Audit

Systems audits

M5% verifications

Final Recipient(ERDF grant)

DG Regio Audit

Paying Authority

Key reporting relationships

ERDF Financial Control Unit

Managing Authority

Management of programme Certification of expenditure to the Commission

Sponsor - Audit Partnership

Summary - audit objectivesSummary - audit objectives

Audit trail – complete and accurate supporting documentation at all levels

Compliance with Eligibility Rules

Compliance with Procurement rules

Ensure adequate monitoring / cost control (Article 4 spot checks)

Ensure that publicity / information requirements are met

Comprehensive Procedures Manuals (including EU regulatory requirements)

Functionally independent of Paying AuthorityFunctionally independent of Paying Authority Legally supported by Statutory Instrument (Ministerial Directive)Legally supported by Statutory Instrument (Ministerial Directive) Co-funded by the European Union – 50% Technical AssistanceCo-funded by the European Union – 50% Technical Assistance Carries out sample checks – minimum 5% (ERDF)Carries out sample checks – minimum 5% (ERDF) Responsible for planning, coordination & review of Systems Audits (ERDF)Responsible for planning, coordination & review of Systems Audits (ERDF) Body designated to issue declarations on winding up of assistanceBody designated to issue declarations on winding up of assistance Administrative Agreement with DG Regio Audit / Internal audit unitsAdministrative Agreement with DG Regio Audit / Internal audit units New development - “Contract of Confidence” with DG RegioNew development - “Contract of Confidence” with DG Regio

Financial Control UnitStructure and Key Activities

Single audit – “partnership” concept Single audit – “partnership” concept Audit strategy submitted to DG Regio (for Programme period, not just a year)Audit strategy submitted to DG Regio (for Programme period, not just a year) Assurance on methodology and quality of audit in MS (e.g. risk assessment)Assurance on methodology and quality of audit in MS (e.g. risk assessment) Exchange of audit reportsExchange of audit reports Annual report by MS Audit AuthorityAnnual report by MS Audit Authority Annual certification / Declaration of assuranceAnnual certification / Declaration of assurance Systematic feedback by the European Commission Systematic feedback by the European Commission Facilitate reduced audit effort by EU audit services in Member StateFacilitate reduced audit effort by EU audit services in Member State

Contract of Confidence

Paying Authority

Contrast: Interreg IIIB (NWE) v ERDF

Interreg IIIB (North West Europe) ERDF Ireland

Managing Authority

Paying Authority

(Min. of Finance)

Intermediate Body

ERDF Financial

Control Unit

Internal Audit

Internal Audit

Managing Authority

(S&E Reg. Ass)

Internal Audit

Final Beneficiary

Internal Audit

European Commission

Lead Partner Irish Partner

European Commission

Joint Secretariat (Lille)

Interreg audit arrangementsInterreg audit arrangements

Member State is responsible for minimum 5% verifications …

Expenditure declarations do not go through cascade structure (as ERDF)

FCU has no direct access to Paying Authority / Managing Authority records

Relies on information from PA / MA to facilitate audit of Partner in Ireland

Southern & Eastern (S&E) Regional Assembly is liaison body in Ireland, but

S&E Regional Assembly have no financial function (e.g. no Article 4 checks)

2007/13 – Cha2007/13 – Challenllenges?ges?

Member State Audit Authority likely to be FCU

Compliance Assessment Body likely to be FCU – review of proposed structures and procedures at beginning of round + opinion as to adequacy

If Structural Funds proportion is low, only national rules apply

National audit strategy – basis for mutual confidence

Adequate methodology

Coordination of audit activity at central level in each MS (by who?)

Contact the FCU at:Contact the FCU at:

ERDF Financial Control Unit15 Lower Hatch Street,Dublin 2Ireland.

Phone: 353 1 639 6217Fax: 353 1 639 6201E-mail: eucontrol@finance.gov.ie

Annual Reports (1999 - 2004)www.csfinfo.com (publications/annual reports)