Setting Up the New Cohesion Policy
Implementation System
Objectives and Challenges
Lessons Learnt from PP 2007-2013
Anthoula Charalambous Savvides
Senior Coordination Officer, Planning Bureau
Structural and Cohesion Funds Directorate
Managing Authority
Budapest 5 October 2012
Overview
 Management and Control System (MCS)
2014-2020 Legal Basis (not final)
 MCS Key Objectives
 Good Governance
 Internal Controls
 Institutional Framework
 Tools for Effective Operation of the MCS
 E-Cohesion Policy
 Strengths and Weaknesses - Cyprus case
2
Cohesion Policy Implementation System
PP 2014-2020
Objective: Simplification of the cohesion policy delivery system,
aiming at the reduction of administrative burden for beneficiaries
Challenge: Balance the accountability of designated bodies to the
complex regulatory environment, with the public interest, by
bringing about positive outcomes and added value
Distinction between the soundness of the management
and control procedures and processes and the goals that
they are meant to achieve remains very important
(Goal: efficient and effective allocation of resources, consistent
with policy priorities)
Management and Control System
PP 2014-2020, Legal Basis (not final)
Common Provisions Regulation, Part 2-Common
Provisions Applicable to CSF Funds, Title VIII
Management and Control, Chapter III, Article 65
Commission Powers and Responsibilities
Common Provisions Regulation, Part 3- General
Provisions Applicable to the ERDF, the ESF and
the CF, Title VI, Chapter I, Management and
Control Systems, Articles 113-116
Designation and functions of MA, CA and AA
Financial Rules Regulation, Article 56
Shared Management with Member States
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Common Provisions Regulation (CPR),
Management and Control,
Commission Powers and Responsibilities (not final)
The Commission,


satisfies itself that MS have set up management and control
systems which function effectively and in compliance with
the CPR and the Fund-specific rules
may carry out on-the spot audits or checks respecting the
principle of proportionality, by taking into account the need
to avoid duplication of audits, the level of risk to the Union
Budget and the need to minimize administrative burden to
beneficiaries
Scope of Commission’s audits,

verification of effective functioning of systems and

assessment of the sound financial management of programs
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Financial Rules Regulation, Article 56
Shared Management with Member States
The Commission and Member States
• respect the principles of sound financial management, transparency and nondiscrimination
Member States
• ensure correct and effective implementation in accordance with applicable
rules
• designate and supervise bodies responsible for the management and control
• carry out controls respecting the principle of proportionality and prevent, detect
and correct irregularities
Commission
• monitors the Management and Control Systems set in MS
• respects the principle of proportionality and level of assessed risk in its audit
work
Designated Bodies
• provide the Commission by 15 February, annual accounts, annual summary of
final audit reports and of controls (accompanied by an opinion of an
independent audit body)
Common Provisions Regulation,
Provisions Applicable to ERDF, ESF and CF
Management and Control Systems (not final) (1)
Member States






Designate MAs (public or private body) and CAs (public body). MA
which is public body may carry out the functions of CA
Designate AA functionally independent from MA & CA
May designate IBs to carry out certain tasks of MA & CA
(arrangements between IBs and MA&CA formally recorded in writing)
MA, CA & AA may be part of the same public body for the investment
for growth and jobs goal, for programs EU contribution<€250 mln
Notification of formal designation of MA and CA prior to submission
of 1st application for payment
Designation based on a report & an opinion of independent audit
body. Audit work may not be carried out where the MCS essentially
the same as for 2007-2013 & evidence of effective functioning.
(Report and opinion of audit body may be requested by Commission for OPs
exceeding €250 mln and for which there are significant changes)
Common Provisions Regulation,
Provisions Applicable to ERDF, ESF and CF
Management and Control Systems (not final) (2)
Managing Authority, responsible for managing the OP in
accordance with the principle of sound financial management
(management of OP, selection of operations, financial
management & control, verifications)
Certifying Authority, responsible for payment applications, for
drawing up accounts (Art 56 of FR) and certifying their
accuracy, completeness & veracity, for amounts recoverable
and withdrawn, for maintaining accounting records
Audit Authority, carries out audits on the proper functioning of
the MCS and responsible, for audit opinion according to
Article 56 of FR and control report
MCS Key Objectives
To view the management and control system only through the
regulatory and technical prism would distort the picture
Design a system based on the key objectives it is supposed to
achieve
Key Objectives:

Allocation of resources consistent with policy priorities (requires
good planning)

Expenditure control (requires effective internal controls system)

Good operational management to promote efficiency and
effectiveness – (requires good coordination among involved
Authorities)
Basic Requirement: good governance
Good Governance
Accountability
• Officials
answerable and
have
consequences
for acts of
commission or
omission
Predictability
• clear laws
and
regulations
enforced
uniformly and
effectively
Transparency
Participation
• clear roles and
responsibilities,
access to
information,
open program
preparation,
execution and
reporting
• by all
stakeholders
for feedback
and reality
check
Internal Controls
appropriate
cost effective
functioning
consistently
as planned
promote orderly,
economical, efficient
and effective
operations
safeguard resources
and adhereance to
laws and regulations
develop and
maintain reliable
data
Institutional Framework
Poor efficiency and effectiveness is partly rooted in institutional
issues. Institutions comprise both formal and informal rules
(“established practices”). Three basic points:



Failure to take into account key informal rules is likely to lead to a
failure of the system (it was the unexposed part of the iceberg that sank the
Titanic). Improvements may fail if in conflict with the less visible
informal rules.
Total stock of institutions is always larger than is visible on the formal
surface.
Organizations and units can be merged, restructured, recombined
and new created, but no change in outcomes will result unless the
basic processes and procedures change as well.
Build the management and control system based on the new legal
framework and taking into consideration the existing
institutional framework
E-cohesion
The E-cohesion initiative stemmed from the need to,
simplify implementation by reducing the administrative burden on
beneficiaries, so the ‘only once’ principle may be applied and to
increase transparency and openness
To comply with the e-Cohesion initiative MS are expected to have in place, for the PP 20142020, an IT environment enabling the secure exchange of information in an electronic way.


Consider reengineering processes to maximize efficiency (to apply
advanced IT to inefficient processes means to computerize
inefficiency)
IT cannot substitute for good management and internal controls
IT system should meet the following criteria,
fit real objectives and user requirements
go hand in hand with improved rules and processes
protect data and systems integrity
aim at an integrated strategy and avoid piecemeal approach
Management and Control System
2007-2013- Cyprus case
Tools for Effective Operation of the MCS
Circulars
(common
procedures)
MIS
(tools and
reports)
MCS
Seminars
and
Workshops
Support
(continuous)
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Management and Control System
2007-2013 Lessons Learnt
Strengths - Cyprus case
Common/Single system of monitoring and controls (and
MIS) enforced through MA circulars, enhanced efficiency
Emphasis on internal system of controls, ex-ante
verifications (administrative and on-the-spot , timing and
content controlled by MA and inbuilt in MIS) ensured
correctness of operations
Emphasis on capacity building/strong IBs (staff / training /
support) promoted effectiveness
Close communication and coordination between
responsible bodies ensured better planning and
coordination of activities, financial management and
control
Help Desk (provision of continuous support to
Beneficiaries and IBs)
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Management and Control System
2007-2013 Lessons Learnt
Weaknesses - Cyprus case
Extensive controls at Beneficiary and IB level
delaying submission and verification of expenditure
Management Information System not integrated with
national accounting system and/or other IT systems
Different financial flow system for different kinds of
beneficiaries (effort not to create parallel structures,
but designed number of financial flows systems)
MIS does not support electronic submission of data
from aid schemes’ Beneficiaries (mainly private
sector)
IBs performing extensive controls on Beneficiaries
that are Government Departments (expend. already
well controlled because of national procedures)
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Conclusions
Implementation systems should be more efficient and effective,
reconsider procedures, processes and specific roles
rethink what we do and what we can do differently
gather, process and store information and transform it to knowledge and
wisdom
give more emphasis on Beneficiaries’ needs and improve accessibility
face bureaucracy built in our systems and challenge the structures
learn from our experiences
Management should be more than administration. Care should be
taken so that we are not reduced to systems and controls. To achieve
efficiency and effectiveness we should
a) simplify
b) simplify and
c) simplify more
Thank you
for your attention
http://www.structuralfunds.org.cy