ERDF User Manual
Chapter 8 Audit Authority Requirements: Version 2
CONTENTS
1.
INTRODUCTION ............................................................................................... 2
2.
BACKGROUND ................................................................................................ 2
3.
FUNCTIONS OF THE AUDIT AUTHORITY ...................................................... 2
System Audits ................................................................................................... 3
Audits of Operations .......................................................................................... 3
Sampling ........................................................................................................... 4
Audit Strategy .................................................................................................... 4
Annual Control Report ....................................................................................... 5
Reliance on other auditors ................................................................................. 5
4.
COORDINATION OF WORKING ARRANGEMENTS ....................................... 5
Article 16 and Article 13 ..................................................................................... 5
Article 16 and the Certifying Authority ................................................................ 5
5.
COOPERATION, ACCESS AND RETENTION OF DOCUMENTS.................... 6
Audit Trail .......................................................................................................... 6
Availability of Documents................................................................................... 6
6.
CLOSURE OF PROGRAMMES ........................................................................ 6
Partial Closure ................................................................................................... 6
Final Closure ..................................................................................................... 7
7.
RESPONSIBILITIES OF THE COMMISSION ................................................... 8
ANNEX A: Relationship working between the Managing, Certifying and Audit
Authorities and the RDAs ....................................................................................... 9
Annex B: Protocol: RDA/IAS working arrangements for A16 inspection visits 19
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1. INTRODUCTION
1.1. This chapter sets out the respective responsibilities of CLG as the Audit
Authority, RDAs as the Intermediate Bodies, and the Commission in relation
to the audit function for the 2007-13 round of Structural Funds for England as
set out in the Council Regulation (EC) No. 1083/2006.
2. BACKGROUND
2.1. For each Operational Programme the Member State has designated an Audit
Authority which is functionally independent of the Managing Authority and the
Certifying Authority to verify the effective functioning of the management and
control systems and carry out the other functions specified in Article 62 of the
Council Regulation. The mutual relationships between these three
authorities, laid down by the Secretary of State in accordance with Article
59.3 are set out in Annex A.
3. FUNCTIONS OF THE AUDIT AUTHORITY
3.1. The functions of the Audit Authority are set out in Article 62 of the Council
Regulation (EC) No 1083/2006.
3.2. In brief the Audit Authority of an Operational Programme is responsible in
particular for:
a. ensuring that audits are carried out to verify the effective functioning of the
management and control system of the Operational Programme;
b. ensuring that the audits are carried out on operations on the basis of an
appropriate sample to verify expenditure declared;
c. ensuring that audits take account of internationally accepted audit
standards;
d. preparing and presenting to the Commission a detailed audit strategy;1
e. by 31 December each year from 2008 to 2015:
i.
submitting to the Commission an Annual Control Report setting out
the findings of the audits carried out during the previous 12 months
ending on 30 June of the year concerned2 in accordance with the audit
strategy;
ii.
issuing an opinion on the basis of the controls and audits that have
been carried out as to whether the management and control system
functions effectively, so as to provide a reasonable assurance that
statements of expenditure presented to the Commission are correct
and as a consequence reasonable assurance that the underlying
transactions are legal and regular;
1
A strategy is not needed where the value of the programme does not exceed euros 750 and
Community co-financing does not exceed 40% of total public expenditure.
2 The first Annual Control Report will cover the period from 1/1/2007 to 30/6/08.
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iii.
f.
submitting, where applicable under Article 88, a declaration for partial
closure assessing the legality and regularity of the expenditure
concerned;
submitting to the Commission at the latest by 31 March 2017 a closure
declaration assessing the validity of the application for payment of the
final balance and the legality and regularity of the underlying transactions
covered by the final statement of expenditure, which shall be supported
by a final control report.
3.3. Where a common system applies to several Operational Programmes, the
information referred to in point 3.2 e.i. may be grouped in a single report, and
the opinion and declaration issued under points 3.2 e.ii. and iii. above may
cover all the Operational Programmes.
3.4. Should the Audit Authority use some other bodies to carry out the work
outlined in paragraph 3.2 a. and b. above it will ensure that such bodies have
the necessary functional independence (see para 3.18).
System Audits (para 3.2 a.)
3.5. CLG’s Internal Audit Service (CLG IAS) as the Audit Authority will evaluate
the reliability of RDAs’ management and control systems for governing
ERDF. The reliability of the systems will be determined using criteria
established by the Audit Authority for system audits, including an
assessment of all key elements of the systems. A record of the assessment
carried out will be kept.
3.6. Before an audit begins, the Audit Authority will contact the RDA to request
necessary background information and a meeting will be arranged to discuss
the terms of reference for the work to be undertaken. The discussion will
cover the objectives and risks to be reviewed as well as the timing, scope
and audit methodology and the RDA staff to be interviewed.
3.7. The Audit Authority will discuss any significant emerging findings and
conclusions with the RDA as the audit progresses. At the end of the fieldwork
a formal presentation meeting will be held to discuss preliminary findings and
possible recommendations. The Audit Authority will prepare a draft report
within 20 working days of conclusion of the fieldwork and the RDAs will be
invited to respond and provide an explanation within 20 working days. The
Audit Authority will, so far as it considers proper in its professional
judgement, take account of comments received. The final report will be
issued within ten working days of receipt of comments from the RDA.
3.8. The RDA will be expected to act on recommendations by drawing up action
plans. The Audit Authority’s strategy will include follow up audits to assess
implementation.
Audits of Operations (para 3.2 b.)
3.9. CLG IAS will also carry out audits for each twelve month period from 1 July
of a sample of operations managed by each RDA selected in accordance
with the provisions of Article 17 of Commission Regulation (EC) No
1828/2006. The Audit Authority will advise each RDA of its audit plan for
each year.
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3.10.
The audits will be carried out on-the spot and will examine documents
and records held by final beneficiaries. The audits will verify that the following
conditions are fulfilled:
a. that each operation meets the selection criteria for the Operational
Programme, has been implemented in accordance with the approval
decision and fulfils any applicable conditions concerning its functionality
and use or the objectives to be attained;
b. that the expenditure declared corresponds to the accounting records and
supporting documents held by the final beneficiary;
c. that the expenditure declared by the final beneficiary is in compliance with
Community and national eligibility rules;
d. that the public contribution has been paid to the final beneficiary in
accordance with Article 80 of Council Regulation (EC) No 1083/2006.
3.11.
Where problems detected appear to be systemic in nature and
therefore entail a risk for other operations under the Operational Programme,
the Audit Authority will carry out further examinations, including additional
audits where necessary, to establish the scale of such problems.
3.12.
Audit findings from specific project inspections will be discussed with
the relevant RDA. This may include any preventative or corrective action
necessary by the RDA.
Sampling
3.13.
The Audit Authority will comply with Article 17 of the Commission
Regulation (EC) No 1828/2006.
Audit Strategy
3.14.
The Audit Authority will develop an Audit Strategy as required under
Article 62 of the Council Regulation (EC) No 1083/2006. Following
submission to the Commission in August 2008, there will then be an annual
updating process, which accompanies the Annual Control Report. The first
update will be submitted to the Commission at the end of December 2008.
3.15.
The Audit Authority will own and determine the content of the strategy.
It will invite comments from RDAs, MA & CA on draft versions one month
before submissions to the Commission. It will also share with the RDAs, MA
and CA any comments received from the Commission which impact on
coverage or timing of assignments in the strategy.
3.16.
The Strategy will contain general themes for the whole programming
period, priorities for the next three years and a schedule of audit
assignments for the forthcoming year. The systems audit element of this will
be determined according to risk.
3.17.
The Strategy will describe the procedures to be followed for the
preparation of the Annual Control Report and the annual opinion (see below).
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Annual Control Report
3.18.
In order to obtain a high level of assurance, that is, a reduced audit
risk, the Audit Authority will combine the results of systems audit and audits
of operations to form an overall opinion. This will be conveyed to the
Commission in the Annual Report in the format set out in Article 18 of
Commission Regulation (EC) No 1828/2006. The Audit Authority will
describe in the Annual Control Report the way assurance has been obtained.
3.19.
In Operational Programmes for which the project error rate is above
the materiality level, the Audit Authority will analyse its significance and take
necessary actions, including making appropriate recommendations, which
will be included in the Annual Control Report.
3.20.
The Audit Authority will send the RDAs’ Secretariats for the
Programme Monitoring Committee the Annual Control Report, or the part of
the report relating to the Operational Programme concerned. The Audit
Authority will also notify the RDAs’ Secretariat of Commission comments
relating to that report.
Reliance on other auditors
3.21.
The Audit Authority will liaise with the RDAs’ Internal Audit and NAO
on a regular basis to discuss issues arising and matters related to the
improvement of the management and control of Operational Programmes.
There will be an exchange of draft systems audit programmes by 31
December each year. The Audit Authority will, however, provide all systems
audit assurance to the EC because RDA Internal Audit has limited
capacity/exposure to the intricacies of ERDF.
4. COORDINATION OF WORKING ARRANGEMENTS
Article 16 and Article 13
4.1. On-the-spot project monitoring work as required by Article 13 of Council
Regulation (EC) No 1828/2006 will be carried out by the RDAs.
4.2. On-the-spot inspection work as required by Article 16 of Regulation
1828/2006 will be carried out by the Audit Authority. Annex B details the
protocol for working relations and the process map that illustrates this.
4.3. The Audit Authority will agree arrangements with the RDAs for the detailed
administration regarding procedures before, during and after Article 16
inspection visits undertaken by the Audit Authority. This will include keeping
the other party informed of respective visit planning arrangements, to ensure
that projects are not unintentionally over-visited.
4.4. The RDAs shall share with the Audit Authority the results of any generic
lessons learned from Article 13 monitoring activity.
4.5. The RDAs shall report on the implementation of actions arising from any
generic lessons learned from Article 16 inspection activity.
Article 16 and the Certifying Authority
4.6. The Audit Authority will provide the Certifying Authority with information on
Article 16 inspection visits. This will allow the Certifying Authority to
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discharge its responsibilities around declarations and drawdowns of ERDF
from the Commission.
5. COOPERATION, ACCESS AND RETENTION OF
DOCUMENTS
5.1. The RDA, MA and CA have a duty to cooperate fully with the Audit Authority
and Commission officials or its authorised representatives and facilitate
planned and any ad hoc audits. All records, both paper and electronic, and
identified staff that auditors need to access must be made available.
Audit Trail
5.2. The RDAs, MA and CA should establish an adequate reliable audit trail for
Operational Programme spending through good records management. An
adequate audit trail will meet the following criteria:
a. it will permit the aggregate amounts submitted to the Certifying Authority
to be reconciled with the detailed accounting records and supporting
documents held by RDAs and beneficiaries;
b. it will permit verification of payments of the public contribution to the
beneficiary;
c. it will permit verification of application of the selection criteria established
by the monitoring committee for the Operational Programme; and
d. it will contain in respect of each operation, as appropriate, the technical
specifications and financial plan, documents concerning the grant
approval, documents relating to public procurement procedures, progress
reports and reports on verifications and audits carried out.
Availability of Documents
5.3. The RDAs, MA and CA shall ensure that all the supporting documents
regarding expenditure and audits on the Operational Programmes are kept in
accordance with Article 90 of the Council Regulation.3 The minimum period
specified in the new regulation is three years following the closure of an
Operational Programme (1083/2006 Article 90)4.
6. CLOSURE OF PROGRAMMES
6.1. The Audit Authority has specific responsibilities for providing the Commission
with an opinion on the statement of expenditure related to partial and final
closure of programmes submitted by the Managing Authority.
Partial Closure
6.2. If appropriate, the Audit Authority may provide an opinion to the Commission
on the statements of expenditure presented by the Managing Authority for
3
Also note section [ ] of the Funding Agreement chapter where State Aid requirements to
retain information for ten years could take precedence over the Article 90 requirement.
4 Lesson learnt – This could easily be until 2020 or later. Contracts should quote Article 90
rather than a date that may change due to closure delays. The policy of the GO Network
required files for 2000-06 to be retained for review until January 2015.
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operations completed ahead of the end of the programme. In reaching an
opinion, the Audit Authority will examine the results of the audit work carried
out, with a view to obtaining a reasonable assurance as to whether it is
correct and valid and the underlying transactions covered by the statement
are legal and regular.
Final Closure
6.3. For the final closure of a programme the Audit Authority will examine the
results of the audit work carried out on the programme in accordance with
the audit strategy. The results of the examination and any additional work
performed will be summarised in the final control report for the period 1
January 2015 to 31 December 2016. This work will be done to obtain a
reasonable assurance as to whether the payment application from the
Certifying Authority for the final balance of the Community contribution to the
Operational Programme is correct and valid and the underlying transactions
covered by the final statement of expenditure are legal and regular.
6.4. In reaching an opinion the Audit Authority will establish for each programme
whether the cases of irregularities and error rates found in the audit work are
material when compared with the way the Managing Authority had dealt with
them and the trend in the level of their occurrence over time. It will also
comment on the scope of the examinations conducted indicating whether
there were any limitations such as lack of documentation, systemic
problems, weaknesses in management controls, legal proceedings etc. and
the amount of expenditure and Community contribution affected. It will either
give:
a. Unqualified opinion – No limitations on the scope of examination and
the application for payment of the final balance of the Community
contribution to the programme is valid and the underlying transactions
covered by the statement of expenditure are legal and regular.
b. Qualified opinion – Some limitations on the scope of the examination
and/or irregularities and error rates and the way they have been dealt with
by the Managing Authority call for a qualified opinion but do not justify an
unfavourable opinion for all the expenditure concerned. An estimate of the
impact of the qualifications on the expenditure declared and the
Community contribution will be provided.
c. Adverse opinion – Major limitations on the scope of the examination
error rates and cases of irregularities and the way they have been dealt
with by the Managing Authority such that no conclusion can be reached
on the reliability of the final statement of expenditure without considerable
further work. The claim will be considered not valid.
6.5. The Commission will inform CLG of its opinion on the content of the closure
declaration within five months of the date of its receipt. Article 89 of the
Council Regulation (EC) No 1083/2006 sets out the conditions for the
payment of the final balance and what action the Commission can take
before final closure of the programme.
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7. RESPONSIBILITIES OF THE COMMISSION
7.1. Without prejudice to audits carried out by the Audit Authority, Commission
officials or authorised Commission representatives may carry out on-the-spot
audits to verify the effective functioning of the management and control
systems, which may include audits on operations included in Operational
Programmes, with a minimum of ten working days’ notice, except in urgent
cases. The Commission may ask CLG officials to take part in such audits.
7.2. Commission officials or authorised representatives empowered to carry out
on-the-spot audits will have access to the books and all the documents,
including electronic documents and data, related to expenditure financed by
the Funds.
7.3. The Commission and the Audit Authority will meet on a regular basis, at least
once a year, to examine together the Annual Control Report and opinion
presented under Article 62 and to exchange views on other matters relating
to the improvement of the management and control of the Operational
Programme. The Audit Authority will co-operate with the Commission to
coordinate their respective audit plans and audit methods and immediately
exchange the results of audits to make the best possible use of resources
and to avoid unjustified duplication of work and burden on the RDA.
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ANNEX A
Relationship working between the Managing,
Certifying and Audit Authorities and the RDAs
Introduction
1. The paper sets out arrangements agreed for liaison between the managing,
certifying and audit authorities and the RDAs in connection with the
performance of their respective tasks under the Structural Funds Regulations.
This is intended to be a live document and once agreed will be updated as
necessary to reflect the latest understanding.
Status of this paper
2. This paper will be submitted for approval to the ERDF Programme Board,
chaired by CLG’s Director General Finance, the European Programme
Boards, chaired by CLG’s Director of European policy and the Programme
Implementation Group, chaired by CLG’s Deputy Director of European
Programmes. Together these Boards play a key role in oversight of the
ERDF programmes. The paper will be adopted as part of the Management
and Control system through being appended to the Annex XII description of
the management and control system. The User Manual and Regulations take
precedence in any debate about interpretation.
The paper is subject to
review, but there is presently no plan for undertaking reviews on a regular
basis. In this paper, a reference to an Article is, unless otherwise stated, a
reference to an Article of Council Regulation 1083/2006.
Background
3. The Secretary of State for Communities and Local Government is responsible
for the management and control of the Operational Programmes approved by
the Commission for England, in particular, through ensuring that the
programmes are effectively managed in accordance with the management
and control system set up under Article 58.
4. The Commission has approved ten Operational Programmes in nine regions
(two in the South West). For each programme the Member State has
designated a Managing Authority (MA), Certifying Authority (CA) and an Audit
Authority (AA) to ensure that projects are managed in line with the Structural
Funds Regulations. The functions of each authority can be vested in different
parts of the same organisation but the parts must be functionally independent.
5. The Secretary of State, for the UK Government, has designated European
Policy and Programme Division (EPPD) as the MA, Internal Audit Services as
the AA and Financial Reporting and Accounting Division as the CA. These
parts or administrative divisions of CLG are functionally independent of one
another and have separate reporting lines to the CLG Board.
Annex A
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Roles
Managing Authority
6. The MA is responsible for overseeing the implementation of the Operational
Programmes and for ensuring compliance with the Structural Funds
Regulations and any national legislation that applies. It is also responsible for
ensuring that the outputs set out in the Operational Programmes are
delivered. For each programme the functions of the MA have been split
between EPPD and the RDA for the region concerned, which has been
designated as an Intermediate Body under Article 59.2, but EPPD retains the
overarching responsibility for ensuring that all legislative requirements are
met. The MA will take account of RDA business processes in exercising its
functions. The functions of the MA are set out in Article 60.
Intermediate Bodies
7. The RDAs have been designated as Intermediate Bodies, which means that
they have been entrusted with the performance of specified Managing
Authority responsibilities. For each Programme, the entrusted functions were
set out in a Schedule of Managing Authority Functions, which was laid before
Parliament and published on the CLG website. The RDAs will run the
programmes in line with the User Manual and other guidance issued by
EPPD and the Commission from time to time. EPPD, as MA, retains the
responsibility for the interpretation of the Structural Funds Regulations, but
would always seek to involve RDAs in problems of interpretation.
Certifying Authority
8. The CA is responsible for approving applications for payments from the ERDF
made in respect of expenditure under the programme and for drawing up and
submitting certified statements of expenditure to the Commission. The CA
must maintain accounting records of these applications and the expenditure
in computerised form. The functions of the CA are set out in Article 61.
9. The CA should ensure that it has adequate information concerning the
procedures operated by the MA and by the intermediate body to verify the
delivery of the co-financed products and services, the reality of the
expenditure claimed and compliance with all applicable Community and
national rules. The CA is also responsible for ensuring that the expenditure
declared has been incurred in respect of operations properly selected for
funding and that an adequate audit trail has been maintained. This will be
done largely through information and assurances held on MCIS, the IT
system which has been developed to assist the management of ERDF
programmes, but the CA could seek additional information from the RDA or
the MA if there is any question about the eligibility of the expenditure about to
be declared to the EU.
The Audit Authority
10. The Audit Authority is responsible for assessing independently the
effectiveness of systems of management and control put in place by the MA
and reporting on their findings to the Commission. The AA then tests this
assessment periodically through a programme of annual audit (Article 16
checks) and audit checks contributing to programme closure. The functions
of the AA are set out in Article 62. An audit strategy has been drawn up by
the AA setting out how it proposes to undertake its ERDF functions.
Annex A
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11. If the AA identifies a specific problem in the way in which any RDA has
handled a specific issue, it would first raise this with the RDA concerned. The
MA would also be alerted so that it could consider whether further guidance
or support was needed for the RDA concerned or across the whole network.
Once an issue has been identified it will be for the MA and the RDA to work
together to resolve the issue, involving audit expertise from the AA as
necessary.
Interface between the MA, the RDAs, the CA and the AA
12. It will be essential for the MA, the CA and the AA to work together in
performing their respective functions for each programme, in liaison with the
RDA, and to keep in close touch to ensure that guidance on policy and other
matters is provided in a timely way to RDAs and that emerging issues are
identified and dealt with quickly and effectively. That does not detract from
each organisation’s independence. It would be desirable for there to be a
reliance on each others’ work in order to minimise duplication of effort.
However, the Audit Authority must be able to recheck work already carried
out if it considers that necessary to obtain assurance on the quality of controls
or if it falls within the audit sample.
13. There are regular meetings between the CA, MA, AA and RDAs in the form of
the Programme Implementation Group (PIG). This is a strategic group which
has representatives of all RDAs, the CA, MA and AA. BIS and a GO network
representative are also members. This group is the main forum for
discussing ERDF issues such as how to respond to EU advice, sharing best
practice about managing the programme, challenging interpretation and
determining next steps. Where it is not possible to reach a consensus, issues
are escalated to the European Programme Board.
14. But not all discussion of ERDF matters needs to be in formal surroundings.
All parties will have exchanges about emerging issues or problems. There is
no hierarchical approach to those communications, so that all parties can feel
free to raise issues with any of the others. The key point will be to adopt a
collaborative approach to discussion and resolution of problems so that
solutions can be owned by all and not imposed by one or other party.
Maintaining regular communication between all parties will also be critical to
the successful implementation of each Operational Programme.
Interface between the MA, RDAs, CA and AA and the EU
15. The MA, RDAs, CA and AA each have regulatory obligations to submit
various reports to the EU throughout the life of the programme. There are
formats and clear timetables for submission and for the EU to respond. Rolespecific access to the EU’s web based IT system SFC07 has been assigned
to individuals in each of the MA, CA and AA to allow them to upload reports
as required. That doesn’t mean these reports are developed in isolation, but
that where appropriate they would be shared in draft with relevant
stakeholders. There is an expectation that wherever reports are due, the
MCIS system would provide the data. We annexed a paper to our Annex XII
description of management control which sets out our thinking on which
regulatory reports could be prepared in this way. Some reports, eg the
Annual Implementation Report, must first be cleared through the PMC before
being submitted by the MA. This system was followed successfully for the
AIR reports submitted in June 2007.
Annex A
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16. Each of the organisations covered by this paper will have its own relationship
and communications channel with the EU. The MA would take the lead in
discussing England-wide issues with the EU but would work closely with the
RDA network and others as necessary to ensure that any issues are clearly
understood and regional implications taken into account. But RDAs would
also communicate directly with the EU on matter of particular interest in their
region, involving others as necessary. As the DG Regio desk officer sits on
the PMC as an observer the relationships are already being built up.
17. The CA and AA will want to have their own separate dialogues with the EU on
issues that impact mainly on them, but again, would discuss implications with
others where there are potential wider reaching impacts.
Mutual requirements of CLG as MA and the RDAs as Intermediate
Bodies:
i. joint working to brief the PMC Chair to ensure that key issues are carefully
explained to and explored by the PMC;
ii. timely and accurate advice and response to queries;
iii. collaborative working and effective consultation before the issue of guidance
by the MA (the MA is under a statutory duty to consult) or the implementation
of any significant change in the way ERDF is operated;
iv. mutual support if the need arises to challenge advice or action from other
parties;
v. sharing final reports prepared by the Internal Audit Service of the RDA on the
management of the ERDF and resultant action plan to address any
deficiencies identified (if the RDA concerned agrees);
vi. sharing final reports by RDAs on Article 13 verification visits;
vii. sharing final reports of audits carried out by the AA, European Court of
Auditors or the Director General for Regions, where that is agreed;
viii. full co-operation from RDAs, if and when the MA considers it necessary to
exercise its right to carry out on the spot quality reviews;
ix. timely submission of the annual and final implementation reports for
Operational Programmes prepared by RDAs and approved by PMCs;
x. sharing final evaluations of effectiveness of programme outcomes;
xi. creating a culture of openness, trust and ‘no surprises’ through quarterly
meetings between the MA and the RDA to review management and
operational issues and policy developments;
xii. identifying and addressing common issues and risks arising from the
implementation of Operational Programmes and developments in EC and
national requirements; and
xiii. developing guidance and sharing best practice.
Mutual requirements of MA and CA:
i. CA to provide percentages and values statistics on irregularities identified by
RDAs as reported via MCIS (or other agreed means while MCIS is under
development);
ii. CA to share the debtors ledger on money owed, recovered or outstanding (to
help review issues around clawbacks and for regular reconciliation of records
maintained by MA);
iii. CA to provide a regular feedback on issues identified through the examination
of aggregated claims submitted by RDAs, so that the MA can identify and
address any systemic problems or weaknesses in the management and
control systems.
Annex A
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iv. MA to provide regular feedback to CA on the effectiveness of the RDA in
managing its Operational Programme, based on knowledge gained from
attendance at Programme Monitoring Committees, quarterly joint meetings
with the RDA and BIS, other regular meetings with the RDA, regional visits,
meetings with other stakeholders and EC officials, Annual Implementation
Reports, the RDA’s communications strategies, regular and ad hoc reports
from MCIS and audit reports.
Mutual requirements of MA and AA:
i. AA sharing with MA the outcome of compliance assessment audits done on
RDAs and agreeing the action needed to address any weaknesses;
ii. AA preparing the annual report (Article 16) incorporating reviews of the Article
13 checks done by the RDA and agreeing with the MA and the RDA a course
of action to address issues arising from the report;
iii. AA and MA holding regular liaison meetings to review audit issues, progress,
and dealings with RDAs and the EC; and
iv. AA and MA to work closely together to ensure appropriate handling of fraud.
As Managing Authority CLG will also:
i. identify national issues in partnership with the RDAs – such as the recent
uncertainty over interpretation of Article 55 – and set up meetings and
prepare or procure discussion papers with a view to finding a solution, where
necessary in dialogue with the Commission;
ii. act as the first point of contact for RDAs on all aspects of the Operational
Programme, legislation and regulations, the MCIS system; in consequence,
enhancing the flexible flow of information between RDAs, Devolved
Administrations, other Government Departments, and the EU to facilitate
more effective decision-making and ERDF administration;
iii. have quarterly meetings with each RDA to discuss progress and
achievements and emerging issues and risks; a standing agenda will be used
to ensure that key issues are covered and that regional leads interrogate
MCIS as required before the meeting to ensure they are up to speed;
iv. review the outcomes of the joint quarterly meetings and consider whether
joint or individual action is required;
v. quality review the standing instructions RDAs have prepared to ensure they
minimise the potential for non-compliance and are clear and robust;
vi. during quarterly visits seek a better understanding of what quality checks and
balances the RDAs have in place to ensure compliance, including (1)
establishing the progress and ascertaining the quality of the RDA’s Article 13
monitoring regime; and (2) have a clear understanding of the percentage of
the programme where the RDA is the final beneficiary and the additional
controls put in place to achieve separation of functions;
vii. ensure that lessons learned from the 2000-06 ERDF round are acted upon to
prevent similar failings happening again;
viii. monitor progress against N+2 spending targets in sufficient time to enable
appropriate action to be taken to prevent the possibility of de-commitment of
funds;
ix. monitor trends in error rates for early warning of potential problems and to
facilitate spreading of best practice amongst RDAs;
x. contribute to PMC business and attend PMC meetings to relate CLG and
wider Government policy positions and to gather intelligence on issues
affecting programme management, compliance with regulations and delivery
of products;
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xi. have regular meetings with BIS to review capacity and governance issues
and associated risks, and findings of internal and external auditors that may
affect any RDA’s ability to deliver its Operational Programme;
xii. use MCIS intelligently and in a proactive manner to monitor and obtain
reasonable assurance on progress in implementing Operational Programmes;
regularly review a sample of aggregated claims submitted by RDAs to obtain
assurance on the conformity of expenditure with stated requirements; and
xiii. run workshops based on chapters of the ERDF User Manual, as required, for
RDA practitioners and CLG regional leads.
The Ladder of Intervention
18. The aim of MA is to steer not micro manage. The MA has a duty to ensure
that the RDA’s performance standards in relation to the management of the
ERDF are maintained at an effective level, and will have to intervene in
situations where the RDA’s ability or willingness to manage the programme
effectively and compatibly with regulatory requirements is compromised
significantly. But the MA will endeavour to ensure that the degree of
intervention is proportionate to the perceived failure and the inherent risk. For
example, a relatively minor, low risk act of non-compliance might be
effectively dealt with be means of a phone call, whereas serious and
sustained acts or omissions that risks financial correction would have more
formal consequences. This stepped approach to intervention relies heavily
on trust, cooperation and dealing in good faith between EPPD and the RDAs.
Intervention triggers
19. The following are some examples where a higher level of direct MA
intervention can reasonably be expected:
i. failure to discharge any of the responsibilities entrusted to the RDA at all or in
line with acceptable practice (according to the Structural Funds Regulations,
guidance issued by the MA or the Commission, the User Manual or
otherwise);
ii. knowingly disregarding the requirements or other provisions of the User
Manual;
iii. failure to cooperate with the AA or EC auditors in the discharge of their audit
responsibilities;
iv. failure to implement accepted audit recommendations without reasonable
justification;
v. despite repeated reminders from the MA, failure to provide the annual
implementation report in the required format and in compliance with EC
requirements;
vi. failure to provide information required by the PMC to enable it to discharge its
responsibilities under Article 65;
vii. failure to use MCIS in accordance with agreed procedures and processes;
viii. failure to take all necessary steps to meet N+2 spending targets (which could
threaten de-commitment of funds);
ix. failure to submit claims and expenditure forecasts to the CA in an acceptable
form on MCIS;
x. failure to report known irregularities to MA or to take action to recover grant or
take other remedial steps in consequence of irregularities;
xi. concerns about propriety or conflicts of interest in the case of support for
projects where the RDA is the final beneficiary, including a significant rise in
the percentage of programme resources allocated for such projects or a clear
upward trend;
xii. inadequate response to adverse AA reports and findings.
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Appropriate action
20. Where the MA considers that there is a problem or potential problem relating
to the management of an Operational Programme, the first response will
normally be an informal exchange with the RDA to establish the facts with a
view to agreeing steps required to rectify or avert the problem. All parties
share responsibility to find an acceptable, ERDF compliant and timely
solution. Any issues of cross-cutting significance will be brought to the
attention of all RDAs through the Project Implementation Group. Any
persistent failings will be reported to the European Programme Board and,
depending on level of risk that they present, to the Departmental Board.
Depending on the nature and intensity of the problem, the MA could take any
of the following steps:
i. undertake an on-the-spot quality review;
ii. seek advice from BIS as sponsor Department;
iii. ask the AA or other suitable and independent organisation to undertake an
adhoc audit to establish the situation on the ground at the RDA;
iv. facilitate a peer review with a second RDA which had resolved a similar
problem;
v. agree an action plan or timetable with the RDA to bring about change;
vi. offer advice, support or additional resources to assist the RDA;
vii. suspend reimbursement of an individual RDA claims until satisfied that good
progress is being made to address the shortcomings;
viii. where necessary seek to strengthen the PMC to help improve monitoring of
programmes and compliance with regulations; and
ix. ultimately as a last resort and with Ministers’ consent revoke the RDA’s
designation as an intermediate body. This would be achieved by revoking the
statutory instrument that gave effect to the designation, and would be a
matter for the Secretary of State acting for the UK Government, rather than
for the MA. But the Secretary of State would only act on the advice and
recommendation of the MA.
Sharing Information
21. The MA and the CA will obtain assurance from the information supplied by
the RDAs, any quality review work carried out by the MA and from the work
done by the AA on the RDAs’ systems for handling claims, including dealing
with irregularities, clawbacks and other changes. The CA will also look to the
MA to provide additional assurance from a policy perspective that the
programmes are delivering the agreed outcomes. In turn, the AA will require
sufficient information from the MA and the RDAs on which it can devise an
appropriate approach to audits and base its judgements. This sharing of
information will develop further as progress is made in rolling out MCIS and
as the RDAs begin financing of projects.
Government Office Role Outside London
22. The Government Office Regional Director chairs meetings of the Programme
Monitoring Committee, supported by an RDA Secretariat for ERDF and in
most cases by a GO Secretariat for ESF. Arrangements between the
Regional Director and the RDA Secretariat should provide a vehicle for Chair
and the Secretariat(s) to agree the agendas, agree how issues should be
handled in the meetings and ensure that ERDF and ESF management is
complimentary. RDs are representatives of the Government and as such
bring to the PMC independence and expertise on key matters of national and
regional policy. The Regional Director is expected to exercise the chair
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responsibility judiciously, with support from the relevant MA regional lead.
Government Offices play a strategic role in shaping national policy through
local and regional expertise, and by coordinating sub-national work across
departmental boundaries. They have also been asked by BIS and CLG to
add value to the RD’s presence on the PMC by operating a ‘support and
challenge’ role in relation to the ERDF. The GO can help the MA and CA to
discharge their responsibilities by providing knowledge about regional needs
and regeneration activity, and by sharing any intelligence relating to ERDF
issues or local perception of the effectiveness of the Operational Programme.
GOs and the MA are working together to improve their coordination to make
sure that they both engage sensibly and sensitively with the RDAs and that
information and other requests to RDAs are not duplicated.
What has CLG as MA done so far?
23. The Government and the MA have been working closely with the RDAs and
others to put in place systems and procedures to ensure compliance with the
Structural Funds Regulations and with national legal, administrative and
financial requirements. The steps taken include:
i. developing and adopting the User Manual, which is the main document
comprising the management and control system put in place by the Secretary
of State, and is designed to regulate and inform the implementation of
Operational Programmes; establishing a protocol to explain how changes to
the Manual would be taken forward and outstanding chapters completed;
arranging a series of workshops based around the User Manual chapters to
ensure common interpretation and understanding of its provisions by the
RDAs in delivering the programmes;
ii. developing and providing a web based electronic Management and Control
Information System (MCIS) to allow claims to be submitted by projects to
RDAs for aggregation and reimbursement by the CA, and to form the basis
for certification of expenditure to the EC;
iii. setting up a hierarchical corporate governance structure through Boards and
Implementation Groups, with clear remits to avoid duplication, in order to
bring together all key stakeholders in the programmes, to allow early
identification of issues, and to provide a forum for discussion, problem solving
and dispute resolution, and for issues to be escalated to the CLG Board if
necessary;
iv. creation of a dedicated resource within EPPD, supported by a network of
senior officials to be Managing Authority Regional Leads, responsible for
representing MA at Programme Monitoring Committee and for having
quarterly policy discussions with each of the RDAs to ensure that systemic
issues are identified and dealt with speedily and that a consistent approach is
taken across all regions;
v. creation of a dedicated resource and expertise within EPPD for liaising with
the CA and dealing with financial issues;
vi. creation of a dedicated resource and expertise within EPPD to monitor
irregularities and recovery process, and to meet all EC reporting
requirements;
vii. creation of a dedicated resource to act as client for the MCIS system to
ensure that it continues to provide a compliant and effective system for the
RDA’s payments and aggregate claims, and that it meets the business needs
of the RDAs, the MA and the CA;
viii. creation of a risk register to identify and address threats to the successful
delivery of ERDF programmes and to help avoid or minimise the chances of
financial correction or de-commitment;
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ix. holding regular liaison meetings with the CA and the AA to promote greater
synergy in the discharge of their respective functions and enhance each
authority’s understanding of the role of the others; and
x. strengthening BIS’s sponsorship assurance framework to include a specific
section on ERDF.
What has CLG as AA done so far?
24. The ERDF and European boards and the Programme Implementation Group
should also be aware of what has been done so far by the AA. The steps
taken include:
i. identifying areas where information flows need to be improved or more clearly
understood; some of this activity has been directly linked to the compliance
assessment, but other areas have included communication and
responsibilities in relation to fraud matters and irregularities;
ii. raising awareness of and passing on lessons from the 2000-06 programme;
iii. building an understanding of the AA functions, including the AA’s role under
Article 16 and liaison with the RDAs to ensure effective communication about,
and discharge of its duties under, Articles 13 and 16;
iv. drawing attention to the risks of not sharing a common understanding of the
Structural Funds Regulations and of failure to comply with deadlines; Work on
the compliance assessment has frequently provided opportunities for
suggesting improvements to the MA, for example in relation to guidance on
eligibility.
What has CLG as CA done so far?
25. The ERDG and European boards and the Programme Implementation Group
should also be aware of what has been done so far by the CA. The steps
taken include:
i. clearly documenting its data requirements and processes and procedures;
and
ii. being closely involved in the development of MCIS and attending the MCIS
user acceptance testing.
Next
26. This document will be reviewed regularly and updated by the MA after
consultation with the RDAs, the CA and the AA.
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Reporting template for Quarterly Reviews
Present:
Date of meeting:
Report agreed by & date:
Report sent to:
PROGRAMME OVERVIEW
How’s it going (RAG)
Major projects
Details of projects where RDA is
the end beneficiary
Successes and achievements
Progress
against
targets,
indicators and outputs
Spend v commitment & pipeline
MA help needed to resolve issues
Potential problems
Management
verifications
of
Article 31 checks
Risk Register
Fraud cases
Monitoring and verification (any
issues thrown up by A13 or A16
work?)
Docs held by RDA and available
to EC
Projects aborted after start-up
Projects insolvent
Reconciliation between RDA’s
general ledger ERDF expense
codes
Discussions with desk officer
Relationship
with
partners/stakeholders
Planned events or publicity
Suggestions
for
best
practice/improvements
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ERDF User Manual
Chapter 8 Audit Authority Requirements: Version 2
Annex B
Protocol: RDA/IAS
inspection visits
working
arrangements
for
A16
1. Introduction
1.1. This document provides detailed day-to-day working arrangements underpinning
chapter eight of the User Manual. Separate protocols have been developed for antifraud procedures (chapter five) and systems based audits.
1.2. The Regional Development Agencies (RDAs) as Intermediate Bodies (IB) and the
Communities and Local Government Internal Audit Services as Audit Authority (AA)
have clearly defined and independent roles for the delivery of the 2007 – 2013
ERDF Programmes. These roles are also key to the Certifying Authority’s (CA)
understanding of project risk, irregularities, disputes, payment blocks, etc. The
Managing Authority (MA) will also have an interest in how the IBs are carrying out
delegated functions, the findings of the AA and any disputes between the AA and
the IBs.
1.3. The AA and RDA must work closely together while ensuring that each maintains its
own independence. This is essential in order for the overall ERDF management and
control system to operate effectively.
1.4. In addition to this there should be effective communication between the IB A13
function and the AA. Lack of effective communication between A4 and A10 teams
was highlighted, by the European Court of Auditors and the Government Office Audit
Team, as a deficiency in the 2000–06 ERDF programmes. Adherence to the
principle of the protocol will guard against any future criticism of 2007-13
programmes.
1.5. The Commission has also produced draft guidance relating to good practice for A13
controls (COCOF 08/0020/01-EN). Page 14 paragraph 2.11 states:
“Although management verifications (A13) and audits (A16) under the responsibility
of the AA should be separated, exchange of information between the staff carrying
out these separate controls is desirable. For example, the staff involved in A13
should be kept informed of the results of A16 and may well look to the AA for
advice while the latter should take into account the results of A13 in its risk analysis
and audit strategy.”
1.6. Therefore it is necessary to ensure that there is effective communication and sharing
of information between the A13 and A16 teams on the 2007-13 programmes. The
process should be documented in order that each RDA and the A16 team
understand what is required.
1.7. Annex 1 details the communication requirements in relation to the A13/A16
relationship. Annex 2 relates to the protocol in process map format.
2. Principles of the AA/RDA roles for A16 audit visits.
2.1. The AA will identify a lead contact for each RDA/Operational Programme and the
RDA will identify a lead contact for AA liaison.
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ERDF User Manual
Chapter 8 Audit Authority Requirements: Version 2
2.2. The AA and RDA will hold regular, at least quarterly, meetings and/or
teleconferences to support planning needs and to share information. All meetings
should be documented in order to create a suitable audit trail and discussion should
include:

progress towards completing planned visits;

issues arising from visits and lessons learned;

progress in clearing irregularities, including irregularities where the RDA is the
final beneficiary;

action taken to resolve any systemic issues identified through A16/A13 visits;

overall error rates detected and progress in reducing these; and

wider policy and audit issues emerging from the Managing Authority and/or
the European Commission.
2.3. The AA will produce bi-annual plans for Article 16 audit visits. The RDA will ensure
the most up to date information is available in order for the AA to prepare the plans
and for the preparation of audit visits.
2.4. The RDA will be the main point of contact between the AA and individual projects. A
named individual within the RDA will be nominated as the key liaison point for each
project.
2.5. Where the RDA is the final beneficiary, the same principles will be followed, whereby
the RDA as Intermediate Body will act as the main point of contact between the AA
and the RDA as project deliverer. The organisational structure within the RDA set
out in the Implementing Provisions confirms the separation of functions between the
Intermediate Body roles and the RDA as project deliverer.
2.6. The AA will discuss the findings from each specific project audit and agree with the
RDA any follow up action and timeframe.
2.7. The RDA will be responsible for resolving any issues identified through A16 audits
by managing any follow-up action with individual projects, keeping A16 teams
updated with any progress information. The AA will be ultimately responsible for
deciding if the actions taken by the RDA to resolve issues are acceptable.
2.8. The RDA will be responsible for producing and sending a report to the AA to confirm
corrective/preventative measures, including the handling of irregularities and
financial corrections in line with guidance contained in chapter five. The report shall
contain base level documentation (invoices, procedures, evidence of repayments
etc) to ensure that the AA has absolute proof that recommendations have been
resolved and the required follow up action has been taken (further detail at section
7).
3. Development of the A16 annual audit plan
3.1. The Audit Authority’s operational year, for carrying out A16 visits, runs from 1 July to
30 June each year. The projects to be included in the audit plan must have incurred
expenditure in the previous calendar year. The definition of expenditure incurred, as
provided by the EC, means expenditure declared to the Commission.
3.2. This means that for a project to be selected in the July 2009 to June 2010 annual
audit plan it must have incurred expenditure within the 2009 calendar year. It is
important to note that not only should the project have incurred expenditure, the
RDA must then have declared this to the CA and the CA in turn to the Commission.
The diagram at Figure 1 sets this out in more detail.
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ERDF User Manual
Chapter 8 Audit Authority Requirements: Version 2
Figure 1
EUROPEAN COMMISSION
DG Regional Policy & DG Employment, Social Affairs & Equal Opportunities
EN
Timing of the reports
AP
Audit period
ACR
Annual control report
ACR
RSRP Random sample reference period
FCR
Final Control Report (31 March 2017)
2007
AP1
2008
2009
FCR
2010
2011
2012
2013
2014
2015
ACR2
AP3
ACR3
ACR4
AP4
AP5
ACR5
AP6
ACR6
AP7
ACR7
AP8
Annex B
2017
ACR1
AP2
Guidance note:
Annual Control
Reports and
Opinions
2016
ACR8
AP9
Brussels, 5 December 2008
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Version 2 September 2009
FCR
7
3.3. For each Operational Programme the AA will prepare bi-annual audit plans selecting
and identifying projects to be audited. RDAs will supply to the AA, by 1 May each
year, a list of all projects approved for funding [and anticipated approvals] by Priority
Axis, their expenditure profiles, RDA risk banding and a copy of the A13 visit plan.
3.4. During the course of each year the AA will provide the RDA with A16 plans for two
periods. For the audit year concerned, by 8 July for visits to be carried out between
July and January and 8 January for visits to be carried out between February and
June. The plans will include the rationale for selecting projects and the AA staff
involved. The RDA should raise any queries about the proposed audit plans within
ten working days of receipt.
3.5. AA will provide the RDA with the final plans by 22 July and 22 January each audit
year. Once the plan has been received, RDA’s must send the following information
for all projects in the plans to the AA within ten working days:

the outcome of monitoring visits under A13 and any other audit visits;

any concerns the RDA may have about delivery of the project;

key personnel and contact details for the project organisation; and

contact details of the appropriate Delivery/Monitoring Officer at the RDA.
3.6. Once the AA issues its final plans, it is recommended that the RDA writes to each
selected project to inform it that it has been selected for audit within the AA
operational year and to outline the requirements of the visit. The AA will provide
projects with confirmation in writing of the exact dates of the audit. The AA will
attempt to give the selected projects all available prior notice, but in any event not
less than two weeks, copying the RDA into any correspondence.
3.7. There could be circumstances where the AA adds further A16 visits to its sample
after the issue of the final plan, and the RDA and the project have less notice of the
visit.
[This precise timing of the arrangements under section 3 can be agreed on a bilateral
basis between each RDA and the respective A16 Teams.]
4. A16 Audit – Preparation for Visit
4.1. Before the inspection visit takes place the AA and RDA shall agree a mutually
convenient date when the RDA will make the selected project files available,
providing the AA with suitable working space in order that they may review the files.
The RDA shall also provide the AA with access to photocopying facilities.
4.2. Where project files exist in electronic version only, the RDA should give A16 teams
access to the electronic system on which the documents are stored. Access
arrangements can be agreed between individual RDA’s and A16 teams, however
the A16 teams must have access to all original documentation relating to the funding
of an ERDF project in order to comply with Article 14 of EC Regulation 1828/2006.
4.3. The AA will review the project files at the RDA’s premises and take copies of at least
the following documents, detailed below, in order to prepare the A16 audit file.
Following the review of the project file the AA may need to discuss aspects of the
project with the RDA project officer.

project registration of interest;

project application form;

project appraisal;

project business plan;

project offer letter including any amendments;
Annex B
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Version 2 September 2009

project claim selected for audit.
4.4. The above list is the minimum required and is not exhaustive, the AA retains the
right to copy any documents contained within the project files which they consider to
be relevant to the audit.
4.5. There may also be occasions where the A16 staff will need to remove project files
from the RDA premises in order to complete A16 visits. Instances of where this
could happen would be where an audit has been arranged at the last minute (eg. as
a result of a request by the Commission) or where the RDA have been unable to
produce the files at the time requested by the AA.
4.6. However, the decision to use RDA files during an audit must only be taken as a last
resort and in any instances the RDA should be provided with full details in writing as
to the reasons why.
5. A16 Audit – Conducting the Visit
5.1. The AA will contact the provider organisation selected for audit to agree a date for
the audit and will write formally at least ten working days prior to the start. The letter
will set out the type of records the AA may wish to inspect and will require that key
project staff be available for interview during the course of the visit. The RDA will be
copied into the letter. In the early stage of the programme the letter will also give the
project organisation the option of a pre-engagement visit. The AA will review the
effectiveness of pre-engagement visits to different size and types of projects to
determine their value to later stages of the programme.
5.2. The RDA may wish to attend the A16 audits. If so the RDA should notify the AA, in
writing, laying out the reasons why it is appropriate that they attend. The AA retains
the right to accept or decline the request. A13 staff may wish to attend A16 audits as
part of their development, again this request should be made in writing to the AA.
5.3. The AA will ensure that the project is given full verbal feedback as to the findings of
the audit, unless agreed otherwise, before the end of the visit to the project. The AA
will contact the RDA in order to discuss any significant issues as soon as possible
after the end of the visit to the project.
5.4. Where the initial A16 visit cannot be completed due to substantial discrepancies or
lack of audit trails, a revisit should be agreed within six weeks. The AA will ensure
that both the organisation and the RDA are informed of the date of the revisit in
writing.
5.5. In these cases the AA will request that the RDA raises an irregularity on MCIS for
the entire claim amount and ensure that future claims for the project in question are
suspended by the RDA or alternatively paid but not included in the aggregate claim
to the Certifying Authority until the revisit has taken place and the irregularity has
been satisfactorily resolved. Should the RDA choose the latter option then RDA
bares the risk of not being able reclaim any future claims paid to the project back
from the CA.
5.6. The AA may request that the RDA impose a block on payments to an organisation
or project found to be unnecessarily delaying or obstructing A13 or A16 visits. In
this case there will be A13/A16 and RDA liaison until the matter is resolved, and the
RDA will notify the AA and the CA when the payments block is lifted.
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5.7. In relation to 5.4, 5.5 and 5.6 above, the AA will also notify the CA of any such
instances (providing the RDA with a copy of any correspondence) so that they can
take an informed decision as to whether they continue to authorise any RDA
aggregate claims which include claims from such projects. The CA can use this
information to obtain subsequent management information relating to particular
projects.
6. A16 Audit – Reporting Procedures
6.1. Following completion of the audit the AA will prepare a draft report and send it to the
RDA, normally within ten working days. Where relevant, it will include a list of
recommended actions with target dates for completion.
6.2. The RDA, if necessary in liaison with the project, will then have ten working days to
respond to the draft report. Once the response to the draft report has been received
and considered the AA will issue a final report to the RDA within ten working days of
receipt of the response. The RDA will be responsible for liaising with the project and
ensuring that they action any recommendations, providing the AA with any
requested responses.
6.3. The project and RDA will produce an action plan, if required, within ten working days
of receipt of the final audit report. This will contain a clear timeframe to put in place
corrective/preventative actions. The AA will confirm in writing within ten days of
receipt of the action plan if it is content with the proposed actions. As a guide, all
actions should be completed within three months of the final report being issued and
the AA should make any return visit within six months.
6.4. The RDA will confirm in writing, by the agreed deadline, to the AA that the agreed
actions have been completed and provide the AA with documentary evidence to
confirm the actions taken.
7. A16 Visits – Irregularities, Closure and Follow up Action
7.1. Where an irregularity has been identified and confirmed and this has been formally
acknowledged by the RDA when responding to the AA’s report, the AA will send
details of the irregularity to the CA/MA for information and copy the notice to the
RDA. The AA’s final report confirming any irregularity will represent a formal written
statement as defined in paragraph nine of chapter five.
7.2. The RDA will be responsible for formally recording and reporting the irregularity and
it will remove the total amount of ineligible expenditure from its next claim to the CA.
The RDA must provide the AA with documentary evidence to show that all ineligible
expenditure has been removed from the claims to the CA.
7.3. Once all outstanding issues and irregularities have been brought to a satisfactory
conclusion, the AA will then issue a formal ‘A16 completion statement’ indicating that
it is content with the action taken. The RDA Delivery/ Monitoring Officer will review a
project’s risk banding after an A16 visit.
7.4. The AA reserve the right to carry out follow up visits to any projects which have been
subject to an A16 visit. Follow up visits will be selected either randomly or based on
the number of errors identified in the original A16 visit.
7.5. Follow up visits can be conducted at anytime during the 2007-13 Programme and
can be arranged with the minimum of notice given to the RDA.
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8. Dispute Resolution.
8.1. It is recognised that different views may arise between the project, RDA and AA, for
example of the level of ineligible expenditure and what is defined as an irregularity.
Any RDA/project disputes will be managed under the terms of the funding
agreement.
8.2. Disputes between the RDA and AA may arise at various points in the process and
result in delays. Where issues cannot be resolved or agreed through direct
discussion and liaison between the AA and the RDA, the MA must be informed in
order for it to consider issues and discharge its overarching responsibility for MA
functions.
If necessary, the issue will be referred to Department’s ERDF
Programme Board for resolution.
8.3. The AA reserves the right to notify the CA of any unresolved disputes in order that
claims can be monitored until the dispute is resolved.
9. RDA responsibilities where fraud is alleged or detected.
9.1. As mentioned in paragraph 1.1, there is a separate protocol for the reporting and
investigating of fraud in chapter five. However, it is appropriate to include a brief
overview of the responsibilities of the AA and RDA within this protocol.
9.2. Where fraud is alleged or detected on a project receiving ERDF the RDA will notify
the MA and IAS immediately. The RDA will provide information to the AA in the
format to be specified. In addition, the RDA will consider action that needs to be
taken in line with its own agreed anti-fraud and corruption policy and procedures,
[including notification to its internal auditors]. The RDA and the MA will discuss with
the AA on a case-by-case basis how their actions should be co-ordinated to best
effect.
9.3. Where fraud is alleged or detected and the RDA is also the beneficiary of the ERDF,
the RDA will notify the MA and IAS immediately and will follow its own agreed antifraud and corruption policy and procedures regarding reporting [including notification
to both its internal and external auditors]. The AA will decide, on a case by case
basis, who will be responsible for conducting any investigation where the RDA is the
final beneficiary or if the suspected fraud includes RDA personnel. The RDA will be
required to cooperate at all stages and may be asked by the AA to provide
assistance with the investigation. As its own funding is involved, the implications will
be much wider than if only ERDF was involved and are likely to involve other
authorities, in particular BIS and the NAO. The MA will take a coordination role.
9.4. All RDAs are required to have in place a fraud policy procedure to allow staff to
report on any improper practices in line with the Public Interest Disclosures Act
(PIDA) 1998. This will cover details of each agency’s whistleblowing procedure
listing the designated assessor or prescribed person to whom a members of staff
within an RDA can disclose their concern.
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ANNEX 1
A13/A16 Communication Requirements
1. RDA A13 and AA A16 teams should liaise effectively through regular meetings and
sharing of information. It will be for each RDA and A16 team to decide on how
liaisons between A13 and A16 will take place. For example some may decide to
include liaisons as part of the management meetings detailed in paragraph 2.2;
others may decide to keep the A13/A16 liaison a separate procedure.
2. The following requirements shall be followed:
 Regular, at least quarterly, meetings to take place, A13/A16 staff responsible for
carrying out visits to attend these meetings. All meetings to be documented and
saved as part of the audit trail.
 Meetings to include discussions on progress towards completing planned visits;
issues arising from visits and lessons learned; progress in clearing irregularities
identified through A13 visits and action taken to resolve any systemic issues
identified through A13 visits.
 RDA A13 teams to ensure that the A16 teams are provided with copies of all
completed visit report.
Annex B
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Version 2 September 2009
Annex 2
Process Map
L:\PROGRAMME\
GOVERNANCE\10. National Governance\Regulations Guidance User Manual\AA guidance\Visio-Process map - RDA AIS v2 3.vsd.pdf
Annex B
Page 27
Version 2 September 2009