Accreditation Process
1. Accreditation definition and road maps
Accreditation represents the recognition and verification that an organization is fulfilling
explicitly defined standards. In the process of decentralized management of preaccession funds (DIS) it represents the process of assessing the readiness of certain
structures (National Fund and Operational Structures) 1 for the initiation of management
and use of EU funds in accordance with clearly defined criteria. Therefore, accreditation
represents a confirmation by the European Commission (EC) that established structures
are eligible to manage and use European funds, in such a way that the country itself can
assess if the programming and programme implementation can be carried out
independently in accordance with defined procedures and manuals, etc. Management of
funds includes the programming, launching of tenders, contracting, payments to the endusers and contractors, monitoring and evaluation of the overall process.2.
Aforementioned activities are currently being implemented by the Delegation of the
European Commission to Montenegro, which represents a centralized system of
monitoring and implementation of the European Union funds.
Any country, regardless the type of the pre-assistance, needs to define so called DIS
Road Map – the document that would clearly define indicators, necessary activities to be
completed, as well as the timeframe for the fulfillment of obligations in order for a country
to transfer to decentralized implementation system for the management of EU funds.
The objective of the Road Map is to assist potential candidate countries in obtaining DIS
with ex-ante controls where, prior to adopting any decision, the Contracting Authority
must submit to the European Commission for approval all draft decisions related to
procurement and the awarding of contracts. Countries which implemented DIS, the Road
Map should assist in reaching decentralization without ex-ante controls, i.e. where
decisions related to procurement and the awarding of contracts are adopted by the
Contracting Authority, without previously submitting it to the European Commission for
approval. However, the Road Map were designed to provide some degree of flexibility,
so that a country can consider its own specific circumstances when defining the
operational structure organization, as well as taking into consideration the degree which
a country reached in EU integration process.
2. Conferral of management powers
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National Fund is established within the Treasury department of the Ministry of finance, which in
accordance with the “Information on the second phase of establishment of DIS for management of EU
funds in Montenegro”, with the Action Plan for the Conferral of Management of IPA funds for 2009,
operational structure for the first IPA component are considered the Secretariat for European Integration,
Central Financing and Contracting Unit (CFCU), Programme Implementation Units (SPO’s offices)
established in all line ministries and Internal Audit Units established in all line ministries.
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The objective of decentralized management is to establish the ownership over the process and to enable
the candidate and potential candidate countries to independently implement European Union financed
projects and to prove their ability of conferring all responsibilities arousing from obligations towards the
European Union. Pursuant to the IPA Implementation Regulation, (IPA IR) - the document representing the
basis for the implementation of the DIS, in order to obtain accreditation it is necessary that the beneficiary
– the user of EU assistance fulfils all requirements defined in the Annex of the IPA IR.
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In that light, if possibility of conferring of management powers of EU funds within
decentralized system is to be transferred to a country, a number of conditions defined by
in the Annex of the IPA Implementation Regulation need to be fulfilled (hereinafter
referred to as the IPA IR). The initial step is to appoint key players in the DIS process
such as CAO, NAO, PAO and SPO officers and this precondition has been fulfilled. The
final objective of Montenegro in the DIS process in this phase (DIS with ex-ante controls
by the Commission) is the conferral of management powers from the European
Commission to the beneficiary of the EU assistance, i.e. Montenegro in order to be
eligible to manage programmes and project with the previous control of the European
Commission. This conferral of management is fulfilled after the self assessment of the
country resulting in the ability to carry out this activity independently, which means that
CAO3 accredits, provides NAO4 with the statement of assurance and the National Fund,
and NAO accredits operating structure5. However, it is necessary to make the difference
between the national accreditation issued by CAO and NAO in case when it is necessary
to carry out the self assessment and subsequently issue the accreditation by the national
structures and the accreditation representing the final objective in the conferral of
management powers, when the European Commission, on the basis of engaging its
auditors is checking or assessing the national accreditation and based on results of the
assessment and findings issues accreditation for the conferral of management powers.
Hence, the conferral of management powers represents the next phase related to issue
of national accreditation representing so called authorization by the European
Commission to manage pre – accession funds.
Apart from accrediting National Fund - subsequently NAO as the person managing the
National Fund, operational structures are accredited for each component, programme or
measure depending on the established system which defers from country to country
using the pre-accession assistance. In this way all structures engaged in the process are
contributing to the regular functioning of the system within the DIS. This means, that if
one operational structure obtained accreditation for one component, it does not
automatically mean that issued accreditation comprises other IPA component. Any
change in the structure of one accredited programme or component will require new
check by the European Commission. The purpose of obtaining DIS accreditation is to
check whether all entities or bodies included in the IPA management process have
defined and established appropriate system that would enable the fulfillment of
appropriate requirements and whether the established system fulfils accreditation criteria
set forth in the Annex of the IPA IR. In defining whether the country fulfilled certain
criteria pursuant to the IPA IR, will be supported by independent auditing firm issuing
audit reports on whether necessary conditions defined by the IPA IR have been fulfilled,
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CAO - Competent Accrediting Officer is the Finance Minister, Mr. Igor Luksic, PhD,
NAO – National Authorizing Officer is the Deputy Minister for Treasury Operations, Mr. Dusan Perovic
5 In accordance with the Articles 11-16, IPA IR, i.e. in accordance with the Annex A, of the Law on
ratification of the Framework Agreement between the Government of Montenegro and the Commission of
the European Community on rules of cooperation related to the financial assistance of the European
Community to Montenegro, within the implementation of the Pre-accession instruments - -IPA, CAO is
responsible for issuing, control of work and withdrawal , i.e. suspension of accreditation of the NAO
therefore the National Fund, while NAO is responsible for issuing, control of work withdrawal, i.w.
suspension of accreditation of all Operational Structures. CAO shall assure himself that the requirements
prescribed by the Article 11, of the IPA IP are fulfilled, based on the audit opinion functionally independent
from all actors in the management and control system. Audit opinion is based on review carried out in
accordance with the Internationally accepted Auditing Standards..
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in order to enable the key players in the DIS Process (CAO and NAO) to bring the
decision to issue the accreditation to NAO and the National fund, i.e. operational
structures. As already mentioned, following the adoption of the decision on national
accreditation, the request for accreditation is submitted to the European Commission.
Hence, prior to conferral of IPA funds decentralized management, the European
Commission requires the confirmation that the system has been defined and
established in the manner providing the rules of the sound financial management for all
structures that would be included in the IPA funds management.
Accreditation package6, in accordance with the Annex of the IPA IR relating to the
accreditation criteria, as well as the Annex A of the Law on Ratification of Framework
Agreement between the Government of Montenegro and the Commission of the
European Communities on the Rules for Cooperation concerning EC-Financial
Assistance to Montenegro in the Framework of the Implementation of the Assistance
under the Instrument for Pre-Accession Assistance (IPA) consists of the large number of
documents enabling the conformity assessment of the management and control system
in aforementioned areas. The package includes:
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Description of defined system in Montenegro, regulations necessary for the
establishment of the system (appointment of key DIS structures, Implementing
Agreement between NAP and PAO, Operating Agreements between PAO and
all SPO’s competent for the Project Implementation Units in all line ministries,
the protocol between the National Fund and the bank on bank accounts opening
and management, etc.);
Numerous Rulebooks and Manuals related to the legal and institutional
framework chapters, human resources management, risk management,
information technology, irregularities, programming, monitoring, evaluation,
internal audit, etc., related to all actors in DIS process – National Funs, Central
Financing and Contracting Unit, Audit Authority, NIPAC Office, Secretariat for
European Integration, Programme implementation units in all line ministries, as
well as the Internal Audit Units that are part of the Operational Structure for the
first IPA component. Manuals should relate to the both IPA Components
currently used by Montenegro.
Basic accreditation preconditions that need to be fulfilled, i.e. in order to confer the
management of pre-accession funds, are as follows:
 Established structures;
 Staffing and approved procedures;
 Conducted self assessment;
 National accreditation obtained.
In addition, it is necessary to establish the system in the manner to enable the fulfillment
of the following objectives:
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In 2008, the European Commission issued information / instructions in the content of the accreditation
package to be submitted to the EC, and it is set forth in the Annex of the „Rod MA for DIS, in IPA case“.
Accreditation package relates to the documents that are necessary to collect and submit to the EC in order
to support the requirement for the conferral of management powers on decentralized bass within IPA.
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Effectiveness, efficiency and economy of activities;
Reporting reliability;
Protection of assets and information;
Protection from and identification of frauds and irregularities;
Adequate risk management related to the regularity of important transactions,
taking into consideration multi annual programme characteristics as well as the
payment nature.
3. Phases in accreditation procedure
There are several phases in accreditation procedure, which characteristics are given
bellow:
Zero phase – Establishing the framework for the management and control system
In this phase CAO, usually represented by the Finance Minister, which is the case in
Montenegro, establishes the general framework for the management and control system
for the IPA in accordance with the objectives, principles ad rules defined by the IPA IR.
In that way, CAO defines criteria for the appointment of NAO and appoints a person
meeting criteria for NAO, and NAO in consultation with the NIPAC appoints PAO. It is
necessary to define institutional and organizational structure which is important to fulfill
minimum criteria set forth in the Annex of the IPA IR, and moreover to establish the
management system with the defined procedures and internal controls.
First phase - Gap Assessment
The objective of this phase is to establish the ceiling/degree up to which the conditions
for the establishment of DIS are fulfilled, to determine activities necessary to be
undertaken in order to have internal control system functioning efficiently and effectively,
as well as the changes and progress that is necessary to make. Activities that are
necessary to complete in this phase are as follows: definition of existing operational
structures and procedures, including procedures public internal and financial control,
procurement procedures, performed audits and moreover it is necessary to establish to
which extend the public internal financial control is harmonized with the European Union
requirements. The assessment results and appropriate evaluations will be given in the
Gap Assessment Report based on auditors report. The document comprises results on
the current state of play in all institutions, identifying all unconformity elements, i.e.
procedures that proved to be inappropriate, proving recommendations on what is
necessary to fulfill in this phase with the timelines for the fulfillment of activities. The
report should include the table with all requirements for the internal control and define
responsible persons.
Second phase - Gap plugging
In this phase are made necessary changes and improvements in certain institutions in
accordance with the recommendations in aforementioned Report on Gap Assessment.
Activities that are necessary to be made are as follows: the development of detail Action
Plan, with clearly defined responsibilities and final deadlines to complete the activities,
develop manuals for the financial management and control procedures, as well as
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manuals for the audit operations. Hence, this phase is used to fill the gaps in the real
and required condition, on the basis of identified weaknesses and issued
recommendations set forth in the Report on Gap Assessment with the overall objective
to fulfill requirements for DIS.
Third phase - Compliance Assessment
This phase represents the most important phase in the process, because if in this phase
activities are properly and qualitatively completed it will significantly result in obtaining
positive accreditation. Prior to submitting the Accreditation Package to the EC in
Brussels, in order to asses the readiness for the accreditation, Montenegrin authorities
must implement the compliance assessment (sometimes called the national
assessment or self - assessment). The EC is requiring national authorities to asses if
they are ready to submit the accreditation request. This phase enables competent
structures responsible for the financial management of the EU funds to determine
whether all preconditions for the formal application of the country for the DIS are fulfilled
in accordance with the Annex of the IPA IR (defining accreditation criteria), and in
accordance with the Article 12 (2), of the IPA IR, i.e. whether structures have reached
the level which is necessary for the fulfillment of the EU requirement. This requirement is
checked by engaging independent auditing firm by the national authorities. Hence, the
process starts when the Competent Authorizing Officer (CAO) contacts the auditing firm
to implement the compliance assessment,. In principle, CAO is accrediting National
Fund, i.e. NAO, and NAO is accrediting Operational structure, i.e. PAO.
Forth Phase - National Accreditation and the submission of application for the conferral
of management powers 7
In this phase national accreditation is formally issued as defined in the IPA IR and the
request/application for the conferral of management powers is submitted (so called
accreditation package). This means that NAO and CAO, on the basis of results of
independent auditing firm, based on Report and conducted audit, i.e. the Report on
Conformity Assessment, must submit the EC the request for the conferral of
management powers. The request is submitted independently for each IPA component
or programme, in order to enable the management over all IPA components on
decentralized basis. Along with the request must be submitted the Accreditation
Package. NAO will collect all necessary documents on accreditation of the Operating
structure and collect all necessary additional documentation required by the EC.
Fifth Phase – Preparation for the EC decision
While the first four phases in the process are the exclusive responsibility of the
beneficiary country of the pre – accession assistance, this last phase represents the
obligation of the EC. Following the official submission of accreditation package, the EC
is checking performed audits (performed by the Commission) twice – by reviewing all set
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Before deciding to confer management powers relating to a component, a programme
or a measure on the beneficiary country, the Commission shall satisfy itself that the
country concerned meets the conditions referred to in Article 56(2) of Regulation (EC,
Euratom) No 1605/2002, in particular as regards the management and control systems
established, and that the accreditations as laid down in Articles 12 and 13 are in force..
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of documents submitted in the form of accreditation package, as well as „on-the-spot“
verifications meaning conducting meetings with the key players in the DIS process in
Montenegro. The process of adopting the decision whether to accredit the country or not
may last for several months. It is mostly the case of certain recommendations issued by
the EC in its audit report in order to improve the overall system. In case of the absence
of recommendations that may suspend accreditation, the EC brings the decision of
conferral of management, i.e. accreditation of DIS in accordance with the Article 14 of
the IPA IR (in this phase, the issues is DIS by retaining ex-ante control by the
Commission).
4. Conclusion
The process of the conferral of management powers is the key element in assessing the
capacity of the potential candidate country to establish the system of the sound financial
management in a way to guarantee good usage of funds of the Community following the
accession of the country into the EU. Moreover, structures or institutions established in
the process if using pre-accession funds represent the structures mainly established in
case of Structural/Cohesion funds following the membership into the EU. While
establishing the accreditation system at the national level, more precisely at the level of
CAO and NAO, the intention of the European Commission is to increase the
management over the accreditation process itself by the user country, more precisely
that the country is aware that the accreditation process is conducted for the country itself
and to overtake the management over the process.
Obtaining the candidate country status and obtaining the accreditation for the
management of the EU funs is not strictly linked, but the strengthening of institutions in
the field of the EU integration and acceptance of the EU standards related to the DIS will
improve the status of Montenegro and built stronger connections between the European
Commission and Montenegro. In that light, administrative and management capacities of
the key DIS structures should be strengthen in order to obtain positive compliance
assessment by the European Commission.
Ms. Kovačević Nataša, Deputy Minister,
CFCU
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