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Typical problems arising in the audit of the

Cohesion Fund

Jacques PONCET

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a)of public procurement rulesb)of environmental directivec) of Decision 96/455 on publicityd)of the eligibility of expenditure rules

1. Non-respect

2. Under - evaluation of receipts from income generating projects

Type of irregularities noted during audits

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1. Award of contracts without a formal call for tenders

2. Cost increases on contracts which were not due to unforeseeable circumstances

3. Artificial splitting of contracts to avoid having to respect the requirements of the Public Procurement Directives

Public procurement (1)

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4. Use of the criterion ‘previous professional experience’ as a

criterion for the award of contracts, even though this can only be used as a selection criterion.

5. Non-respect of Annex II Art. I of Regulation (EC) 1664/94

Public procurement (2)

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Examples:

1. No environmental impact study (EIS) carried out for projects.

2. Projects which do not comply with the terms of the Waste Directives

Environmental Directives

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Commission Decision 96/455 sets out a number of requirements for the final beneficiary depending on the size/cost of the project• Publicity signs

• Production of leaflets, brochures

• A joint preface by both the national authorities and the Community

authorities

• Production of audio visual material including a video in the case of large projects

Publicity

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Regulation 16/2003 sets out the rules regarding the eligibility of expenditure for Cohesion Fund projects

Eligibility of expenditure (1)

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Types of irregularities

1. Purchase of land already in public ownership

2. Purchase of equipment and other running costs (office equipment, computers, vehicles)

3. Non-respect of the initial and final eligibility dates

4. Requests for payments Demandes de paiements anticipés en dehors des

acomptes légaux

Eligibility of expenditure (2)

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5. Salary cost of national public administration staff

6. Financing of the capital of the Final beneficiary company

7. Financing of additional supplementary works which were not approved or foreseen in the Decision

Types of irregularities

Eligibility of expenditure (3)

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The problems arising in the audit of Cohesion Fund projects are similar to those of ERDF Programmes. However, the advantage with the audit of the Cohesion Fund is that it is project based thus facilitating a more complete and global approach to the audit.

On the other hand, it makes it more difficult to apply extrapolation of financial corrections, although these are nonetheless possible.

Conclusions

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Financial corrections decided by the Commission always involve a net reduction in the Community financial commitment to the project.

To ensure a consistent approach, these rules should also be used for ERDF projects.

Conclusions