Financial Control and Audit of ESI Funds

Registration & Welcome Coffee

Welcome Note by Lexxion and Chair, Introduction Round

Financial Management and Control Requirements for Managing, Certifying, Audit Authorities and Intermediate Bodies

• Regulatory environment 2014-2020 –what is new?
• Roles and responsibilities of the bodies involved
• Implementation of a control framework: control checklists and control reports

Outlook into the future: Regulatory Framework 2021-2027

• Proposal for the Regulatory framework 2021-2027
• What are the main expected changes and challenges?
• Points for duscusstion at national level

Coffee Break

Audit Findings – Practical Insights

• Newest legal requirements: Chapter on good practices promoted by Audit Community
  (EC and national AAs) when carrying out audits under ESI funds, by DG REGIO
• Audit findings and recommendations in
  system audits
• Audit findings and recommendations in audits
  on operations/projects
• Process of the audit of projects
  (planning, execution, reporting)

Workshop

During this practical session participants from managing, certifying authorities and intermediate bodies will be asked to brainstorm, what and how they would prepare for audit control. Auditors will be asked to consider their expectations to the auditees. Finally we will examine the gap between auditors and auditees.

Quiz

You are welcome to take part in the quiz and to test your gained knowledge. Don’t miss the chance to win special prizes from our speaker!

Coffee Break

Management of and Most Common Irregularities in ESI Funds

• Definition of an irregularity and difference
  between error and irregularity
• Overview on most common types of irregularities
• Who can determine irregularities?
• Which irregularities can be identified by first
  level controllers?
• Which irregularities are typically identified
  by auditors?
• How to treat irregularities?

Practical exercises

Practical exercises on how to detect and handle irregularities. You are welcome to contribute to this session. Just send us your questions in advance and we will discuss them during the event.

Reporting and Financial Corrections

• When do irregularities lead to recoveries,
  withdrawals and financial corrections?
• Rules and obligations for bodies involved
• Purpose and types of financial corrections
• Pre‐ and post‐payments
• Reporting requirements
• New rules on treatment and reporting of irrecoverable amounts
• Recoveries and withdrawal workflow

Group Exercises

How to Choose the Right Type of Financial Correction and how to Calculate the Rate of Corrections

End of Day 1

Boat tour and common dinner with all speakers and participants

Introduction into the Assurance Package

• Regulatory framework
• What is the Assurance Package
• Requirements and obligations of involved actors
• Management declaration and annual summary (Managing Authority)
• Annual accounts (Certifying Authority)
• Audit opinion and annual control report
  (Audit Authority)
• Timing obligations for programming bodies
  and division of tasks

How to Draw up, Certify and Submit Annual Accounts to the EC: Exchange of Experiences from 2017, 2018 and 2019

• Timeline for structure of annual accounts
• Preparation, documentation and reporting requirements
• Content of annual accounts
• Which information can be added after
  submission to the EC
• How to treat irregularities
• Planning the activities for upcoming months

Coffee Break

Practical Exercise on Annual Accounts

Participants will be offered to go through the template for annual accounts and discuss on concrete examples, how to fill it in.

Audit of Annual Accounts

• Regulatory framework
• Timeline for conducting audit of annual accounts
• Communication between certifying and audit authorities
• How to use results of system audits for the audit of accounts
• How to use results of audit of operations for the audit of accounts
• Final additional verifications of the draft certified accounts
• Audit opinion on the accounts

Workshop

Participants will go through the check list for audit of accounts and discuss in groups the most important issues to be checked and the common errors.

Lunch

Guidance on Management Verifications

• Legal requirements
• Verification methodologies
• Delegation principles
• Timing / nature / frequency of verification

Administrative versus On-the-Spot Verifications

• Strategy and planning:
  Administrative versus on-the-spot verification
• Cooperation between Managing Authorities
  and Intermediate Bodies
• Segregation of duties
• Record-keeping and reporting requirements
• How to put together a verification methodology
  for on-the-spot checks
• How to deal with personnel and overhead costs?
• The importance of documentation in the verification process

Coffee Break

Group Exercises

Verification of Simplified Cost Options

Group Exercises

Verification of State aid and public procurement

Group Exercises

Verification of State aid and public procurement

Workshop

Sampling and On-the-Spot Verification

End of Day 2

Requirements and Tools

• The anti‐fraud cycle
• KR 7: Anti-Fraud Measures
• Instruments and methods for the prevention and detection of irregularities, fraud and corruption
• How to identify red flags of fraud and corruption?
• Cyber fraud
• Capability of IT tools: The obligatory fraud risk self‐assessment tool and Arachne

Best practice

Best practice from Latvia: cooperation between AFCOS and Audit Authority

Practical exercises

How to conduct a (fraud) risk analysis with fraud risk self‐assessment tool, and how to define effective and proportionate measures based on the outcome of that risk analysis.

Coffee Break

How to Ensure Good Cooperation between Managing and Audit Authorities?

Audit of Simplified Cost Options

• Using SCOs: Considerations for Audit Authorities
• Implications for the audit procedure:
  Audit of methodology
• Specific audit trail requirements
• Compliance with eligibility rules, public procurement and State aid rules
• Errors and irregularities in SCOs –
  how to avoid them?

Practical Exercises and Group Work on Eligibility of Costs: How to Avoid Errors and Irregularities in SCO?

Participants will work on practical exercises and will discuss different situations where SCO are being applied. Given the use of different options, participants will assess whether and why there is ground for an irregularity.

Lunch Break

Audit Findings in State Aid and Public Procurement

• Use of professional expert institutions in
  public procurement and State aid
• Public procurement and State aid errors detected
  and corrected during management verifications
• Audit findings in public procurement and State aid
• Practical examples

Practical examples of

• Audit findings in State aid and public procurement from the ongoing audits
• Using Arachne when auditing public procurement

Coffee Break

Audits by the European Court of Auditors

• Financial and compliance audits
• Performance Auditing
• Reasons & Objectives
• Performance audit approaches and methodologies
• Typical audit results/Weaknesses in EU funded programmes

Case Study

A Real-life Performance Audit