Supplementary note submitted by the European
Commission (ESF 19F)
CONTROL AND
AUDIT: SHARED
RESPONSIBILITIES
The annexed text describes the main components
of financial management and control.
The main components of financial management
and control are:
— ESF management and payment systems
that meet EU and UK requirements—audited by Commission
and DWP auditors;
— separation of functions in
DWP and Government Offices between contract management, payments
and audit work;
— clear and comprehensive guidance
for projects on financial management and eligible expenditure;
— inspection visits by DWP and
Government Office auditors, to verify project activity and expenditure,
covering at least 5% of ESF spend each year;
— annual checks ("audit
certificates") on ESF projects receiving more than £20,000,
undertaken by independent external auditors; and
— performance data from projects,
and monitoring visits to projects by DWP and Government
Office staff.
Commission (during negotiation) and DWP have
put in place systems that comply with EU and national requirements
to protect public funds. Failure to do so would risk
repaying money from the UK to the Commission and recovering
funding from projects. Member States that have operated less stringent
controls have had to repay considerable sums.
Controls are implemented to minimise burdens
on projects and maximise access to ESF funds. The aim is to
prevent problems and repayments at a later stage—by
offering clear advice and guidance up front, and through annual
audit certificates.
Under co-financing the EU financial audit trail
stops with Co-financing Organisations, reducing the audit burden
on providers.
Audit visits are planned to focus on areas of
potential risk. Audit requirements are made clear to projects
when they apply for funding.
The Commission agreed to co-ordinate the Commission
controls in order to avoid overlaps. In that framework the Commission
will establish a co-ordinated audit programme—albeit
limited to the Commission Structural Funds DGs—, in which
the Court of Auditors would be strongly encouraged to take part.
OLAF, for statutory reasons, cannot be associated to this co-ordination
exercise, although some co-ordination mechanisms might be set
up.
| 
