# CE2004088EN.01021001.xml

| 8.4.2004 | EN | Official Journal of the European Union | CE 88/210 |
| --- | --- | --- | --- |

8.4.2004

EN

Official Journal of the European Union

CE 88/210

---

(2004/C 88 E/0218)

WRITTEN QUESTION E-0764/04

by José García-Margallo y Marfil (PPE-DE) to the Commission

(11 March 2004)

Subject:   Use of pre-accession funds

Subject:

In relation to the effective use of pre-accession funds, can the Commission say how many audits have been carried out in the new Member States?

What were the main findings?

What were the shortcomings most frequently found in the use of funds by the countries concerned?

Answer given by Mr Verheugen on behalf of the Commission

(30 April 2004)

(30 April 2004)

In response to the first question of the Honourable Member, it is important to underline that the audits carried out related to pre-accession funds were essentially management control audits and that these concerned transactions fall under the decentralised responsibility of the Candidate Countries (management of pre-accession funds was generally conferred to the national authorities of the Candidate Countries at an early stage, in order to prepare them for their future responsibilities in respect of sound financial management of Community funds.)

Two types of audits were carried out, namely closure audits on the regularity and legality of transactions or alternatively so-called systems audits.

All contracts funded under pre-accession assistance and managed by the national authorities in the Candidate Countries are subject to ex ante controls by the Commission, until the date of accession, after which any new contracts signed shall normally be managed fully by the new Member States themselves, without Commission ex ante controls, under a system known as EDIS (1).

1

To a considerable degree closure audits therefore act as a further layer of control over the ex ante controls already applied by the Commission. As closure audits are by definition carried out at the closure of a programme, until now these have for the most part been carried out for PHARE pre-accession aid, since the Instrument for Structural Policies for Pre-Accession (ISPA) and Special Accession Programme for Agriculture and Rural Development (Sapard) programmes only started relatively recently and have not yet been closed. Programmes are not ready for closure audit until year n+4, n being the year of programming. Prior to 2000, closure audits had been undertaken on 139 PHARE programmes. Since 2001, closure audits have been undertaken on a further 149 PHARE programmes, mainly covering programmes within the period 1992-1999. Such audits will continue.

Systems audits examine the whole management and control system of pre-accession aid established by the national authorities in the Candidate Country. Already full systems audits of the EDIS applications have been effected for PHARE in most of the 10 new Member States (linked to the EDIS verification process). These will be followed in 2005 for Bulgaria and Romania. A systems audit was also carried out on the Turkish national authorities prior to the decision taken to confer the management of pre-accession aid to Turkey on a decentralised basis.

Regarding pre-accession assistance under ISPA, in total 32 systems audit missions (2) have been effected to date. For three countries EDIS verification missions were also carried out. After 1 May 2004, further audits carried out in the new Member States will fall within the framework of the Cohesion Fund Regulation.

2

As the Honourable Member may be aware, the pre-accession instrument known as Sapard has always operated on a fully decentralised basis, whereby no pre-accession funds were released until the EDIS accreditation of the agencies of the national authorities, following extensive system audits. Conferral of management audits served as a basis for the Conferral of Management Decision adopted by the Commission. A total of 21 conferral of management audits were carried out. Following the conferral of management, monitoring missions were organized in four countries. In addition, for Sapard, financial audits were conducted in four countries in 2002 and in eight countries in 2003. These audits cover the integrity, accuracy and veracity of the accounts submitted by the Sapard Agency and also of the Sapard euro account. Moreover, conformity audits were carried out in eight countries between September 2003 and March 2004.

As to the main findings/shortcomings, these are similar in nature to those identified in the systems in place in existing Member States, and are of a minor significance for example in the archiving of tender documentation of contracts being audited, bearing in mind that such audits take place some years after contracting. Nevertheless, at an earlier stage these contracts had been ex ante endorsed by the Commission. The systems audits revealed weaknesses — corrected in the EDIS accreditation process — such as lack of adequate staffing or training; nascent local internal audit implementation; lack of preparation for the more ‘non-standard’ types of contracting e.g. twinning, nuclear safety, etc.

As for Sapard, any weaknesses identified in the conferral of management audits were minor and were addressed to the competent authorities in a letter of observations respectively and the Commission followed up the implementation of the recommendations related to those weaknesses. The financial audits made recommendations on the management of the Sapard euro account. In some cases the conformity audits identified minor weaknesses which were addressed to the Candidate Countries in the form of observations and recommendations.

---

(1)  EDIS (Extended Decentralised Implementation System) is an accreditation process whereby the systems of the national agencies managing pre-accession funds are accredited by the Commission in a step similar to that used for Structural and Cohesion Funds, allowing for a waiving of the Commission's ex ante control over tendering and contracting (and project selection in the case of grants). Prior to accession all countries have undertaken a process of improvement of their systems and have put forward applications to be accredited under EDIS (except in some cases for ISPA where the legal base is changed on accession).

1

(2)  All Acceding Countries except Cyprus and Malta, plus Bulgaria and Romania.

2

---