Management & Control, Designation of Authorities State of play

1. Management & Control, Designation of AuthoritiesState of play 6 June 2016 – Brussels Claude Tournier, Head of Unit DG Regional and Urban Policy Audit Directorate – Unit C3

2. Aim of the designation process? To ensure that MA and CA have the necessary and appropriate management and control system set up from the start of the programming period to ensure that they can fulfil the responsibilities assigned to them Based on a report and an opinion of an IAB Prior to the submission of the first application for interim payment to the Commission

3. Legal Basis & Guidance • Article 123 - Designation of authorities Reg. (EU) No 1303/2013 (CPR); • Article 124 - Procedure for the MA & CA designation; • Article 21 - Designation of authorities Reg. (EU) No 1299/2013 (ETC Reg.) • Commission ImplementingRegulation (EU) No 1011/2014: • Annex III Model for the description of the functions and procedures in place for the managing authority and the certifying authority • Annex IV & V Model Audit report and audit opinion • Guidance note on DesignationProcedure EGESIF_14-0013-final_18/12/2014 (http://ec.europa.eu/regional_policy/en/information/legislation/guidance)

4. Designation process • Article 124(1) CPR "The Member State shall notify the Commission of the date and form of the designations, which shall be carried out at an appropriate level, of the managing authority and, where appropriate, of the certifying authority prior to the submission of the first application for interim payment to the Commission." • Article 124(2) CPR "The designations referred to in paragraph 1 shall be based on a report and an opinion of an independent audit body that assesses the fulfilment by the authorities of the criteria relating to the internal control environment, risk management, management and control activities, and monitoring set out in Annex XIII. (…)"

5. New Designation criteriaAnnex XIII CPR • A framework for Risk management • Procedures for putting in place Anti-fraud measures • Procedures for drawing up management declaration/ annual summaries/accounts • Procedures to ensure reliability of data on indicators/ milestones/progress of the OP in achieving its objectives

6. SFC2014The notification of the designation and, where applicable, the designation package, aretransmitted by the MS via SFC2014for theDesignation Processhttp://ec.europa.eu/sfc/en/support/DOA

7. Designation Decision To designate or Not ? • Opinion of IAB unqualified -> the MS candesignate. • Opinion of IAB adverse or qualified -> no designation of that body; Probation period (Article 124 (5) CPR) The MA/CA to resolve all outstanding issues (action plan) in order to be able to concludewith an unqualified opinion

8. Audit and control results Supervision, the period of the probation and ending a designation The designated authority no longer complies with the criteria underpinning designation MS ends the designation of the authority and informs the COM MS determines a probation period for the authority to undertake remedial actions MS informs the COM of the probation period MS designates another authority based on the applicable rules and informs the COM Necessary remedial action is taken MS lifts the probation MS informs the COM Necessary remedial action is not taken MS ends the designation MS informs the COM MS designates another authority based on the applicable rules and informs the COM

9. Commission may request IAB's audit report, opinion and MCS within 1 month of notification (I) For OPs > €250m and based on risk analysis 2 months for Commission feedback Role of the Commission Article 124(3)(4)CPR • Commission's approval of the designation process is not required ─˃ Big change compared to 2007-2013 (II) For OPs > €250m and MCS changed significantly from 2007-13 MS may submit IAB's opinion and MCS within 2 months of notification of designation 3 months for Commission feedback

10. Treatment of interim payments • Interimpaymentscanstart as soon as: • The managing and certifyingauthorites have been designated • The MS has notified the formaldesignationdecision to the Commission following adoption of the programme • In cases (I) and ( II) above, the Commission may make observations within two/three months of receipt of the documents. Without prejudice to Article 83, the examination of those documents shall not interrupt the treatment of applications for interim payments

11. State of playETC May 2016 • Notified 7 out of 76 ETC programmes (5 cross borders and 2 Transnational) • 43 ETC programmes planned to be notified in the last quarter of 2016 • 1 planned to be notified in 2017 • 18 ETC have not submitted details on the planned timing of notification but internal work is "ongoing" • 69 ETC cannot submit payments applications

12. Overview • The pace of notification is significantly lower than Member State forecasts • Risks that notifications awaited in the last quarter will slip into early 2017: • Risk of conflict of Priorities with Closure 2007-2013 for the Audit authorities

13. Identified issues which may hamper the designation process • Lack of necessary IT monitoring and reporting systems • Design of effective and proportionate anti-fraud measures • Governance arrangements for validation (National, regional, layers; ETC: cross-border or transnational) • Lack of capacity at MA and AA level • Other?

14. Thank you for your attention