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Transcript of This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
1
Bölgesel Rekabet Edebilirlik Operasyonel Programı’nın Uygulanması için Kurumsal Kapasitenin Oluşturulmasına Yönelik Teknik Yardım
Technical Assistance on Institutional Building for the Implementation of RCOP in Turkey
This project is co-financed by the European Union and the Republic of Turkey
Basics of Financial Management under IPA Programme
Ankara, 16 September 2011Ankara, 16 September 2011
[email protected]@ecorys.com.tr
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 20112
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
ContentContent
1. Budget Allocations in IPA Structure2. Flow of Funds3. Functions and Role of the Finance Division
under the RCP-CID and RCOP4. Lifecycle of Expenditures5. General overview for payments 6. Plenary Discussion and Questions
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
1)Budget Allocations in IPA 1)Budget Allocations in IPA StructureStructure
Let’s start from the beginning
The Commission must keep tight control over the way the Community budget is executed since, under Article 274 of the EC Treaty, the Commission is ultimately responsible for budget implementation of both commitments and payments. The Commission has to take appropriate steps to ensure that the principles of sound financial management are being adhered to in all cases.
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This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
When the Commission When the Commission gives gives moneymoney??
Implementation of the budget is only delegated to Member States (shared management) or third countries (decentralised management) if the Commission is satisfied that the countries in question will implement the budget in accordance with the rules in force and with the principles of sound financial management and that a clearance of accounts/financial correction mechanism is in place to correct potential irregularities.
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This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Before decidingBefore deciding
Before confer management powers the Commission is checking the fulfillment requirements to the management and control systems – Accreditation Process
If you need Commission money you should answer the requirements
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This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Requirement for implementation Requirement for implementation of IPA Programmeof IPA Programme
The Commission confers the management of certain actions on the beneficiary country, while retaining overall final responsibility for general budget execution.
For this purposes of assistance under the IPA Regulation decentralised management shall cover at least tendering, contracting and payments which at the same time refers to the life cycle of expenditures.
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This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Accreditation Criteria Annex to Accreditation Criteria Annex to the IPA Implementing Regulation the IPA Implementing Regulation 718718
Control EnvironmentPlanning and Risk ManagementControl ActivitiesMonitoring Activities (supervision of interventions)Communication (ensuring all actors receive information
necessary to fulfill their role)
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This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Remember the COSO Model?Remember the COSO Model?
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Control Activities mainly related with the financial management of IPA funds
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Candidate StatusCroatia (Hırvatistan) the former Yugoslav
Republic of Macedonia (Makedonya)
Turkey (Türkiye)
Potential candidate status Albania, Bosnia&
Herzegovina (Arnavutluk, Bosna Hersek)
Iceand (İzlanda)Serbia and Montenegro
including Kosovo according to UNSCR 1244 (Sırbistan, Karadağ ve Kosova)
Budget Allocation (IPA) 2007-2013 Budget Allocation (IPA) 2007-2013 Instrument for Pre- Accession Instrument for Pre- Accession AssistanceAssistance
Budget: 11,468 billion euros
Allocation of IPA funds per component for TurkeyAllocation of IPA funds per component for TurkeySource: Instrument for pre- accession assistance (IPA) revised multi- annual indicative financial framework for 2011-2013
Component 2007 2008 2009 2010 2011 2012 2013
1: Support for transition and institution building (Kurumsal Kapasite Geliştirme)
257 250 233 211 231 234 238
2: Cross-border cooperation(Bölgesel ve Sınır Ötesi İşbirliği)
2 9 9 10 10 10 10
3: Regional development (Bölgesel Kalkınma)
168 174 183 238 291 368 378
4: Human resource development (İnsan Kaynaklarının Gelişimi)
50 53 56 63 78 90 96
5: Rural development (Kırsal Kalkınma)
21 53 86 131 173 198 213
Total in million EUROS
497 539 566 654 782 900 936
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
For Turkey: 2007-2013For Turkey: 2007-2013
Total Budget allocation for Turkey under all IPA Components: 4,874 billion euros
Total Budget allocation for Component 3,
Regional Development: 1,800 billion euros
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
For 2007-20For 2007-201313 (Ministry of Science, (Ministry of Science,
Industry and Technology) Industry and Technology)
Component 3: Regional Development 2007-2013
RCOP 2007 2008 2009 2010 2011 2007-2011
2012-2013
2007-2013
Priority 1 Business environment 36,5 37,9 47,7 80,1 98,5 300,7
Priority 2 Enterprise capacity and entrepreneurship
9,9 10,2 12,9 2,2 2,3 37,5
Priority 3 Technical Assistance 3,0 3,0 3,9 1,7 2,7 14,3
Totals 49,3 51,1 64,5 84,0 103,5 352,5 223,7 * 576,2*
* Estimation for 2012-2013 based on the MIFF and 33% share of RCOP in Component 3.
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
2) Flow of Funds(Logical 2) Flow of Funds(Logical Framework)Framework)
EU Contribution:
Fund transfer from the Commission to the NF
National Co- Financing: Fund transfer from the Line Ministries to the NF
For Both:
Fund transfer from the NF to Contracting Authority
13
PLEASE
SEE THE ANNEX
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 201114
FLOW OF FUNDSFLOW OF FUNDS
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Request of Funds from the Commission Request of Funds from the Commission (Brussels)by the NF (Turkey)(Brussels)by the NF (Turkey)
Request of Funds from the Commission (Brussels)by the NF (Turkey)
Payments, transfer of funds from the Commission(Brussels) to the NF(Turkey)
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This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
National Authorising Officer National Authorising Officer (Ulusal Yetkilendirme Görevlisi)(Ulusal Yetkilendirme Görevlisi)
• National Authorising Officer (NAO):
• is the head of the National Fund (NF)
• has the full responsibility for the financial management of EU funds
• responsible from the legality and regularity of transactions
• responsible from the effective functioning of management and control systems under IPA regulation
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This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
The Responsibilities of the The Responsibilities of the NAO/NFNAO/NF
Responsibilities of NF&NAO according to Article 26 of the IPA regulation:
requesting funds from the Commission; organising the bank accounts;authorising the transfer of funds received from the Commission to the Contracting Authority/Operating Structures
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This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Request of Funds from the Request of Funds from the NFNF
According to Article 40 of the IPA regulation:
In relation to each IPA component&programme, each year by the 28 February, each Beneficiary country shall send to the commission a forecast of its likely payment applications for the financial year concerned and for the subdequent financial year.
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This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
To request the fundsTo request the funds
Signature of the Financing Agreement, the Contracting Authority in close cooperation with the OS shall, on the basis of:
• The Procurement Plan and • Commitment and Disbursement forecasts provided
to the NAO / NF with their forecasts for payment to Contractors.
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This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Payments by the Comission Payments by the Comission to the NFto the NF
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This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Request of Funds from the Request of Funds from the Line Ministries (Brussels)by Line Ministries (Brussels)by the NF (Turkey)the NF (Turkey)
Request of Funds from the Line Ministries by the NF (Turkey)
Payments, transfer of funds from the Line Ministres to the NF(Turkey)
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This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
The OS / Contracting The OS / Contracting Authority is responsible forAuthority is responsible for::
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The request for funds from the National Fund ensuring the national co-financing The payment to Contractor
Responsibility of OS/Contracting Authority
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Ensuring the National co-Ensuring the National co-financingfinancing
23
•As a general rule and unless otherwise agreed with the EC:
•Investment projects require national co-financing equivalent to at least 15% of total eligible expenditure under the relevant project
•Technical assistance projects require national co-financing equivalent to at least 10% of total eligible expenditure under the relevant project
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Request of Funds from the NF Request of Funds from the NF by the Contracting Authorityby the Contracting Authority
Request of Funds from the NF (Turkey) by the Contracting Authority/OS
Payments, transfer of funds from the NF to the Contracting Authority/OS
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This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Request of Funds From the NF Request of Funds From the NF to the Contracting Authorithyto the Contracting Authorithy
The amounts of the Requests for Funds are established on the basis of detailed disbursement forecasts based on the invoices already checked and approved by the OS/Contracting Authority and end-recipients, derived from detailed commitment forecasts developed by the OS and payment schedules under signed contracts
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This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
• Finance Division is preparing the Requests for Funds on a regular basis (generally quarterly basis)
• Finance Division is responsible to check the approved limit and if there is a difference between the requested and approved amount to clarify the issue with the National Fund
26
Request of Funds from the NF Request of Funds from the NF by the OS/Contracting by the OS/Contracting AuthorityAuthority
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
3) Responsibilities of Finance 3) Responsibilities of Finance Division under RCP-CID / RCOPDivision under RCP-CID / RCOP
27
Sound Financial Management
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Overall Responsibilities of Overall Responsibilities of Finance DivisionFinance Division
1)Request for Funds from the National Fund
2)Payment Authorisation and Execution
3)Financial Reporting
4)Accounting
VERY IMPORTANT!
Clear segregation of duties between two functions-Finance-Accounting
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This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Segregation of DutiesSegregation of Duties
In accordance with the good internal control practice the following
shall be in place in relation to financial procedures:
– Segregation between payment authorisation and payment execution
– Segregation between financial management and accounting
Accountants responsible for maintaining the IPA accounting records are not involved in the approval nor in execution of payments
- Segregation between financial management and tendering
Accounting and payment approval functions are separated from the tendering function
29
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Responsibilities of Finance Responsibilities of Finance DivisionDivision
Finance Function
Staff
Chief of Finance Division
IPA Expert- Payment 1
IPA Expert- Payment 2
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Responsibilities•Preparation of Request for Funds•Execution of payments for service, framework, supply and works contracts•Provision of assistance to VAT exemption and other tax related issues•Financial Reporting
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Responsibilities of Finance Responsibilities of Finance DivisionDivision
Accounting Function
Staff
Chief of Finance Division
IPA Expert- Senior Accountant
IPA Expert- Accounting
31
Responsibilities•Organising book-keeping activities•Presto
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Responsibilities of Finance Responsibilities of Finance 1) Request for Funds1) Request for Funds
• Request of Funds from NF
• Verification of availability of funds and checking if the funds are available under the relevant sub-account to execute the payment
• Checking if the amount requested in the Request of Funds are adequate for the reimbursements, in order to avoid a surplus balance of the funds and late payments.
32
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
2) Payments2) Payments
• Receiving requests for payment from contractors, checking legitimacy of request
• Checking and verifying the payment dossier in accordance with the contract dossier and standard EU procedures in force at the time
• Double-checking of the Payment Dossier;
• Checking and verifying the “Good for Payment” amount proposed by the IPA Expert- Payment 1
• Checking the Transfer and Payment Order Form prepared by the IPA Expert- Payment 1 and make sure the sub-accounts, payment accounts, bank details of the Contractor and the payment amounts are correct,
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This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
3) Reporting3) Reporting
• This function describes the activity of financial reporting performed through OS Accounting program, OS database - MIS and reports prepared manually based on supporting information from these systems.
• Reports submitted by the OS are the basis for the NF further reporting to the EC. All reports are provided in the standard format agreed by the NF
• Monthly Financial Report, providing to the National Fund, for distribution to the NAC and EC Representation in Ankara, monthly reports covering the status of projects being implemented and the financial status of each programme
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This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
4) Accounting4) Accounting
• Establishing and maintaining the accounting system • Registration of the contracts with all necessary details;
such as Contract Number, Contractor, Contract Amount, Estimated Payment Amounts, Bank Details of the Contractor, bank guarantees, payment requests;
• Organises the book-keeping activity;• Ensures appropriate book-keeping and registration for
each programme, objective, component, contract;
Making records of payments under signed contracts
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This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 201136
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
4) 4) LifecycleLifecycle of Expenditures of Expenditures
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Types of ComponentsTypes of Components
Service: Procurement of consultancy, research, know-how and training
Supplies: Procurement of equipment, materials
Works: infrastructure, superstructure and oher engineeringworks
Name of the Training 37
Fee based Global price Based on Direct Costs
Service
(FWC)
Supplies
Works
Twinning
Grants
(Direct Grants)
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
5) Payments to the Consultants 5) Payments to the Consultants /Contractors/Contractors
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Sözleşme Türü(Component Type)
Avans ÖdemesiPre-financing payment
Ara ödemeInterim Payment
Nihai ödemeFinal Payment
Ücret bazlı Hizmet veya Birim Fiyat MüşavirlikService/FWC*Fee- based Service/TA*Unit Price Supervision
12 ay veya daha az %4012-24 (24 hariç) %3024 ay veya fazlası %20
6 ayda bir (%90’ a kadar)
% 10
Götürü Usulü HizmetGlobal Price
% 60 N/a %40
İnşaatWorks
SupplyMal Alımı
%10
%60
Hakedis Ödemeleri Aylık olarak yapılır.Ara ödemelerden %5 retention kesintisi yapılır.
Retention
%4040
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Basic Terminology during the Basic Terminology during the payment process of the projectpayment process of the project
Contractor: For all types of contractsConsultant: For service contractsAn official commercial request for payment/payment claim/invoiceThe complete contract numberThe complete contract title Invoice numberDate of issue of the invoiceThe type of payment claimThe period covered by the payment claim
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Types of PaymentsTypes of Payments
Pre-financing Further pre-financing
Interim PaymentBalance
Different in all components!!!
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
After the request of payment is After the request of payment is received from a Consultant by received from a Consultant by the Contracting Authority:the Contracting Authority:
The invoice of the Consultant is registered in the Invoice Register upon receipt by the OS
The original invoice is also registered into the accounting system
The Invoice is checked with Invoice Identification Control Sheet
If approved a payment order is prepared by Finance Manager
Once the payment to the contractor is done the Contracting Authority shall inform the Consultant about the payment
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Time Frame for paymentTime Frame for payment
Within 45 days of receipt of the contract signed by all parties and all relevant documents (request for payment, financial guarantee if applicable).
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
The submission and approval of the below The submission and approval of the below documents are necessary to start to 45 days documents are necessary to start to 45 days payment deadline (Example service payment deadline (Example service contracts)contracts)
Invoice / request for paymentA detailed list of expenses for fees and incidentals which
form the financial report which shall indicate the cumulative expenditure and the balance available.
Related Progress ReportExpenditure Verification Report by external auditorsTimesheets for the related periodWorking at weekend or national holiday approvalsSubject to the approval of the interim report by end
recipient and Contracting Authority in accordance with Article 27 of General Conditions
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
The role of the end-recipient:The role of the end-recipient:
A copy of the front page of the invoices stating “Read and Approved” signed and dated by two authorised signatures one of which is the SRER is a pre-requisite for starting the payment request and execution of the payment deadline of 45 days.
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Approval of the progress Approval of the progress reportreport
The approval of the progress report is a pre- requisite to proceed with the paymentThe period of the progress report should comply with the period of expenses in the request for payment/invoice.The progress reports should be accompanied by a financial report and an expenditure verification by the audit firm
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Audit Firm for the expenditure Audit Firm for the expenditure verification & eligibility of costsverification & eligibility of costs
Notification from the Consultant related to the audit firm
The audit firm has to be a member of an internationally- recognised supervisory body for statutory auditing according to Atricle 20 of the contract
CPA or YMM in Turkey
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Basic Terminology Basic Terminology During the implementation of the During the implementation of the projectproject
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Verifications on fees/man-Verifications on fees/man-daysdays
To execute a payment there should be reliable and sufficient evidence that:
the experts employed by the consultant have actually been working on the contract for the number of days claimed in the Consultant’s invoices
Fees are paid for services actually rendered, the time worked.
STEs must have CFCU prior approval
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Eligibility Verifications on IncidentalsEligibility Verifications on IncidentalsIncidental Budget Approval RequestsIncidental Budget Approval Requests
All incidental expenditure in contract is to be invoiced at actual cost
The invoice and /or other documents must be compatible with the Turkish regulations.
A number of items are ineligible, examples include:VAT, customs and import duties Types of administrationetc.
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Exchange RatesExchange Rates
Conversion of expenses incurred in currencies other than Euro should be based on the monthly Info euro exchange rates published by the European Commission web site.
www.europa.eu.int/comm/budget/inforeuro/index.cfm?fuseaction=dsp_html_monthly_rates&lamguage=en
)
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Physical Storage of the Physical Storage of the DocumentsDocuments
Relevant documentation must be kept for a 7-year period after the final payment made under the contract
All supporting documents are kept carefully
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 201154
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
• Verification – ensuring double-check of all steps in a transaction
• Procedures for supervision by accountable management of tasks delegate to subordinates
• Payment procedures (including procedures for confirmation of output delivery and eligibility conditions “on-the-spot where necessary
AS YOU SEE AS YOU SEE Control Activities – Control Activities – mainly related with the financial mainly related with the financial management of IPA fundsmanagement of IPA funds
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 201155
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
• Budgetary procedures – to ensure availability of funds (including funds necessary to maintain implementation if Commission funding is delayed or refused)
• Procedures for monitoring delivery of co-financing
• Procedures for continuity of operations
More....More....
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 201156
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
• Accounting procedures – ensuring full and transparent accounting following accepted accounting principles
• Reconciliation procedures – ensuring that wherever possible accounting balances are reconciled against third-party information
• Security procedures – ensuring that assets and data are kept secure from interference or physical damage
• Archiving procedures ensuring that documents will be available and kept secure
And More....And More....
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 201157
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
• Segregation of duties – ensuring that where different tasks in the life of the same transaction are allocated to different staff to ensure some automatic cross-checking controls
• Reporting of internal control weaknesses – ensuring that the registration of any internal control weakness identified from any source and that management responses are recorded and followed-up.
And More....And More....
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 201158
This project is co-financed by the European Union and the Republic of Turkey
IPA Funds Programme Management 12-19 sept. 2011
Preminary DiscussionsPreminary Discussions
QuestionsQuestions