1. No category

BOSNIA AND HERZEGOVINA
MINISTRY OF FINANCE AND TREASURY
FIRST LEVEL CONTROL OPERATIONAL
MANUAL
Cross Border Co-operation Programmes
under shared management mode
Version
Approved by
2.0, July 2013 Vera Letica, Assistant minister
Signature
Table of Contents
List of Abbreviations
1.PURPOSE OF THE FLCOM………………………………………………………………….2
1.1 Register of modifications……………………………………………………………..3
2. INSTITUTIONAL AND REGULATORY FRAMEWORK……………………………4
2.1 Sharedmanagement……………………………………………………………………..4
2.2 Programme management structures……………………………………………4
2.3 EC Regulations……………………………………………………………………………..7
2.4 BIH Regulations………………………………………………………………………......7
2.5 Programme specific Regulations……………………………………………….….8
3. DESCRIPTION OF FIRST LEVEL CONTROL (FLC) SYSTEM IN BIH……….…9
3.1 System in place………………………………………………………………………….….9
3.2 Internal organisation of the Control Body………………………………….…10
4. PROCEDURES OF VERIFICATION OF EXPENDITURE…………………………..11
4.1 Objective of the FLC………………………………………………………………………11
4.2 Steps of the FLC/Validation process…………………………………………..…12
4.3 Reporting, verification and retention periods and deadlines….…...14
4.4 Desk-based administrative check………………………………………………...15
4.4.1 Staff costs………………………………………………………………………….…18
4.4.2 Overhead………………………………………………………………………….….21
4.4.3 Travel and accomodation…………………………………………………..…22
4.4.4 External expertise………………………………………………………………...25
4.4.5 Meetings and events………………………………………………………….…28
4.4.6 Promotion costs……………………………………………………………….…..30
4.4.7 Equipment……………………………………………………………………………32
4.4.8 Investments………………………………………………………………………….36
4.4.9 Financial charges and guarantee costs…………………………………40
4.5 On the spot checks……………………………………………………………………….41
4.5.1 Definition and purpose…………………………………………………………41
4.5.2 Risk assesment and sampling………………………………………… …..42
4.5.3 On the spot checks activity plan……………………………………….…..46
4.6 Documenting FLC checks………………………………………………………………47
5. SUBSTANTIVE PROCEDURES……………………………………………….……………48
5.1 Checks of completeness……………………………………………………….………49
5.2 Checks of compliance…………………………………………………………………..49
5.3 Checks of plausibility……………………………………………………………………51
5.4 Checks of existence and reality…………………………………………………….52
6. SUB PROCEDURES……………………………………………………………………………54
6.1 Inspection of documents and records…………………………………………..54
6.2 Reconciliation………………………………………………………………………………..55
6.3 Recalculation…………………………………………………………………………………56
6.3 Inquiry and interviews……………………………………………………………………57
6.4 Observation of events and processes…………………………………………….58
6.5 Walk- through………………………………………………………………………………..59
7. IRREGULARITIES………………………………………………………………………………63
7.1. Background, definitions and types of irregularities…………………..63
7.1.1 Background……………………………………………………………………….63
7.1.2 Definitions…………………………………………………………………………63
7.1.3 Types of irregularities…………………………………………..……..…...64
7.1.4 Irregularities by type of infliction………………………………………65
7.1.5 Irregularities by type of impact………………………………………….66
7.1.6 Irregularities by nature………………………………………………………67
7.2
7.2.1 Detection and prevention…………………………………………………67
7.2.2 Reporting irregularities……………………………………………………..68
7.2.3 Recording irregularities…………………………………………………….71
7.2.4 Recovery of funds……………………………………………………………..73
8. PUBLIC PROCUREMENT………………………………………………………………..73
8.1 Rules on public procureemnt……………………………………………………..74
8.2 Basic rules to be respected…………………………………………………………74
8.2.1 Nationality and origin………………………………………………………..74
8.2.2 Language…………………………………………………………………………..75
8.3 Tender procedure walk-through…………………………………………………76
ANNEXIES
3
LIST OF ABBREVIATIONS (IN ALPHABETICAL ORDER)
AA
Audit Authority
AF
Application Form
AR
Activity Report
BiH
Bosnia and Herzegovina
CBC
Cross Border Co-operation
CFCU
Central Financing and Contracting Unit
CNP
Competitive Negotiated Procedure
DEI
Directorate for European Integration
DVE
Declaration on Validation of Expenditure
EC
European Commission
EU
European Union
FA
Financing Agreement
FB
Final Beneficiary
FLC
First Level Control
FLCO
First Level Control Office
FR
Financial Report
FwA
Framework Agreement
INF
Irregularity Notification Form
IO
Irregularity Officer
IPA
Instrument for Pre-accession Assistance
JMC
Joint Monitoring Committee
JTS
Joint Technical Secretariat
KM
Konvertible Mark
LB
Lead Beneficiary
MA
Managing Authority
MED
Transnational Mediterranean Programme
MIS
Management Information System
MoFT
Ministry of Finance and Treasury
NA
National Authority
NCF
National Co-financing
NAO
National Authorising Officier
OP
Operational Programme
PMCM
Programme Management and Control Manual
PRAG
Practical Guide to contract procedures for EU external actions
SEE
South East Europe Programme
TA
Technical Assistance
VAT
Value Added Tax
WD
Working day
WP
Work Package
1. THE PURPOSE OF THE MANUAL
The purpose of this manual is to summarise and explain the procedures applicable within Cross Border
Co-operation (CBC) Programmes under shared management in which either lead or final beneficiaries
from Bosnia and Herzegovina (BiH) participate with respect to the validation of expenditure by the
national First Level Control Office (FLCO) of approved projects as well as the handling of irregularities
and recoveries.
At the time of drafting this manual, programmes implemented under shared management in Bosnia and
Herzegovina (BiH) are:
IPA Adriatic CBC Programme
South East Europe Programme (SEE)
Transnational Mediterranean Programme (MED)
The manual is designed primarily for use by the staff of the Central Financing and Contracting Unit
(CFCU) within the Ministry of Finance and Treasury (MoFT) which has been appointed by means of a
Decision by the Council of Ministers (Session 153) on 14 June 2011 and formally announced in the
Official Gazette No 66/11 of 22 August 2011. With this decision the CFCU is officially designated as the
national First Level Control Office (FLCO) in Bosnia and Herzegovina (BiH) for the above-mentioned
programmes.
At the same time the manual can be consulted by beneficiaries from Bosnia and Herzegovina (BiH) that
are part of a project implemented under any of the three programmes subject to this manual so as to
get a better insight into the nature and kinds of checks performed by the First Level Controllers and to
be drawn attention to some of the more challenging and potentially problematic areas such as adequate
presentation of supporting documentation and public procurement of services, supplies and works.
Inherent to the nature of manuals of procedures is the fact that they may become subject to changes.
Changes can be either small or substantial.
2
Smaller changes (e.g. a row in a checklist) will be made by the person noticing the need to
change it after having obtained prior approval from the Head of the CFCU and without changing
the number of the version of the manual.
More substantial changes will be discussed in staff meetings and agreed upon, following the final
approval of the Head of the CFCU who will nominate and appoint a member of staff in charge of
effectuating the change prior to an agreed deadline.
The following procedures apply whenever there is a need to modify the manual:
Whenever a user identifies the need for a modification of the manual, s/he notifies the Head of the
CFCU and prepares a proposal for the change to be implemented in writing.
Once the change has been approved by the Head of the CFCU and the change is reflected in the updated
manual, the Register of Modifications (as presented below) will be completed.
1.1.
REGISTER OF MODIFICATIONS
Version
Date of
Section modified
Nature of the change
No.
change
1.0
Juni 2012
N/A
Final version for approval
2.0
July 2013
N/A
Final version for approval
3
2. INSTITUTIONAL AND REGULATORY FRAMEWORK
2.1.
SHARED MANAGEMENT
According to IPA Implementing Regulation1, under component 2 – Cross-Border Co-operation, there are
two types of Cross-Border Programmes (CBPs):
Programmes between Members States (MSs) and one or more IPA beneficiary countries
Programmes between two or more IPA Beneficiary countries.
Programmes between IPA Beneficiary countries are managed separately, according to decentralised or
centralised management system respectively, whereby each of the participating countries has it’s own
Operating Structure (OS) and each of the OSs is responsible for implementation of contracts of
beneficiaries from their respective part of the programme area.
Programmes with MSs, however, are implemented according to the shared management, whereby
authorities in the Member State of the programme bear responsibility for implementation of the crossborder programme as a whole and single contract is signed with Lead Partner/Beneficiary. The rules of
these programmes are de facto a modification of ERDF rules and are represented in a separate chapter
of IPA Implementing Regulation (Chapter 2, Section 2, Articles 101 – 138).
In addition to these two types of cross-border programmes, cross-border cooperation component of IPA
programme supports participation of the beneficiary countries in the transnational ERDF programmes
under European Territorial Cooperation objective.2 Unlike IPA cross-border co-operation programmes,
these programmes are funded by 2 different funding instruments and are hence defined by 2 different
sets of regulations (ERDF and IPA).
A form of shared management principle is introduced to the transnational programmes (TPs) as of the
second term of the financial perspective and with the amended IPA Implementing Regulation in January
20103. Article 86 of IPA Implementing Regulation is rephrased to state: “The rules governing the
participation of beneficiary countries in the above programmes shall be established in the relevant
programming documents and/or in the relevant financing agreements, as appropriate.” The new version
of the regulation thus gives relative flexibility to the participating countries to define the implementing
modalities for cooperation in ERDF/IPA transnational programmes, but for all the programmes
management by the Member State is introduced.
2.2.
PROGRAMME MANAGEMENT STRUCTURES
These procedures cover exclusively programmes implemented under the shared management mode and
the managing structures involved under shared management usually include:
Structure
Role and responsibility
Responsible for selecting and approving operations
1
Commission Regulation (EC) No 718/2007, Art.86
2 Commission Regulation (EC) No 718/2007, Art.86
3
Commission Reulgation (EU) No 80/2010 amending Regulation (EC) No 718/2007
4
Verifies the effectiveness and quality of the implementation
of the Programme
Joint Monitoring Committee (JMC)
Reviews and approves Annual Implementation Reports
Approves amendments to the Programme
Is composed of representatives at national, regional and local
level of all countries involved in the Programme
Overall responsibility for the financial management of the
programme and projects
Selection of projects
Managing Authority (MA)
Ensuring compliance with EU and national rules
Ensuring programme evaluation
Providing information and reporting to the JMC and EC
In the case of IPA CBC programmes the MA is located in an EU
Member State (EU MS)
Receiving payments from the Commission and transferring
Certifying Authority (CerAut)
funds to Beneficiaries
Certifying expenditure
Preparation and submission of payment claims to the
Commission
Recovery of funds
In the case of IPA CBC programmes the CA is located in an EU
Member State (EU MS)
Responsible for the functioning of the management and
control systems in accordance with the Programme and
European Regulations
Ensuring audits are carried out to (i) verify the effective
Audit Authority (AA)
functioning of the programme’s management and control
system and (ii) on specific projects
In the case of IPA CBC programmes the AA is located in an EU
Member State (EU MS) and supported by a Group of Auditors
comprising one representative of each participating country
Responsible for the day-to-day management of the
Programme
Assists the Managing Authority (MA) and all the other
Programme structures and bodies in performing their tasks
Joint Technical Secretariat (JTS)
Normally organises Calls for Proposals (CfP) and receives
and assesses the project proposals
5
Monitors the implementation of the Programme
In the case of IPA CBC programmes the lead JTS is usually
located in the same country as the Managing Authority (MA)and
consists of representatives from all participating countries
Verification whether expenditure reported is in line with
the Subsidy Contract and all relevant EC, national and
programme regulations and procedures
Checking
First Level Control (FLC)
the
eligibility,
regularity
and
legality
of
expenditure reported
Validation of expenditure reported and issuance of the
Declaration on Validation of Expenditure (DVE)
Programme management structures can involve additional bodies including national or regional contact
points for each country participating in the programme.
In Bosnia and Herzegovina the Directorate for European Integration (DEI), Sector for Coordination of EU
Assistance, Cross Border Cooperation (CBC) department acts as the National Authority (NA) and is
responsible for the provision of support to overall management to the Managing Authority (MA),
ensuring publicity and visibility of the programme throughout the eligible areas on the territory of
Bosnia and Herzegovina (BiH) and provision of information and advice with respect to the rules of the
programme concerned to potential applicants in BiH. The DEI also provides three representatives as
members of the Joint Monitoring Committee (JMC).
With respect to the programmes subject to these procedures the main management structures are the
following:
IPA Adriatic CBC
South East Europe (SEE)
Mediterranean Programme
(MED) *
National Development
Managing
Regione Abruzzo Servizio Attivita
Agency, Managing Authority
Provence Alpes Côte d’Azur
Authority
Internazionali (Italy)
for International Cooperation
Région (France)
(MA)
Programmes (Hungary)
Certifying
Regione Abruzzo Servizio Autorita
Ministry for National
Caisse des dépôts et
Authority (CA)
di Certificazione (Italy)
Economy of Hungary – NAO
consignations (CDC)
Office
Audit
Regiona Abruzzo Struttura
Directorate General for Audit
Commission interministérielle de
Authority (AA)
Speciale di Supporto «Controllo
of European Funds (Hungary)
coordination des contrôles (CICC)
Mrs. Mirjana Vidanovic
Mr. Kirill Dimanopoulos
Ispettivocontabile»
Joint Technical
Vanja Bozic
6
Secretariat
(JTS)
[email protected]
4
([email protected])
([email protected])
5
* In addition there are two liaison offices, one in Valencia and one in Thessaloniki.
2.3.
EC REGULATIONS
The main EC regulations and documents related to the control system and the verification of
expenditure of the IPA Adriatic CBC Programme are:
Council Regulation (EC) No 1085/2006 of 17 July 2006 establishing an instrument for preaccession assistance (IPA)
Commission Regulation (EC) No 718/2007 of 12 June 2007 implementing Council Regulation (EC)
No 1085/2006 establishing an instrument for pre-accession assistance (IPA)
Commission Regulation (EU) No. 80/2010 of 28 January 2010 amending Regulation (EC) No
718/2007 implementing Council Regulation (EC) No 1085/2006 establishing an instrument for
pre-accession assistance
Commission Decision C (2007) 2034 of 24 May 2007 on the rules and procedures applicable to
service, supply and works contracts financed by the general budget of the European Communities
for the purpose of cooperation with third Countries, with the exclusion of Section II, 8.2
(hereinafter “IPA procurement rules”) and the related EC guide on procurement and contracting
procedures and rules which apply to EC external aid contracts “Practical Guide to contract
procedures for EU external actions” (PRAG) which fully replaces public procurement rules of
participating countries within the limits set out by the decision C (2007) 2034 Council Regulation
(EC) No 1083/2006 as General Regulation
The Practical Guide to contract procedures for EU external actions (the “PRAG”) the latest version
of which (March 2013) which can be found on the following website
http://ec.europa.eu/europeaid/work/procedures/implementation/practical_guide/
2.4.
BOSNIA AND HERZEGOVINA REGULATIONS
IPA Framework Agreement (FwA) between the European Commission and the Government of
Bosnia and Herzegovina signed on 20 February 2008
The main specific national provisions according to legislation in place in BiH and which may have an
impact on the financial management, eligibility and verification of expenditure incurred and declared by
beneficiaries from BiH are contained in the BIH Control Guidelines developed for each of the three on
going cross border co-operation programmes under shared management (i.e. IPA Adriatic CBC
programme, South East Europe transnational cooperation programme and the transnational MED
5
For both SEE and MED there is no dedicated representative from Bosnia and Herzegovina on the JTS at the time of
drafting these procedures.
7
programme) and which are also published on the website of the Ministry of Finance and Treasury
(MoFT).
2.5.
PROGRAMME SPECIFIC REGULATIONS
The main programme documents specific to the IPA Adriatic CBC Programme are:6
IPA Adriatic Operational Programme (OP)
IPA Subsidy Contract applicable under the Call for Proposals (CfP) under which the project is
financed
IPA Partnership Agreement
Application form
Programme Management and Control Manual (PMCM)
Guidance for First Level Controllers
The main programme documents specific to the South East Europe Programme (SEE) are:7
South East Europe Transnational Cooperation Programme approved by the European
Commission on 20 December 2007, Decision No. C (2007) 6590
SEE Programme Manual (relevant Call for Proposals) which contains the programme specific
rules for the eligibility of expenditure
SEE Implementation Manual laying down the programme specific rules for the implementation
of the SEE projects
SEE Control Guidelines version 3.1 which is the second amendment dated 27 May 2011 to the
initial guidelines developed on 10 June 2009 and amended for a first time on 6 July 2009
Information on the Control Systems in the Member States of the SEE Programme
Guidance to the Declaration on validation of expenditure in the SEE Partner Report
SEE Project Implementation Package
SEE Partner Report Tool and Guidelines
The main programme documents specific to the MED are8
the MED Operational Programme (OP)
6
Documents can be found at the following link: http://www.adriaticipacbc.org
7
Documents can be found at the following link: http://www.southeasteurope.net/en/downloads_section/programme_related_documents/
8
Documents can be found at the following link: http://www.programmemed.eu/
8
Implementation Guide of the Programme (March 2010)
Guidelines on First Level Control (July 2011)
Communication Plan MED Programme (April 2008)
The above list of Community, national and programme specific regulations and documents is not
exhaustive and may have to be amended and/or complemented during the implementation of the
Programme.
3. DESCRIPTION OF THE FIRST LEVEL CONTROL (FLC) SYSTEM IN BIH
3.1.
FLC SYSTEM IN PLACE
In line with Article 108 of Commission Regulation (EC) No 718/2007 of 12 June 2007 implementing
Council Regulation (EC) No 1085/2007 establishing an instrument for pre-accession assistance (IPA) each
participating country shall set up a control system in order to validate expenditure at national level.
Each participating country shall designate the controllers responsible for verifying the legality and
regularity of the expenditure declared by each Beneficiary participating in the operation.9
Bosnia and Herzegovina has opted to use a centralised control system at national level through a public
administrative body for ensuring First Level Control (FLC).
To this end the body designated as the national First Level Control Office (FLCO) in BiH is the Central
Financing and Contracting Unit (CFCU) within the Ministry of Finance and Treasury (MoFT). This decision
was taken by the Council of Ministers (Session 153) on 14 June 2011 and formally announced in the
Official Gazette No 66/11 of 22 August 2011.
Since FLC function is assured by means of a centralised control system at national level by a public
administrative body, the costs related to FLC in BIH are not borne by the beneficiaries.
The Head of the CFCU, who is also Assistant Minister, is the sole responsible person for the formal
issuance of the Declarations on Validation of Expenditure (DVE) whereas the actual verification will be
carried out by a number of his/her staff as determined by him/her whereby each controller will be
assigned the responsibility for the verification of a dedicated number of projects.
The BiH First Level Controllers are civil servants and their salaries are paid out of the national budget.
Other costs related to the execution of first level control (such as those related to on-the-spot checks,
participation of controllers in training/seminars either within the territory of BiH or abroad, participation
in events organised by Interact in Vienna etcetera may be financed out of the budget allocated by
means of the Technical Assistance (TA) Subsidy Contract.
9
Whenever the terminology “Beneficiary” is used, reference is made to either “Lead Beneficiary” or “Final
Beneficiary”.
9
3.2.
INTERNAL ORGANISATION OF THE CONTROL BODY
Head of CFCU
(1)
Quality Control Advisers (2)
Expert Adviser (2)
Department for Management
of Programmes and Projects
of EU Assistance
(8)
Head of Unit *
Administrative/Technical Officer (1)
Department for Finance and
Accounting
(4)
Head of Unit *
Expert Adviser (1)
Expert Adviser (1) *
Senior Specialist (1) *
Senior Specialist (3) * (2)
Specialist (3) * (2)
Specialist (1) *
From the above it can be seen that there are ten (10) members of staff of the CFCU that are currently
involved in first level control (FLC) with regard to cross border co-operation (CBC) programmes under
shared management.
The profile of first level controllers foresees that they should posses at least the following qualifications:
university or college degree
working experience in financial / project management
at least one (1) year working experience in a similar field
knowledge of the relevant EU and national regulations
knowledge of English (at least intermediate level)
Their job descriptions provide for the following activities (non-exhaustive list):
ensure the formal registration of all relevant documents in the programme level management
information systems and in the internal registry of the Ministry of Finance and Treasury (MoFT)
perform desk-based administrative and on-the-spot checks whereby s/he checks:
o the delivery of services and products in accordance with the Subsidy Contract
10
o the soundness of the expenditure declared for operations (or parts of operations)
implemented in Bosnia and Herzegovina (BiH)
o the compliance of such expenditure and or related operations (or parts of operations)
with Community, programme and national rules and legislation
validating expenditure incurred by the Beneficiary by means of the preparation of Declarations
on the Validation of Expenditure (DVE) and submission to the Head of the CFCU for control and
signature
drafting checklists and reports on the controls performed according to the templates contained
in the programme documents / Control Guidelines at national level
continuous liaison with the relevant programme bodies (Managing Authority – MA, Joint
Technical Secretariat – JTS) and national bodies (National Authority – NA)
use of the relevant templates, management information systems and control guidelines
keeping track of changes in programme documentation and relevant legislation and reflection of
such in this Manual and the Control Guidelines at national level accordingly when required
4. PROCEDURES FOR VERIFICATION OF EXPENDITURE
4.1.
OBJECTIVE OF FLC
The primary objective of First Level Control (FLC) is to guarantee that expenditure reported and claimed
by Beneficiaries is justified, substantiated, real, actual and incurred and in line with the provisions of the
Subsidy Contract / Partnership Agreement concerned and are in line with all legal provisions governing
the Programme (EC, national and programme specific – see 2 “Legislative and Regulatory Framework”
above).
In view of that Controllers shall:
check the regularity and legality of expenditure incurred and declared by Beneficiaries from
Bosnia and Herzegovina (BiH) by conducting desk-based administrative and on-the-spot checks
validate the expenditure incurred by Beneficiaries from Bosnia and Herzegovina (BiH)
validate the content of both the activities and the finances of the partner report
draft a report and a checklist on the control performed (templates are usually developed at
programme level)
sign and issue a Declaration on Validation of Expenditure (DVE)
keep complete files on the validation process in lien with both programme as well as national
requirements
FLC is the most extensive level of control whereby 100% of the expenditure is checked.
11
FLC is the first step in the expenditure certification / validation process and is performed
prior to EC reimbursement of validated expenditure. This means in effect that
Beneficiaries incur costs before being reimbursed from Programme funds. FLC requires
a 100% check of expenditure declared.
Verifications comprise 2 key elements:
 Administrative verification, i.e. desk-based verifications (in principle of 100% of project
expenditure)
 On-the-spot verifications (potentially of a sample of operations).
4.2.
STEPS OF THE FLC/VALIDATION PROCESS
Submission of Activity Report (AR) and Financial Report (FR) by A national Beneficiary in electronic
version through the programme specific information system and hard copy to the national First Level
Control Office (FLCO)
Desk-based administrative check of Activity Report (AR) and Financial Report (FR), including all
supporting documentation by the national FLCO
If the project is included in the on-the-spot check activity plan (or otherwise decided on a case by case
basis), an on-the-spot check visit will be performed by the national FLCO
Establishment of the eligible costs and approval of the Beneficiary’s report by the national FLCO
Issuing the Declaration on Validation of Expenditure (DVE) by the national FLCO
The project partner from BiH prepares a Progress Report (PR) in the defined format as per the specific
programme and as per the time schedules laid down for each particular programme specifying activities
(Activity Report) and the related costs (Financial Report) incurred during the period covered by the
report.
The Progress Report is uploaded electronically in the Management Information System (MIS) developed
for each specific programme and a hard copy of the report, together with all original supporting
documentation proving the expenses, is submitted for validation to the designated body in charge of first
level control of the expenditure declared which in the case of BiH is the Central Finance and Contracting
12
Unit (CFCU) within the Ministry of Finance and Treasury (MoFT) located at the following address and
with the following contact details:
Trg BiH 1
Sarajevo
Bosnia and Herzegovina
Tel: +387 33 70 30 24, +387 33 70 25
Fax: +387 33 70 31 28
Each project is assigned by the management of the CFCU to a designated First Level Controller who will
be in charge of validating expenditure under the projects assigned to him / her.
The First Level Control Office, i.e. the CFCU, will perform an administrative desk-based check of 100% of
the expenditure declared, both in terms of form and content on the basis of the control guidelines
developed for each particular programme, and, in addition, will perform on a regular basis on-the-spot
checks (see also section 6.3.1 above).
Once the checks (either administrative desk-based check alone or an administrative desk-based check
followed up by an on-the-spot check) have been completed, the CFCU in its role as FLCO will determine
the amount of the eligible costs and validate the eligible expenditure in the MIS by means of issuing of a
“Declaration on Validation of Expenditure (DVE)” expressed in euro.
The DVE is supported by several annexes which are:
additional information concerning the administrative check and on-the-spot check, if any as well
as irregularities determined during the period covered by the report (see section 8 below)
summary of costs according to the individual budget lines and work packages.
Under normal circumstances the FLCO is given a predetermined period from the receipt of the hard copy
of the report to complete the validation process. Beneficiaries are drawn attention to the fact however
that this initial period can be interrupted or suspended if outstanding issues are identified during the
verification process and in which case a letter will be sent to the Beneficiary by the FLCO requesting for
clarification(s) and / or additional documentation.
FLC checks are being performed on the basis of control checklists agreed on programme level and which
are contained in the guidelines for first level control and/or implementation manuals developed for each
specific programme and which can be downloaded from the respective programme’s website.
13
4.3.
REPORTING, VERIFICATION AND RETENTION PERIODS AND DEADLINES
The work of the FLCO involves a continuous process which normally starts with the receipt of a hard
copy of a signed Progress Report (consisting of an Activity Report as well as a Financial Report)
submitted by a beneficiary, the check and verification of 100% of the expenditure incurred and declared
by means of a desk-based administrative check (see Section 4.4 below) and on-the-spot checks on a
sample basis (see Section 4.5 below) and which results in the issuing of a Declaration on Validation of
Expenditure (DVE) while constantly monitoring projects with respect to irregularities, fraud and
corruption.
The deadlines for the submission of reports by Beneficiaries, the time allocated to perform and finalise
the first level control checks, the time given to Beneficiaries to submit clarifications or additional
documentations, if any, to the FLCO and the period during which all documentation related to
expenditure and the FLC process needs to be retained as per the programme rules established for each
of the three programmes covered by these procedures is presented in the table below:
IPA Adriatic CBC
Reporting by Beneficiary
quarterly (i.e. by 31
st
SEE
MED
six-monthly
six-monthly (by 31 October
st
th
th
January, by 30 April, by
th
30 June, by 31
October)
Time allowed for Controllers
and 30 April)
st
10
3 months
60 days
20 – 30 calendar days
14 calendar days (i.e. 10
14 calendar days (i.e. 10
8 calendar days
11
to issue the Declaration on
Validation
of
Expenditure
(DVE)
Time allowed to Beneficiaries
to
submit
additional
documentation
or
clarifications
upon
working days)
working days)
13
12
specific
request by FLCO
Retention deadline of FLC
documentation
by
Beneficiaries / Controllers
the
3 years after the official
31 December 2022
31 December 2021
closure of the programme
(see Partnership
Agreement Article 3.3)
10
This is according to Section 6.1.1.2 “Timing for Reporting” of the Programme Management and Control Manual
(PMCM) developed specifically for the IPA Adriatic CBC Programme which also specifies that “Beneficiaries may
report expenditure whenever they are ready given that at least the spending forecasts planned in the Application
Form will be respected”.
11
In line with the “Guidelines for First Level Control for the MED programme of July 2011.
12
There is no such deadline given in the programme rules and this time period has therefore been set by the BiH
national FLCO.
13
In line with the “Guidelines for First Level Control” for the MED programme of July 2011.
14
i.e. 31 December 2021
On average an initial desk-based administrative check takes between five (5) and fifteen (15) working
days and depends on the complexity of the project, the value and nature of the expenditure declared,
the number and quality of the supporting documentation, the experience of the first level controller and
the fact whether or not discrepancies (e.g. between the Activity and Financial Report) are discovered
and whether clarifications are required from the Beneficiary. In addition the process may be
substantially slowed down if Beneficiaries are slow in providing the additional information requested by
the first level controller.
On average an on-the-spot check takes maximum five (5) working days and includes activities related to
planning, preparation, travel, the actual on-the-spot check and reporting.
The templates to be used for reporting purposes by the Beneficiaries are published on the programme
websites and are contained in the Control Guidelines developed for each programme.
4.4.
DESK-BASED ADMINISTRATIVE CHEKS
As soon as the First Level Control Office (FLCO), and more in particular the First Level Controller within
the Central Finance and Contracting Unit (CFCU) assigned to the project concerned, has received the
hard copy of the Activity Report (AR) and the Financial Report (FR) including all necessary supporting
documentation from the Beneficiary, a desk-based administrative check is initiated.14
This check is performed at the premises of the FLCO (i.e. CFCU).
The First Level Controller first checks the completeness of the documentation submitted and the
conformity with standard templates and formats developed for the specific Programme. In this respect
it is to be noted that the Application Form (AF) as approved by the Joint Monitoring Committee (JMC),
the IPA Subsidy Contract and the Partnership Agreement (including all annexes) needs to be attached to
the first report submitted by the Beneficiary.
Subsequently the First Level Controller continues to perform the following formal checks and judges
whether or not there is satisfactory evidence that:
ITEM / ISSUE TO BE CHECKED
DOCUMENTS USED / CHECKED
Expenditure reported is real and incurred and is
Original invoices, receipts or accounting documents
supported by accurate and acceptable documents as
of equivalent probative value
to their form and content
Services or products have been actually delivered
Timesheets and outputs (e.g. reports) of project
and are in line with the approved Application Form
staff (both employees of the Beneficiary as well as
14
The time period within which FLC has to be completed determined at programme level starts to counts as of the
receipt by the FLCO of the hard copies of all due reports.
15
and the Subsidy Contract
external staff)
Acceptance documents for supply or work
components
Approved Application Form
Subsidy Contract
Activity Report
Financial Report
Expenditure reported is in line with the eligibility
Programme Management and Control Manual
rules of the EU, specific Programme and national
(PMCM)
legislation
Guidance for First Level Controllers
Programme Implementation Guide / Programme
Management and Control Manual
EU and national legislation
Eligibility period of the reporting period / project
(start and end date)
Eligible area of the Programme
Subsidy contract (where the approval date, start
and end date of the project are given)
Expenditure reported can be traced back / linked to
Comparison of expenses with activities described in
activities reported in the Activity Report
the Activity Report
Expenditure incurred in local currency (KM) is
InforEuro exchange rate
correctly converted into €
IPA Adriatic CBC: InforEuro exchange rate of the
month in which the report was submitted by the
Beneficiary to the national FLCOI
SEE: InforEuro exchange rate of the last month of the
reporting period (for SEE)
15
MED: InforEuro exchange rate of the month in which
the invoice was paid or the of the month in which the
costs were reported to the Lead Partner or 6-months
average of the InforEuro exchange rate or market
exchange rate of the day the invoice was paid or
market exchange rate of the last day of the reporting
period (Note: in those cases where the beneficiary
has sent their figures to the Lead Partner in their
national currency and it is the Lead Partner that
converts these figures into euro then the Lead
15
As the KM is pegged to the euro, the fixed exchange rate is € 1 to KM 1.95583.
16
Partner must use the average monthly exchange rate
set by the EC of the last month of the reporting
period or the market exchange rate of the last day of
the reporting period
properly
 Approved Application Form (should, whenever
communicated and deducted from the eligible
possible, contain an estimate of revenues if
expenditure declared
foreseen)
Net
revenue,
if
any,
has
been
 Calculation method by Beneficiary to report net
revenues
 Statement by the Beneficiary that the project
does not generate revenues
Recoverable Value Added Tax (VAT) has been
deducted from the eligible expenditure declared
16
 Check VAT status of Beneficiary in the Section on
VAT of Activity Report
Expenditure is charged to the correct Work Package
 Approved Application Form
(WP) and correct budget line and budgets by WP and
 IPA Subsidy Contract
budget line have been respected
 Original
Double financing is avoided
invoices
/
receipts
/
accounting
documents are voided (stamped) by FLCO upon
approval
The
Beneficiary
maintains
either
a
separate
accounting system or an adequate accounting code
EU
requirements
concerning
publicity are respected
information
and
 This will be normally subject to verification during
on-the-spot checks
 Materials produced by the Beneficiary (e.g.
brochures, leaflets, press releases, …) comply with
EU visibility and information rules
Supportive documents to the reported expenditure provided by BIH project partner are accompanied
with the necessary copies together with the list of expenditures to the controller, verified by signatures
and stamps in relevant cases.
If the project partner has filled the reporting materijals inadequately, documentation is missing or
instructions have not been followed, First Level Controller should ask the project partner to correct the
mistakes or clarify the unclear issues.
The First Level Controller will then perform an in-depth check of the expenditure claimed under the
various budget lines. These are per programme:
16
If at any time during the implementation of the project the FLC reveals that the project is generating revenues
which are not declared by the Beneficiary and thus not deducted from the eligible expenditure, this is considered an
irregularity and the irregularity procedure and recovery procedure need to be initiated (see Section 8 below).
17
Budget line
IPA ADRIATIC CBC
SEE
MED
No.
1
Staff costs
Staff costs
Staff costs
2
Overheads
Overheads
Durable goods
3
Travel and accommodation
Travel and accommodation
Consumable goods
4
External expertise
External
Travel and accommodation
expertise
and
services
5
Meetings and events
Equipment
Services (other than external
expertise)
6
Promotion costs
Small scale investments
7
Equipment
Financial
charges
External expertise
and
Promotion, information and
guarantee costs
publications
8
Investments
N/A
Overheads
9
Financial charges and guarantee
N/A
Other
costs
From the above it can be noticed that the structure of the budgets of the subsidy contracts slightly
differs from programme to programme and that sometimes particular costs are eligible under a given
programme whereas for others this is not the case (e.g. no investment component under the MED
programme).
The sections below contain general information regarding each individual major budget line, the nature
of costs that can be claimed, the kind of supporting documentation that is required and the nature of
the checks that will be performed by the First Level Controllers. More detailed information including
specific requirements according to relevant legislation in Bosnia and Herzegovina are contained in the
Control Guidelines at national level developed separately for each of the three programmes (IPA Adriatic
CBC, SEE and MED).
4.4.1 Staff costs
The first budget line is entitled “staff costs” and covers the salaries (i.e. gross salary
including possible salary for overtime, sickness, holidays plus any other benefit, reward, bonus payment
plus all legal provisions such as insurance, health and social security charges paid by both the employee
and the employer) of the staff of the Beneficiary working either on a full-time or part-time basis on the
project, as indicated in the Application Form.
Typically personnel working on these kinds of projects are personnel such as a Project Coordinator, a
Project Manager, an Assistant, a Financial Manager etc) and it is compulsory for the Beneficiary to prove
18
that members of staff for which salaries are claimed under the project are directly employed by the
Beneficiary organisation on the basis of a regular work contract or any similar type of contract according
to the national rules (e.g. service contract of predefined duration as a self-employed person).
Staff costs should be calculated in hourly rates and presented as such.
First Level Controllers will inter alia verify whether staff costs are claimed in accordance with the
envisaged work of the different employees on the project as indicated in the Application Form (e.g.
ensure that no full salaries are claimed for staff envisaged to work only part-time on the project) as well
as reconcile the information provided on the timesheets with the proof of payment of salaries (e.g. if the
timesheet reveals that a person worked 120 hours i.e. 8 working days on the project in a given month
then only a fraction – 120/176 or 68.18% - of that staff member’s salary can be charged to the project.17
This cost category normally makes up the largest part of the overall project budget and expenditure
claimed in each individual report and therefore the necessary attention and care should be allocated in
verifying the eligibility and acceptability of claim under this budget line.
Checks related to claiming staff costs include18:
ITEM / ISSUE TO BE CHECKED
Information is available concerning expenditure
DOCUMENTS USED / CHECKED

claimed for all staff working in the project
Full list of staff working in the project is
attached / included in the first report stating as
a
minimum:
name
of
the
employee,
qualification, position in the project, percentage
of work allocated to the project, gross salary,
indicative costs to be funded under the project’s
budget

Employment contracts / job descriptions stating
as a minimum: tasks, start and end date,
indication whether full-time or part-time

Payslips / proof of payment (e.g. bank
statements)

Monthly timesheets (stating as a minimum
name of the employee, date, time, detailed
description of activity) and signed by both
employee and employer or activity reports
17
As a general rule the EC uses 22 working days per month as an average. Salary calculations should however be
based on the real number of working days in a given month e.g. February 12 only has 21 working days whereas
May 2012 has 23 working days.
18
For all expenditure claimed, proof of payment should be provided (in the form of e.g. bank statement, not
transferable at-sight checks, bank checks, payment orders, daily book for cash payment, …).
19

Calculation method for calculating hourly rates /
total staff costs (based on real costs and
excluding any fringe benefits and for time
exclusively worked on the project)

Declaration by the responsible person within
the
employer
institution
for
overtime
performed
To further proof and substantiate the costs claimed for salaries, beneficiary organisations from Bosnia
and Herzegovina may be requested by the FLCO to provide their internal book of rule (“pravilnik o
platama”) or equivalent.
The basic calculation principle to charge staff costs against the project’s budget is:
monthly gross salary + social charges
_______________________________ X hours worked on the project in the given month
total working hours in the given month
Staff costs are based on the normal remuneration the employee receives when not working on the
project and no ad-hoc salary increases or arbitrary hourly rates for project purposes are possible.
Below is an example of the various elements making up a gross salary and the method for calculation for
both the Federation (FBIH) as well as the Republika Srpska (RS):
PIO iz ld
17%
FBIH
ZDRAVSTVENO NEZAPOSLENOST iz
OSIG. Iz ld 12,5%
ld 1,5%
265.54
195.25
BRUTO
PLATA
RS
1658.38
BRUTO
DOPRINOSI
547.26
23.43
BRUTO
PLATA
PIO na
ld 6%
1562.00
OSNOVICA ZA
POREZ
POREZ 10%
1111.11
111.11
ZDRAVSTVENO
OSIG. na ld 4%
93.72
NEZAPOSLENOST
na ld 0,5%
62.48
PIO 17%
281.92
7.81
ZDRAVSTVENO
OSIG. 12%
199.01
POREZ OD
ELEMENT.
NEP. 0,5%
5.00
POREZ
10%
77.78
ZAPOŠLJAVANJE 1,5%
NETO PLATA
24.88
1000.00
NETO
PLATA
ISPLATA
1000.00 1731.01
ISPLATA
1616.92
20
4.4.2 Overheads
The second budget line concern “Overheads“ by which reference is made to
expenditure such as utilities or office costs including electricity, heating, lighting, water, cleaning,
administrative costs such as telephone, fax, internet, mailing/postal/courier services, stationary, office
supplies and bank costs/charges for NATIONAL financial transactions related to the normal bank account
of the organisation (i.e. in case a separate dedicated account was NOT opened for the project): For more
information on other kinds of bank costs / charges (e.g. for the ones related to a specific dedicated
account which was opened for the project or costs / charges related to INTERNATIONAL financial
transactions – see 6.3.1.9 below).
There are two categories of overheads for which there are different reporting and calculation
requirements:
(i) direct general costs (overheads directly allocated to the project): This method is to
be applied when it is possible to allocate overheads directly to the project or in other
words where it is possible to determine those overheads derived exclusively from the
project. In this case no lump sums, estimations or arbitrary keys are allowed.
(ii) Indirect general costs (overheads allocated proportionally to the project): This
method is to be applied when overheads cannot be directly allocated to the project and
when actual cost is shared with organisational non-project related costs. In this case
overheads must be allocated proportionally to the project and calculated, using a duly
justified fair and equitable method, on flat rates, not exceeding 25% of those direct costs
of an operation that can affect the level of overheads, based on average costs.
In those cases where apportionment is used, the method for calculating and allocating overheads to the
project should be clearly stated and explained in the first Progress Report and can be reviewed yearly.
Depending on the type of cost claimed, the basis for apportionment could be any of the below three:
number of people working for the project divided by the number of people working in the
organisation
number of hours worked on the project divided by the total number of hours worked in
total in the organisation (i.e. including work on other activities than the particular project)
surface used by the personnel working for the project divided by the total surface of the
organisation (most suitable for costs of utilities such as heating, lighting, electricity, water
etc)
Checks related to the overheads budget line include19:
ITEM / ISSUE TO BE CHECKED
DOCUMENTS USED / CHECKED
19
For all expenditure claimed, proof of payment should be provided (in the form of e.g. bank statement, not
transferable at-sight checks, bank checks, payment orders, daily book for cash payment, …).
21
Information is available concerning expenditure
claimed
for
overheads
incurred
during

the
In case of direct general costs, the costs show a
direct link to the project’s activities, are based
implementation of the project
on actual costs and can be verified (no lump
sums, estimations or arbitrary keys are allowed)

Method for calculating overheads including a
list of the cost items – in case of indirect
general costs - is clearly stated in the first
Progress Report (if changes to this calculation
method, then explained and substantiated in
any of the next reports bearing in mind that the
calculation method can only be reviewed yearly)

Proof of payment (e.g. invoices, receipts, postal
account bulletin, debit note, telephone bill with
clear indication which calls were project related
providing as a minimum person/institution
called and reason for the call)

Overheads claimed are in line with the eligibility
rules governing the Programme
It is important to note that the Beneficiary should make the calculation method available to the
First Level Controllers (FLC) in a way that is easy to understand and the calculation method may be
subject to verification at the Beneficiary’s premises during an on-the-spot check.
4.4.3 Travel and accommodation
This cost category refers to the travel and accommodation costs of the employees of
the Beneficiary (note: travel and accommodation costs of external experts participating in the project
have to be charged against the budget line “External expertise” – see section 6.2.1.4 below).
Expenditure claimed should be carefully checked to assess whether they are reasonable, had been
foreseen, are approved internally within the Beneficiary, are in line with the organisation’s internal rules,
occurred in eligible areas covered by the Programme etc…20
The basic rules governing this budget line are:
20
Travel outside the Programme eligible area must have been previously authorised by the Managing Authority
(who will inform the national FLCO accordingly).
22
economy of transport: the cheapest way / most economical way of transportation should be
used (demonstrated on the basis of an assessment by the Beneficiary) and this would normally
be public transport (bus, train, boat, plane) whereby business or first class tickets are ineligible
(even if this is allowed by the internal rules of the Beneficiary). Exceptions, if any, must be duly
justified in each case
only travelling and accommodation costs of “project staff” is eligible
reasonability of board and lodging costs: the accommodation and costs of meals should be
reasonably priced and higher price ranges must be duly justified in each case
reporting method: costs should be reported in line with national rules or specific internal
regulations of the Beneficiary
assignment of costs: costs should be borne by the Beneficiary and thus proof of direct payment
by the employee is insufficient. If costs are paid by the employee on the basis of
an
advance
paid by the Beneficiary to him / her then there should be proof of the advance paid and the
balance reimbursed by the employee to the Beneficiary at the end
of the mission.
duration: the duration of the travel should be reasonable and should normally start the day
before the event / meeting / reason for travelling until the day after
So-called daily allowances/per diems (fixed daily rates / flat rates for meals; accommodation, local
travel) can be eligible provided these are foreseen in the national rules as the only way of
reimbursement of such costs.
According to national legislation in place the amounts eligible for the countries participating in the three
programmes concerned are (effective June 2012):
Country
State level
Federation
Republika Srpska
Albania
130 KM
90 KM
20 €
Austria
145 KM
140 KM
45 €
BiH
25 KM
25 KM
25 €
Bulgaria
108 KM
90 KM
25 €
Croatia
121 KM
100 KM
20 €
Cyprus
117 KM
110 KM
40 €
France
143 KM
140 KM
45 €
23
Greece
126 KM
110 KM
40 €
Hungary
117 KM
100 KM
30 €
Italy
140 KM
130 KM
45 €
109 KM
90 KM
20 €
Malta
117 KM
110 KM
40 €
Moldova
114 KM
100 KM
35 $
Montenegro
113 KM
90 KM
20 €
Portugal
117 KM
110 KM
40 €
Romania
119 KM
110 KM
25 €
Serbia
113 KM
100 KM
20 €
Slovak Republic
117 KM
100 KM
30 €
Slovenia
117 KM
100 KM
30 €
Spain
134 KM
110 KM
40 €
Ukraine
130 KM
110 KM
40 $
United Kingdom
148 KM
140 KM
45 €
The
former
Yugoslav
Republic of Macedonia
Checks related to the travel and accommodation budget line include21:
ITEM / ISSUE TO BE CHECKED
All necessary information is available concerning
DOCUMENTS USED / CHECKED

Analytical documentation / itemised list of
expenditure claimed for travel and accommodation
travel and accommodation costs effectively
costs incurred during the implementation of the
incurred by the employee accompanied by all
project; travel is directly related to the project and
receipts
occurred within the programme eligible area
expenditure stated (e.g. bus/train/metro tickets,
/
bills
/
invoices
proving
the
meal receipts, plane ticket with boarding passes,
car rental invoice, …)

Calculation
sheet
prepared
according
to
21
For all expenditure claimed, proof of payment should be provided (in the form of e.g. bank statement, not
transferable at-sight checks, bank checks, payment orders, daily book for cash payment, …).
24
national or institutional rules for travel by
company/own car stating at least the distance,
unit rate and total cost and accompanied by
additional proof documents such as highway
tickets/stamps

Invitation, agenda, list of participants, minutes
etc. of the event are available and from which
the name of the participant and date, reason
and place of the mission can be seen

Mission report duly signed by the person(s) who
travelled

Class of car (maximum class C) in case of travel
by rental car

Proof of payment: either paid directly by the
Beneficiary or reimbursement of costs incurred
to the employee
One can notice from the above that the First Level Controller will often have to use
personal judgment or carry out a small market research in order to be able to assess whether the costs
claimed are indeed going rates which do not exceed going market rates.
To further proof and substantiate the costs claimed for travel and accommodation, beneficiary
organisations from Bosnia and Herzegovina may be requested to provide to the FLCO their internal book
of rule (“pravilnik o sluzbenim putovanjima”) or equivalent.
4.4.4 External expertise
This budget line includes costs paid for professional services of an external expert, consultant
or supplier exclusively engaged for the project purposes to perform certain activities / tasks outside the
knowledge base of the Beneficiary (examples include financial management, project management, legal
advice, notarial fees, studies, researches, surveys, translation…).22
The following primary conditions have to be met:
the work of the external expert(s) is essential to the project
22
Translation can only be charged against the budget line «External expertise» if they are not related to any other
particular budget line. Whenever reproduction or translation of project documents is linked to specific events, the
related costs shall be charged against the budget line entitled “Meetings and events”.
25
rates charged are reasonable and in relation to the level of expertise and experience
Project Partners cannot be contracted as external experts or subcontractor
The same person already charged under the budget line “Staff costs” cannot be
contracted under the budget line “External expertise”.
Recruitment of external experts / consultants needs to fully respect the relevant
procurement rules under the programme concerned. Usually the procurement procedures to be used
are the rules and procedures applicable to service, supply and works contracts financed by the general
budget of the European Communities for the purposes of cooperation with third countries (see Article
121 “Procurement” of the IPA Implementing Regulations). In effect this means that the provisions of the
“Practical Guide to contract procedures for EU external actions (PRAG)” need to be consulted by the
Beneficiaries whereby PRAG templates are encouraged to be used albeit that it is not obligatory.23
In addition Interact Point Vienna has produced a document entitled “Public procurement in IPA crossborder cooperation programmes with EU Member States in shared management” which can also be
consulted by Beneficiaries.24 It has to be noted however that Beneficiaries are not obliged to use any
standard formats or templates contained in any of the documents mentioned above but the public
procurement needs to respect the basic underlying philosophies (e.g. transparency, equal treatment,
non-discrimination, fair competition, open competition, impartiality, best value for money, nationality
and origin).
Furthermore national public procurement rules may be used and this would be in fact the normal way of
proceeding (in fact they have to be used whenever they are more restrictive than the PRAG or Interact
rules). The Law on Public Procurement provides in Article 5.1.c however that, in those cases where the
project is (co)funded by international donors, the latter’s procurement rules may be used. The link to
the Public Procurement Agency of Bosnia and Herzegovina where the Public Procurement Law can be
found is stated in the footnote below.25
The First Level Controller (FLC) will judge on a case by case basis whether there is sufficient written
evidence that the evaluation of the offers and the award of the contract was carried out in a
professional, objective, fair and transparent manner and therefore will check the existence of basic
documents justifying the choice of the selected service provider or supplier and the most important of
which are Technical Specifications (supplies) / Terms of Reference (services), information about the
potential Tenderers approached, request for offer to several potential service providers or suppliers,
offers received, evidence of the evaluation of the offers (members of the Evaluation Committee,
evaluation report), contract with the selected supplier / service provider (making clear reference
to the project and the programme), outputs etc.
23
The document can be found on:
http://ec.europa.eu/europeaid/work/procedures/implementation/practical_guide/
24
The document can be found on: http://www.interacteu.net/ipa_interact_publications/interact_ipacbc_documents/319/4867
25
http://www.javnenabavke.ba/index.php?id=10zak&zak=1&jezik=en
26
The days and hours of work of the external expert shall be fixed on the basis of the laws, regulations and
customs of Bosnia and Herzegovina more details of which can be found in the Control Guidelines
developed for each individual programme.
In case the days and work of the external expert are not regulated by any means, the number of working
days (WD) that usually can be worked by an external expert is limited to a maximum of 220 working days
per year. If the number of days worked is less (e.g. if the expert is only employed for a fraction of a year)
then the fees should be calculated on the basis of a maximum of 20 working days per month.
It is important that the First Level Controller (FLC) uses his / her own judgment to ascertain that rates
charged and paid are in line with going market rates in Bosnia and Herzegovina (BiH) for such services
and fee rates are in line with the level of experience, expertise and competence of the service provider
selected (e.g. a daily fee of 1,000 KM should be seriously questioned).
Difference is made between fee-based service and global price contracts whereby the latter can
(exceptionally) be used where the work of the external expert leads to a clearly defined specific outcome
(e.g. studies).
Checks related to the external expertise budget line include26:
ITEM / ISSUE TO BE CHECKED
All necessary information is available concerning
DOCUMENTS USED / CHECKED

Services delivered by external experts are
expenditure claimed for external expertise incurred
directly related to the project and activities are
during the implementation of the project
explicitly foreseen in the latest approved
Application Form

Evidence of compliance to procurement rules
(i.e. it is clear on what basis the external expert
has been selected and the following basic
documentation
is
available:
Technical
Specifications (supplies) or Terms of Reference
(services), information about external experts
approached to submit an offer, request for
offer, offers received, evaluation report /grid,
members of the Evaluation Committee, …)

External experts are not already employed by
the Beneficiary as regular staff

Rates charged by the external expert are
conform to going market rates and in line with
26
For all expenditure claimed, proof of payment should be provided (in the form of e.g. bank statement, not
transferable at-sight checks, bank checks, payment orders, daily book for cash payment, …).
27
the expert’s level of expertise, experience and
competence

The contract concluded with the external expert
is available and reference is made to the project
and the programme and states as a minimum a
description of the services provided, total price,
deadlines for the delivery of outputs, names of
the experts, …)

Evidence of the work is available (timesheets,
outputs)

Deliverables / outputs respect EU visibility and
publicity requirements applicable under the
programme under which they are financed
4.4.5 Meetings and events
This budget line includes costs related to the organisation of conferences, seminars,
meetings, workshops or events directly related to the project and traceable from the latest approved
Application Form.
Examples of eligible costs include:
renting of equipment for above-mentioned events
interpretation at events
translation of documents linked to specific events
printing of materials directly related to eventsµ
catering expenses
speaker’s fees
costs of external participants
Eligibility of costs under this budget line is subject to the full respect of both the prevailing
procurement rules and publicity rules (see also above under 6.3.1.4 “External expertise” and 6.3.1. 7
28
“Equipment” below). In other words it should be clear from the supporting documentation submitted
by the Beneficiary on what basis the service provider has been selected (request for offer to several
potential service providers, offers received, evidence of the evaluation of the offers received (members
of the Evaluation Committee, evaluation report etc), the contract between the Beneficiary and the
service provider (making clear reference to the event, the project and programme) should be available
at the FLCO. It is important to ensure that the most cost-efficient option has been selected (value for
money).
In addition for each event where the participation of external experts was required and for which costs
are declared, the following information should be readily available:
purpose
agenda
location
duration
list of participants
minutes
copy of the materials produced directly linked to the event
number of languages for which translation has been provided, if any
In order to further substantiate the occurrence of these types of events, beneficiary organisations are
encouraged to take pictures or make videos of the event which can be subsequently checked by the First
Level Controllers (FLC).
Checks related to the meetings and events budget line include27:
ITEM / ISSUE TO BE CHECKED
All necessary information is available concerning
DOCUMENTS USED / CHECKED

Services delivered are directly related to the
expenditure claimed for meetings and events
project and activities are explicitly foreseen in
incurred during the implementation of the project
the latest approved Application Form

Evidence of compliance to procurement rules
(i.e. it is clear on what basis the service provider
has been selected and the following basic
documentation
is
available:
Technical
Specifications (supplies) or Terms of Reference
(services), information about service providers
approached to submit an offer, request for
27
For all expenditure claimed, proof of payment should be provided (in the form of e.g. bank statement, not
transferable at-sight checks, bank checks, payment orders, daily book for cash payment, …).
29
offer, offers received, evaluation report /grid,
members of the Evaluation Committee, …)

Evidence of compliance to EU publicity and
visibility rules

Evidence that the most cost-efficient option has
been chosen (“value for money”)

The contract concluded with the service
provider is available and reference is made to
the project and the programme

All material proving that the event was actually
carried out (including list of participants,
agenda, minutes, location, duration etc) is
available
4.4.6 Promotion costs28
This budget line includes costs related to information and communication activities
related to the project.
Examples of eligible costs include:
brochures
leaflets
newsletters
press releases
inserts / advertisements in newspapers
design and maintenance of a website for the project
publication costs related to the project and not linked to specific events (such as display panels,
commemorative plaques, banners, promotional items, photographs, audio or video production)
28
Under the Transnational Mediterranean Programme (MED) this budget line is referred to as “Promotion,
information and publications”.
30
If an external service provider is used to carry out promotion activities, the FLCO will have to ensure that
the prevailing procurement and visibility rules have been respected (see also 6.3.1.4 “External expertise”
and 6.3.15 “Meetings and events” above and 6.3.1.7 “Equipment” below).
Checks related to the promotion costs budget line include29:
ITEM / ISSUE TO BE CHECKED
All necessary information is available concerning
DOCUMENTS USED / CHECKED

Promotion costs are directly related to the
expenditure claimed for promotion costs incurred
project and are explicitly foreseen in the latest
during the implementation of the project
approved Application Form

Evidence of compliance to procurement rules
(i.e. it is clear on what basis the service provider
has been selected and the following basic
documentation
is
available:
Technical
Specifications (supplies) or Terms of Reference
(services), information about service providers
approached to submit an offer, request for
offer, offers received, evaluation report /grid,
members of the Evaluation Committee, …)

Evidence of compliance to publicity and
visibility rules

The contract concluded with the service
provider is available and reference is made to
the project and the programme

All material proving that the promotion costs
were actually carried out (e.g. copy of
brochures, leaflets etc or existence of the
website) is available
29
For all expenditure claimed, proof of payment should be provided (in the form of e.g. bank statement, not
transferable at-sight checks, bank checks, payment orders, daily book for cash payment, …).
31
4.4.7 Equipment30
This budget line includes costs related to:
purchase of equipment
rent of equipment
lease of equipment
Examples of eligible costs include:
IT equipment (computer, printer, software)
office furniture
machineries
All purchase of equipment needs to respect fully the procurement procedures established for the
programme concerned as well as the publicity rules (see also section 6.3.1.4 “External expertise”, 6.3.1.5
“Meetings and events” and 6.3.1.6 “Promotion costs”).
The FLCO will pay attention to whether or not the most economic option (“value for money”) has been
chosen.
All equipment purchased must have been clearly foreseen in the last updated version of the Application
Form (AF) and if this is not the case, the equipment purchased must have been approved by the
Managing Authority (MA), the Joint Technical Secretariat (JTS) and or the Joint Monitoring Committee
(JMC) beforehand.
The FLCO will regularly verify the existence of equipment by means of on-the-spot checks.
The FLCO will also check whether:
the equipment has not already been financed by other subsidies (e.g. EU, national, regional)
the equipment has not already been completely depreciated
the equipment is not claimed in another budget line (e.g. overheads costs)
30
Under the Transnational Mediterranean Programme (MED) this budget line is referred to as “goods” and broken
down between “durable goods” and “consumable goods”
32
With respect to the purchase of second hand equipment the situation is the following for the three
programmes:
IPA ADRIATIC CBC
SEE
MED
Ineligible
Eligible
Eligible
Where second hand equipment is purchased the following provisions apply:
price of the equipment is in line with its market value and less than the price of similar new
equipment
the equipment has the technical characteristics necessary for the project
depreciation costs are only eligible if the equipment has not yet been already completely
amortised
Depending on the option selected to acquire the equipment (i.e. purchase, rent or lease) the following
must also be respected:
a) Purchase of equipment
Where equipment is purchased exclusively for use under the project:
either 100% full cost can be charged to the project
or the equipment will be depreciated
100% full cost can be charged to the project where:
the equipment is of low-cost value and thus not depreciable
the period from the date of purchase until the end date of the project is longer than (or equal to)
the normal depreciation period
the period from the date of purchase until the project closure is shorter than the normal
depreciation period but:
o
the equipment is used for the same purpose at least 5 years after the end of the project
o
the equipment is part of a specific goal of the project (e.g. office furniture of one of the
objectives of the project is to set up an office that will provide services for the target
group also after project completion)
Note: In both the two above-mentioned cases the Beneficiary should submit a declaration to the FLCO that this is
the case. This can be done with the submission of the first Progress Report (and then full price can be reported) or
if the declaration is submitted at a later stage, then only the depreciation amounts can be reported until the
submission of the declaration).
33
Depreciation method should be used whenever the full purchase price is not charged to the project.
Depreciation refers the decrease in value of assets over time and the allocation of the cost of those
assets to periods in which the assets are used.
The depreciation method and the way of calculation should respect fully the provisions of the legislation
in force in the entity in which the beneficiary is located. In view of that reference is made to the
following laws and provisions:
For the Republika Srpska (RS):

Law on tax on profit of legal entities (Official Gazette RS nr. 25/2001, 80/2002, 43/2003, 84/2004
and 18/2010

Manual of methods of classifying fixed assets according to group and method of determining
depreciation for tax purposes (Official Gazette RS nr. 116/2004 and 99/2010)
For the Federation of Bosnia and Herzegovina (FBiH):

Law on tax on profit of enterprises (Official Gazette FBIH nr 32a/97)

Decision on the amount and method of calculating depreciation and the revaluation of fixed
assets that are recognised as expenditures in tax balance (Official Gazette FBiH nr. 27/98)
The main difference in the treatment of depreciation between the entities is the allocation of
depreciation which in RS is done on a regressive basis whereas in FBiH the straight line method is used.
The depreciation allowances have to be charged proportionally in each Progress Report until the end of
the project and the depreciation costs can of course never exceed the initial purchase price.
The Beneficiary needs to demonstrate to the FLCO which depreciation method has been used for each
piece of equipment and show that this is in line with the prevailing accounting regulations / tax
legislation of Bosnia and Herzegovina.
Where the equipment purchased is not used exclusively for the purpose of the project, the costs should
be charged on a pro-rata basis also as far as depreciation is concerned. In other words, only a part of the
purchase price (or depreciation rate) can be allocated to the project.
34
b) Rent of equipment
This is only possible provided that renting is the most economic and cost-effective way of obtaining the
equipment (this will have to be proven by the Beneficiary).
c) Leasing of equipment
This is only eligible if the total cost of leasing does not exceed the cost of renting.
Checks related to the equipment budget line include31:
ITEM / ISSUE TO BE CHECKED
All necessary information is available concerning
DOCUMENTS USED / CHECKED

Equipment purchased, rented or leased is
expenditure claimed for equipment incurred during
necessary for the implementation of the project
the implementation of the project
and is explicitly foreseen in the latest approved
Application Form

If equipment is rented then this should be the
most cost-effective way (i.e. cheaper than
purchase or lease)

If equipment is leased the total leasing fee
should not exceed that of rental for the same
period.

Kind of equipment is eligible according to the
Programme
rules
and
guidelines
(e.g.
Programme Management and Control manual if
such exists)

Evidence of compliance to procurement rules
(i.e. it is clear on what basis the supplier has
been
selected
documentation
and
the
following
is
available:
basic
Technical
Specifications (TS), information about potential
suppliers approached to submit an offer,
request for offer, offers received, evaluation
report /grid, members of the Evaluation
Committee, contract…)
31
For all expenditure claimed, proof of payment should be provided (in the form of e.g. bank statement, not
transferable at-sight checks, bank checks, payment orders, daily book for cash payment, …).
35

Evidence of compliance to publicity and
visibility rules

The contract concluded with the selected
supplier is available and reference is made to
the project and the programme

Evidence of the existence of the equipment (e.g.
inventory) is available

Purchase price is in line with market value

If the economic lifetime of the equipment goes
beyond the duration of the project, only
depreciation costs are reported and the
calculation method is available and correct

If the economic lifetime of the equipment goes
beyond the duration of the project, a separate
declaration by the Beneficiary that it undertakes
to avoid any substantial change to the
equipment for at least 5 years following project
completion

If equipment is NOT used exclusively for the
purpose of the project, only a share of the
actual cost can be allocated pro rata to the
project calculated using a fair, justified and
equitable method.

Changes in the quantity of equipment: have to
be confirmed by the Lead Beneficiary

Changes in the type of equipment: have to be
approved by the Managing Authority
4.4.8 Investments32
This budget line refers to small scale investments with a demonstrated transnational
impact approved in the Application Form and includes costs related to:
32
This budget line is referred to as “Small scale investments” under the South East Europe Programme (SEE).
36
construction works (either from the beginning or adaptation of something which already exists
purchase of land33
When awarding contracts for the realisation of works the procurement procedures established for the
programme concerned need to be fully respected as well as the publicity rules (see also section 6.3.1.4
“External expertise”, 6.3.1.5 “Meetings and events” and 6.3.1.6 “Promotion costs”).
The FLCO will pay attention to whether or not the most economic option (“value for money”) has been
chosen.
All construction works realised must have been clearly foreseen in the last updated version of the
Application Form (AF) and if this is not the case, they must have been approved by the Managing
Authority (MA), the Joint Technical Secretariat (JTS) and or the Joint Monitoring Committee (JMC)
beforehand.
The FLCO will regularly verify the existence of construction works by means of on-the-spot checks.
Depending on the nature of the investment, the respect of environmental policies (e.g. feasibility study,
environmental impact assessment, building permission etc) needs to be ensured. Costs related to this
needed prior to realisation of the investment and delivered during project implementation should be
allocated to the budget line “Investments”.
Beneficiaries should possess a valid construction permit prior to signing the IPA Subsidy Contract and the
owner of the permit should be a partner in the project.
a) Construction works
These can take the form of construction from scratch or reconstruction, expansion or renovation of
already existing buildings or infrastructure.
For these kinds of costs either the full cost may be eligible or a share of the actual cost to be allocated
pro-rata to the project depending on the use.
1.
100% full cost can be charged to the project where:
The construction work is used exclusively for the project’s purpose and will remain In use for the same
purpose for at least 5 years after project completion without any substantial modification.
2.
Share of the actual cost allocated pro rata to the project where:
The construction work is NOT exclusively used for the project’s purpose.
33
Up to a limit of 10% of the total project budget.
37
b) Land purchase
Land not yet built on can be purchased and be eligible under four conditions:
1. There should be a clear direct link between the land purchase and the project’s objectives
2. The cost does not exceed 10% of the project’s total budget
3. Certificate from an independent qualified assessor (or duly authorised official body) confirming
that the price does not exceed the market value.
4. Copy of draft sales contract showing that the land is free of any burden (to be submitted before
signing the IPA Subsidy Contract).
Checks related to the investments budget line include34:
ITEM / ISSUE TO BE CHECKED
All necessary information is available concerning
DOCUMENTS USED / CHECKED

The investment (i.e. construction works or
expenditure claimed for investments incurred during
purchase of land) is explicitly described in the
the implementation of the project
Application Form

Nature of the investment is eligible according
to the Programme rules and guidelines (e.g.
Programme Management and Control manual if
such exists)

Evidence of compliance to procurement rules
(i.e. it is clear on what basis the works
contractor has been selected and the following
basic
documentation
is
available:
Tender
Dossier, information about potential works
contractors approached to submit an offer,
request for offer, offers received, evaluation
report /grid, members of the Evaluation
Committee, contract…)

The contract concluded with the selected works
contractor is available and reference is made to
the project and the programme
34
For all expenditure claimed, proof of payment should be provided (in the form of e.g. bank statement, not
transferable at-sight checks, bank checks, payment orders, daily book for cash payment, …).
38

Evidence of the existence of the construction /
renovation (e.g. documentation of the works at
community and / or national level, photographs)
is available

If construction will NOT be used exclusively for
the purposes of the project, then only a share of
the actual cost can be allocated pro rata to the
project using a fair, justified and equitable
method

A valid and legal construction permit (or other
document required by community / national
law) is available and the owner of the permit is
beneficiary in the project

If owner is not a beneficiary in the project,
proof of ownership of the real estate (which
could be state-owned) is available

If the real estate is owned by private legal or
natural persons (companies or individuals) the
partner has submitted a long-term hiring or
lease agreement with a minimum validity of 5
years upon completion
LAND PURCHASE

If land is purchased, up to 10% of the eligible
expenditure of the operation is used at the
moment of project closure

If land is purchased, contract is available

Evidence is available that the price of the land is
in line with market values (certificate from
independent
qualified
assessor
or
duly
authorised official body)

Copy of sales contract showing that the land is
free of any other burden is available
39
4.4.9 Financial charges and guarantee costs
This budget line includes costs related to:
charges for transnational financial transactions
bank charges for opening and administering the accounts where the implementation of an
operation requires (a) separate account(s) to be opened
cost of guarantees provided by a bank (or other financial institutions) to the extent that such
guarantees are required by national or Community legislation
cost of guarantee requested from the private Lead Beneficiary up to the same amount of the
cost of the guarantee covering the amount of the pre-financing
a) Financial charges
In case of separate bank accounts opened specifically for project purposes, the bank charges paid by the
Beneficiary for setting up and administering the account are eligible.
Bank charges which are eligible include:
periodical or lump sum fees
registration costs for each entry
annual costs for cash dispenser management
bank statement or communication despatch costs
costs for (periodical) closure
Charges related to a bank account not specifically opened for the purposes of the project (e.g. where the
Beneficiary has decided to use an existing account) cannot be charged against the budget line “Financial
charges and guarantee costs” but should instead be reported under the budget line “Overheads”.
b) Guarantee costs
Costs related to guarantees provided by a bank (or other financial institutions) are eligible to the extent
that they are required by national or Community legislation.
In the framework of some programmes, private Beneficiaries may be required to provide a financial
guarantee prior to the signature of the IPA Subsidy Contract. In these cases, the cost of the guarantee is
eligible only up to the cost of the guarantee covering the amount of the pre-financing.
40
Checks related to the financial charges and guarantee costs budget line include35:
ITEM / ISSUE TO BE CHECKED
DOCUMENTS USED / CHECKED
All necessary information is available concerning

Costs are real and directly related to the project
expenditure claimed for financial charges and

Costs have not been declared under other
guarantees incurred during the implementation of
budget lines

the project
If charges for opening and administering a
bank account are declared, a dedicated bank
account for the specific purpose of the project
has been opened (Note: if an existing account of the
Beneficiary is used, then charges should be reported
under “Overheads”)

If costs of guarantees are claimed, such
guarantee is required by national or Community
legislation

The costs claimed for guarantees is up to the
amount of the pre-financing
4.5.
ON THE SPOT CHECKS
4.5.1 DEFINITION AND PURPOSE
The above-described desk-based administrative checks are complemented by so-called on-the-spot
checks carried out by the First Level Control Office (FLCO).
On-the-spot checks make it possible for the First Level Controller (FLC) to get better acquainted with the
project and to verify in real life the existence and realities of the project and thus are of added value to
the checks performed on the basis of the documents in the FLCO premises.
In addition, on-the-spot checks make it possible for the First Level Controller (FLC) concerned to ensure
that the activities as stated in the Activity Report (AR) have been in effect carried out, that the outputs of
such activities have in effect been delivered (e.g. equipment purchased can be located at the premises of
the Beneficiary, construction works are undergoing etc…) and to have a general discussion with the
Beneficiary on planned activities during the next reporting period, problems encountered so far and how
to avoid them in the future etc.
35
For all expenditure claimed, proof of payment should be provided (in the form of e.g. bank statement, not
transferable at-sight checks, bank checks, payment orders, daily book for cash payment, …).
41
It is good practice for the FLCO to perform regular on-the-spot checks but it is of course impossible to
systematically visit all projects and therefore they are done on a sample basis (for further information on
risk assessment and sampling strategy see section 6.3.2.3 below). However the FLCO should strive to
visit a maximum of projects at least once during the project’s lifetime and for projects that have an
investment component, it is recommend paying at least two visits (one at an appropriate point of time
during the implementation period of the project and one close to the end).
During an on-the-spot check the FLC in charge will verify at least:
the reality of the operation
existence and / or proof of delivery of services / equipment / investments declared
compliance with publicity and visibility rules applicable to the programme under which the
project is financed
a more in-depth check of all documentation related to the respect of the public procurement
procedures (for further information see section 6.3.2.2 below)
the adequacy of all sorts of supporting documentation and the existence of an adequate audit
trail
the existence and effective functioning of an accounting system (either a separate system
dedicated to the project or an analytical system that allows tracking of expenditure back to the
project)
On-the-spot checks should be planned and prepared for in advance so as to render them as effective as
possible. Generally sufficient notification should be given to the Beneficiary (e.g. two weeks) to ensure
that the relevant staff and documentation will be available to the FLC. It is nevertheless left at the
discretion of the FLC to perform an unannounced on-the-spot check.
4.5.2 RISK ASSESSMENT AND SAMPLING
First Level Controllers will perform at an early stage (i.e. as soon as possible after a contract is signed and
the project implementation period starts) a risk assessment of the projects for which they are
responsible and risk factors that will be taken into account include inter alia:
the type of beneficiary i.e. is the Beneficiary a public institution, a relatively big municipality, a
small municipality, a NGO, a private company etc
the size of the Beneficiary i.e. a large institution with major resources and high capacity or a
small organisation with limited resources and small capacity
the type of contract e.g. projects containing a lot of public procurement, value of contract, value
of investments
42
the complexity of project operations, activities and environment i.e. is the project routine to the
Beneficiary, are many implementation problems expected (e.g. number of participants in project
events, number of external stakeholders, legal and regulatory framework of the project)
the experience of the Beneficiary’s employees i.e. do key staff members (e.g. Managing Director,
Financial Manager or Accountant, …) have had prior experience with the implementation of
similar projects funded by the international donor community
the internal control systems of the Beneficiary i.e. do they exist and are they adequate
previous experience with the Beneficiary i.e. has the Beneficiary implemented projects in the
past for which FLC was performed by the CFCU, have there been any problems detected during
previous on-the-spot checks, have irregularities, fraud or corruption been identified in the past
The information to be gathered can arise from discussions with other people / institutions that have
experience with the Beneficiary (e.g. the Delegation of the European Union to Bosnia and Herzegovina)
or consulting different sources of information including media such as Internet, newspapers,
government databases etc and the Beneficiary itself.
The risk factors are then given a risk level coefficient ranging from low over average to high and given a
weighting and based on the results of the risk assessment exercise a final selection of projects to be
visited on-the-spot will be made and an on-the-spot checks activity and time plan will be developed,
ideally for each calendar year (“annual on-the-spot checks plan” – see below).
The risk assessment exercise will culminate in a risk assessment table, an illustrative example of which is
presented below:
43
RISK ASSESSMENT TABLE (illustrative example)
(Period: from … / …. / …. to …. / …. / …..)
Project Code / Project Acronym / Name of Beneficiary
RISK LEVEL
RISK FACTORS
RISK COEFFICIENT
LOW
1
2
MEDIUM
3
4
HIGH
5
0.2
0.4
0.6
0.8
1.0
WEIGHT
∑=100%
ADJUSTED for
Year 1
Cumulative Risk Coefficient
10%
12.5%
5.0
10%
12.5%
2.5
10%
12.5%
12.5
10%
12.5%
7.5
10%
12.5%
10.0
1. Type and size of final beneficiary:

Type

Size
X
X
2. Contract characteristics:

Value of contract

Total of procurement and investments
X
X
3. Complexity of a particular project operations and
environment
X
4. Experience of staff involved:

Experience of Final Beneficiary employees
X
10%
12.5%
12.5

Experience of First level controllers
X
10%
12.5%
12.5
10%
12.5%
5.0
5. Internal control systems of the Final beneficiary
X
6. Previous experience with the beneficiary
36

On-the-spot checks carried out during the
previous year and current year
10%

Any significant irregularities previously detected
10%
-
100%
100%
Total
-
67.5
Value in money (in €)
100,000
Monetary value adjusted to risk level
67,500
36
Please note that during the first year of performance of on-the-spot checks, this criterion should be disregarded. The respective weighting should be distributed to other
categories.
44
A final result of the risk assessment is a so-called risk ranking table, an illustrative example of which is
presented here:
RISK RANKING TABLE – BASIS FOR SAMPLING FOR ON-THE-SPOT CHECKS (illustrative example)
(Period : from … / … / …. to …. / ….. / ….)
Beneficiary
Value (€)
Risk
coefficient
Value
adjusted to
risk level
Ranking
Preliminary on-the-spot
37
scheduling
Q1
1
Organisation XYZ
100,000
2
NGO ABC
50,000
3
Municipality QPR
70,000
4
...
5
....
67.5
38
67,500
H
82.5
41,125
M
50
35,000
L
Q2
Q3
Q4
39
X
X
X
X
There are several criteria for scheduling certain projects for testing by means of on-the-spot checks. The
key criterion is value of the project adjusted to risk level. However, attention needs to be paid and use
only value of the project that is according to the project budget falling within the period under review.40
Additional criteria include foreseen end date of the project, the number of controllers and their
availability, readiness of beneficiary to prepare necessary documentation and provide assistance etc.
Based on the Risk Ranking Table above an annual on-the-spot check activity plan will be prepared, the
template of which is provided in the following section:
37
At this stage a preliminary schedule for on-the-spot checks should be prepared i.e. it should be decided which
projects will be visited in which quarter of the current year.
38
See Risk Assessment Table
39
For projects that due to high risk level have priority in terms of early scheduling of on-the-spot check, additional
follow-up visits should be tentatively scheduled. However, this will also depend upon the results of the first on-thespot checks.
40
If a project has a budget of 3 million that is evenly spread over 3 years, and if our period of review is 1 year, value
used for risk assessment should be € 1 million.
45
4.5.3
ON-THE-SPOT CHECK ACTIVITY PLAN
Illustrative example for calendar year 2012 as per 09/02/2012
Project
Project
Beneficiary
FLC in
Project value
Risk level (L
acronym
code
from BiH
charge
(budget of BiH
/ M / H)
First on-the-spot check
Second on-the-spot check
beneficiary)
Planned
Date of
date
execution
Findings
Planned
Date of
date
execution
(month /
(month /
quarter)
quarter)
ABC
123
AAA
Ms. AB
€ 213,111.20
M
01/2012
06-08/01/2012
see report
DEF
456
BBB
Mr. CD
€ 134,765.89
L
Q4/2012
Q2/2013
GHI
789
CCC
Ms. EF
€ 74,982.15
H
Q2/2012
Q1/2013
Findings
Q2/2013
…
Notes:
(i)
The above table caters for two on-the-spot checks to be carried out per project; however for those projects where more than two on-the-spot checks are
warranted by the project situation more columns can be added.
(ii)
If the execution date differs substantially from the planned date for the on-the-spot check, the reasons for such should be explained.
(iii)
The on-the-spot check activity plan will be updated on a monthly basis.
46
4.6.
DOCUMENTING FLC CHECKS
Experience has shown that sometimes controllers perform excellent work but fail to document the
work carried out in a way that would enable audits at a later stage to fully understand and
demonstrate what was done at the time. It is important to realise that auditors normally have
neither experience nor prior knowledge of the project, the beneficiary or the controller and
therefore need to have access to as much information as possible to get a clear picture of the project
situation in its entirety.
In view of that First Level Controllers should systematically keep sufficient and well-organised
documentation and records, in electronic version and/or paper copy, of (i) the various controls
performed (ii) the results and evidence obtained by means of these controls and (iii) the conclusions
and corrective measures taken.
Such documentation and records include as a minimum:
approved Application Form (copy)
signed Subsidy Contract and its amendments, if any (copy)
signed Partnership Agreement and its amendments, if any (copy)
original signed paper version and electronic version of each Declaration on Validation of
Expenditure (DVE) including the control report and control checklist
Beneficiary report in hard copy (original) and electronic version
copy of each invoice and/or accounting document of probative value (originals are sent to
the FLCO by the Beneficiary for verification purposes, voided by the FLCO and sent back to
the Beneficiary and a copy is kept at the FLCO)
copy of each supporting document included in the Beneficiary report (e.g. payslips, bank
statements, public procurement documentation, contract with external service providers,
suppliers etc)
project deliverables (i.e. all materials produced during the project period)
control checklists filled in and signed by the Controller (original)
control reports
personal notes taken by the FLC during the administrative desk-based or on-the-spot check
personal memos by the first level controller
correspondence with beneficiaries on clarifications / missing information requested (letters
sent by postal service / courier service, email) (copy)
copies of the beneficiary’s main documents (contracts, agreements, invoices, promotional
brochures, training material etc)
photographs taken
47
all documentation related to any on-the-spot check carried out
audit reports, if any
…
The verification of expenditure (‘”first level checks”) is to be documented by the Controllers and the
work records are to be retained for audit purposes for at least three years after the date of closure of
the programme concerned and in practice this means that all documents need to be kept until the
dates specified below:
IPA Adriatic CBC Programme
December 31, 2021
South East Europe Programme (SEE)
December 31, 2022
Transnational Mediterranean Programme (MED)
December 31, 2021
It is recommended to store documents during the programme implementation period at the
premises of the Controllers and after that to be archived for audits until the dates specified above.41
Records should state the work done, the results of the verifications as well as the measures taken in
case of irregularities and errors.
5. SUBSTANTIVE PROCEDURES
The key procedures that underlie checklists and control reports are:
Check that costs are supported by all necessary documents (e.g. for
Check of completeness
staff costs items such as time sheets, employment contracts,
calculation methods that demonstrate the (part of the) salary charged
against the project
Check of compliance
Check that costs comply with all relevant legislation and rules
governing the programme / project
Check of plausibility (acceptability)
Check that costs are credible and probable (e.g. for staff costs issues
such as: hours worked and related outputs generated, rates)
Check that costs declared have been incurred in reality and relate to
Check of existence and reality
existing and verifiable outputs (e.g. for staff costs: verify during an onthe-spot check that project staff exist in reality)
41
The official archiving procedure of the Ministry of Finance and Treasury (MoFT) will be respected.
48
5.1.
CHECKS OF COMPLETENESS
These intend to verify whether the information provided by the Beneficiary is complete and can
relate, for instance, to the completeness of the documents attached to the financial report but also
to the completeness of revenues deducted, if any.
They are commonly used during the desk-based administrative check and to a lesser extent during
the on-the-spot checks.
What do controllers check in terms of completeness?
Examples include:
verification that all expenditure items listed in the List of Expenditure and declared in the
financial report are supported by invoices or documents of equivalent probative value
check whether there is an adequate audit trail
check whether there is an adequate filing system in place
check whether the Beneficiary maintains an accounting system
How can the checks be documented?
The checks can be documented by ticking the foreseen box in the checklist (e.g. “document sent by
the Beneficiary are complete”) and, if necessary, including comments on missing documents or
documents which do not meet the minimum criteria set by either the Programme, Community or
national rules or legislation.
5.2.
CHECKS OF COMPLIANCE
These intend to verify whether the Beneficiary complies with all relevant legislation, both on
Programme, Community as well as national / entity level governing the project.
Many compliance checks are straightforward with a clear control objective, a clear outcome and
immediate effects on eligibility (e.g. expenditure was incurred during the eligible time period). Other
compliance checks can be less straightforward such as those related to horizontal issues (e.g. “equal
opportunity and non-discrimination”) or more complex rules or legislation (e.g. “public
procurement”).
What do controllers check in terms of compliance?
Examples include:
correctness of the application for reimbursement
49
verification that expenditure relates to the eligible period
verification that the expenditure relates to an approved operation (or part of an operation)
compliance with programming documents including, where applicable, compliance with the
approved co-financing rate
compliance with EC and/or national procurement rules
respect of rules on visibility and publicity
Sometimes it is not necessary, or impossible, to draw a clear line between compliance and other
kinds of checks as ultimately all checks refer to rules, regulations and legislation.
In a centralised control system (such as the one in place in Bosnia and Herzegovina) it may be useful
for the Controller to cross-check different projects implemented by the same Beneficiary whereby
the Controller will pay special attention to staff costs (as this generally makes up the biggest cost of
any project) and more specifically cross-checking of timesheets of employees working for more than
one project.
It can also be useful to use Internet search engines (such as Google) to inspect information about a
Beneficiary (e.g. field of expertise, other projects and funding sources) or management personnel
(e.g. their activities in other organisations, roles in other projects). This can be an effective means to
get a better understanding of the beneficiary and to detect, for instance, potential cases of double
financing. The number of projects implemented by a Beneficiary should also be included in the risk
assessment prepared to select projects that will be subjected to an on-the-spot check.
How do controllers check compliance?
They often use sub-procedures such as inspections, interviews, observations or walk-trough (for
more information see section 3.2 below).
Controllers could verify that all the conditions outlines in the Subsidy Contract are complied with by
inspecting relevant documentation and records, by inspecting project evidence (e.g. deliverables or
outputs) or by interviewing project personnel.
How can the checks be documented?
Compliance checks are very definite by nature and a well developed first level control (FLC) system
includes compliance checks in its checklists, especially those related to compliance with EU and
national / entity legislation and programme rules. Therefore tick marks on the checklist or control
report and references to the legislation concerned can be sufficient. Checks performed can be then
documented by making a copy of the rule / regulation / legislation concerned which are kept on file.
50
5.3.
CHECKS OF PLAUSIBILITY
These kinds of checks verify whether expenditure incurred and declared are plausible or, in other
words, credible and probable.
Basically any check involving professional judgment on the side of the controller such as checking
value for money or the allocation method for overheads is a plausibility check.
In addition almost every check whether or not an expense was economically justified is a plausibility
check and usually Controllers will check during an on-the-spot check (by means of interviews) what
exactly people work on to get an idea of the plausibility of staff costs declared.
Plausibility checks are used in both desk-based administrative checks as well as during on-the-spot
checks and may involve inspections, reconciliations, recalculations or interviews.
What do controllers check in terms of plausibility?
It is neither necessary nor possible to check every Beneficiary and report in terms of every single
potential plausibility aspect. Instead controllers apply professional judgment and decide which
plausibility checks are especially required or useful for a given project and Beneficiary based on the
risk assessment carried out at the beginning of the project. As an example controllers could decide
to make certain plausibility checks on staff costs for those employees that have very high projectrelated costs.
Examples include:
plausibility of project outputs in relation to staff hours claimed
plausibility of hours worked on the project in relation to other assignments / tasks of that
staff
plausibility of overheads charged to the project in relation to the time spent by the
Beneficiary on the project
Controllers do not check the quality of project activities and outputs in principle as the role of FLC is
not to evaluate the project and there are quite often limitations for the Controller to assess results,
especially with regard to specialist areas or studies (e.g. environmental impact assessments, training
curriculae).
How do controllers check plausibility?
Controllers often need to rely ion their experience and apply professional judgment in order to come
to a conclusion.
There are three approaches to plausibility checks:
51
(i) checks within the project itself (e.g. comparing the expenditure incurred and declared to the
overall progress of the project and outputs generated)
(ii) checks with respect to other activities of the Beneficiary (e.g. comparing the allocation of
overheads across the various projects the Beneficiary is involved in)
(iii) checks in relation to what is usual / common on the market (e.g. comparing costs with
benchmarks, maximum / average costs i.e. what is an average or maximum salary in the
country for the type of personnel / expert employed, what is an average cost of renting an
office in a particular town etc)
Examples of checks include:
interview with the project accountant
inspection of timesheets: check if time worked on the project as indicated on the timesheets
equals the hours claimed and whether or not they exceed daily working hours
inspection of pay slips: check if payment of salaries contain ineligible expenditure (e.g.
bonuses)
compare salaries with what is typical in the sector taking into account the job description,
the position, work experience etc
How can the checks be documented?
For checks requiring substantial professional judgment it can be useful to prepare a memo and in
case the check involved the review of specific documents, it is also useful to include these documents
in the working papers.
5.4.
CHECKS OF EXISTENCE AND REALITY
The objective of these kinds of checks is checking if the Beneficiary, the project, products or services
as described in project reports exist in reality.
They can also helpful in gaining a better understanding and insight of the project as well as the
organisation that implements the project and its environment and to identify potential risks.
They are mostly used during on-the-spot checks but can also be used during the desk-based
administrative checks (e.g. verification of the existence of written outputs generated such as studies).
What do controllers check in terms of existence and reality?
52
The EC guidance on management verifications highlights the importance of checks of existence and
reality during on-the-spot checks in particular where operations are intangible and where little or no
physical evidence remains upon completion (e.g. training courses).
Depending on the kind of Beneficiary, the nature of the project and the controller’s own risk
considerations, potentially useful checks of existence and reality can include:
the overall situation of the Beneficiary i.e. office environment, staff, organisational structure,
its legal environments
the role of the Beneficiary in the overall project
the Beneficiary’s financial management systems including audit trail and filing and archiving
systems
purchased goods written outputs such as studies, manuals, …
information on project activities such as trainings, seminars, conferences, information
events, press conferences etc
How do controllers check existence and reality?
Checks of existence and reality aim at comparing a written or oral statement (a “plan”) to the actual
reality. Therefore controllers will always look at the “plan” first and then compare it to the actual
situation. The “plan” may include for instance obtaining and inspecting an inventory of purchased
goods which then will be counter checked during an on-the-spot check.
How can the checks be documented?
Controllers often document existence and reality by including evidence in the working papers such
as:
evidence of the project site such as plans of the project office, photos of the project office
copies of project outputs (e.g. studies, manuals)
other evidence such as training materials, attendance lists of meetings / workshops /
seminars, press releases, photos of project events
evidence of goods purchased (e.g. inventory which is ticked off) or photos of equipment
In cases where serious issues are detected such as no evidence of the project being implemented,
fake evidence, double financing) it can become necessary to draft a separate memo on the situation
to be included in the controller’s working papers.
53
6. SUB PROCEDURES
A set of sub-procedures underlie the above-stated substantive procedures:
Inspection
of
documents
and
records
Reading and understanding of any relevant document, electronic
record or print out of an electronic record
Double check of figures to ascertain that what is stated in one
Reconciliation
document is identical with the same figure included in another
document
Verification whether a figure was calculated correctly, i.e. a re-
Recalculation
performance of a calculation executed by the beneficiary is
undertaken
Inquiry and interview
Documented discussions with beneficiary staff (extensive inquiries are
usually referred to as interviews)
Observation
of
processes
events
and
Watching people while they execute project-related activities either at
the premises of the beneficiary or any other site where projects
activities take place
Walk-through
Tracing of a specific process or transaction step by step (e.g. tender
process)
The first three sub procedures are normally undertaken during the administrative desk-based checks
whereas the last three would normally be performed during on-the-spot checks but they can also be
used interchangeably.
6.1.
INSPECTION OF DOCUMENTS AND RECORDS
This is referred to as the reading and understanding of any relevant document, electronic record or
print out of an electronic record and are an essential part of substantive procedures such as checking
completeness, plausibility ort compliance and are used both during desk-based administrative checks
as well as during on-the-spot checks.
What do controllers inspect?
Controllers will check for each payment claim whether the supporting documentation includes as a
minimum:
a list of expenditure showing the individual cost items and a total amount of expenditure
54
references of underlying invoices or documents of equivalent probative value, date of
payment and payment reference number
copies of invoices / receipts
proof of payment for expenditure items
However the above minimum requirements are considered insufficient in CBC programmes under
shared management and it is common practice to inspect a much wider set of documents including
relevant contracts, documentation of public procurements, written project outputs, publicity
material, travel documents, calculation schemes (e.g. for the calculation of overheads),
documentation of project meetings and events etc.
Standard checklists outline a minimum set of documents and thus provide certainty that key
documents are covered. However although some checklists are quite comprehensive and lengthy,
no list can ever be complete and cover all potential cases and therefore controllers have to decide on
a case-by-case basis whether or not certain additional documents (not included in the checklist)
should be inspected.
How can the inspections be documented?
Checklists usually require information that cannot be obtained without inspection of the relevant
documents and records. E.g. “checking whether all expenditure is directly related to the project and
necessary for the development of the project” requires the inspection of invoices, Application Form,
Subsidy Contract etc.
Although the basic method is simple, inspections can easily become quite demanding and time
consuming and some inspections may also require specific technical expertise that may not be
readily available.
It is very useful to inform Beneficiaries (e.g. by incorporating this into the letter announcing the onthe-spot check) in advance about the documents that should be prepared for inspection as this helps
saving time during the on-the-spot check.
6.2.
RECONCILIATION
This is a basic check whether or not a figure included in one document is identical with the same
figure included in another document (e.g. amounts stated in the Financial Report should be exactly
the same as the ones stated in the Activity Report – see also the Section 6.1.2.2 “Financial Report” of
the Programme Management and Control Manual – PMCM – developed for the IPA Adriatic CBC
Programme).
Usually when reconciling figures, Controllers do not stop just there but continue by re-calculating
figures to ensure that they are mathematically correct (see below).
55
If figures cannot be reconciled, Controllers either reject the figure or ask the Beneficiary to submit a
clarification.
What do controllers reconcile?
In principle each single figure included in the Financial Report should be substantiated with
supporting documents and Controllers usually reconcile all these figures with the relevant supporting
documentation.
Examples include:
reconciling the Financial Report with invoices and other supporting documents
reconciling the Financial Report with the list of expenditure, the bank account statements
and the Beneficiary’s accounting system
reconciling staff costs with timesheets, hourly rates, payslips etc
reconciling overheads with overhead calculation methods
reconciling depreciation allocated to the project with the national rules in this respect
Some reconciliations (e.g. the reconciliation of the Financial Report with the list of expenditure) are
usually done during the desk-based administrative checks whereas others, such as the reconciliation
of declared costs with the Beneficiary’s accounting system will be carried out during on-the-spot
checks.
How can reconciliations be documented?
Some checklists include questions related to reconciliations like “do lists of expenditure and Financial
Report match”? Controllers then indicate on the checklist which reconciliations were carried out and
what were the results.
In case of complicated reconciliations, Controllers may decide to include a memo in the working
papers.
6.3.
RECALCULATION
This aims at verifying that a figure was calculated correctly and is thus arithmetically correct.
Therefore a re-calculation is a re-performance of a calculation done by the Beneficiary in order to
calculate eligible expenditure for a specific cost item.
If figures cannot be re-calculated, Controllers either reject the figure or ask the Beneficiary for a
clarification.
Re-calculation often follows reconciliation as a logical next step.
56
Examples include:
re-calculation of the sum of items included in the list of expenditure
re-calculation of staff costs (hourly rates, sums in time sheets etc)
re-calculation of overheads (way of allocation to the project)
re-calculation of depreciation allocated to the project
re-calculation of revenues generated, if any
How can re-calculations be documented?
Some checklists include questions related to re-calculation e.g. “are staff costs calculated correctly”?
Controllers can then document in the checklist which checks were done and what were the results.
In case of complicated re-calculations, Controllers may decide to include a memo in the working
papers.
Regularly inexperienced Beneficiaries have problems providing controllers with calculation schemes
or methods and they leave it essentially up to the controller to come up with the calculated figure.
However it is the responsibility of the Beneficiary to provide a traceable and verifiable calculation
scheme / method for any cost allocated to the project.
6.4.
INQUIRY AND INTERVIEWS
These are documented discussions with Beneficiaries.
They can be either short and relate to a specific outstanding issue or be quite extensive (e.g. so as to
get a better understanding of the accounting process, procurement) and then they are often called
interviews.
Inquiries and interviews are mostly used during on-the-spot checks but can also be part of the deskbased administrative checks for instance in cases where Beneficiaries are invited to the premises of
the controller to discuss the project.
What do controllers inquire about?
Controllers can inquire about any subject they consider relevant for FLC purposes.
During an on-the-spot check it is quite normal and useful to conduct a general opening interview and
a closing interview with the key personnel in order to obtain general information and to gain a better
57
understanding of the project (the project set-up, its process and progress), the Beneficiary (legal
status, organisational set-up, staff, internal processes and controls, responsible persons with regard
to accounting, public procurement etc) and the project environment (industry or sector activity, legal
and organisational relations to other entities e.g. framework contracts with specific suppliers,
outsourced personnel, funding sources including other projects co-financed by EU or national
sources etc).
It is good practice to start an on-the-spot visit with an interview on how the project progresses.
Additional specific interviews with a view on obtaining information on specific (e.g. high risk) issues
or transactions (e.g. specific public procurement) and discuss these with the person in charge.
In order to do efficient and focused interviews, a list of questions prepared in advance and based on
inter alia findings from preceding controls and audits can be very helpful.
Controllers should identify and contact the persons to be interviewed in advance so as to ensure that
they will be present during the on-the-spot check.
How are inquiries and interviews conducted?
Even though inquiries and interviews sometimes directly lead to the detection of an error, they are
often not sufficient in itself and need to be complemented by further control procedures.
Controllers may decide to first hold interviews with key personnel so as to better understand the
project and then continue to verify whether the information obtained is true by applying other
control procedures such as the inspection of documents, re-calculation etc…
How can inquiries and interviews be documented?
Controllers can prepare a memo of an inquiry and interview and include it into the working papers.
In those cases where someone explained a specific document it could be sufficient to include this
document in the working papers and put a short handwritten notice on it indicating the person that
has been asked the question and the information obtained.
6.5.
OBSERVATION OF EVENTS AND PROCESSES
These involve watching people while they execute project-related activities such as an event or an
internal process at the premises of the Beneficiary or at any other site where project activities take
place.
They are particularly useful if no “hardcopy” outputs of a process or event exists.
58
What do controllers observe?
Controllers make individual decisions on what to observe on the basis of information obtained (e.g.
during a desk-based administrative check) and / or own risk considerations related to the project
(e.g. projects with many training events).
Examples include:
observation of a project event (e.g. seminar, conference, training etc)
observation of an internal process (e.g. the execution of a payment)42
Observations may or may not be announced in advance.
How can observations be documented?
Observations can be documented in a memo describing the event or internal process that was
observed.
It can be useful to include copies of outputs or other evidence of the event or process observed (e.g.
pictures) in the working papers.
In cases where dates of project events are not made publicly available or are not indicated in project
documentation, controllers can ask the beneficiary for a list of such planned events and respective
dates and venues.
It is also good practice that controllers request the beneficiary to inform them about planned
tenders. Controllers can then decide to participate in evaluation meetings (as observer) or can
request a copy of the Tender Dossier so as to check compliance with the prevailing procurement
rules. These are considered pro-active checks which contribute to the prevention of serious
problems during the implementation of the project.
6.6.
WALK-THROUGH
During a walk-through controllers trace a specific transaction or process of the Beneficiary step by
step (e.g. a particular public procurement).
A walk-through can be useful in order to gain a better understanding of the Beneficiary’s processes
and internal controls and identify potential error sources or risks.
42
This can be an effective method to detect potential error sources and to learn how the process is performed by
the Beneficiary.
59
What do controllers “walk through”?
A walk-through can be very time consuming and controllers therefore have to make own
professional judgment about whether or not to use the walk-through procedure and to what extent.
An option regularly used in the FLC community is to perform a walk-through of the most risky
transactions only (e.g. the major public procurement under a given project). Another option is the
walk-through of a single expense of each cost category (e.g. staff costs of one employee, overheads
of a given reporting period) or to simply trace one invoice through the beneficiary’s accounting
system from receipt to payment.
Examples include:
tracing of one or more public procurement processes from the decision on the procurement
procedure to be used to the conclusion of the contract
tracing of one or more salary payments from the filling in of the time sheets by the employee
to the payment to the employee’s account
tracing of travel costs from the handing in by the employee to reimbursement by the
organisation
tracing depreciation from the calculation of the eligible depreciation costs chargeable to the
project to the inclusion in the accounting system
How do controllers conduct a walk-through?
An example of a basic walk-through for public procurement contains the following steps:
conduct a specific interview on public procurement with the person responsible within the
Beneficiary’s organisation (e.g. how do you usually perform public procurement?) and
inspect related documents (e.g. internal manual on public procurement if existing)
select one public procurement as a sample and walk through in chronological order together
with the Beneficiary and obtain all documents and records related to it (e.g. request for
offers, offers received, evaluation, selection, contract)
document the walk-through (e.g. in a memo)
if material deviations from the processes (as identified during the interview or internal
manual) are discovered, discuss these issues with the Beneficiary and where applicable
define the error(s) and determine the financial effects
60
How can a walk-through be documented?
A walk-through is basically a comparison between a planned process and an actual process.
Therefore as a first step the controller can document the planned process by documenting the
interview in a memo clearly describing the individual steps of the process and their expected
outputs. The memo should be included in the working papers.
As a second step the controller will document the results of the walk-through in a memo on the basis
of the description of the planned process (as identified during the interview mentioned above) and
the actual findings.
An example of documentation of a walk-through of a procurement process related to services (single
tender) may look like this:
61
Information obtained during the interview with the person responsible for public
Documentation of the steps of the process that have been subjected to a walk-through
procurement within the Beneficiary’s organisation
Process step
Output
Planning of the services required
Documentation on preliminary research and
and decision on the procurement
decision on the selection of the procurement
procedure to be applied
procedure to be used
Initiation of the tender procedure
Clear description of the services (e.g. Terms of
(description
Reference – ToR)
of
the
services
requested and definition of the
Clear, unambiguous and non-discriminatory
evaluation and selection criteria)
evaluation and selection criteria have been
Output available?
Output correct?
Y/N
Y/N
Controller notes
defined
Launch of the tender procedure
Letters to potential service providers
Receipt of offers
Offers have been duly received and filed
Evaluation of the offers
Offers have been evaluated on the basis of
the pre-agreed evaluation matrix
Information to successful and
All Tenderers that submitted a bit have been
unsuccessful Tenderers
informed about the result
Signature of contract
Signed contract
62
7. IRREGULARITIES AND RECOVERIES
7.1 BACKGROUND, DEFINITIONS AND TYPES OF IRREGULARITIES
7.1.1 Background
The provisions with respect to the detection, reporting and ensuring the necessary follow-up measures
with respect to suspected or actual irregularities in using EU funds, in combination with the recovery of
amounts unduly paid, are laid down in a number of legal texts:
Commission Regulation (EC) No. 1828/2006 of 8 December 2006 setting out rules for
implementing Council Regulation No. 1083/2006 laying down general provisions on the ERDF,
ESF and Cohesion Fund and Council Regulation No. 1080/2006 on the ERDF
Council Regulation (EC, Euratom) No. 2185/1996 of 11 November 1996 concerning on-the-spot
checks and inspections by the Commission to protect EC financial interests
Council Regulation (EC, Euratom) No. 2988-95 on protection of EC financial interests
Council Regulation (EC, Euratom) No. 1073-1999 concerning investigations conducted by the
European Anti-Fraud Office (OLAF)
Framework Agreement between Bosnia and Herzegovina and the Commission of the European
Communities on the rules for cooperation concerning EC financial assistance to Bosnia and
Herzegovina in the framework of the implementation of the assistance under the Instrument for
Pre-accession Assistance (IPA)
Council Regulation (EC) No. 718/2007 implementing Council Regulation (EC) No. 1085/2006
establishing an instrument for pre-accession assistance (IPA) and more in particular Article 114
and Article 138 of the IPA Implementing Regulations (IPA IR)
Commission Regulation (EU) No. 80/2010 of 28 January 2010 amending Regulation (EC) No.
718/2007 implementing Council Regulation (EC) No. 1085/2006 establishing an instrument for
pre-accession assistance (IPA)
Basically the above-mentioned legal provisions state that participating countries shall be responsible for
the management and control of cross-border programmes in particular preventing, detecting and
correcting irregularities and recovering amounts unduly paid together with interest on late payment (if
applicable). Beneficiary countries are obliged to notify such irregularities to the Commission and keep
the Commission informed of the progress of administrative and legal proceedings.
7.1.2 Definitions
IRREGULARITY - Any infringement of a provision of Community and/or national law resulting from an act
or omission by an economic operator which has, or would have, the effect of prejudicing the general
budget of the Communities by reimbursing an unjustified item of expenditure.
63
FRAUD - Any intentional act or omission relating to:
(i)
the use or presentation of false, incorrect or incomplete statements or documents which has
as its effect the misappropriation or wrongful retention of funds from the general budget of
the European Communities or budgets managed by, or on behalf of, the European
Communities
(ii)
non-disclosure of information in violation of a specific obligation with the same effect
(iii)
the misapplication of funds for purposes other than those for which they are originally
granted43
CORRUPTION Active: deliberate action of whosoever promises or gives, directly or through an intermediary, an
advantage of any kind whatsoever to an official for himself or for a third party for him / Her to
act or to refrain from acting in accordance with his / her duty or in the exercise of his / her
functions in breach of his / her official duties in a way which damages or is likely to damage the
financial interests of the European Communities
Passive: deliberate action of an official who, directly or through an intermediary, requests or
receives advantages of any kind whatsoever, for himself or a third party, or accepts a promise of
such advantage, to act or to refrain from acting in accordance with his/her duty or in the
exercise of his / her functions in breach of his / her official duties in a way which damages or is
likely to damage the financial interests of the European Communities
7.1.3 Types of irregularities
Irregularities can take different forms and shapes and may be caused by a variety of reasons. They can
be:
Technical: arise due to the supply of material or workmanship of a lower quality than that
specified in the contract (most especially for supplies and works types of contracts). Quality
control should be ensured in the first place by the Beneficiary and double checked by the FLC
when exercising on-the-spot checks.
Contractual: arise due to an incorrect application of the contractual legal rules. A thorough
knowledge and understanding of the contract is essential to avoid this kind of irregularities.
Contractual irregularities include:
43
Whenever fraud is suspected it gives rise to the initiation of administrative of judicial proceedings at national
level. Remember that fraud is a crime and therefore it is the relevant court that will qualify it as such.
64
-
an incorrect delegation of powers and duties
-
incorrect site instructions
-
incorrect presentation of addenda / variation orders
-
failure to respect deadlines
-
incomplete or lack of supporting documentation
-
total lack of or insufficient accounting records
Financial: can arise from fraud or error whereby financial irregularities are caused by fraudulent
application or theft of funds which may include corrupt practices and are caused by mistakes in
the processing of financial transactions resulting in erroneous movement of EU funds or a threat
to the financial interests of the European Communities.
The below is a non-exhaustive list of examples of financial irregularities, whether intentional (fraudulent)
or unintentional (error):
- costs declared which had not been foreseen in the original or revised (and
approved) budget
-
expenditure which is apportioned to the project in an incorrect way
-
disrespect for the ratio between EU and national co-financing
-
revenue generated by the project but not declared by the Beneficiary
Note: The FLC will use professional judgment and following an in-depth analysis of the issue concerned decide on a case-by-case
basis whether the deviation from what should have been correct is serious enough to be taken to a higher level and to be put
into the irregularity reporting system and recovery procedure mechanism. Please note in this respect as well that the FLC’s main
role and responsibility is to control and validate expenditure declared PRIOR to reimbursement by the programme concerned so
expenses rejected at the level of FLC result in non-payment anyway and therefore the financial interests of the European
Communities are not damaged as such.
Administrative: arise from non-compliance with applicable rules established under the
programme concerned and quite often concern matters of incorrect presentation of
documentation (e.g. not using the standard formats / templates agreed at programme level).
7.1.4 Irregularities by type of infliction
Intentional:
arise from actions of any player / institution involved in the overall process (Lead Beneficiary,
Final Beneficiary, First Level Control Office - FLCO, National Authority – NA, National Fund - NF,
65
Joint Technical Secretariat – JTS, Managing Authority – MA, Certifying Authority – CerAut, …) in
order to enrich himself or any other person and which is in conflict with the contract between
the Beneficiary and the Managing Authority (MA).
Examples include:
-
invoices issued for undelivered services, goods or works (fictitious invoices, dummy contracts)
-
invoices issued by non-existent firms
-
(original) invoices issued in duplicate (whereby one is charged to a given project and the
duplicate to another with a view on obtaining reimbursement twice i.e. double-financing)
-
falsification or manipulation of accounting records and/or supporting documentation
-
transfers of funds to accounts not related to the project
With respect to public procurement some of the most common irregularities that may be
encountered include (non-exhaustive list):
-
artificial split of the envisaged services / supplies / works so as to be able to use the lesser
demanding procedure given the lower threshold
-
proven conflict of interest between the Beneficiary and the Tenderer / Contractor
-
failure to state all the selection and award criteria in the tender notice / tender dossier
-
application of unlawful / discriminatory contract award criteria
Unintentional:
arise from actions of any player / institution involved in the overall process (Lead Beneficiary,
Final Beneficiary, First Level Control Office - FLCO, National Authority – NA, National Fund – NF,
Joint Technical Secretariat – JTS, Managing Authority – MA, Certifying Authority – CA, …) caused
by negligence and resulting, in most cases, from an infringement of approved procedures.
7.1.5 Irregularities by type of impact
With financial impact: those irregularities which have already resulted in the payment of
unjustified expenditure to the Beneficiary (Note: one of the most important roles of the FLCO is avoiding
validating unjustified expenditure)
and which should be claimed back from the Beneficiary by means of
the procedures in place (Note: if repayment by the Beneficiary cannot be ensured for whatever reason, the
recovery procedure mechanism as explained below will be initiated).
66
Without financial impact: those irregularities which are identified prior to the reimbursement of
unjustified expenditure to the Beneficiary (i.e. those expenses rejected and declared ineligible by
the FLCO)
7.1.6 Irregularities by nature
Systemic: arise from a fundamental weakness in the management and control systems and have
a high probability of re-occurrence and can therefore occur in more than one project. Attention
needs to be given to the fact that notwithstanding the fact that initially systemic irregularities
may arise unintentionally, the system weakness can be eventually be exploited for fraudulent
purposes.
One-off: occur only in a specific project, are not system related and arise out of specific project
situations and should, in principle, not occur throughout the system or in other projects if the
management and control systems in place are properly functioning
7.2 DETECTION, PREVENTION, REPORTING AND RECORDING OF IRREGULARITIES AND
RECOVERY FUNDS
7.2.1 Detection and prevention
Irregularities can occur at any stage in the lifecycle of a project / programme and systems established for
the detection and prevention of irregularities must therefore cover the entire project / programme life
cycle.
Main preconditions to prevent as much as possible irregularities include:
strong commitment from top management
transparent, comprehensive and easy to use written procedures
segregation of duties thereby ensuring lack of conflict of interest
effective internal control system
independent audit function
a well-functioning monitoring and evaluation system
regular on-the-spot checks based on adequate risk assessment
comprehensive system for filing and archiving of all documents (electronic as well as paperbased)
proper procedures for reporting of irregularities
67
The FLC has a crucial role regarding the detection of irregularities since they are the only body
performing 100% check of project expenditure. At the same time they have an important role in the
prevention of irregularities by proposing improvements, through the Joint Technical Secretariat (JTS),
the Managing Authority (MA) or the Working Group of First Level Controllers, to the financial
management and control system and to assist, to a certain extent, the beneficiaries with their financial
implementation issues and reporting duties.
Irregularities can be detected on the basis of the verification of supporting documentation during the
administrative desk-based checks or by means of findings during an on-the-spot check or a combination
of the two (e.g. information provided on paper does not match the situation found in reality on site).
7.2.2 Reporting irregularities
Whenever a First Level Controller (FLC) identifies, or suspects, an irregularity, s/he immediately informs
the Irregularity Officer (IO) appointed within the CFCU.44
The IO is responsible for:
acting as a focal point for the collection of any information regarding suspected and / or actual
cases of fraud, corruption or malpractice which may arise during the implementation of a CBC
programme under shared management
collect all required documentation both from within as well as outside his / her organisation
record the data in the Register of Irregularities (see below)
establish a single file per suspected or actual irregularity
provide active and unrestricted assistance to any authorised body investigating a suspected or
actual irregularity (e.g. internal / external auditors, financial police, economic crime department,
OLAF, …)
participate in monitoring visits and on-the-spot checks, as required
review and improve, if necessary, the existing system on the detection, prevention and reporting
of irregularities
The IO within the CFCU will examine each individual case submitted to him / her and if considered
necessary draw up an “Irregularity Notification Form (INF) in the format provided below.
44
Suspicion is the situation in which there are indications that an irregularity has occurred but not all facts and
circumstances are clear yet.
68
IRREGULARITY NOTIFICATION FORM (INF)
DETAILS ABOUT THE PROJECT
Programme title:
……………………………………………………………………
Programme number:
…………………………………………………………………….
Priority:
…………………………………………………………………….
Measure:
…………………………………………………………………….
Project title:
…………………………………………………………………….
Project acronym:
…………………………………………………………………….
Contract number:
…………………………………………………………………….
Contract signature date:
…. / …. / ….
Contract duration:
….. months
Contract end date:
…. / …. / ….
DETAILS ABOUT THE BENEFICIARY
Name:
……………………………………………………………………..
Address:
……………………………………………………………………..
Contact person:
……………………………………………………………………...
Email:
………………………………………………………………………
Tel / fax:
………………………………………………………………………
DETAILS ABOUT THE IRREGULARITY
Date of detection:
…. / …. / ….
Project stage:
………………………………………………………………………..
How was the irregularity detected?
……………………………………………………………….
Description of irregularity:
………………………………………………………………..
List of documents proving and substantiating the irregularity:
(i) ……………………………………………………………………..
(ii) ……………………………………………………………………..
(iii) ……………………………………………………………………..
Name of person initiating the irregularity procedure:
………………………………….
Date of initiating the irregularity procedure:
…. / …. / ….
Signature:
………………………………….
69
At the same time the IO within the CFCU will register the actual or suspected irregularity in the so-called “Register of Irregularities”:
REGISTER OF IRREGULARITIES FOR PROGRAMME …………………………………
Last updated: …. / …. / …. (to be updated on a monthly basis by the IO within the CFCU)
Project
Project
No
acronym
Beneficiary
Date
Date
Type of
Source of
Body /
Amount affected by
Amount to be
irregularity
irregularity
irregularity
information
person that
irregularity
recovered
was
was
detected
committed
detected
irregularity
IPA
NCF
Total
IPA
NCF
Total
Amount recovered
IPA
NCF
Remarks
Total
70
The IO within the CFCU then submits the Irregularity Notification Form (INF) to the IO appointed within
the office of the National Authorising Officer (NAO) / National Fund (NF) who will analyse it and
ultimately determine whether any further action is required.
The IO within the office of the NAO will immediately inform the NAO who will decide on the most
appropriate course of action which could entail as a first recourse either a further unplanned on-thespot check by the FLC in charge of the project, accompanied by both the IO of the CFCU and the IO of the
NAO, to further investigate the case or a request to internal auditors to perform an audit mission. Based
on the outcome of the additional checks, the NAO may decide to report the irregularity to the Managing
Authority (MA), in the format designed under the specific programme and who will make a final
decision. Upon receipt of all required information from the NAO, the MA in close cooperation with the
Commission, decides whether or not the case requires further action in the form of e.g. judicial
proceedings. Depending on the situation and following instructions from the MA and / or the
Commission, the national irregularity and recovery procedure will be initiated which ultimately will lead
to a request issued by the European Commission (EC) to the Government of Bosnia and Herzegovina
(BiH) to refund the programme.
The procedure related to detection and reporting of irregularities can be presented in a schematic way
as follows:
Action
Description of the action
Person responsible
Deadline
Audit trail / document
Detection of the suspected / actual
FLC
Upon
Irregularity Notification Form (INF) and
No.
1
irregularity
2
Compilation of evidence / supporting
detection
FLC
5 WDs
documents
3
Notification to Irregularity Officer within
Register of Irregularities (RI)
Supporting documentation in electronic
version / hard copy
FLC
1 WD
Email all of the above
IO CFCU
5 WDs
INF / RI + supporting documentation
IO NAO / NF
5 WDs
INF + RI + supporting documentation
the CFCU (IO CFCU)
4
Review of irregularity file and decision on
further action (if further action required
notification to Irregularity Officer within
NF / NAO office)
5
Review of irregularity file and decision on
further action (if further action required
notification to the Managing Authority of
the programme concerned)
7.2.3 Recording irregularities
Upon detection of an irregularity, the person in charge of irregularities (IO) within the CFCU / FLCO must
ensure that an “Irregularity File” is opened. Such files will be available to any auditing body investigating
the irregularity.
The purpose of the “Irregularity File” is to:
71
provide a history of the irregularity and the way in which it was treated
provide information and evidence which might be needed in the case of e.g. criminal
proceedings
provide information in a consistent way if the details of the irregularity need to be
communicated to relevant and authorised persons or institutions
As a minimum the following data have to be recorded in irregularity files:
project acronym
project code
project title
priority measure (number and title)
name of Lead Beneficiary
country of Lead Beneficiary
contact details of responsible person within Lead Beneficiary
name of beneficiary from Bosnia and Herzegovina
contact details of responsible person within beneficiary from Bosnia and Herzegovina
budget managed by beneficiary from Bosnia and Herzegovina
overall project budget
First Level Controller in charge of the project
type of irregularity
reference to laws or other legal provisions which have been broken
date when the irregularity occurred
date when the irregularity was detected
source of information on the basis of which the irregularity was detected
irregularity has a financial impact (i.e. expenses had been validated and paid already)
date when the irregularity was reported to the Irregularity Officer within the CFCU / FLCO
date when the irregularity was reported to the Irregularity Officer within the office of the NAO
date when the irregularity was reported to the Managing Authority
date when the irregularity was reported to the European Commission
information on any previous irregularities committed by this beneficiary, if applicable
actions taken to resolve and eliminate the irregularity
information about the progress and result of any action initiated to recover funds that have
already been validated and paid out
date on which the funds were recovered and the details of the account on which they were
received
72
date of receipt of the recovery order from the European Commission
deadline for repayment to the European Commission
date on which the funds were transferred to the European Commission
7.2.4 Recovery of funds
In addition Article 114 of the IPA IR states that it is the responsibility of the Certifying Authority (CerAut)
of the programme concerned to ensure that any amount paid as a result of an irregularity is recovered
from the Lead Beneficiary (LB). Final Beneficiaries shall repay the Lead Beneficiary the amounts unduly
paid in accordance with the agreement existing between them. If the Lead Beneficiary does not succeed
in securing repayment from a Final Beneficiary, the participating country on whose territory the relevant
Final Beneficiary is located shall reimburse the Certifying Authority (CerAut) the amount unduly paid to
that Final Beneficiary (FB).
According to Instruction of the Minister of finance and Treasury No 08-02-1-9583-1/12 from November
11, 2012 ; Point 8., the recovery of funds is been regulated as follows:
“If the MA of CBC Programme submits a request for a reimbursement of unduly paid out amounts to the
MFT, the Ministry shall, in accordance with the Financial agreement between BIH, EC and the MA of that
CBC Programme repay the requested amount from the budgetary position: Direct transfers - Funds
appropriated for the withdrawal of IPA, a part of unallocated funds for projects.
The Ministry shall take all actions in accordance with the laws of Bosnia and Herzegovina in order to
compensate the reimursed funds from the BIH project beneficiary/project partner/LB.
A claim for the executed recovery will be recorded in the Treasury General Leger.“
8.PUBLIC PROCUREMENT
8.1 RULES ON PUBLIC PROCUREMENT
The purchase of goods and services, as well as the ordering of works is subject to obligatory procurement
rules as followes:
IPA Adriatic CBC
South East Europe (SEE)
Mediterranean Programme
(MED)
PRAG is SUGGESTED
45
PRAG
PRAG
Public procurement in the IPA cross-border
cooperation programmes with EU Member
46
State in shared management by Interact
BIH Public procurement legislation
47
45
http://ec.europa.eu/europeaid/work/procedures/implementation/practical_guide/index_en.htm)
46
http://www.interact-eu.net/downloads/1909/Public_procurement_in_IPA_crossborder_
cooperation_programmes_with_EU_Member_States_in_shared_management.pdf
47
http://www.javnenabavke.ba/index.php?id=10zak&zak=1&jezik=en
73
8.2 BASIC RULES TO BE RESPECTED
8.2.1 Nationality and origin
Nationality : grants are made to beneficiaries according to programme rules and the territorial eligibility
for applicants is usually specified in the programme documents such as Calls for Proposals. This
restriction does not apply to experts (external expertise) recruited under a specific grant contract as they
may be of any nationality.
Origin: all supplies and materials purchased under the IPA Subsidy Contract must EITHER originate in
one of the 27 Member States of the European Union (EU MS)
Austria
Finland
Latvia
Romania
Belgium
France
Lithuania
Slovakia
Bulgaria
Germany
Luxembourg
Slovenia
Czech Republic
Greece
Malta
Spain
Cyprus
Hungary
Netherlands
Sweden
Denmark
Ireland
Poland
United Kingdom
Estonia
Italy
Portugal
OR in one of the countries eligible under the programme that provides the financing and as this is the
Instrument for Pre-accession Assistance (IPA) equipment can be purchased also from the following
countries:
Any country that is beneficiary of the Instrument for Pre-accession Assistance (IPA):
Serbia including Kosovo
former
Yugoslav
Republic
of
Macedonia
Turkey
Montenegro
Albania
Bosnia
Croatia
and
Herzegovina
Any country that is beneficiary of the European Neighbourhood and Partnership Instrument (ENPI):
Algeria
Georgia
Moldova
Tunisia
74
Armenia
Israel
Morocco
Ukraine
Azerbaijan
Jordan
Palestinian Authority of
Russian Federation
the West Bank and
Gaza Strip
Belarus
Lebanon
Libya
Syria
Egypt
Any country that is a Member State of the European Economic Area (EEA):
Iceland
Liechtenstein
Norway
International organisations:
 international public-sector organisations set up by intergovernmental agreements and
specialised agencies set up by such organisations
the International Committee of
The International Federation of
The European Investment Bank
the Red Cross (ICRC)
National Red Cross and Red
(EIB)
Crescent Societies
Investment Fund (EIF)
and
the
European
For unit purchases exceeding € 5,000 the beneficiary should be able to submit proof of the origin of the
equipment (to be obtained from the contractor). However In exceptional cases a derogation from the
rule of origin can be obtained from the Contracting Authority (i.e. the Managing Authority in the case of
CBC programmes under shared management) but this has to be duly justified and substantiated and
such derogation has to be obtained prior to initiating the procurement procedure as normally no
retroactive approvals are granted48.
8.2.2 Language
It is recommended to use English wherever possible (accompanied if required by a translation into the
local language).
48
Exceptional circumstances include (i) unavailability of services or products in eligible countries (ii) extreme
urgency (iii) the realisation of the project or action will be impossible or exceedingly difficult if no derogation is
obtained.
75
Expenditure related to public procurement of services, supplies and / or works that do not
comply with the requirements prescribed may be considered ineligible by the First Level Controllers
(FLC) and may give rise to, given the nature of the activity, the opening of an irregularity investigation
and in the worst case scenario to a need for recovery of substantial amounts wrongly paid.
8.3 TENDER PROCEDURE WALK-THROUGH
Given the fact that public procurement of services (external expertise), supplies (e.g. IT equipment) and
works (e.g. infrastructure) needs to respect the procurement rules applicable under the programme
concerned and in all cases must respect the basic principles of fair competition, transparency, equal
treatment and non-discrimination, the First Level Controllers will systematically carry out additional
checks (complementary to the desk-based administrative check of all documentation submitted by the
Beneficiary) on any tender procedures carried out by the Beneficiary during the implementation of the
project.
In view of that the following “tender walk through” procedure will be executed by the First Level
Controllers during an on-the-spot check (non-exhaustive list of checks):
STEPS IN THE TENDER
NATURE OF CHECKS BY FLC
DOCUMENTS USED
PROCESS
1. PROCUREMENT PLANNING
Definition of needs
The tender process is related to an
Approved Application Form
activity in the project as it was approved
Modifications to the Subsidy
Contract
Procurement plan
Estimated budget and sources of
Budget limitations are respected
Subsidy Contract
financing
Modifications to the Subsidy
Contract
Identification of and adherence
All legal preconditions are fulfilled and
Relevant
to the regulatory framework
respected (e.g. the correct procurement
legislation
rules
Programme documents
have
been
used,
permits/licences/documents
Choice of tender procedure
any
proving
Manuals,
EU
and
national
guidelines
and
ownership etc have been obtained)
instructions
Correct tendering procedure according
Approved Application Form
to type (services, supplies, works) and
Subsidy Contract
amount (e.g. local open tender, single
Modifications to the Subsidy
76
tender etc) was chosen
Contract
Procurement plan
Tender Dossier
2. PREPARATION OF TENDER DOCUMENTATION
Preparation
of
Non-discrimination
Tender Dossier
Principle of origin observed
Clarifications
Formal requirements related to
Equal treatment, non-discrimination, fair
Tender Dossier
submission of bids by Tenderers
competition principles observed
Clarifications
Equal treatment, non-discrimination, fair
Tender Dossier
competition principles observed
Clarifications
Equal treatment, non-discrimination, fair
Tender Dossier
financial)
competition principles observed
Clarifications
Award criteria (best value for
Equal treatment, non-discrimination, fair
Tender Dossier
money,
competition principles observed
Clarifications
documentation
Reference
tender
(Terms
–
ToR,
of
Technical
Specifications- TS etc)
(standard templates, deadline,
language, packaging etc)
Eligibility
criteria
nationality,
(origin,
grounds
for
exclusion)
Selection
criteria
(technical,
economically
most
advantageous offer, lowest price)
3. LAUNCH OF TENDER
Decision to launch the tender and
Launch of the tender procedure was
Approved Application Form
nomination
formalised
Decision
Timing corresponds to the schedule of
Procurement plan
of
Evaluation
Committee (see also below)
activities
Publication
of
Procurement
Notice / Invitations to Tender
Tender was properly advertised
Procurement Notice
Minimum number of Tenderers invited
Invitations to Tender
according to the procedure
4. SUBMISSION AND RECEIPT OF BIDS
Period of preparation of offers
Required minimum period for the
Publication
/
Invitations
preparation of offers by Tenderers is
Tender
respected
Register of offers received
to
Proofs of receipt
Additional information during the
Additional information was provided to
Requests for clarification from
bid preparation period
all (potential) Tenderers and within the
(potential) Tenderers
77
time limits set by the procedure
Replies to (potential) Tenderers
concerned.
No illegal modifications to the tender
conditions occurred
Deadlines were respected
Deadline for the submission of
Tenders submitted before the deadline
Publication
/
Invitations
bids
were accepted and those submitted
Tender
after the deadline have been rejected
Register of offers received
to
5. TENDER EVALUATION
Evaluation Committee
An Evaluation Committee was appointed
Order for the nomination of the
consisting of the minimum number of
Evaluation Committee
voting members possessing over the
CVs of the members of the
necessary skills and competence
Evaluation Committee
Declarations of Impartiality and
Confidentiality
Tender Opening Session and
Public opening of offers (if applicable)
Tender Opening Report
Clarifications do not amend tender
Requests for clarification and
conditions
replies received
Eligibility and selection criteria were
Evaluation Report
formal check
Clarifications
Administrative compliance check
observed
Evaluation
of
technical
and
Award criteria were observed
Evaluation Report
financial offers
Conclusions of the Evaluation
Procedure
Committee
transparent and objective way
and
Evaluation
was
carried
out
in
a
Evaluation Report
Report
6. CONTRACTING
Contract
with
successful
A
contract
was
Tenderer
successful Tenderer
Letters to unsuccessful Tenderers
Unsuccessful
signed
Tenderers
with
the
Letter to successful Tenderer
Contract
were
duly
Letters to unsuccessful Tenderers
notified about the result and the
reasons for not awarding the contract to
them
78
ANNEXIS:
1. ORGANIGRAMME OF THE MINISTRY
2. INTERNAL PROCEDURES OF THE FLCO BIH (LOCAL LANGUAGE)
BIH Control Guidelines IPA Adriatic, Ver. 2, September
2013
BIH Control Guidelines for SEE, ver. 3 – July 2013
http://cfcu.gov.ba/
BIH Control Guidelines for MED, Ver. 1
from September 4, 2013
Interna procedura o kontroli javnih nabava,
Ver. 1.8.2013.
(LOCAL LANGUAGE)
3. Instruction on how to return the funds, reimbursement of funds and recording in the General
Ledger paid less grant funding from the EC, endorsed by the Minister of Finance and Treasury,
No 08-02-1-9583-1/12 from November 11, 2012
(LOCAL LANGUAGE)
79