Irregularity

Transcription

Irregularity

EARMA Annual Conference 2014 Tallinn
Most common errors and
irregularities in EU research
projects, need for
sophisticated software
July 1, 2014 Tallinn
Robertina Gjoka
Head office at RR & CO. Ltd.
Schedule for today
EARMA Annual Conference 2014 Tallinn
Institutions
Understanding terminology
What is an irregularity?
What is an error?
What is fraud???
Statistics, figures and facts
Cases
Consequences for organizations & individuals
Is there a need for a sophisticated software?
Issues addressed and solved with a software
Characteristics of a good software
Saving time and money with the right tool in your hand!
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© RR & CO. Knowledge Centre Ltd. All rights reserved.
www.efamt.eu
Institutions
European Court of Auditors
any time during or after, for unlimited period of time
European Antifraud Office (OLAF)
any time during or after, for unlimited period of time
Audit
Ex – ante auditor (project coordinator, during or just after the project is
finished)
Ex-post audit (European commission, after the project is finished)
Recommendation: pre-audit preparation
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www.efamt.eu
European Public Prosecutor's Office
Proposal of the Commission
Independent, decentralized, strong procedural rights
Approved by European Parliament, 2014
To be adopted by Member States in the Council
To be fully operational by 2015
Only 46% of cases referred to MS => national judicial authorities with the
conviction rate of these is just 42%
= only 19 % of cases are convicted
Yearly approx. €500 million in EU expenditure and revenue is lost due to
suspected fraud
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Method of detection
Table: Method of detection of irregularity not reported as fraudulent, 2012
Source: Commission Staff Working Document - Statistical evaluation of irregularities reported for 2012, page 65.
Focus on the new financial perspectives:
- Systematic errors
- Organizations, not only projects
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Irregularity
Error
Correction
(Actual) Irregularity
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ERROR (I)
An error is an administrative mistake which does
not have financial impact or it has been corrected
before causing financial impacts.
Errors are recorded but they are not reported
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ERROR (II)
Clerical error is “an unintentional addition or omission
of a word, phrase, or a figure”. A clerical error is not
intended to claim ineligible grant and does not behave
fraudulently.
Technical error “does not affect the nature or facts of
the projects, for example, using a wrong stamp,
forgetting to attach an annex to a grant offer,
forgetting a particular condition in the grant offer”.
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Correction
A correction is a mistake that is detected and
corrected by the managing authority or
certifying authority before any payment to the
beneficiary.
Corrections are recorded but are not reported
as well
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(Actual) Irregularity (I)
An (actual) irregularity is an “incorrectly
claimed expenditure or systematic error
detected by external audit”.
They are recorded and reported to the EC in
accordance to reporting thresholds in different
grant programmes.
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(Actual) Irregularity (II)
Financial irregularity
incorrectly claimed grant which makes a directly financial
impact
Non-financial irregularity
is “any breach of regulation or management and control failure to
which there is no direct financial value”.
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(Actual) Irregularity (III)
Irregularity reported as fraudulent
irregularities suspected of being fraudulent or established to
be so
Irregularities not reported as fraudulent
are any other type of irregularities reported, but not
ascertained to be fraudulent
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Fraud (I)
Affecting the European Communities' financial
interests shall consist of:
a) in respect of expenditure, any intentional act
or omission relating to:
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,
non-disclosure of information in violation of a specific obligation, with the
same effect,
the misapplication of such funds for purposes other than those for which
they were originally granted;
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Fraud (II)
b) in respect of revenue, any intentional act or
omission relating to:
the use or presentation of false, incorrect or incomplete statements or
documents, which has as its effect the illegal diminution of the resources
of the general budget of the European Communities or budgets managed
by, or on behalf of, the European Communities,
non-disclosure of information in violation of a specific obligation, with the
same effect,
misapplication of a legally obtained benefit, with the same effect.
Source: Convention on the protection of the European
Communities' financial interests
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Fraud (III)
Suspected fraud
an irregularity giving rise to the initiation of administrative
and/or judicial proceedings
Established fraud
it has been proven in Courts that it was fraud
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Community programmes – data
Irregularities reported as non-fraudulent and related amounts, 2011 and 2012
Irregularities reported as fraudulent and related amounts, 2011 and 2012
Source: Commission Staff Working Document - Statistical evaluation of irregularities reported for 2012,
page 62
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Community programmes – data
Table 3: Irregularities reported by policy areas and related amounts 2012.
page 63
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Introduction – types of irregularities
Action not implemented
Inappropriate accumulation of aid
Action not in accordance with
the rules
Incomplete documents
Calculation error
Incorrect rates used in calculating the
claim
Copy documents rather than
originals
Missing documents
Deadline not respected
Public procurement procedures not
respected
Expenditure declared not
related to the action
Recoverable VAT, interest received, not
correctly reflected
Expenditure not covered by
legal base
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www.efamt.eu
Data: types of irregularities
Table: Recoveries (number and amount) by type of irregularity, 2010
Type of irregularity
NO
%
€ 1 000
%
Average € 1 000
Action not in accordance with the rules
Action not used for intended purposes
Advances not correctly reflected
Beneficiary ineligible
Calculation error
Expenditure declared not related to the action
Expenditure not covered by legal base
Falsified documents
Incorrect rates used in calculating the claim
Lack of necessary co-financing
Missing documents
Not applicable
Public procurement procedures not respected
Quality of action inadequate
Recoverable VAT, interest received, not correctly reflected
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389
1
1
6
71
26
44
168
8
3
24
87
3
102
15
8
20
17
2,7
38,1
0,1
0,1
0,6
7
2,5
4,3
16,5
0,8
0,3
2,4
8,5
0,3
10
1,5
0,8
2
1,7
2 1518
13 703
91
901
175
1 669
317
901
5 212
1 278
111
536
3 657
63
7 259
412
193
3 854
269
5,8
31,8
0,2
2,1
0,4
3,9
0,7
2,1
12,1
3
0,3
1,2
8,5
0,1
16,8
1
0,4
8,9
0,6
89,9
35, 2
90,7
900,7
29,2
23,50
12,2
20,5
31
195,8
36,9
22,3
42
21,2
71,2
27,5
24,1
192,7
15,8
TOTAL
1 021
100
100
42,4
43 120
page 121.
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Trend of increase of cases 2007-2012
Increasing number of fraudulent and non-fraudulent cases of centralized management in EU
Member States, 2007 – 2012
Source: RR & CO., based on Commission Staff Working Document - Statistical evaluation of irregularities
reported for 2007-2012
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Increase of cases 2007-2012 in research
Graph: Growing number of non-fraudulent irregularity and related amount in Research
domain, 2007 - 2012
Source: RR & CO., based on Commission Staff Working Document - Statistical evaluation of irregularities
reported for 2007-2012
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Recoveries by
Member States
in 2012
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Structural funds Slovenia 2007- 2013
12 cases reported to OLAF for fraud and suspected
fraud
Total value of 10 MIO EUR loss EU participation
Delo, June 2014
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Case 1 – Frammework programme
Irish Electricity Generating Co. Ltd
Sector: non-nuclear energy
Returned:EUR 180.664,70 + late-payment interest and
to pay the costs
Missed deadline, not fulfilled contract obligations
EU Court of Justice - Case T-323/09
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Case 2 – Frammework programme
Organization: Parthenon AE Ikodomikon, Greece
Developments:
Parthenon failed to perform its contractual
obligations  EC ordered recovery of advance
payment with the framework of contract.
Result: Parthenon had to pay EUR 154.383,53 + plus
interests
Source: EU Court of Justice - Case T-7/05
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Case 2 - Structural funds Slovenia 2007- 2013
Year 2012, grant of 578.000 EUR
Boiler using biomass wood & 740 m of hot water
distribution system
Zarja Ekoenergija vs. Zarja Kovis = same management
The implementing company (Zarja Ekoenergija)
estabilished months prior to the project start
Dnevnik, June 2014
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Case 3 – Stuctural funds
SI.EVA and SIMIT Development Centers
4 MIO EUR
Old equipment as new
Finance, Novemeber 2013
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Consequences for organisations & individuals
Returning partially or the whole funded amount +
interest rates
Prison
Black lists (5-10 years)
Bad PR
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To remind you…
Over 118.000.000 EUR or 1.648 cases were reported only in 2012 as irregularities
(non fraudulent)
Table: Irregularities reported by policy areas and related amounts 2012.
Source: Commission Staff Working Document - Statistical evaluation of irregularities reported for 2012, page 63
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Let‘s go back to irregularity types
Action not in accordance with
the rules
Calculation error
Copy documents rather than
originals
Expenditure declared not
related to the action
Expenditure not covered by
legal base
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Incorrect rates used in calculating the
claim
Missing documents
Public procurement procedures not
respected
Recoverable VAT, interest received,
not correctly reflected
www.efamt.eu
Why the EC would not give us a hand on this?
Why there is not a unified software that each beneficiary would use and
make happy the EC?
Why our accounting tools are not sufficient?
Why excel is not good any longer?
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Is there a need for a
sophisticated software?
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Is there a need for a sophisticated
software? (1)
Yes! To ensure having all the data in one database
Yes! To record time spend on every project
Yes! To record all the direct costs on every project
Yes! To have a detailed overview over all the projects within the
organisation
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Is there a need for a sophisticated
software? (2)
Yes! To have a detailed overview over the project consortia
Yes! To have a system that enables audit trail
Yes! To have a professional but yet a flexible tool to manage all the projects
regardless to sources of financing
Yes! To be able to calculate automaticly and consider all the financial
regulations
Yes! To minimise chances of mistake
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What can not be solved with?
Human intentional actions to make fraudulent actions…
at least not with IT but with social norms, regulations and
Penalties and punishment for those that violate rules
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EFAMT® online financial
management tool
Flexible
International collaboration
Financial analyses
Enter your time and costs in
detail or summary, in your
national currency.
Simplifies communication about
costs in a consortium
In-depth financial analytics
comparing actual with planned
time and costs
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Official reports
Always prepared for audits
Automatically generated reports,
in line with
Horizon 2020 rules
Get things right the first time
www.efamt.eu
EFAMT® in brief
Online, accessible with a username and password
No installations needed
Very user-friendly & Easy to learn
Easy to integrate with other systems
Export results: Export all analyses into Excel, Word, pdf or XML. Results of
analyses are also shown as graphs
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Recording
Record time (timesheets) and costs
Only minimal data is required to distribute time and costs in line with the budget
VAT, depression of equipmement, other information
Currency conversation
You can record your costs in different currencies within the same projects
Staff wage rate definition
You can record different staff wage rates without having to be concerned about
accuracy of calculation
Set up
By activity types, workackages, tasks, deliverables, definition of VAT refund
rates, staff wage rates, different costs modules,
Access rights of users
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Analytics
Automatically generated analyses enable complete insight into project dynamic in
real time
In-depth financial analytics comparing actual with planned time and costs
Overview of financial data of time and costs spent over all projects .
Overview of financial data of time and costs spent for a whole consortium and all
partners.
Overview of all the partner financial data: costs and time spent and financial data
of the partner
Automatically generated offical reports, in line with rules of managing authorities
(FP6, FP7, Horizon2020)
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Benefits (1)
Time saving
Risk management
Universal database model for all EU and national rules for grant funded projects
Support through entire project cycle – from beginning of the project to the auditing
International collaboration : Simplifies communication about costs in a consortium
Easy and efficient interdepartmental collaboration
Minimizes the chances of mistakes
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Benefits (2)
Minimizes administrative burden
Minimizes transactional costs
Data consistency: EFAMT® will ask you only to record time and costs. Everything else
is calculated automatically, which guarantees consistency.
Project database: All your project financial data is safely stored in one central
repository and readily available.
Flexible transfer of data: Transfer of data between work packages, tasks,
deliverables, cost categories, activity types, measures.
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Security and reliability
In compliance with regulatory requirements and security best
practices (e.g. ISO 27000 family of standards)
User access management according to user's roles
Audit trail for all inserts / updates / deletes
Providing compliance with eCohesion where applicable
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Characteristics of a good software
In compliance with regulatory requirements and security
best practices
User-friendly
Interface that can be used for different types of projects
Powerful analytical capabilities
Audit trail
Relational database
Interoperability with other systems: accounting system,
document system…
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Saving time and money with the right
tool
Based on observation and analyses of data from
2001 till now
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Results
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Our development since 2000
For each €1 of received grant, we have
invested € 2,89 of own resources
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Growth of use of EFAMT® since 2005
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Conclusions (1)
Don’t take projects for granted
Changes on the level of the EC require changes on the
organization level, so don’t rely only on previous experiences
Communicate with the project officer as much as possible
Consider external assistance when not 100 % sure
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Conclusions (2)
Consider additional training, if needed
Consider changing working habits, if needed
Make sure you have all the documents in order
And yes, consider implementing a professional tool for
more efficacy and make sure the interoperability is
achieved
50
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RR & CO. Knowledge Centre Ltd.
http://rr-co.eu/horizon2020
http://rr-co.eu/efamt
http://www.rr-co.eu
phone:
+386 (0)1 432 41 91
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Irregularity

Transcription

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