Commission Delegated Regulation (EU) No 1042/2014 of 25 July 2014 supplementing Regulation (EU) No 514/2014 with regard to the designation and management and control responsibilities of Responsible Authorities and with regard to status and obligations of Audit Authorities

CHAPTER I

GENERAL PROVISIONS

Article 1

Definitions

For the purposes of this Regulation, the definitions in Regulation (EU) No 514/2014 shall apply. The following definitions shall also apply:

(a) ‘designating authority’ means the ministerial authority of a Member State referred to in Article 26(1) of Regulation (EU) No 514/2014 that designates the Responsible Authority;

(b) ‘competent authorities’ means the Responsible Authority, the Audit Authority and, where appropriate, the Delegated Authority referred to in Article 25(1) of Regulation (EU) No 514/2014;

(c) ‘SFC2014’ means the electronic information system established by Article 2 of Commission Implementing Regulation (EU) No 802/2014 (¹);

(d) ‘grant agreement’ means an agreement or an equivalent form of legal instrument on the basis of which the Responsible Authority provides grants to the beneficiary for the purpose of implementing a project under the national programme.

CHAPTER II

THE RESPONSIBLE AUTHORITY

SECTION I

Designation of the responsible authority

Article 2

Criteria and procedure for designating the Responsible Authority

The body to be designated as the Responsible Authority shall have an administrative organisation and a system of internal control that comply with the criteria set out in the Annex to this Regulation (‘the designation criteria’). The designation criteria concern:

(a) internal environment,

(b) control activities;

(c) internal information and communication;

(d) internal monitoring and reporting.

Member States may lay down further designation criteria to take account of the size, responsibilities and other characteristics of the Responsible Authority.

Pending compliance, the body may be granted provisional designation as Responsible Authority for no more than 12 months. The length of this provisional period shall be proportionate to the non-compliances identified.

Upon designating the Responsible Authority, the Member State shall notify the Commission without delay through SFC 2014. With this notification, the Member State shall transmit documentation setting out:

(a) the main division of responsibilities between the organisational units of the Responsible Authority;

(b) where appropriate, its relationship with delegated authorities, the activities to be delegated, and the main procedures for supervising these delegated activities; and

(c) a summary of the main procedures for processing financial claims from beneficiaries and for authorising and recording expenditure.

Article 3

Supervision of the Responsible Authority and review of the designation

SECTION II

Management and control responsibilities of the responsible authority

Article 4

Tasks of the Responsible Authority

The Responsible Authority shall manage and implement the national programme in accordance with the principles of sound financial management. It shall:

(a) consult partners in accordance with Article 12(1) of Regulation (EU) No 514/2014;

(b) ensure the proper functioning of the monitoring committee referred to in Article 12(4) of Regulation (EU) No 514/2014;

(c) submit a proposal to the Commission for the national programme referred to in Article 14 of Regulation (EU) No 514/2014 and any subsequent revisions using SFC2014;

(d) define and establish the eligibility rules for projects and project costs for all activities, ensuring equality of treatment and avoiding any conflicts of interest, in accordance with the principles of sound financial management;

(e) organise and advertise calls for tenders and proposals, and organise and advertise the subsequent selection and award of projects for financing under the national programme, in accordance with the scope and objectives of the Specific Regulations referred to in Article 2(a) of Regulation (EU) No 514/2014 and with the criteria set out in Article 9 of this Regulation;

(f) ensure that there are systems in place to collect the data required to report the common and programme-specific indicators to the Commission, together with other data on the implementation of the programme and projects;

(g) receive payments from the Commission, and make payments to the beneficiaries;

(h) ensure consistency and complementarity between co-financing under the Specific Regulations and other relevant national and Union instruments;

(i) monitor the projects and check that the expenditure declared for projects has actually been incurred and complies with Union and national rules;

(j) ensure that there is a system for recording and storing in computerised form accounting records for each project under the national programme and that the data on implementation necessary for financial management, monitoring, control and evaluation are collected;

(k) without prejudice to national accounting rules, ensure that beneficiaries and other bodies involved in implementing projects financed under the national programme maintain either a separate accounting system or an adequate accounting code for all transactions relating to the project;

(l) ensure that the evaluations of the national programme referred to in Article 56 and Article 57(1) of Regulation (EU) No 514/2014 are carried out within the relevant time limits;

(m) ensure that the independent evaluators receive, for the purposes of carrying out the evaluation referred to in Article 56 and Article 57(1) of Regulation (EU) No 514/2014 and formulating the evaluation opinion, all necessary information on the management of the national programme;

(n) set up procedures to ensure that all documents regarding expenditure, decisions and control activities have the required audit trail and are held in accordance with the Commission Implementing Regulations adopted on the basis of Article 27(5) of Regulation (EU) No 514/2014.

(o) ensure that the Audit Authority receives, for the purposes of carrying out the audits referred to in Article 29 of Regulation (EU) No 514/2014 and formulating the audit opinion, all necessary information on the management and control procedures applied and expenditure financed under the Specific Regulations;

(p) draw up the implementation reports referred to in Article 54 of Regulation (EU) No 514/2014 and the evaluation reports referred to in Article 57(1) of Regulation (EU) No 514/2014 and submit them to the Commission using SFC2014;

(q) draw up the request for payment in accordance with Article 44 of Regulation (EU) No 514/2014, and submit it to the Commission using SFC2014;

(r) carry out information and publicity activities and disseminate the programme's results, in accordance with Article 53 of Regulation (EU) No 514/2014;

(s) carry out administrative controls and on-the-spot controls in accordance with Article 27 of Regulation (EU) No 514/2014;

(t) cooperate with the Commission and the Responsible Authorities in other Member States; and

(u) respond to the findings of the Audit Authority either by addressing them or, where the findings of the Audit Authority are not accepted, by providing a detailed justification.

Article 5

Delegated Authority

Where authorised by the Responsible Authority, the Delegated Authority may act as executing body as referred to in Article 8.

The scope of the tasks delegated by the Responsible Authority to the Delegated Authority and the detailed procedures for fulfilling them shall be set out in a document signed by the Responsible Authority and the Delegated Authority. This Act of Delegation shall mention at least:

(a) the relevant Specific Regulation;

(b) the task(s) delegated to the Delegated Authority, including where applicable, the projects for which the Delegated Authority may act as executing body as referred to in Article 8;

(c) the obligation of the Delegated Authority to verify the beneficiaries' compliance with Union and national rules;

(d) the obligation of the Delegated Authority to put in place and to maintain an organisation structure and a management and control system suited to its duties;

(e) the information and the supporting documents the Delegated Authority is to submit to the Responsible Authority and the time limits it is to observe; and

(f) the Responsible Authority's mechanism for supervising the Delegated Authority.

Article 6

Outsourcing tasks

The Responsible Authority may outsource some of its tasks. It shall, however, remains responsible for them.

The Responsible Authority shall regularly review the outsourced tasks to confirm that the work performed is satisfactory and in compliance with Union and national rules.

SECTION III

Obligations of the Responsible Authority as regards public intervention

Article 7

The role of the Responsible Authority as awarding body

Restricted calls for proposals are open only to selected organisations because of the specific nature of the project or the technical or administrative competence of the bodies invited to submit proposals.

The grounds justifying the use of a restricted call for proposals shall be set out in the call for proposals.

The grounds justifying the use of a direct award shall be set out in the award decision.

The grounds justifying that the grant was awarded without a call for proposals shall be set out in the award decision.

Article 8

Conditions under which the Responsible Authority acts as executing body

If the Responsible Authority is likely to act as executing body on a regular basis:

(a) the Responsible Authority and the Audit Authority shall not be part of the same body, unless the Audit Authority reports to an outside body and its audit independence is guaranteed; and

(b) the tasks of the Responsible Authority as set out in Article 4 shall not be affected.

Article 9

Selection and award procedure

The calls for proposals referred to in Article 7(1) and (2) shall specify at least the following:

(a) objectives;

(b) selection and award criteria;

(c) arrangements for Union and, if applicable, national financing, including, where applicable, the possibility to apply a higher co-financing rate in accordance with Article 16(5) of Regulation (EU) No 514/2014;

(d) arrangements and final date for submission of the proposals;

(e) eligibility rules for the expenditure;

(f) project duration; and

(g) financial and other information to be kept and reported.

Article 10

Documents formalising grants when the Responsible Authority acts as awarding body

In cases where the Responsible Authority acts as awarding body, it shall lay down project management procedures which require, at least to:

(a) sign grant agreements with beneficiaries and

(b) monitor the grant agreements, including any amendments thereto, by administrative means such as exchanges of correspondence or written reports.

The grant agreement shall include or indicate the following:

(a) maximum amount of Union contribution;

(b) maximum percentage of Union contribution in accordance with the relevant Specific Regulation;

(c) detailed description and timetable of the project;

(d) if applicable, any major task that the beneficiary intends to subcontract to third parties, together with the related costs;

(e) agreed forward budget and financing plan for the project, including expenditure and income, in accordance with the eligibility rules established;

(f) method for calculating the amount of Union contribution upon the project's closure;

(g) timetable and implementing provisions of the agreement, including provisions on reporting obligations, amendments to the agreement and termination of the agreement;

(h) operational objectives of the project, including quantified objectives and the indicators to be reported on;

(i) provision requiring the beneficiary to collect, in a timely manner, the requisite data for the common indicators set out in the Specific Regulation, and any programme-specific indicators, and to report these data at least once a year;

(j) definition of the eligible costs, including, where applicable, a description of the methodology for determining scale-of-unit costs, lump sums and flat-rate financing;

(k) bookkeeping requirements and conditions relating to payment of the grant;

(l) conditions relating to the audit trail;

(m) provisions relating to data protection and

(n) provisions relating to publicity.

Article 11

Documents formalising grants when the Responsible Authority acts as executing body

In cases where the Responsible Authority acts as executing body, it shall lay down project management procedures which require at least to:

(a) formalise an administrative decision to co-finance projects and

(b) monitor the administrative decision and any amendments thereto by administrative means such as exchanges of correspondence or written reports.

The administrative decision shall include or indicate the following:

(a) maximum amount of Union contribution;

(b) maximum percentage of Union contribution in accordance with the relevant Specific Regulation;

(c) detailed description and timetable of the project;

(d) if applicable, any major task that the beneficiary intends to subcontract to third parties, together with the related costs;

(e) agreed forward budget and financing plan for the project, including expenditure and income, in accordance with the eligibility rules established;

(f) method for calculating the amount of Union contribution upon the project's closure;

(g) operational objectives of the project, including quantified objectives and the indicators to be used;

(h) provision requiring the Responsible Authority to collect, and report at least once a year, the requisite data for the common indicators set out in the Specific Regulation, and any programme-specific indicators, and to report these data at least once a year;

(i) definition of the eligible costs, including, where applicable, a description of methodology for determining scale-of-unit costs, lump sums and flat-rate financing;

(j) bookkeeping requirements and conditions relating to payment of the grant;

(k) conditions relating to the audit trail;

(l) provisions relating to data protection and

(m) provisions relating to publicity.

CHAPTER III

STATUS OF THE AUDIT AUTHORITY AND OBLIGATIONS WITH REGARDS TO AUDITS

Article 12

Status of the Audit Authority

Article 13

Outsourcing audit work

The Audit Authority may outsource part of its audit work to another audit body, provided that this body is functionally independent from the Responsible Authority. The Audit Authority shall remain responsible for the work it outsources.

Outsourced audits shall be carried out in accordance with internationally accepted audit standards and under the close monitoring and supervision of the Audit Authority.

Article 14

Audits

Based on these system audits, the Audit Authority shall verify the compliance with the key requirements set out in Annex to Commission Implementing Regulation (EU) 2015/378 (³) and whether the Responsible Authority continues to comply with the designation criteria set out in Annex I to the present Regulation.

The financial data shall comprise all types of payments made by the Responsible Authority during a financial year as defined in Article 38 of Regulation (EU) No 514/2014, including advance payments, interim payments, final payments and payments relating to technical assistance and operating support. The financial data shall also comprise, for the Asylum, Migration and Integration Fund, the number of persons relocated, resettled, transferred or legally admitted.

Audits of expenditure shall:

— be carried out on the basis of supporting documents constituting the audit trail and shall verify the legality and regularity of the financial data in the draft accounts,

— where applicable, include on-the-spot verification of the expenditure incurred by the beneficiaries, including mutatis mutandis for payments made under technical assistance and operating support,

— where applicable, include verification of compliance with the requirements set for persons relocated in accordance with Council Decisions (EU) 2015/1523 and 2015/1601, resettled in accordance with Article 17 of Regulation (EU) No 516/2014, transferred in accordance with Article 18 of Regulation (EU) No 516/2014 and legally admitted in accordance with Council Decisions (EU) 2015/1601, for which a lump sum is claimed,

— verify the accuracy and completeness of the payments to beneficiaries and recorded by the Responsible Authority in its accounting system and the reconciliation of the audit trail at all levels.

When the Audit Authority detects an error rate in the draft accounts that is material or problems detected appear to be systemic in nature and therefore entail a risk for other payments funded by the national programme, the Audit Authority shall ensure further examination, including, where necessary, additional audits to establish the scale of the problems. The maximum materiality level shall be 2 % of the Union contribution of the financial data in the ‘draft accounts’.

The Audit Authority shall recommend the necessary corrective actions to the Responsible Authority, including where applicable, flat rate financial corrections in line with Commission Implementing Regulation (EU) 2015/378. The Audit Authority shall report the results of the audits of expenditure and the associated recommendations and corrective measures in the annual control report referred to in Article 14(8).

The Audit Authority shall document, in the annual control report referred to in Article 14(8), its professional judgment used to establish the statistical or non-statistical sampling method and the applicable sampling parameters. The Audit Authority shall keep records of the sampling methodology applied covering the planning, selection, testing and evaluation stages, in order to demonstrate that the selected sampling method is suitable.

When statistical sampling methods cannot be used, a non-statistical sampling method may be used on the professional judgment of the Audit Authority. Any non-statistical sampling method shall provide for a random selection of the sample items and cover a minimum of 10 % of the value of the financial data included in the ‘draft accounts’.

The sampling method chosen and the sample size shall allow the Audit Authority to draw conclusions on the total population from which the sample was drawn.

For this purpose and if applicable, the Audit Authority may stratify the financial data by dividing into strata, each of which is a group of sampling units which have similar characteristics.

When the audit sample includes interim payments and/or final payments clearing advance payments declared in the accounts of previous financial years, these advance payments shall fall within the scope of the audit of expenditure.