4.3 Control system
This chapter explains the control system used in the Northern Periphery and Arctic Programme 2021-2027 to verify expenditure and project implementation.
There are two levels in the control system for the Northern Periphery and Artic Programme 2021-2027: Management verifications (Control) and Audits.
The management verifications of main projects and small-scale projects differ as outlined in sections 4.4 and 4.5.
4.3.1. Management verifications
Expenditure declared by each beneficiary in payment claims will undergo checks by controllers, identified by their respective countries. Each partner should refer to the control system of the partner country where it is located, regardless of the Lead Partner’s location. The Lead Partner is responsible for setting up arrangements for management verifications regarding costs for partners outside the programme area.
To ensure coherence among controllers from all countries participating in the programme, all controllers will work with a set of templates and checklists, provided by the MA. All verifications performed by controllers, in Jems, will be documented.
In Sweden, Finland, Ireland, and Iceland the control systems are centralised, whereas decentralised systems operate in Norway, Greenland, and the Faroe Islands. Project partners should consult the NPA website to find information on national controllers.
In decentralised countries, it is the national controllers who approve a controller for each partner and introduces them to the task. Partners may incur costs for the control of the project expenditure. In such cases, the costs for the control will normally be charged to the project, and will be considered an eligible project cost.
Administrative verifications
The controller’s task is to check that project expenditure is eligible according to the NPA Eligibility Rules, European regulations and national legislation. These controls are in most cases performed by administrative verifications, i.e. desk checks of partner reports. Controllers will require the project partner to provide certain documentation in order to enable the control. Each controller will have different requirements, but in many cases a project ledger supported by invoices, evidence of public and private contributions, and other adequate documentation will be required. It is up to each partner country to establish procedures for holding documentation according to the EC regulation and applicable national legislation. An exception is if the partner applies one of the flat rate options, where the Controller in most cases will not require supporting documents.
On-the-spot verifications
The verification of operations in each NPA partner country will include both administrative verifications and on-the-spot verifications, where relevant. The level of risk identified during the administrative verifications influences the extent and detail of on-the-spot verifications.
It is up to the controller to decide the format of the on-the-spot check. Different distance-spanning techniques could be used, if the quality of checks can be considered to be the same as when checks take place at the premises of the project partner.
Besides checking costs and documentation, the on-the-spot check will ensure that expenditure declared is real and that outputs have been delivered. Project partners shall make accessible all necessary records, documents, and metadata, irrespective of the medium in which they are stored.
On-the-spot checks should preferably be undertaken when the project is well underway.
Risk based verifications
Both administrative and on-the-spot checks shall be risk based and proportionate to the risks identified ex ante and in writing. The first partner report shall be validated based on 100% verification of costs, in order for the controller to be able to establish a risk profile. The following administrative verifications shall be based on the principle of a more extensive verification of items that are considered risky and a random sampling for other non risky items.
Management verifications shall include administrative verifications in respect of all payment claims made by beneficiaries, but not all expenditure items within a payment claim need to be verified.
The scope and coverage of management verifications should be based on a risk assessment, taking into account factors such as:
The type, size and the content of the project
The beneficiary
The level of risk identified by previous management verifications and audits
The risk assessment made by the Joint Secretariat during project approval.
A 100% verification by controllers is possible, provided that it is properly justified. Overall responsibility for applying the risk-based methodology is with partner countries, but minimum requirements have been presented by the MA.
4.3.2. Audits
Besides checks made by the identified controllers and the programme administration, there might also be additional checks organised by the partner country and performed on the project by an auditor, on the basis of an appropriate sample to verify the expenditure declared.
Where a project partner is chosen in the sample, the audit authority, assisted by the national representatives of the Group of Auditors from the participating countries, shall carry out audits in order to provide independent assurance to the European Commission that management and control systems function effectively. These audits may be carried out both with administrative checks and on-the-spot checks to verify the costs.
4.3.3. Irregularities
If irregularities are detected, and the funds involved in an irregularity have already been paid out to a project partner, the Managing Authority will have to initiate a recovery procedure.
There are two possibilities:
· Deducting the amount involved from the next payment to the project
· Recovery of the amount involved from the Lead Partner via invoice
When the amount is recovered from the Lead Partner, the Lead Partner is in turn expected to recover the funds from the partner committing the irregularity in line with the partnership agreement.
4.3.4. Anti-fraud measures
Irregularities include fraud, with the distinction that when it is a case of fraud, there is the element of intentional deceit.
The programme’s objective regarding anti-fraud is to promote a culture which deters fraudulent activity. The programme administration will develop procedures to prevent and detect fraud and to deal with any cases timely and appropriately, referring them to relevant investigation bodies. The responsibility for an anti-fraud culture is the joint work of all those involved in projects. All potential applicants and project partners should be fully committed to acting in the interest of the public good. Although project work always needs to be motivated by some level of own interest, the own gain can never be a driving force in an Interreg project.
4.3.5. Document retention
Project documents and project accounts with supporting documentation should be kept available for audit purposes for a period of five years following the end of the calendar year when the final payment was made, or longer if it is stipulated in national rules applicable to the project partner.
The documents shall be kept either in the form of the originals, or certified true copies of the originals, or on commonly accepted data carriers including electronic versions of original documents or documents existing in electronic version only.
Project partners shall document where original documents are located.