Regional Operational Programme “North-East”: Ineligible payments in the amount of CZK 27.4 million
Press Release – September 10, 2012
The Supreme Audit Office (SAO) performed an audit aimed at Regional Operational Programme “North-East” and its implementation within the period 2007–2011. Auditors scrutinized 13 selected projects with the investments totalling to CZK 373.4 million. The audit revealed that out of the payments, CZK 27.4 million had been ineligible. Regional Council of the cohesion region “North-East”, which had to assess the applications and approved the projects, failed to reveal the insufficiencies mentioned in the SAO audit report. Even minor non-compliance with any of the stipulated conditions should result in penalty and repayment of the support. In theory, all the provided support should be returned in case of ineligible expenses, but the Regional Council may decide on remission of the penalty.
The SAO audit aimed at beneficiaries as well as the managing authority – the Regional Council – and scrutinized the application, implementation, and accounting processes. The SAO audit report concluded that Regional Council had failed to supervise the projects sufficiently. For example, technical quality specifications made 40% proportion of the project’ assessment, but within the period 2007–2009 only one expert was called to perform the assessments. On the basis of the expert’s opinion, the Regional Council approved 100 projects with the allocated support totalling to CZK 3,000 million. Thus, the Regional Council violated the “four eyes” principle, which requires two independent experts for each assessment.
A committee of six experts was established to assess whether the projects are necessary and relevant, which made another 40% proportion of the project appraisal. Members of the committee gave points to individual projects without explanations and it was not possible to review the appraisal processes. The SAO auditors supported this conclusion by an example of the reconstruction project related to the Franciscan monastery in Hostinné, which was not approved at first, while in the next stage the project was approved in spite of no changes to the original plans.
At beneficiaries, the SAO also revealed insufficiencies, which mostly involved violations of the budgetary discipline. For example, the municipality of Lázně Bohdaneč utilized CZK 4.4 million for ineligible expenses thus violating the public procurement conditions previously stipulated in the support provision agreement. Similar situation happened in the municipality of Křižany, where a project aimed at a playground construction was partly provided from a supplier without a competition. But the support provision agreement clearly defines that three prospective suppliers should be addressed and invited to tender.
For further details about the auditing operation No. 11/18 (in Czech only), see the following link: http://www.nku.cz/assets/media/informace-11-18.pdf (pdf 192 kB).
Communication Department
Supreme Audit Office