Auditing operation No. 04/08
The State Budget and the European Union funds earmarked for the SAPARD programme
The auditing operation was included in the Annual Audit Plan of the Supreme Audit Office (hereinafter referred to as “SAO”) for the year 2004 under No. 04/08. The auditing operation was managed and audit conclusion drawn up by Mr. Jiří Kalivoda, the Member of the SAO.
The aim of the audit was to examine the management of the funds earmarked for the implementation of the SAPARD programme in the agriculture and rural development.
The audited period covered the period of the preparation and the implementation of the SAPARD programme, i.e. the years 2001 to 2003 and the applicable part of the year 2004 as well as previous periods in case of relevant connections.
The audited bodies were the Ministry of Finance (hereinafter referred to as “MF”), the Ministry for Regional Development (hereinafter referred to as “MRD”), the Ministry of Agriculture, The State Agricultural Intervention Fund (SAIF), the SAIF head office and its regional divisions in Praha, České Budějovice, Ústí nad Labem, Hradec Králové and Olomouc; as well as thirty-two selected beneficiaries.
The audit detected that the delayed start of SAPARD had no consequences in the form of a reduction in the amount of funds the Czech Republic received from the European Union. Under annual financial agreements the Czech Republic will obtain more finances than the original SAPARD financial plan specified.
Even though the detected shortcomings were not too serious, the following need to be mentioned:
- The MRD used CZK 262,500 for a different purpose than defined by SAPARD;
- Lengthy administrative procedures for the annual financial agreements caused that at the start of 2004 there was not enough EC money in the “National Fund – SAPARD EURO 2000” account to cover the SAPARD Agency’s commitments in respect of beneficiaries;
- Lengthy administrative procedures for changes to the Operating Manual (lasting up to several months) and the need to make faster system changes in the administration of projects led to the new procedures being used before the respective version of the Manual formally entered into effect;
- Audit of the Agency’s implementation function detected a material-error rate of 1.5 % in a sample of 160 projects (approx. 16 % of financed projects). The SAIF remedied eliminable errors during the audit. Some of the administration-phase errors cannot recur, as the contracting process was completed at the end of 2003;
- There was detected at some projects that the control system of the SAPARD Agency did not note the shortcomings in the project administration and some shortcomings in relation to the applications for the payment of the spent acceptable expenses (approx. 0.2 % of the total 11 683 audited duties);
- 10 of the 32 audited beneficiaries were found to have breached one or more of the provisions of the SAPARD assistance provision agreement; in one of these the specified objective set by the agreement was only partly fulfilled;
- In some cases purchased items were not labelled with a sign declaring the involvement of SAPARD funds.
The SAIF has system possibilities for resolving the detected shortcomings with beneficiaries up to three years after termination of the projects, i.e. at least until 2006.