The SAO audited funds from the European Social Fund earmarked for projects carried out in Prague
Press Release – June 18, 2012
The audit aimed at projects, which were carried out in the Capital City of Prague within the programming period 2004–2006. The audit scrutinized provision, drawing, and utilisation of funds earmarked for realization of the Operational Programme Prague – Adaptability. The audit also scrutinized the Programme’s implementation system and reviewed how the experience with the Goal 3 Single Programming Document for Prague Region was utilized in the Programme’s setting and management. (The Single Programming Document served as a reference document; on the basis of the Document, the support for human resource development projects was provided from European Social Fund and state budget funds in the programing period 2004–2006.)
In view of the experience with the Goal 3 Single Programming Document, the found shortcomings of the Programme are alarming, especially in the period 2008–2010, as well as the lengthy process of dealing with the problems. The audit conclusion is pointing out that the Programme development evaluation paper will be finished as late as 2012, and therefore the revealed shortcomings cannot be remedied in due time, that is by the end of 2013 (or by the end of 2015 respectively).
The monitoring indicators should have been set uniformly and unambiguously as they influenced the outcome of the Programme and effectiveness of expended funds in the programing period 2007–2013. The audit revealed that the monitoring indicators chosen for the Programme priority axes had not been set in ways, which would make it possible to assess the progress achieved in relation to the pre-set goals.
The set goals of the Programme do not make it possible for the projects to include the demand of individual activities’ sustainability. Properly set and defined monitoring indicators could offer the EU as well as the Czech society a credible assessment of the utilisation of funds amounting over CZK 3.2 milliard, out of which over CZK 2.7 milliard were utilized from the EU funds (by the end of 2010). The SAO warns of the fact that it would not be possible to perform the assessment of utilized funds if the monitoring indicators are defined and set at the same time, which may cause misrepresentation of the outcome of projects supported by the European Social Fund.
The audit revealed errors in how the beneficiaries had selected suppliers, realized the projects, and met the projects’ goals. The same errors were found at the audited projects’ realizers. The tax administrators in charge were informed of these cases.
The SAO recommends changes to the system, in which the Prague City Hall as the management authority provides funds to individual departments of the Capital City of Prague, and at the same time performs the functioning of the auditing authority. The risk of insufficient independence of the auditing subjects and poor supervision has already been found by DG Regio. In case the funds are transferred from the projects’ realizers (i. e. beneficiaries) to third persons (i. e. partners), it is essential to ensure appropriate monitoring and controlling mechanisms.
The suggested corrective measures based on the audit findings – if adopted – could significantly enhance the quality of support the European Social Fund implemented in the Czech Republic, make it easier for the project to acquire certifications, and improve the public’s understanding of how the Programme’s funds are utilised in the Czech Republic.
The auditing operation was performed from June 2011 to January 2012. The audited period extended from 2004 to 2010; where relevant, the preceding period and the period until the completion of the auditing operation were also scrutinized. Among audited bodies were the Ministry of Regional Development, the Ministry of Labour, the Capital City of Prague, and 19 selected beneficiaries. The auditing operation was included into 2011 Audit Plan of the SAO under No. 11/35. Petr Neuvirt, Member of the SAO Board, managed the operation and prepared the audit conclusion as well.
Communication Department
Supreme Audit Office