Auditing operation No. 04/20
Financial resources provided in the framework of the EU supportive programmes ISPA and PHARE for improving the environment measures
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. 04/20. The auditing operation was managed and audit conclusion drawn up by Mr. Zdeněk Brandt, the Member of the SAO.
The aim of audit was to examine the drawing of EU funds as well as the Czech Republic funds for selected projects during the period of the Czech Republic preparation for the European integration.
The audit was focused on financial resources provided in the framework of the EU supportive programmes ISPA and PHARE for improving the environment measures.
The audited period covered the years 1999 to 2003 as well as previous periods in certain cases of relevant connections.
The audited bodies were the Ministry of Finance (hereinafter referred to as “MF”), the Ministry of the Environment (hereinafter referred to as “ME”), State Environmental Fund of the Czech Republic, Centre for Regional Development of the Czech Republic and selected beneficiaries.
The total amount of the audited funds was € 57 million (about CZK 1,700 million) and it comprised ISPA projects in the environmental sector including anti-flood projects and related co-financing, subsidies from the State Environmental Fund, selected CBC PHARE projects and the National Fund PHARE projects including their co-financing.
The auditors did not ascertain any cases of misusing of the EC assistance resources in conflict with intended purpose.
The auditors ascertained that the national co-financing of the environmental ISPA projects was not prepared in an adequate advance, thus the financial memoranda ratifications were repeatedly delayed. The applications for the first part of advance payment (about 20%) were postponed for the same reason.
The co-financing and implementation agreements of the ISPA projects were concluded in additional proceedings with delay of several months.
Further unpreparedness for the ISPA projects transfer under the Cohesion Fund after the Czech Republic joining the EU, e.g. some contracting relationships were not updated. Financing from both the EU funds and the national co-financing resources were delayed. Final beneficiaries had to get over this delay in the ISPA projects financing by measures in the framework of their own budgets and thereby they were often brought into difficult situation.
The MF and the ME published certain documents, guidelines and manuals laying down the Cohesion Fund rules only several months after the Czech Republic joining the EU. The methodology for dealing with the State Budget funds was prepared only during November and December 2004, when financial situation of the final recipients became very difficult. The agreement on the preparation and the implementation of the projects financed from the Cohesion Fund EU between the Ministry of the Environment and the State Environmental Fund was also ratified after the Czech Republic accession to the EU.
The authorising official of the sector was not a head of implementing agencies, thus he was not satisfactorily acquainted with the state of the projects.