Procedures by which Resources in the State Budget are Intended for the Implementation of Projects Co-financed by European Union Structural Funds and the Cohesion Fund, as well as Procedures for Making of Payments and Preparation of Statement of Expenditure

Issued pursuant to Section 18, Clause 6 of the
Law On Management of European Union
Structural Funds and the Cohesion Fund

I. General Provisions

1. This Regulation prescribes the procedures by which resources in the State budget are intended for the implementation of projects (hereinafter - European Union fund project) co-financed by European Union Structural Funds and the Cohesion Fund (hereinafter - European Union fund), as well as the procedures by which payments are made and a statement of expenditure is prepared.

2. Resources in the State budget for a European Union fund project (including grant from the State budget to the local government and planning region) shall be planned as a grant from general revenue according to the approved sum total of the European Union financing and the State budget financing (except the case referred to in Paragraph 5 of this Regulation).

3. Taking into account the availability of financial resources, the Cabinet shall decide on the maximum available amount of the State budget financing or on the procedures for the implementation of obligations of a civil legal contract regarding the implementation of a European Union fund project or an agreement regarding the implementation of a European Union fund project (hereinafter - contract), approving the regulatory enactment regarding the procedures for the implementation of the activity.

4. If financial resources are available to the Responsible Institution or the Co-operation Institution for the implementation of the contract obligations, the Responsible Institution or the Co-operation Institution shall, in accordance with the regulatory enactments regarding preparation of planning documents of the European Union funds and introduction of such funds, enter into a contract with the final beneficiary of the European Union fund (hereinafter - final beneficiary) and may provide for an advance payment to the final beneficiary.

5. If financial resources are not available to the Responsible Institution or the Co-operation Institution (in the amount of the European Union financing) for the implementation of the contract obligations and the local government or the final beneficiary, other than a State budget authority, planning region or local government (hereinafter - another final beneficiary), may fulfil the contract obligations, using their own resources (including from their own budget revenue, balances of budget resources or loan), the Responsible Institution or the Co-operation Institution shall enter into a contract with such final beneficiary and plan revenue from foreign financial assistance in a separate State budget sub-programme, as well as appropriate expenditure in the budget year, in which repayment is intended to the final beneficiary. If the State budget financing is intended in the European Union fund project, it shall be planned in accordance with the procedures specified in Chapter II of this Regulation. The Responsible Institution shall submit a request regarding changes in the budget of the Responsible Institution, intending revenue from foreign financial assistance in a separate programme, as well as appropriate expenditure, to the Ministry of Finance after entering into a contract with the final beneficiary. The Responsible Institution or the Co-operation Institution may intend advance payment to the final beneficiary, if financial resources are available thereto.

6. If the financial resources are not available for the Responsible Institution or the Co-operation Institution for fulfilment of the contract obligations and the local government or another final beneficiary cannot fulfil the contract obligations on their own resources (including from their own budget revenue, balances of the budget resources or a loan), the Responsible Institution or the Co-operation Institution shall enter into a contract with such final beneficiary after the financial resources are available thereto for fulfilment of the contract obligations, and an advance payment may be intended for the final beneficiary.

II. Planning of Resources from the State Budget

7. Resources from the State budget for a European Union fund project shall be planned and a request for resources from the State budget shall be prepared in accordance with the regulatory enactments regarding basic principles for the development and submission of requests for resources from the State budget.

8. Resources for European Union fund projects, regarding which a decision on approval thereof has not been taken yet and to which appropriations in the budget of the ministry or a central State institution (hereinafter - ministry) have not been provided for, or for termination of the approved European Union fund projects if an appropriation for them has not been provided for in the budgets of ministries, shall be planned in the Law On the State Budget for the current year in the budget programme 80.00.00 "Undivided Financing for Implementation of Projects and Measures Co-financed by Instruments of the European Union Policy and Other Foreign Financial Assistance" of department No. 74 "Financing to be Redivided in the Implementation Process of the Annual State Budget".

III. Preparation of Requests for Resources from the State Budget

9. A ministry shall be responsible for the submission of requests for resources from the State budget to the Ministry of Finance for final beneficiaries, which are in institutional subordination of the relevant authority, and the Responsible Institution or the Co-operation Institution. The ministry may request information for preparation of requests for resources from the State budget from the Responsible Institution or the Co-operation Institution, or the final beneficiary.

10. The ministry shall draw up a request for resources in the State budget in compliance with the approved European Union fund projects and contracts entered into.

11. The Ministry of Finance shall evaluate a request for resources from the State budget submitted by a ministry in compliance with the regulatory enactments regarding the basic principles for the development and submission of requests for resources from the State budget, taking into account the data regarding the approved European Union fund project which the Responsible Institution or the Co-operation Institution has entered in the information system for the management of the European Union Structural Funds and Cohesion Fund. Requests for resources from the State budget for the financing of the implementation of projects shall be examined in accordance with the regulatory enactments regarding the budget and financial management.

IV. Ensuring of Financial Flow

12. The Paying Authority shall ensure the accounting of the resources of the European Union funds received from the European Commission and used for each European Union fund.

13. The Responsible Institution or the Co-operation Institution, which administers an activity or sub-activity of the relevant European Union fund, shall:

13.1. submit to the Paying Authority a short-term forecast of payment orders to be submitted within the framework of the relevant European Union fund and of the relevant operational programme (Annex 1) according to the deadline for the submission of a payment request of the final beneficiary (hereinafter - payment request) and a payment order, regarding which the Responsible Institution or the Co-operation Institution and the Paying Authority reaches a written agreement in accordance with the procedures specified in the State Administration Structure Law. The short-term forecast of payment orders shall be sent to an electronic mail address PFPD@kase.gov.lv. The information regarding payment orders in the relevant payment currency, which the relevant Responsible Institution or the Co-operation Institution plans to submit to the Paying Authority in the two subsequent dates for the submission of payments orders, shall be included in the short-term forecast of payment orders;

13.2. by the twenty-fifth date of every month, submit to the Paying Authority a forecast of expenditure of the relevant European Union fund and of the relevant operational programme for the subsequent 12 months (Annex 2). The forecast of expenditure of the European Union fund and of the operational programme shall be sent to an electronic mail address PFPD@kase.gov.lv. Information regarding expenditure in the relevant payment currency which the relevant Responsible Institution or the Co-operation Institution plans to perform in the subsequent 12 months, shall be included in the forecast of expenditure of the European Union fund and of the operational programme.

14. The Responsible Institution or the Co-operation Institution, in making payments to final beneficiaries, shall control:

14.1. the sum specified in an operational programme and a supplement to an operational programme of activities or sub-activities of the European Union fund to be administrated, not allowing to exceed the sum of the activity or sub-activity; and

14.2. the amount of overcommitment financing if any specified for the Responsible Institution or the Co-operation Institution.

V. Types of Payments and Submission of a Payment Request

15. A ministry, in accordance with the regulatory enactments regarding granting of allocation and implementation thereof, shall approve a financing plan in compliance with the approved amount of the European Union financing and the State budget financing.

16. The procedures by which payments are made to the final beneficiary within the framework of the European Union fund and the special conditions for checks of payment documents shall be determined by the Responsible Institution or the Co-operation Institution in a contract with the final beneficiary, taking into account the following possible types of payments:

16.1. an advance payment to the final beneficiary or an advance payment to the final beneficiary, which implements a European Union fund project which shall be qualified as support of commercial activity in accordance with Article 107(1) of the Treaty on the Functioning of the European Union or de minimis, if the advance payment has been intended in the regulatory enactment regarding the procedures for implementation of the activity and is paid in compliance with Article 78(2) of the Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 (hereinafter - Council Regulation (EC) No 1083/2006);

16.2. an interim payment, which is made on the basis of expenditure performed within the framework of the project, including advance payments made in accordance with the service contract, supply of goods contract or works contract; and

16.3. a final payment after implementation of the project.

[13 September 2011]

16.¹ If the final beneficiary is implementing a European Union fund project within the scope of the operational programme "Human Resources and Employment" or the operational programme "Infrastructure and Services" and it qualifies as commercial activity support in accordance with Article 107(1) of the Treaty on the Functioning of the European Union or de minimis support, the advance payment may be paid to the final beneficiary by the same procedure as to the final beneficiary, which is implementing the European Union fund project, which is not qualified as commercial activity support.

[13 September 2011]

17. If a fixed rate of indirect expenditure is applied in a European Union fund project, the final beneficiary, in preparing a payment request, shall take into account the requirements specified in the regulatory enactments regarding preparation of planning documents of the European Union funds and implementation of such funds and in the contract.

18. Repayment of expenditure performed by the final beneficiary from the financing of the European Union fund and, if provided for in the approved European Union fund project, from the State budget financing shall be made on the basis of a payment order prepared by the Responsible Institution or the Co-operation Institution and an approved payment request (Annex 3). Prior to approval of the payment request, the Responsible Institution or the Co-operation Institution shall ascertain that the current progress report on the European Union fund project has been received and examined within the deadlines and according to the procedures specified in the contract.

19. A payment request shall be prepared and expenditure of the final beneficiary shall be repaid in lats, if it has not been specified in the contract that the payment request shall be prepared and expenditure of the final beneficiary shall be repaid in the single currency of the European Union.

20. A payment request may be prepared and expenditure of the final beneficiary may be repaid in the single currency of the European Union, taking into account the following conditions:

20.1. it has been provided for in the regulatory enactment regarding implementation of the relevant activity;

20.2. the budget of the European Union fund project is in the single currency of the European Union;

20.3. the account of the European Union fund project is in the single currency of the European Union; and

20.4. expenditure within the framework of the European Union fund project arise in the single currency of the European Union.

21. The Responsible Institution or the Co-operation Institution shall submit to the Paying Authority signature samples of the persons who are entitled to approve a disbursement of an advance payment and a payment request.

VI. Procedures for Making of Payments and Use of Advance Payment

22. If the final beneficiary is a State budget institution:

22.1. in implementing a European Union fund project, it shall make payments from resources, which are intended for the implementation of the European Union fund project in the budget of the ministry, to which the relevant State budget institution is institutionally subordinated. The State budget institution shall make payments within the framework of the European Union fund project from the received State budget financing, indicating the classification code of the budget expenditure according to economic categories;

22.2. a payment request and copies of corroborative documents of expenditure included therein shall be submitted to the Responsible Institution or the Co-operation Institution within the deadlines and according to the procedures specified in the contract;

22.3. the Responsible Institution or the Co-operation Institution shall examine the documents referred to in Sub-paragraph 22.2 of this Regulation (the Responsible Institution or the Co-operation Institution may randomly verify the copies of corroborative documents of expenditure included in the payment request in accordance with the guidelines approved by the Managing Authority) and approve the sum of eligible expenditure included in the payment request, which conforms to the requirements specified in the contract, as well as prepare and approve a payment order regarding transfer of the approved European Union financing into the State budget revenues, indicating the classification code of the budget expenditure according to economic categories;

22.4. and it does not submit a payment request or a report on the progress of a European Union fund project within the time period specified in the contract, the Responsible Institution or the Co-operation Institution may take a decision regarding suspension of the allocation for implementation of the project provided for in the financing plan in accordance with the regulatory enactments regarding suspension, renewal or revocation of allocation;

22.5. repayment into the State budget revenues shall be performed in accordance with Paragraph 30 of this Regulation.

23. If the final beneficiary is a planning region:

23.1. the ministry, to which the planning region is institutionally subordinated, shall transfer the financing from the State budget intended for implementation of a European Union fund project to the account of the final beneficiary opened in the Treasury. The final beneficiary shall make payments within the framework of the European Union fund project from the State budget financing received and, if it is provided for in the European Union fund project, from other financing intended for this purpose;

23.2. a payment request and copies of corroborative documents of expenditure included therein shall be submitted to the Responsible Institution or the Co-operation Institution within the deadlines and according to the procedures specified in the contract;

23.3. the Responsible Institution or the Co-operation Institution shall examine the documents referred to in Sub-paragraph 23.2 of this Regulation (the Responsible Institution or the Co-operation Institution may randomly verify the copies of corroborative documents of expenditure included in the payment request in accordance with the guidelines approved by the Managing Authority) and approve the sum of eligible expenditure included in the payment request, which conforms to the requirements specified in the contract, as well as prepare and approve a payment order regarding transfer of the approved European Union financing into the State budget revenues, indicating the classification code of the budget expenditure according to economic categories;

23.4. repayment into the State budget revenues shall be performed in accordance with Paragraph 30 of this Regulation.

24. If a contract is entered into with a local government or another final beneficiary in accordance with Paragraph 5 of this Regulation:

24.1. the Responsible Institution or the Co-operation Institution may transfer the advance payment to the local government or another final beneficiary in accordance with the time periods and procedures specified in the contract. The local government shall open an account at the Treasury, but another final beneficiary - at the Treasury or a transaction account at a credit institution (natural person - transaction account at a credit institution);

24.2. the local government or another final beneficiary, in implementing a European Union fund project, shall make payments from the advance payment received or its own resources;

24.3. the local government or another final beneficiary shall submit a payment request and copies of corroborative documents of expenditure included therein to the Responsible Institution or the Co-operation Institution within the deadlines and according to the procedures specified in the contract;

24.4. the Responsible Institution or the Co-operation Institution shall examine the documents referred to in Sub-paragraph 24.3 of this Regulation (the Responsible Institution or the Co-operation Institution may randomly verify the copies of corroborative documents of expenditure included in the payment request in accordance with the guidelines approved by the Managing Authority) and approve the sum of eligible expenditure included in the payment request, which conforms to the requirements specified in the contract, prepare and approve a payment order regarding repayment of eligible expenditure to the final beneficiary pursuant to the rate of the European Union financing and, if provided for in the project, of the State budget financing specified in the project application, indicating the classification code of the budget expenditure according to economic categories, or a decision regarding deletion of advance payment;

24.5. repayment to the local government or another final beneficiary shall be performed according to the contract in conformity with Paragraph 31 of this Regulation. If the local government uses a loan for implementation of the project, it shall, within five working days after receipt of the repayment, repay a loan to the grantor in the amount of the repayment received, not exceeding the amount of the loan for the co-financing part of the European Union;

24.6. the Responsible Institution or the Co-operation Institution, in transferring advance or interim payments, shall observe the condition that the sum total thereof may not exceed 90% of the European Union financing and, if provided for in the project, of the State budget financing granted to the European Union fund project.

[14 February 2012]

25. If a contract is entered into with a local government or another final beneficiary in compliance with Paragraph 4 or 6 of this Regulation:

25.1. the Responsible Institution or the Co-operation Institution may transfer the advance payment to the local government or another final beneficiary in accordance with the time periods and procedures specified in the contract. The local government shall open an account at the Treasury, but another final beneficiary - at the Treasury or a transaction account at a credit institution (natural person - transaction account at a credit institution);

25.2. the local government or another final beneficiary, in implementing a European Union fund project, shall make payments from the advance payment received or its own resources;

25.3. the local government or another final beneficiary shall submit a payment request and copies of corroborative documents of expenditure included therein to the Responsible Institution or the Co-operation Institution within the deadlines and according to the procedures specified in the contract;

25.4. the Responsible Institution or the Co-operation Institution shall examine the documents referred to in Sub-paragraph 25.3 of this Regulation (the Responsible Institution or the Co-operation Institution may randomly verify the copies of corroborative documents of expenditure included in the payment request in accordance with the guidelines approved by the Managing Authority) and approve the sum of eligible expenditure included in the payment request, which conforms to the requirements specified in the contract, prepare and approve a payment order regarding repayment of eligible expenditure to the final beneficiary pursuant to the rate of the European Union financing and, if provided for in the project, of the State budget financing specified in the project application, indicating the classification code of the budget expenditure according to economic categories, or a decision regarding deletion of advance payment;

25.5. the Responsible Institution or the Co-operation Institution shall perform repayment to the local government or another final beneficiary according to the contract in conformity with Paragraph 30 of this Regulation. If the local government uses a loan for implementation of the project, it shall, within five working days after receipt of the repayment, repay a loan to the grantor in the amount of the repayment received, not exceeding the amount of the loan for the co-financing part of the European Union;

25.6. the Responsible Institution or the Co-operation Institution, in transferring advance or interim payments, shall observe the condition that the sum total thereof may not exceed 90% of the European Union financing and, if provided for in the project, of the State budget financing granted to the European Union fund project.

[14 February 2012]

25.¹ A final beneficiary, when opening a transaction account at a credit institution in the case referred to in Sub-paragraph 24.1 or 25.1 of this Regulation, shall enter into a trilateral contract between the final beneficiary, Responsible Institution or Co-operation Institution and the credit institution, observing the following conditions:

25.¹ 1. a certified copy of the contract entered into by the final beneficiary and the performer of the work intended in the project (hereinafter - performer of work), which shall be an integral component of the transaction account contract;

25.¹ 2. a condition shall be included in the transaction account contract that the credit institution shall make payments from the transaction account only after the final beneficiary has submitted the following documents to the credit institution:

25.¹ 2.1. a deed of acceptance and delivery, which certifies the fulfilment of performed work within the scope of the contract referred to in Sub-paragraph 25.¹ 1 of this Regulation, which was entered into by the final beneficiary and the performer of work;

25.¹ 2.2. a bill written out by the performer of work regarding the work performed within the scope of the contract referred to in Sub-paragraph 25.¹ 1 of this Regulation, which was entered into by the final beneficiary and the performer of work;

25.¹ 3. the term of validity of the transaction account contract shall not exceed six months after receipt of the advance payment into the transaction account. The referred to term may be extended, on the basis of a decision of the Responsible Institution or Co-operation Institution regarding extension of the time period for use of the advance payment.

[14 February 2012]

26. If a local government or another financial beneficiary implements a European Union fund Project, which qualifies as commercial activity support in accordance with Article 107(1) of the Treaty on the Functioning of European Union or de minimis support:

26.1. the Responsible Institution or the Co-operation Institution shall transfer the advance payment in compliance with Article 78(2) of the Council Regulation (EC) No 1083/2006 (observing the exception prescribed in Section 16.¹) and within the deadlines and in accordance with the procedures specified in the contract, if it is provided for in the regulatory enactments regarding the procedures for implementing the activity. The local government or another financial beneficiary shall open an account at the Treasury or credit institution (an account in the credit institution shall only by another final beneficiary), which has been registered for the performance of activity of a credit institution in the Republic of Latvia in accordance with the procedures specified in regulatory enactments, for the receipt of the advance payment and performing of expenditure of a European Union fund project from the received advance payment;

26.2. the local government or another final beneficiary, in implementing a European Union fund project, shall make payments from the advance payment received or its own resources;

26.3. the local government or another final beneficiary shall submit a payment request and copies of corroborative documents of expenditure included therein to the Responsible Institution or the Co-operation Institution within the deadlines and according to the procedures specified in the contract;

26.4. the Responsible Institution or the Co-operation Institution shall examine the documents referred to in Sub-paragraph 26.3 of this Regulation (the Responsible Institution or the Co-operation Institution may randomly verify the copies of corroborative documents of expenditure included in the payment request in accordance with the guidelines approved by the Managing Authority) and approve the sum of eligible expenditure included in the payment request, which conforms to the requirements specified in the contract, as well as prepare and approve a payment order regarding repayment of eligible expenditure to the final beneficiary pursuant to the rate of the European Union financing and, if provided for in the project, the rate of the State budget financing specified in the project application, indicating the classification code of the budget expenditure according to economic categories, or a decision regarding deletion of advance payment;

26.5. the Responsible Institution or the Co-operation Institution, in transferring advance or interim payments, shall observe the condition that the sum total thereof may not exceed 90% of the European Union financing and, if provided for in the project, of the State budget financing granted to the European Union fund project;

26.6. the Responsible Institution or the Co-operation Institution shall perform repayment to the local government or another final beneficiary according to the contract in conformity with Paragraph 30 of this Regulation. If the local government uses a loan for implementation of the project, it shall, within five working days after receipt of the repayment, repay a loan to the grantor in the amount of the repayment received, not exceeding the amount of the loan for the co-financing part of the European Union.

[13 September 2011]

27. The Responsible Institution or the Co-operation Institution shall submit the payment order referred to in Sub-paragraphs 22.3, 23.3, 24.4, 25.4 and 26.4 of this Regulation, an approved copy of the payment request to the Paying Authority or send a payment request approved with the safe electronic signature to the electronic mail address ESMD@kase.gov.lv, drawing up signature and date details in accordance with the regulatory enactments regarding the use of safe electronic signature, and a summary of payment orders (Annex 4). The Responsible Institution or the Co-operation Institution shall prepare, approve and submit the payment order referred to in Sub-paragraph 24.4 of this Regulation regarding transfer of the European Union financing to the Paying Authority after receipt of resources from the European Commission.

28. If the sum of eligible expenditure of the payment request approved by the Responsible Institution or the Co-operation Institution in accordance with Sub-paragraphs 22.3, 23.3, 24.4, 25.4 and 26.4 of this Regulation differs from the sum of eligible expenditure requested by the final beneficiary, the Responsible Institution or the Co-operation Institution shall submit a copy of the prepared supporting document (calculation, decision or other document) to the Paying Authority together with an approved copy of the payment request or a payment request approved with the safe electronic signature. If the Responsible Institution or the Co-operation Institution has approved a smaller sum of eligible expenditure of a payment request than requested by the final beneficiary because the final beneficiary has performed expenditure provided for as eligible expenditure within the framework of the European Union fund project, but the Responsible Institution or the Co-operation Institution has recognised them as inappropriately performed, the Responsible Institution or the Co-operation Institution shall act in accordance with the regulatory enactments regarding non-conformities detected in implementation of the European Union Structural Funds and the Cohesion Fund.

29. The Responsible Institution or the Co-operation Institution shall examine a payment request and corroborative documents of expenditure included therein, approve the sum of eligible expenditure and prepare a payment order regarding repayment of the eligible expenditure or regarding transfer to the State budget revenues within 20 working days after receipt of the payment request (the time period shall be extended depending on the time necessary for examination of clarifications and the requested additional information, but not longer than by five working days counting from the day of receipt of the requested additional information), except for the payment order referred to in Sub-paragraph 24.4 of this Regulation regarding transfer of the European Union financing.

30. If the final beneficiary is a State budget institution, a planning region or a final beneficiary to which the payment procedures referred to in Paragraph 25 and 26 of this Regulation are applied:

30.1. the Paying Authority shall perform repayment to the final beneficiary or transfer to the State budget revenues in accordance with the current Law On the State Budget within five working days after receipt of the documents referred to in Paragraphs 27 and 28 of this Regulation (the time period shall be extended depending on the time necessary for examination of clarifications and the requested additional information, but not longer than by three working days);

30.2. the Paying Authority shall submit the unapproved payment request or payment order to the Responsible Institution or the Co-operation Institution for re-examination and correction within two working days after making of an entry in the payment request regarding non-approval of the payment request. The Paying Authority shall accept the payment request and the payment order from the Responsible Institution or the Co-operation Institution until 15 November 2015.

31. If the payment procedures referred to in Paragraph 24 of this Regulation are applied for the final beneficiary:

31.1. and the State budget financing is provided for in a European Union fund project, the Paying Authority shall perform repayment of the part of the State budget provided for in the European Union fund project to the final beneficiary in accordance with the Law On the State Budget for the current year within five working days after receipt of the documents referred to in Paragraphs 27 and 28 of this Regulation (the time period shall be extended depending on the time necessary for examination of clarifications and the requested additional information, but not longer than by three working days);

31.2. the Paying Authority shall repay the European Union fund financing to the final beneficiary in accordance with the Law On the State Budget for the current year within five working days after receipt of the documents referred to in Paragraph 27 of this Regulation (the time period shall be extended depending on the time necessary for examination of clarifications and the requested additional information, but not longer than by three working days) after the European Union fund financing has been received from the European Commission;

31.3. the Paying Authority shall submit the unapproved payment request or payment order to the Responsible Institution or the Co-operation Institution for re-examination and correction within two working days after making of an entry in the payment request regarding non-approval of the payment request. The Paying Authority shall accept the payment request from the Responsible Institution or the Co-operation Institution until 15 November 2015.

32. The Paying Authority shall compare information regarding the sum of the European Union financing approved in the payment request in the single currency of the European Union, which has been calculated, taking into account Article 81 of Council Regulation (EC) No 1083/2006, with the Responsible Institution or the Co-operation Institution once a month until the tenth date of the month. The Responsible Institution or the Co-operation Institution shall, once a month until the tenth date of the month, inform the Paying Authority regarding the other sums of eligible financing sources approved in the payment request in the single currency of the European Union, which have been calculated, taking into account Article 81 of Council Regulation (EC) No 1083/2006.

33. The European Union fund financing received from the European Commission shall be transferred to the State budget revenues. If the payment procedures referred to in Paragraph 24 of this Regulation are applied to a European Union fund project, the Paying Authority shall, within one working day after receipt of the resources from the European Commission, inform the Responsible Institution or the Co-operation Institution thereof by electronic means, sending the information to the official electronic mail address of the Responsible Institution of the Co-operation Institution. The Responsible Institution or the Co-operation Institution shall, within one working day after receipt of the information from the Paying Authority, inform the Paying Authority by electronic means regarding an account into which the resources received from the European Commission should be transferred, sending the information to the electronic mail address ESMD@kase.gov.lv.

34. The Paying Authority shall, within three working days after receipt of the information from the Responsible Institution or the Co-operation Institution, transfer the European Union fund financing received from the European Commission in the single currency of the European Union from the State budget revenues to the relevant Responsible Institution or Co-operation Institution, if it has planned such resources in compliance with Paragraph 5 of this Regulation. If the equivalent in lats of the sum of the European Union fund financing to be transferred, which is determined in accordance with the exchange rate of the single currency of the European Union specified by the Bank of Latvia:

34.1. exceeds the sum in lats of the European Union fund financing approved in the payment request of the Responsible Institution or the Co-operation Institution, the Paying Authority shall reduce the sum to be transferred to the Responsible Institution or the Co-operation Institution; or

34.2. is less than sum in lats of the European Union fund financing approved in the payment request of the Responsible Institution or the Co-operation Institution, the Responsible Institution or the Co-operation Institution shall request additional State budget resources in accordance with the regulatory enactments regarding the procedures for redivision of undivided financing for the implementation of projects and measures co-financed by the European Union policy instruments and other foreign financial assistance for ensuring of repayment of a full approved sum of the European Union fund financing to the final beneficiary.

35. If a negative balance forms in the State budget revenues of the relevant fund, the Paying Authority shall notify the Ministry of Finance thereof.

36. If an advance payment is granted for the final beneficiary for the implementation of the European Union fund project:

36.1. the final beneficiary shall submit a payment request in the amount of the granted advance payment to the Responsible Institution or the Co-operation Institution within six months after receipt of the advance payment;

36.2. and it implements a project, which qualifies as commercial activity support in accordance with Article 107(1) of the Treaty on the Functioning of European Union or de minimis support, the final beneficiary shall submit a payment request in the amount of the granted advance payment to the Responsible Institution or the Co-operation Institution within 12 months after receipt of the advance payment.

[13 September 2011]

37. If the final beneficiary cannot use an advance payment within the time period referred to in Sub-paragraph 36.1 or 36.2 of this Regulation, it shall inform the Responsible Institution or the Co-operation Institution.

38. The Responsible Institution or the Co-operation Institution shall assess the usefulness of return of the advance payment, taking into account the European Union fund project activities planned by the final beneficiary, the reasons for non-use of the granted advance payment, the amount of interim payment and the time period of the next advance payment, and may decide on return of the advance payment unused by the final beneficiary.

39. If the Responsible Institution or the Co-operation Institution takes a decision on return of the advance payment unused by the final beneficiary (the time period for return of the unused advance payment shall be specified in a decision) or the final beneficiary cannot use the advance payment referred to in Paragraph 35 of this Regulation and wishes to return it voluntarily:

39.1. the final beneficiary shall, within the framework of the budget year, repay the advance payment not acquired or used to the account, from which the Responsible Institution or the Co-operation Institution has transferred the advance payment to the final beneficiary. The Responsible Institution or the Co-operation Institution shall send information regarding the repayment made to the Paying Authority to the electronic mail address ESMD@kase.gov.lv;

39.2. after the end of the budget year in which the final beneficiary has received the advance payment, the final beneficiary shall repay the advance payment to the account of the Responsible Institution or the Co-operation Institution at the Treasury. The Responsible Institution or the Co-operation Institution shall, within five working days after receipt of the repaid advance payment, submit a payment order to the Treasury regarding transfer of the repaid advance payment into the State budget revenues and send information regarding the repayment per formed to the Paying Authority to the electronic mail address ESMD@kase.gov.lv.

VII. Preparation of Statement of Expenditure and Certification of Expenditure

40. The Certifying Authority shall prepare in the information system for the management of the European Union Structural Funds and the Cohesion Fund:

40.1. a declaration of interim expenditure separately for each operational programme and fund - until the tenth date of the next month regarding expenditure performed until the end of the previous month; and

40.2. a declaration of final expenditure for each operational programme and fund - until 30 June 2016.

41. The Responsible Institution or the Co-operation Institution shall, within the deadlines referred to in Paragraph 40 of this Regulation, prepare and submit a completed certification for approval of a statement of expenditure (Annex 5) to the Certifying Authority separately for each operational programme and fund according to the activities under the responsibility thereof.

42. The Managing Authority shall submit a certification for each operational programme to the Certifying Authority within the deadlines referred to in Paragraph 40 of this Regulation that the data included in the information system for the management of the European Union Structural Funds and the Cohesion Fund is complete and correct, that deficiencies endangering the operation of the established system for the management and control of the European Union Structural Funds and the Cohesion Fund have not been determined and that the Managing Authority ensures the fulfilment of the activities referred to in Article 60 of the Council Regulation (EC) No 1083/2006. In providing the certification, the Managing Authority shall inform regarding system errors and other violations, which have or may have financial consequences, and suggest performing financial correction, specifying the amount thereof.

43. After preparation of the declaration referred to in Paragraph 40 of this Regulation, the Certifying Authority shall:

43.1. perform inspection of the data included in the declaration of interim expenditure within 18 working days (the time period shall be extended depending on the time necessary for making clarification of the Responsible Institution or the Co-operation Institution data in the information system for the management of European Union Structural Funds and the Cohesion Fund and provision of the requested additional information); and

43.2. perform inspection of the data included in the declaration of final expenditure within 40 working days (the time period shall be extended depending on the time necessary for making clarification of the Responsible Institution or the Co-operation Institution data in the information system for the management of the European Union Structural Funds and the Cohesion Fund and provision of the requested additional information).

44. If, in inspecting the data included in a statement of expenditure, inaccuracies in the data of the statement of expenditure are detected or a necessity to receive explanations or additional information occurs, the Certifying Authority shall inform the Responsible Institution or the Co-operation Institution thereof in writing, as well as discontinue the process of approval of the statement of expenditure. The Responsible Institution or the Co-operation Institution shall provide the explanation in writing or inform regarding clarification of data in the information system for the management of the European Structural Funds and the Cohesion Fund within five working days after receipt of the written request of the Certifying Authority.

45. The Certifying Authority may correct the statement of expenditure drawn up in accordance with Paragraph 40 of this Regulation in the information system for the management of the European Union Structural Funds and the Cohesion Fund in relation to inappropriately performed expenditures determined or indicated during the inspection or during other audits, controls or checks, possible non-conformities, suggested financial corrections, as well as financial corrections suggested by the Managing Authority in compliance with Paragraph 42 of this Regulation.

46. If the Certifying Authority approves the statement of expenditure drawn up in the information system for the management of the European Union Structural Funds and the Cohesion Fund, it shall, in the System for Fund Management in the European Community 2007 - 2013:

46.1. prepare an expenditure certificate, a declaration and a payment application in relation to the declaration of interim expenditure and submit them to the European Commission within two working days after the inspection referred to in Sub-paragraph 43.1 of this Regulation; and

46.2. prepare an expenditure certificate, a declaration and a payment application in relation to the declaration of final expenditure (after receipt of the opinion of the Audit Authority regarding the declaration of final expenditure and the report on final control) and submit them to the European Commission by 31 March 2017.

47. In order to determine the sum of expenditure to be included in the statement of expenditure in the single currency of the European Union, it shall be re-calculated individually for each source of financing, taking into account Article 81 of Council Regulation (EC) No 1083/2006.

48. In order to ensure examination of the statement of expenditure and certification of expenditure, the Certifying Authority shall perform a random check of the documentation justifying the payment request on the basis of the risk assessment and other controls specified in the regulatory enactments regarding the management of the European Union funds.

49. [13 September 2011].

50. The procedures for the preparation of the statement of expenditure and certification of expenditure referred to in Chapter VII of this Regulation shall be applied after the information system for the management of the European Union Structural Funds and the Cohesion Fund allows functionally the Certifying Authority to create and correct statements of expenditure. The Managing Authority shall inform the Certifying Authority, the Responsible Institution or the Co-operation Institution regarding fulfilment of such provision.

51. Until fulfilment of the conditions referred to in Paragraph 50 of this Regulation or at the individual request, the Responsible Institution or the Co-operation Institution shall prepare and submit a statement of expenditure (Annex 7) to the Certifying Authority in printed form or electronically within the deadlines referred to in Paragraph 40 of this Regulation. The Responsible Institution, the Co-operation Institution or the Certifying Authority shall, within three working days, inform the Managing Authority regarding operating interferences or data deficiencies in the information system for the management of the European Union Structural Funds and the Cohesion Fund, registering the problem or deficiencies application in the IT problem/incident application system of the Management information system of the European Union Structural Funds and the Cohesion Fund. The Managing Authority shall, within three working days, inform the Responsible Institution, the Co-operation Institution or the Certifying Authority in writing regarding operating interferences, data deficiencies determined thereby in the information system for the management of the European Union Structural Funds and the Cohesion Fund or regarding renewal of the operation thereof.

[13 September 2011]

VII¹. The Right of the Managing Authority to Suspend the Statement of Expenditure at the European Commission Made Within the Scope of the Project

[10 April 2012]

51.¹ The Certifying Authority, on the basis of the decision of the Managing Authority, for a period until the elimination of the relevant deficiencies shall suspend the further statement of expenditure at the European Commission made within the scope of an operation programme, priority, measure, activity, sub-activity or project.

51.² The Managing Authority may take the decision referred to in Paragraph 51.¹ of this Regulation, if at least one of the following conditions exists:

51.² 1. it has been determined in the report of the Audit Authority or external audit that there are significant deficiencies in the management and control system of the Responsible Institution or Co-operation Institution;

51.² 2. it has been determined in the comparative examination of the work of the internal audit unit of the ministry (within the scope of which the Responsible Institution or Co-operation Institution was established) or quality review of the audit files that there are significant deficiencies in the management and control system of the Responsible Institution or Co-operation Institution;

51.² 3. the Managing Authority in the examination of the Responsible Institution or the Co-operation Institution has determined significant deficiencies in its management and control system;

51.² 4. the Managing Authority has at its disposal other objective and substantiated information, which shows evidence regarding the improper performance of the task referred to in Article 60 of Commission Regulation (EC) No 1083/2006 and delegated to the Responsible Institution or Co-operation Institution in accordance with the regulatory enactments of the Republic of Latvia and there exists the probability of the case referred to in Articles 91 or 92 of Council Regulation No 1083/2006 occurring.

51.³ The Managing Authority shall within a period of three working days after the acceptance of the decision referred to in Paragraph 51.¹ of this Regulation send it to the Certifying Authority, as well as for their information to the relevant Responsible Institution or Co-operation Institution, to the Responsible Institution in the functional subordination of which is the relevant Co-operation Institution , and to the Audit Authority.

51.⁴ The Responsible Institution or Co-operation Institution shall within a period of 15 working days after receipt of the decision referred to in Paragraph51.¹ of this Regulation prepare and send to the Managing Authority for harmonisation a draft action plan (hereinafter - action plan) for prevention of the determined deficiencies. The Responsible Institution or Co-operation Institution shall indicate in the action plan the measures to be performed and a time schedule for its implementation (the time period provided for the implementation of the measures of the action plan shall not exceed three months), as well as the official responsible for implementing the relevant measure.

51.⁵ The Managing Authority shall within a period of 10 working days after receipt of the draft action plan referred to in Paragraph 51.⁴ of this Regulation harmonise it or prepare commentaries regarding the draft action plan and submit these in writing to the Responsible Institution or Co-operation Institution.

51.⁶ The total time period for harmonising the action plan shall not exceed one month from the time the draft action plan was received by the Managing Authority.

51.⁷ The Responsible Institution or Co-operation Institution shall be responsible for the implementation of the measures included in the action plan in accordance with the deadlines and procedures specified in the action plan. The Responsible Institution or Co-operation Institution shall within a period of five working days of the due date specified in the plan inform the Managing Authority in writing regarding the progress of the implementation of the measures.

51.⁸ The Managing Authority shall within a period of 15 working days after receipt of the information referred to in Paragraph 51.⁷ of this Regulation examine, if the relevant measure has been implemented in accordance with the action plan.

51.⁹ If the Responsible Institution or Co-operation Institution has implemented the measures in accordance with the action plan, the Managing Authority shall take a decision to recommence the statement of expenditure at the European Commission made within the scope of the operation programme, priority, measure, activity, sub-activity or project.

51.¹⁰ The Managing Authority shall within a period of three working days after the acceptance of the decision referred to in Paragraph 51.⁹ of this Regulation send it to the relevant Responsible Institution or Co -operation Institution, to the Responsible Institution in the functional subordination of which is the relevant Co-operation Institution, and to the Audit Authority.

51.¹¹ If the Responsible Institution or Co-operation Institution and the Managing Authority are unable to agree regarding the action plan by the deadline referred to in Paragraph 51.⁶ of this Regulation or the Responsible Institution or Co-operation Institution has not implemented measures in accordance with the action plan, the Managing Authority shall inform the Cabinet thereof.

VIII. Closing Provisions

52. Cabinet Regulation No. 418 of 26 June 2007, Procedures by Which Resources in the State Budget are Budgeted for the Implementation of Projects Co-financed by European Union Funds, as well as Procedures by Which Payments are Made and the Expenditure Declaration is Prepared (Latvijas Vēstnesis, 2007, No. 104; 2008, No. 175; 2009, No. 27, 118; 2010, No. 30, 83) is repealed.

53. If the final beneficiary is a capital company in which State capital share is invested and the financing for implementation of a European Union fund project has been granted thereto until 29 October 2008:

53.1. the ministry, which is the holder of capital shares of the final beneficiary, shall transfer the financing of the State budget intended for implementation of the European Union fund project to the account of the final beneficiary opened at the Treasury. The final beneficiary shall make payments within the framework of the European Union fund project from the State budget financing received;

53.2. a payment request, copies of corroborative documents of expenditure included therein and a report on the progress of the European Union fund project shall be submitted to the Responsible Institution or the Co-operation Institution within the deadlines and according to the procedures specified in the contract;

53.3. the Responsible Institution or the Co-operation Institution shall examine the documents referred to in Sub-paragraph 53.2 of this Regulation and approve the sum of eligible expenditure included in the payment request, which conforms to the requirements specified in the contract, as well as prepare a payment order regarding transfer of the approved European Union financing into the State budget revenues, indicating the classification code of the budget expenditure according to the economic categories;

53.4. and it fails to submit a payment request and a report on the progress of a European Union fund to the Responsible Institution or the Co-operation Institution within the specified deadlines, the Responsible Institution or the Co-operation Institution may take a decision and suggest the Treasury to suspend the operation of the account of the relevant project for the final beneficiary until the day of submission of the payment request and the report on the progress of the European Union fund.

Prime Minister,
Minister for Regional Development
and Local Government V. Dombrovskis

Minister for Finance A. Vilks

Annex 1
Cabinet Regulation No. 1041
9 November 2010

Short-term Forecast of Payment Orders to be Submitted within the Framework of
_____________________________________________ Fund and
_____________________________________________ Operational Programme

(specify the currency)

Notes.
1. ¹ If the final beneficiary of the European Union fund is a State budget institution.
2. ² To the final beneficiaries of the European Union fund, which are not State budget institutions.
3. The details of the document "signature" and "date" shall not be completed if the electronic document has been drawn up in conformity with the regulatory enactments regarding drawing up of electronic documents.

Minister for Finance A. Vilks

Annex 2
Cabinet Regulation No. 1041
9 November 2010

Forecast of Expenditure to be Performed within the Framework of
_____________________________________________ Fund and
_____________________________________________ Operational Programme
for the Next 12 Months

(specify the currency)

Notes.
1. ¹ If the final beneficiary of the European Union fund is a State budget institution.
2. ² To the final beneficiaries of the European Union fund, which are not State budget institutions.
3. The details of the document "signature" and "date" shall not be completed if the electronic document has been drawn up in conformity with the regulatory enactments regarding drawing up of electronic documents.

Minister for Finance A. Vilks

Annex 3
Cabinet Regulation No. 1041
9 November 2010

[13 September 2011]

Payment Request

This payment request shall be submitted to the relevant Responsible/Co-operation Institution in compliance with the conditions of the contract entered into by the Responsible/Co-operation Institution and the final beneficiary of the European Union fund. In case of uncertainties, they shall be first of all brought before the relevant institution.

Payment request will only be accepted in the following format.

Currency in which the payment request is prepared shall be underlined.

The payment request shall be prepared and expenditure of the final beneficiary of the European Union fund shall be repaid in the single currency of the European Union, if it is provided for in the regulatory enactments regarding introduction of the activity of the European Union fund.

Expenditure shall be repaid from the financing of the European Union fund and, if it is provided for in the European Union fund project application, from the State budget financing.

1. Information Regarding Request

2. Information on the Project

3. Final Beneficiary of the European Union Fund

Completed by the Responsible Institution/Co-operation Institution

In approving the request for a European Union fund, I hereby confirm that the activities ensured (including examination of additional information) confirm that the sum to be repaid has been calculated according to the contract with the final beneficiary of the European Union fund financing and the requirements specified in the regulatory enactments of the European Union and the Republic of Latvia in the financial field. Corroborative documents are available for examination. During introduction of the project, in performing financial control, deficiencies have not been detected or, if they have been detected, measures for elimination of the deficiencies have been/are being taken.

Completed by the Paying Authority¹

Note.
¹ Service notes shall not be completed by an employee of the Paying Authority, if the electronic document has been prepared in accordance with the regulatory enactments regarding drawing up of the electronic documents.

4. Summary of Eligible Expenditure²

Notes.
² Sums indicated in sections 2 and 4 of the payment request may differ from the sum of eligible expenditure actually approved by the Responsible Institution/Co-operation Institution, if the final beneficiary of the European Union fund does not have information regarding eligible expenditure approved by the Responsible Institution/Co-operation Institution in the previous payment request.
³ Information regarding eligible expenditure approved by the Responsible Institution/Co-operation Institution shall be indicated. If the final beneficiary of the European Union fund has not yet received information regarding the sum of eligible expenditure of the payment request approved by the Responsible Institution/ Co-operation Institution, the sum of the payment request shall be indicated in the box.
⁴ According to the contract entered into.

5. Eligible Expenditure of the Reference Period⁵

Notes.
⁵ Final beneficiaries, for the projects of which a fixed rate of indirect expenditure is applied, shall complete this table regarding direct eligible expenditure.
⁶ Only eligible expenditure shall be indicated.
⁷ To be completed regarding projects co-financed by European Union funds for which fixed rates of indirect expenditure are applied.
⁸ Not to be completed by the final beneficiaries which are not VAT payers

To be completed by final beneficiaries, who are implementing projects of European Union fund within the scope of the operational programme "Infrastructure and Services" Supplement, Sub-activity 3.1.5.1.1 "Development of Primary Health Care Physician Network" or Sub-activity 3.1.5.1.2 "Development of the Health Care Centres".

6. Bank information¹⁰

Bank account for making of payment

To the final beneficiary of a European Union Fund

to the State budget

Note.
¹⁰ Not to be completed if the final beneficiary of a European Union fund is a State budget institution.

7. Fixed Assets Procured or Created within the Framework of the Project (if applicable)

Please, specify the information regarding all fixed assets which have been created or procured during the reference period of the payment request within the framework of the project, using the European Union fund financing partly or fully.

Confirmation for Certification of Expenditure

In accordance with the eligible expenditure declared in the request for a European Union fund, I confirm that:

1) the expenditure included in the request for a European Union fund have been performed, they conform to the specifications in the European Union fund project, as well as are eligible in accordance with the requirements of the regulatory enactments of the European Union and the Republic of Latvia in the field of finance. Corroborative documents of expenditure included in the request for a European Union fund are available;

2) procurement requirements, State aid requirements, environment protection requirements and gender equality requirements (insofar as applicable to the project) have been observed;

3) expenditure have been performed in the period of costs specified in the contract/agreement between the final beneficiary of a European Union fund and the Responsible Institution/Co-operation Institution;

4) the compliance of the publicity and visual identity with the requirements of regulatory enactments in the field of publicity of European Union funds and visual identity has been observed;

5) a separate system of accounting or a corresponding accounting code has been implemented for demonstration of all transactions related to the project;

6) information regarding transactions has been registered by electronic means in compliance with the possibilities and is available upon the request of competent authorities;

7) traceability of the audit has been ensured;

8) copies of the payment request, documents appended thereto and electronic version of the payment request (if it must be submitted according to the contract) comply with the originals;

9) all originals of documents related to implementation of the European Union fund project shall be stored until 31 December 2021; and

10) during the reporting period the information indicated in eligible expenditure is correct and the VAT amount included in the expenditure has not been deducted as an input tax in accordance with the procedure prescribed in Section 10 of the Law On Value Added Tax.

I am informed that the European Commission, Managing Authority, Certifying Authority, Audit Authority, Responsible Institution or Co-operation Institution, where appropriate, perform financial control and I agree to the performance of control.

Note. The details of the document "signature" and "date" shall not be completed if the electronic document has been drawn up in conformity with the regulatory enactments regarding drawing up of electronic documents.

Minister for Finance A. Vilks

Annex 4
Cabinet Regulation No. 1041
9 November 2010

Summary of Payment Orders

Note. The details of the document "signature" and "date" shall not be completed if the electronic document has been drawn up in conformity with the regulatory enactments regarding drawing up of electronic documents.

Minister for Finance A. Vilks

Annex 5
Cabinet Regulation No. 1041
9 November 2010

Certification for Approval of the Statement of Expenditure
as of ____ __________________ 20____

If the deficiencies referred to in Paragraph 4 of this Annex have been detected, please, specify the project and sum (EUR, in breakdown by financing sources) which should be excluded from the statement of expenditure to be submitted to the European Commission, as well as describe the essence of the relevant deficiencies:

Measures that have been or will be performed for elimination of the referred to deficiencies:

I confirm that the requirements referred to in Paragraphs 1, 2, 3 and 4 of this Annex are fulfilled, thus eligible expenditures are correct.

Note. The details of the document "signature" and "date" shall not be completed if the electronic document has been drawn up in conformity with the regulatory enactments regarding drawing up of electronic documents.

Minister for Finance A. Vilks

Annex 6
Cabinet Regulation No. 1041
9 November 2010

Forecast of the Requests for Resources of European Union Funds to be Submitted to the European Commission for the Current and Subsequent Year

[13 September 2011]

Annex 7
Cabinet Regulation No. 1041
9 November 2010

[13 September 2011]

Interim/Final Statement of Expenditure

(EUR)

Annex
to the Interim/Final Statement of Expenditure

Sums Recovered after Submission of the Last Certified Statement of Expenditure and Included in the Current Statement of Expenditure

Notes.
1. ¹ [13 September 2011].
2. ² To be completed, if resources are used in accordance with the possibilities provided for in Article 34(2) of the Council Regulation (EC) No 1083/2006.
3. ³ If applicable.
4. The details of the document "signature" and "date" shall not be completed if the electronic document has been drawn up in conformity with the regulatory enactments regarding drawing up of electronic documents.

Minister for Finance A. Vilks

Translation © 2012 Valsts valodas centrs (State Language Centre)