Republic of Latvia Cabinet Regulation No. 1007 Adopted 8 September 2009

Procedures for Provision of Reports regarding Non-conformities Detected in Implementation of Projects Financed by Programmes for Objective 3 "European Territorial Co-operation" of European Union Structural Funds and Recovery of Non-conforming Expenditure

Issued pursuant to
Section 24, Paragraph two, Clause 1
of the Law On Management of Programmes for
Objective 3 "European Territorial Co-operation" of
European Union Structural Funds

I. General Provisions

1. These Regulations prescribe the procedures by which reports shall be submitted regarding non-conformities detected in the implementation of the projects financed (hereinafter - project) by the 2007-2013 programme for Objective 3 "European Territorial Co-operation" of European Union Structural Funds (hereinafter - programme) and the non-conforming expenditure shall be recovered.

2. The national responsible authority shall ensure participation in the supervision and evaluation of the programme and the performance of financial control and audit in order to avoid and eliminate any non-conformities in implementation of the programme projects.

3. The national responsible authority shall be responsible for the evaluation, registration and notification of the non-conformities detected in the implementation of programme projects and the recovery of non-conforming expenditure from the recipient of financing, which is located in the territory of the Republic of Latvia.

II. Evaluation and Registration of Non-conformity and Notification regarding the Detected Non-conformity

4. Any institution and person involved in the management of a relevant programme may identify the potential non-conformity in the implementation of a programme project and notify the national responsible authority thereof within 10 working days from the detection of the non-conformity.

5. The first level institution of financial control shall notify the national responsible authority each quarter regarding the non-conformities detected in the implementation of programme projects in the current accounting period by sending a quarterly report within 10 working days from the end of the accounting period.

6. The national responsible authority has the right to request that the institution and person involved in the management of the relevant programme, within seven working days, submit information regarding all non-conformities in the 2007-2013 planning period of European Union Structural Funds, which have been detected up to the date of the request of information, in printed form and in the form of an electronic document or only in the form of an electronic document.

7. The national responsible authority shall, within ten working days after receipt of the information referred to in Paragraphs 4, 5 and 6 of these Regulations, evaluate each detected potential non-conformity of the institution or person involved in the management of the relevant programme.

8. If the national responsible authority detects that the particular case is not regarded as non-conformity, the national responsible authority shall, within seven working days, notify the institution or person involved in the management of the relevant programme, which or who provided the information regarding the potential non-conformity, in writing thereof.

9. If the national responsible authority detects that the particular case is regarded as non-conformity, it:

9.1. shall, within seven working days, take a decision regarding actions for elimination of the non-conformities detected or regarding recovery of the financing granted, if the recipient of financing has been refunded the non-conforming expenditure; or

9.2. shall, within five working days after taking of the decision referred to in Sub-paragraph 9.1 of these Regulations, inform the managing authority of the relevant programme, which has entered into a financing contract with the recipient of financing regarding implementation of a project (the project number, title, contract number, recipient of financing, expenditure position and the sum of the non-conforming expenditure, including the ineligible financing of the European Union funds and ineligible national financing, shall be indicated), thereof in writing.

10. The national responsible authority shall ensure the registration of information regarding each non-conformity, which the national responsible authority or the institution or person involved in the management of the relevant programme has detected, and regarding the recovery of non-conforming expenditure. The information shall be registered in the register of non-conformities established by the national responsible authority.

11. The national responsible authority need not notify the managing authority of the relevant programme regarding the detected non-conformity, regarding which the recipient of financing notifies voluntarily, concurrently agreeing with the recipient of financing regarding actions for elimination of the non-conformity, if the relevant non-conformity has not been detected by the institution involved in the management of the relevant programme, the European Commission or another authority, which performs inspections of the implementation of the programme project, and if the non-conformity may be eliminated, as well as if the recipient of financing has not been refunded the non-conforming expenditure.

12. The national responsible authority shall provide a quarterly report regarding non-conformity in the implementation of the European Regional Development Fund in accordance with Article 28(1) and Article 30(1) of Commission Regulation No. 1828/2006 of 8 December 2006 setting out rules for the implementation of Council Regulation (EC) No. 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and of Regulation (EC) No. 1080/2006 of the European Parliament and of the Council of the European Regional Development Fund (hereinafter - Commission Regulation No. 1828/2006) (hereinafter - quarterly report) (Annex) and in accordance with these Regulations shall inform regarding:

12.1. a non-conformity, the total amount of which in lats, applying the exchange rate determined once per month by the European Commission in accordance with Article 81(3) of Council Regulation 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), is equivalent to EUR 10,000 or more, if the expenditure has been refunded to the recipient of financing and later has been declared as non-conforming expenditure.

12.2. a non-conformity, the total amount of which in lats, applying the exchange rate determined once per month by the European Commission in accordance with Article 81(3) of Council Regulation No. 1083/2006, is less than the equivalent to EUR 10,000, if the non-conformity repeats within the framework of the specific project and non-conforming expenditure has been refunded;

12.3. systematic non-conformities that may arise in the implementation of other projects of the programme;

12.4. suspicions of fraud or organised crime in the implementation of programme projects;

12.5. a non-conformity, regarding which there are justified suspicions that this non-conformity may have consequences outside the territory of the relevant programme; and

12.6. a non-conformity, which has arisen by using illegal methods that have not been observed previously, in accordance with the information at the disposal of the national responsible authority.

13. In the cases referred to in Sub-paragraphs 12.1 and 12.4 of these Regulations, as well as in the cases referred to in Sub-paragraphs 12.2 and 12.3 of these Regulations, if Paragraph 11 of these Regulations is not applicable, the national responsible authority shall notify the European Commission and the managing authority of the relevant programme regarding each non-conformity detected by submitting an initial quarterly report and current quarterly reports in the form of an electronic document by the following deadlines:

13.1. for the first quarter of the current year - by 31 May of the current year;

13.2. for the second quarter of the current year - by 31 August of the current year;

13.3. for the third quarter of the current year - by 30 November of the current year;

13.4. for the fourth quarter of the current year - by 28 February of the following year.

14. If the national responsible authority detects a non-conformity that is referred to in Sub-paragraph 12.1 of these Regulations, it shall send a quarterly report to the European Commission, the managing authority of the relevant programme and the European Anti-Fraud Office.

15. If non-conformities are not detected in the implementation of projects, the national responsible authority shall inform the European Commission and the managing authority of the relevant programme thereof in writing within the deadlines specified in Paragraph 13 of these Regulations.

16. In accordance with Article 29 of Commission Regulation (EC) No. 1828/2006, the national responsible authority shall, within five working days from the time period referred to in Paragraph 7 of these Regulations, submit as a matter of urgency a report regarding non-conformities in the form of an electronic document if:

16.1. a complaint has been received regarding an activity or inactivity, which causes suspicions regarding a criminal offence in the implementation of programme projects; or

16.2. the non-conformities referred to in Sub-paragraphs 12.5 and 12.6 of these Regulations are detected.

17. If the national responsible authority, when performing measures of additional inspection, considers the case of non-conformity referred to in the relevant quarterly report as closed, the national responsible authority shall inform the European Commission and the managing authority of the relevant programme thereof within the deadlines specified in Paragraph 13 of these Regulations. The reason why the case of non-conformity is considered to be closed shall be indicated in the final quarterly report.

18. If it is necessary to update or supplement the information included in the quarterly report submitted, the national responsible authority shall ensure the inclusion of the missing or updated information in the quarterly report of the next accounting period.

III. Recovery of Non-Conforming Expenditure

19. If a recipient of financing in whose implemented programme project non-conformities have been detected (regardless of the size of financing thereof), is a direct or indirect State administrative institution or a derived public person and the recipient of financing has not been refunded the non-conforming expenditure, the national responsible authority:

19.1. shall, within five working days after taking of the decision referred to in Paragraph 9 of these Regulations, inform the managing authority of the relevant programme in writing regarding the need to retain non-conforming expenditure from the current refund of expenditure performed in the budget of the recipient of financing. If the recipient of financing is a subordinate institution, a copy of information shall be sent to the head of the direct State administrative institution, to which the relevant institution is subordinate;

19.2. shall prepare and the Minister for Regional Development and Local Government shall submit to the Cabinet an informative report regarding non-conforming expenditure performed and retained (the number and title of the programme and project, the recipient of financing, the total sum of non-conforming expenditure and the allocation thereof by financial sources shall be indicated).

20. If it is not possible to ensure the recovery of non-conforming expenditure in accordance with Paragraph 19 of these Regulations or if a recipient of financing has been refunded the expenditure performed:

20.1. the national responsible authority shall prepare and the Minister for Regional Development and Local Government shall submit an informative report to the Cabinet regarding the need to refund the non-conforming expenditure into the budget of the relevant programme (the name and title of the programme and project, the recipient of financing, the total sum of non-conforming expenditure and the allocation thereof by financial sources, as well as the deadline for refunding shall be indicated);

20.2. the Cabinet shall take a decision regarding the diversion of State budgetary funds for the refund of non-conforming expenditure; or

20.3. the State direct administrative institution shall, within ten days after taking of the Cabinet decision referred to in Sub-paragraph 20.2 of these Regulations, submit a payment order to the Treasury regarding the refund of financial resources into the programme budget account of the relevant programme certification authority. A copy of the payment order shall be sent to the national responsible authority.

21. If a recipient of financing in whose implemented programme project a non-conformity has been detected, is not a direct or indirect State administrative institution or a derived public person, the national responsible authority shall, within five working days after taking of the decision referred to in Paragraph 9 of these Regulations, inform the managing authority of the relevant programme and the recipient of financing in writing regarding the need to retain the non-conforming expenditure performed from the current refund of expenditure performed in the budget of the recipient of financing.

22. If it is not possible to ensure the recovery of non-conforming expenditure in accordance with Paragraph 21 of these Regulations or if the expenditure has been refunded to the recipient of financing, the national responsible authority, in accordance with Section 22 of the Law On the Management of Programmes for Objective 3 "European Territorial Co-operation" of European Union Structural Funds shall agree with the recipient of financing in accordance with the procedures of civil law regarding the refund of non-conforming expenditure. If it is not possible to reach an agreement regarding the refund of non-conforming expenditure within 20 working days after taking of the decision regarding the recovery of financing granted referred to in Paragraph 9 of these Regulations, the national responsible authority shall issue an administrative act regarding the recovery of non-conforming expenditure and shall, within three working days, submit this to the recipient of financing. A copy of the administrative act shall be sent to the managing authority of the relevant programme.

23. If the national responsible authority issues the administrative act referred to in Paragraph 22 of these Regulations and the recipient of financing is unable to refund the non-conforming expenditure within the deadline specified in the administrative act:

23.1. the recipient of financing shall, within three working days after receipt of the administrative act referred to in Paragraph 22 of these Regulations, notify the national responsible authority in writing regarding the need to change the deadline specified for the fulfilment of the administrative act, and shall justify it; and

23.2. the national responsible authority shall, within five working days after receipt of the information referred to in Sub-paragraph 23.1 of these Regulations, evaluate the information submitted and, if the information is recognised as justified, shall issue an administrative act regarding the extension of the deadline, notifying the recipient of financing thereof in writing, and shall send a copy of the administrative act by post to the managing authority of the relevant programme.

24. The recipient of financing shall, within three working days after refunding of the non-conforming expenditure, inform the national responsible authority regarding the refund of non-conforming expenditure into the programme budget account of the relevant programme certification authority by submitting a copy of the payment order. On the basis of the documents submitted, the national responsible authority shall regard the specific case of non-conformity as closed and make an appropriate entry into the register referred to in Paragraph 10 of these Regulations.

25. In the case referred to in Paragraphs 20 and 21 of these Regulations the date of recovery of the non-conforming expenditure shall be regarded as the date when the amount of non-conforming expenditure is refunded into the programme budget account of the relevant programme certification authority.

Prime Minister V. Dombrovskis

Acting for the Minister for Regional Development
and Local Government E. Zalāns

 

Annex
Cabinet Regulation No. 1007
8 September 2009

Non-conformity Report

File No: LV/XX/XXX/XX0¹ dd.mm.yyyy.²

Quarterly Report regarding Non-conformity in Accordance with Article 28(1), Article 29 and Article 30(1) of Commission Regulation No. 1828/2006

I. Report Identification

Member State __________________

Quarter XX/XX³

The institution involved in the management of the European Union funds (hereinafter - institution), which prepared the quarterly report regarding the non-conformity in relation to Article 28(1), Article 29 and Article 30(1) of Section 4 of Commission Regulation No. 1828/2006 (hereinafter - report):

The institution, which prepared the report __________________

Contact person

Given name, surname ___________________________

Telephone __________________

Fax __________________

E-mail ___________________________

II. Summary of Non-conformity

Fund __________________

Objective 3 "European Territorial Co-operation"

Operational programme __________________

Number and title of the priority, measure, activity, sub-activity and of the project __________________

Number of the joint identification code (JIC) __________________

1. The violated legal norm

1.1. the violated legal norm of the European Communities ___________________________

1.2. the violated national legal norm __________________

1.3. the violated condition of the contract __________________

2. Information which has caused suspicions that a non-conformity has occurred:

2.1. the date when information was received for the first time
	(dd.mm.yyyy.)

2.2. source __________________

3. Type:

3.1. evaluation:

3.1.1. error ( )

3.1.2. non-conformity ( )

3.1.3. suspicions of fraud or organised crime ( )

3.2. description of the method used in committing a non-conformity __________________

3.3. has such method been used before:

Yes ( )

No ( )

Uknown ( ).

3.4. if such method has not been used before, has a report been sent in accordance with Section 4, Article 29 of Commission Regulation (EC) No. 1828/2006 to the European Commission and, if necessary, to other relevant Member States?

Yes ( ) date		and reference:
	(dd.mm.yyyy.)

No ( )

Unknown ( ).

4. European Union Member States or third countries:

4.1. are European Union Member States or third countries involved

Yes ( )
	European Union Member States or third countries)

No ( )

4.2. if European Union Member States or third countries are involved, has a report been sent in accordance with Section 4, Article 29 of Commission Regulation (EC) No. 1828/2006 to the European Commission or other European Union Member States involved?

Yes ( ) Date		and reference
	(dd.mm.yyyy.)

No ( )

Unknown ( ).

5. Method by which the non-conformity was detected __________________

6. Duration of non-conformity

Date		or time period from		to
	(dd.mm.yyyy.)

7. The institution that is responsible for the administrative or judicial supervision __________________

8. The date of the primary administrative or judicial finding
	(dd.mm.yyyy.)

9. The natural persons or legal persons involved (including the recipient of financing of European Union fund)

9.1. natural person's:

9.1.1. surname __________________

9.1.2. given name __________________

9.1.3. date of birth
	(dd.mm.yyyy.)

9.1.4. address __________________

9.1.5. postcode __________________

9.1.6. telephone and fax __________________

9.1.7. city __________________

9.1.8. country __________________

9.1.9. function within the framework of the European Union fund project __________________

9.2. legal person's:

9.2.1. name __________________

9.2.2. legal status __________________

9.2.3. given name and surname of the director __________________

9.2.4. date of birth of the director
	(dd.mm.yyyy.)

9.2.5. legal address __________________

9.2.6. postal code __________________

9.2.7. telephone and fax __________________

9.2.8. country __________________

9.2.9. function within the framework of the European Union fund project __________________

III. Financial Aspects

10. Total financing approved for the project:

10.1. the sum total of eligible costs of the project (excluding private financing) EUR _________

10.2. eligible financing of the European Union fund LVL_________ (EUR_________)

10.3. eligible financing of the State budget LVL_________ (EUR_________)

10.4. eligible financing of the recipient of financing LVL_________ (EUR_________)

11. Assessment of financial effects of the non-conformity:

11.1. the type of non-conforming expenditure _________

11.2. the sum total of the non-conforming expenditure, excluding private financing LVL_________ (EUR_________):

11.2.1. European Union fund financing LVL_________ (EUR_________)

11.2.2. State budget financing LVL_________ (EUR_________)

11.2.3. financing of the recipient of financing LVL_________ (EUR_________)

12. Recovery:

12.1. the sum total amount to be recovered LVL_________ (EUR_________)

12.1.1. European Union fund financing LVL_________ (EUR_________)

12.1.2. State budget financing LVL_________ (EUR_________)

12.1.3. financing of the recipient of financing LVL_________ (EUR_________)

12.2. potential of recovery:

Possible ( )

Unlikely ( )

Impossible ( )

12.3. the sum total recovered LVL_________ (EUR_________)

12.3.1. European Union fund financing LVL_________ (EUR_________)

12.3.2. State budget financing LVL_________ (EUR_________)

12.3.3. financing of the recipient of financing LVL_________ (EUR_________)

12.4. the sum total of the recovered non-conforming expenditure, which must be deducted from the next declaration of expenditure or must be repaid to the European Communities LVL_________ (EUR_________):

12.4.1. European Union fund financing LVL_________ (EUR_________)

12.4.2. State budget financing LVL_________ (EUR_________)

12.4.3. financing of the recipient of financing LVL_________ (EUR_________)

13. Is deduction from the next European Union fund request possible:

Yes ( )

No ( )

IV. Stage of the Process

14. Measures in order to ensure the recovery of non-conforming expenditure:

14.1. measures of recovery _________

14.2. date of the commencement of the procedure:
	(dd.mm.yyyy.)

14.3. the planned final date of the procedure:
	(dd.mm.yyyy.)

15. Judicial and administrative procedures, which have been commenced for the recovery of non-conforming expenditure and the determination of sanctions:

15.1. administrative proceedings__________________

15.2. criminal proceedings__________________

16. Have criminal proceedings been suspended (if this Paragraph is not applicable, it need not be completed):

Yes ( )

No ( )

17. Reasons for suspension of the recovery process __________________

18. Additional observations ____________________________________

19. The national responsible authority, taking into account that referred to in Paragraph ___ of this Report, confirms that it considers the case of non-conformity as closed:

Yes ( ), short justification __________________

No ( )

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¹ Except the last digit, the file No. shall be the same and it shall consist of the initial letters of the State/year/three-digit file number/abbreviation of the name of the European Union fund (ERDF, ESF or CF)/the sequence number of the submitted report (for the initial report - 0). In the file number, upon submitting the updated version of the report, only the last digit shall be changed (the sequence number of the specific report). When the report is supplemented, the digit "1" shall be used for the first supplemented version, the digit "2" for the second supplemented version, etc. For example, LV/07/001/ERAF/0.
² dd.mm.yyyy. - the date of preparation of the report.
³ Two digits for the year and two digits for the quarter, for which the report has been prepared, for example, 07/01, 07/02, 07/03, 07/04. Upon submitting the updated version of the report, the year and quarter digits shall change. When the report is supplemented, the year and the quarter, for which the updated report is prepared, shall be specified.

Acting for the Minister for Regional Development
and Local Government E.Zalāns

 

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Translation © 2010 Valsts valodas centrs (State Language Centre)