Procedures by which the Managing Authority, the Certifying Authority, the Co-operation Institution or the Responsible Institution Carries out On-the-spot Verification of a Project Financed by the European Union Structural Funds and the Cohesion Fund

Issued pursuant to
Section 18, Clause 5 of the
Law On Management of European Union Structural Funds
and the Cohesion Fund

1. This Regulation prescribes the procedures by which the Managing Authority, the Certifying Authority, the Co-operation Institution or the Responsible Institution shall carry out on-the-spot verification of a project (hereinafter - on-the-spot verification of a project) of the European Union Structural Funds and the Cohesion Fund (hereinafter - European Union Fund).

2. On-the-spot verifications of a project on a sample base shall be carried out by the Co-operation Institution or the Responsible Institution which has entered into a civil legal contract (hereinafter - contract) or agreement regarding the implementation of the project (hereinafter - agreement) with a final beneficiary of European Union Fund (hereinafter - final beneficiary) or for which a duty to carry out on-the-spot verification of the project is determined by the Cabinet Regulation regarding the implementation of the relevant activity or sub-activity.

3. The Managing Authority and the Certifying Authority also have the right to propose and carry out on-the-spot verification of the project.

4. The Audit Authority has the right to participate at on-the-spot verification of the project that is carried out by the authorities referred to in Paragraphs 2 and 3 of this Regulation.

5. The Managing Authority, the Certifying Authority, the Co-operation Institution or the Responsible Institution shall elaborate and approve an internal regulatory enactment, where the procedures by which on-the-spot verification of the project is carried out by the relevant authority shall be specified.

6. The Co-operation Institution or the Responsible Institution shall include the following information in the management information system of European Union Structural Funds and the Cohesion Fund (hereinafter - management information system):

6.1. regarding on-the-spot verifications of the projects planned for the next year and the risk level of all the European Union Fund projects managed by the Co-operation Institution or the Responsible Institution - until 30 December of the previous year;

6.2. current information regarding on-the-spot verifications of the project planned for the current month - until the first day of each month;

6.3. regarding each planned on-the-spot verification of the project:

6.3.1. date when it is planned to carry out on-the-spot verification of the project; and

6.3.2. time when it is planned to carry out on-the-spot verification of the project (prior to the entering into the contract or agreement, during the implementation of the project or after making the last payment to the final beneficiary).

7.The Co-operation Institution or the Responsible Institution shall:

7.1. determine the risk level of the relevant project (high, medium or low) not later than within a month after entering into the contract or the agreement with the final beneficiary; and

7.2. perform re-evaluation of the risk level of the project not less than once a year.

8. The Co-operation Institution or the Responsible Institution, while performing the risk evaluation, shall take into account at least the following criteria:

8.1. level of complexity of the European Union Fund project;

8.2. type of selection of the European Union Fund project;

8.3. sum total of eligible expenses of the European Union Fund project; and

8.4. legal status of the final beneficiary;

9. Five working days prior to the planned on-the-spot verification of the project (except the verifications referred to in Paragraph 10 of this Regulation), the Co-operation Institution or the Responsible Institution shall inform the final beneficiary thereof.

10. The Co-operation Institution or the Responsible Institution has the right to carry out on-the-spot verification of the project prior to the entering into the contract or agreement with the final beneficiary in order to ascertain regarding the actual implementation of the European Union Fund project or actual conditions for the implementation of the European Union Fund project. The relevant authority shall inform the final beneficiary regarding such a verification at least three working days prior to the verification.

11. In exceptional cases the Co-operation Institution or the Responsible Institution has the right not to inform the final beneficiary regarding on-the-spot verification of the project. Within the meaning of this Paragraph an exceptional case shall be:

11.1.verifications during training (for example, in workshops, courses) in order to ascertain whether the persons included in the list of participants are present at the place of training;

11.2. verifications in order to ascertain whether the property obtained for achieving the objective of the European Union Fund project is in the right place and is used for the project objectives;

11.3. on-the-spot verifications of the project in order to ascertain whether the execution of the particular works is provided; and

11.4. other cases when the genuineness of the activity performed within the framework of the European Union Fund project will not be possible to identify after the completion of such activity.

12. Five working days prior to the planned on-the-spot verification of the project, the Managing Authority or the Certifying Authority shall inform thereof the final beneficiary, the Responsible Institution, the Co-operation Institution and the Audit Authority.

13. The Co-operation Institution or the Responsible Institution shall carry out on-the-spot verification of the project in order to ascertain whether:

13.1. the European Union Fund project is implemented in accordance with the relevant contract or the relevant agreement;

13.2. the expenses qualifying for a refund from the financing of the European Union Fund have been actually made and are eligible for financing from the European Union Fund;

13.3. the final beneficiary ensures that the originals of the documents related to the implementation of the European Union Fund project and the derivatives thereof with a legal force are stored:

13.3.1. in conformity with the regulatory enactments regarding the accumulation, registration, preservation and utilisation of persons' archive documents, and in conformity with the Law On Management of European Union Structural Funds and the Cohesion Fund - if a final beneficiary is a legal person;

13.3.2. in conformity with the Law On Management of European Union Structural Funds and the Cohesion Fund - if a final beneficiary is a natural person;

13.4. the works, supplies, payments and services provided within the framework of the European Union Fund project comply with the provided for in the European Union Fund project, including:

13.4.1. the works and supplies have been carried out or the services have been provided in accordance with the contracts concluded between the final beneficiary and the performer;

13.4.2. the payments conform with the payment arrangements specified in the contracts, the works carried out, supplies and services provided, and the supporting and justifying documents are at the disposal of the final beneficiary; and

13.4.3. the requirements of public procurement, aid for commercial activity and environment protection (if applicable) are observed;

13.4.4. the basic principles of equal opportunities in issues related to gender equality, disability and agening (if applicable) are observed;

13.5. in accordance with the conditions for implementation of the activities, the expenses of the principal activity of the final beneficiary or expenses of other projects co-financed by the European Community, the State or local government (goods, services) are not included in the eligible expenses of the project;

13.6. the requirements, which have been specified in the regulatory enactments regarding the publicity and visual identity of the European Union Fund, have been observed; and

13.7. expenses actually made within the framework of the project comply with the objectives and results of the project.

14. If constant rate of indirect costs, lump sum or flat-rate is used for expenses of the project in accordance with the Article 11 (3) (b) of the Regulation (EC) No. 396/2009 of the European Parliament and of the Council of 6 May 2009 amending Regulation (EC) No. 1081/2006 on the European Social Fund to extend the types of costs eligible for a contribution from the ESF and Article 7 (4) of the Regulation (EC) No. 397/2009 of the European Parliament and of the Council of 6 May 2009 amending Regulation (EC) No. 1080/2006 on the European Regional Development Fund as regards the eligibility of energy efficiency and renewable energy investments in housing, on-the-spot verification of the project shall be carried out in accordance with the basic principles of these payments.

15. The Co-operation Institution or the Responsible Institution, on the basis of the risk evaluation of the European Union Fund project performed by it, shall carry out on-the-spot verification of the project, after the entering into a contract or agreement with the final beneficiary:

15.1. at least once per year to high-risk projects and the major projects;

15.2. at least once during the implementation of the project to medium risk projects; and

15.3. to low-risk projects - chosen by random sampling method, ensuring that each project may be chosen for the carrying out a verification.

16. If the final beneficiary implements more than one European Union Fund project under the supervision of the relevant Co-operation Institution or the Responsible Institution, the Co-operation Institution or the Responsible Institution may carry out one on-the-spot verification of the European Union Fund project, unless they are not high-risk projects or the major projects. If carying out on-the-spot verification of the project, the Responsible Institution or the Co-operation Institution determines significant deficiences or non-compliances for the selected low or medium risk project which may also affect badly the implementation of other European Union Fund projects implemented by the final beneficiary, it may carry out a complex verification at other European Union Fund projects implemented by the final beneficiary.

17. The Co-operation Institution or the Responsible Institution shall use the results of on-the-spot verifications of the project as a basis for the risk evaluation that shall be performed when planning the compliance and efficiency audit of the management and control system of the European Union Fund.

18. The Managing Authority and the Certifying Authority shall use the results of on-the-spot verifications of the project when planning the compliance and efficiency audit of the management and control system of the European Union Fund.

19. The Audit Authority shall use the results of on-the-spot verifications of the project carried out by the Managing Authority and the Certifying Authority when planning the compliance and efficiency audit of the management and control system of the European Union Fund or verifications of the project expenses on a sample base.

20. Within a period of time of five years, but not sooner than on the second year after the making of the last payment to the final beneficiary, the Co-operation Institution or the Responsible Institution shall carry out on-the-spot verification of the project:

20.1. by the method on a random sample base - to low-risk and medium risk projects; and

20.2. at least once per five years - to high-risk projects and the major projects.

21. If significant deficiences are identified after the making of the last payment to the final beneficiary, the Co-operation Institution or the Responsible Institution may carry out on-the-spot verification of the project not earlier than on the second year after the making of the last payment to the final beneficiary in order to verify actual circumstances and ensure elimination of the deficiences.

22. Carrying out the verifications referred to in Paragraphs 20 and 21 of this Regulation, the Co-operation Institution or the Responsible Institution shall ascertain whether:

22.1. significant changes have not occurred in the European Union Fund project within the meaning of Section 55 of the 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 repealing Regulation (EC) No. 1260/1999;

22.2. significant changes have not occurred in the European Union Fund project within the meaning of Section 57 (1) of the 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 repealing Regulation (EC) No. 1260/1999;

22.3. the final beneficiary ensures the storage of all the originals of the documents and the derivatives thereof with a legal force related to the implementation of the European Union Fund project and referred to in Sub-paragraph 13.3 of this Regulation until 31 December 2021;

22.4. the final beneficiary observes the requirements, which have been specified in the regulatory enactments regarding the publicity and visual identity of the European Union Fund.

23. The Co-operation Institution or the Responsible Institution shall inform the final beneficiary regarding the results of on-the-spot verification of the project within 20 working days following the verification.

24. The Co-operation Institution or the Responsible Institution shall carry out repeated on-the-spot verification of the project, if the deviations from the conditions referred to in Paragraphs 13 and 22 of this Regulation have been determined in the previous verification and a repeated verification is necessary in order to ascertain that the deficiencies have been eliminated.

25. If a non-conformity has been determined during on-the-spot verification of the project, the Managing Authority, the Certifying Authority and the Co-operation Institution or the Responsible Institution shall notify thereof in accordance with the procedure by which shall be notified regarding the non-conformities determined in the implementation of the European Union Funds specified in regulatory enactments, shall take a management decision regarding utilisation of the allocated financing and shall recover the non-eligible expenses.

26. The Managing Authority, the Certifying Authority and the Co-operation Institution or the Responsible Institution shall complete detailed verification forms and shall prepare reports, in which the process, results and activities of the verification, which have to be carried out in order to eliminate the deviations from the conditions (if such have been determined) referred to in Paragraphs 13 and 22 of this Regulation shall be documented, as well as shall ensure the accounting of the carried out verifications.

27. The Managing Authority or the Certifying Authority shall inform the final beneficiary, the Responsible Institution and the Co-operation Institution, as well as the Audit Authority regarding the carried out on-the-spot verification of the project and the results thereof within a period of time of 20 working days.

28. In accordance with the particular mutually concluded interdepartmental agreement regarding the procedures by which the relevant involved institution uses the management information system or in accordance with the regulatory enactments, the institutions involved in the management of the European Union Funds shall ensure that the data regarding all the verifications are included in the management information system.

29. Cabinet Regulation No. 440 of 26 June 2007, Procedures by which the Managing Authority, the Certifying Authority, the Co-operation Authority or the Responsible Authority Conducts On-the-Spot Verifications of Projects Financed by European Union Structural Funds and the Cohesion Fund (Latvijas Vēstnesis, 2007, No.104; 2009, No. 53), is repealed.

Prime Minister V. Dombrovskis

Minister for Transport K. Gerhards

Translation © 2011 Valsts valodas centrs (State Language Centre)