The Auditor General recently carried out a joint audit that analysed the manner by which simplification measures of structural funds regulations were being transposed into national regulations and managed by the relevant authorities.
The National Audit Office (NAO) had agreed, together with 13 other European Union (EU) member states, to participate in a study mandated to the Working Group on Structural Funds V.
The NAO said that further to widespread reported errors, misunderstandings, time consuming and intensive administrative procedures, as well as the wrong application of funding regulations across EU member states, the European Parliament and the European Court of Auditors requested the European Commission to simplify regulations, to which it acquiesced.
Against this background, NAO examined the simplification measures corresponding to the 2007-2013 programming period with respect to European Regional Development Fund (ERDF) and European Social Fund (ESF) projects. Apart from focusing on how the simplification measures were transposed on a national scale, NAO sought to determine why certain measures were not implemented and simultaneously elicited feedback on future simplification measures.
Of the existent nine simplification measures, NAO noted that Malta had transposed and applied only one, within the Operational Programme corresponding to the ESF. This measure essentially consisted of the recouping of project indirect costs according to a predetermined rate calculated on actual project direct costs.
Overall, the applied simplification measure proved valuable to the stakeholders, especially to the beneficiaries. The latter commented positively on the fact that administrative burdens were not a component of this measure.
NAO said that it commends the manner by which the Planning and Priorities Coordination Department (PPCD) worked towards determining applicable rates for the ‘indirect costs, declared on a flat-rate basis’ simplification measure. Outsourcing a feasibility study constituted good practice and curbed the risk of introducing an element of subjectivity to the process.
One of the main reasons afforded to NAO with regard to the fact that certain optional simplification measures were not applied was the time and cost associated with carrying out studies that determine applicable rates and justify the use of such measures.
NAO said that PPCD does not manage a large enough volume of projects to be in a position to justify studies carried out in this regard. This situation is further compounded by the fact that the size and nature of projects undertaken in Malta are highly divergent from one another and, therefore, inferences made would most likely be unrealistic.
The NAO said that the beneficiaries whose opinions were assimilated into this study alluded to an apparent lacuna in terms of information sharing with regard to project implementation and leadership.
“All beneficiaries were keen on imparting their knowledge and experience to new and inexperienced Project Leaders who would most likely encounter difficulties already mastered and addressed by other Project Leaders.”
NAO established that beneficiaries needed greater simplification in terms of record-keeping procedures, as well as an increased overall flexibility in view of complications arising from unforeseen changes in circumstances. With respect to this latter point, the institution of safeguards that provide flexibility would be an ideal avenue for further exploration in the context of possible future simplification.
NAO also noted that beneficiaries were not satisfied with the level of support afforded by their respective line ministries, particularly in the address of arising difficulties and challenges. NAO said that it therefore considers the need to coordinate assistance provided by PPCD and the various involved line ministries as a matter of paramount importance, which if not actively managed, may easily prove to be detrimental to all involved.
The Report lays down further conclusions and recommendations based on critical factors and issues identified through the study.
A copy of the full Report may be accessed through the NAO website www.nao.gov.mt [1].