The SAO audited funds earmarked for improving the environment and landscape under the Rural Development Programme
Press Release – November 10, 2011
The audit was conducted as a pilot project for audits coordinated by the Supreme Audit Office (SAO) and the European Court of Auditors (ECA), which was carried out on the basis of the Memorandum concluded between the two institutions on July 14, 2010. The auditing procedures followed the International Standards of Supreme Audit Institutions (ISSAI).
The audit focused on funds provided to the Czech Republic under the Rural Development Programme in the area of improving the environment and landscape (Axes No. II of the Rural Development Programme for period 2007–2013) and scrutinized whether the funds had been utilized in agreement with the pre-set conditions.
The auditors found a number of system-related shortcomings at the Ministry of Agriculture and at the State Agricultural Intervention Fund that had impact on or could have influenced the correctness of payments provided to beneficiaries. This concerned in particular the incorrect setup of penalties in the area of eligibility and conditionality, which were not in compliance with EU regulations. As a rule, the beneficiaries were imposed by lower penalties than they should have been.
On a selected sample of imposed penalties, the SAO verified that the imposed penalties for breach of rules amounted to approximately one-third of the amounts that could have been calculated in line with EU regulations. The calculation of eligible expenditures for the renewal of forest potential after disasters was also incorrectly set up, which led to the uneconomical management of public funds, as the same objective could have been achieved using fewer funds.
Another system shortcoming was the incorrect approach to calculating the area of land blocks and the incorrect determination of the amount of the subsidies to be provided for certain land blocks.
In the frame of the auditing operation, the SAO and the ECA verified lawfulness and correctness of 30 selected operations. The auditors scrutinized the eligibility criteria and compliance with the good agricultural and environmental condition (GAEC). The area of hundreds of land blocks were examined too. The audit did not reveal serious shortcomings, which would indicate that 2009 farmer payments provided under Axes No. II of the Programme had breached the legal regulations.
In view of the facts mentioned above, the SAO states that the control system aimed at individual projects of Axes No. II of the Programme was found partially effective. However, there are possibilities to improve the inspecting mechanisms.
The auditing operation was performed from April 2010 to April 2011. The audited period was years 2009 and 2010; where relevant, the preceding period and the period until the auditing operation’s completion were also scrutinized. The audited bodies were the Ministry of Agriculture, the State Agricultural Intervention Fund, and 30 selected subsidy recipients. The auditing operation was included into 2010 Audit Plan of the SAO under No. 10/29. Jan Vedral, Member of the SAO Board, managed the operation and prepared the audit conclusion as well.
Communication Department
Supreme Audit Office