Slow drawing under the Swiss-Czech Cooperation Programme caused by complicated administration

PRESS RELEASE on Audit No. 13/37 – November 24, 2014

The aim of the Swiss-Czech Cooperation Programme (Programme of Cooperation) is to help with reduction of economic and social disparities between the Czech Republic and more advanced countries of enlarged EU on one hand and between dynamic urban centres and regions affected by structural changes in the Czech Republic on the other hand. In 2006, the EU and the Swiss Federal Council agreed that the Swiss Confederation would support ten new EU Member States in the form of non-repayable financial assistance in the amount of one billion CHF, among which the Czech Republic was also included. The Framework Agreement between the Czech Republic and Switzerland signed in 2007 set financial support in the amount of CHF 109.78 million (around CZK 2,300 million). Despite a complicated organizational structure and time-consuming project approval system, the Czech Republic accomplished commitments to the whole allocation of the Programme of cooperation in time.

The Supreme Audit Office (SAO) focused on the audit of administration system of the Programme of Cooperation, on individual organizational levels, and on the final beneficiaries as well. At the Ministry of Finance, there were scrutinized activities related to the performance of the National Coordination Unit, the Paying Authority, and the National Audit Authority. Specifically, it was the organization of the Programme of Cooperation, the assessment process of drafts and final project proposals, monitoring, control, and disbursement of funding, the annual reports preparation, and the system of reporting and investigation of irregularities, methodological coordination, and supervision. The audit at the Ministry of Interior, the Ministry of the Environment, and the Ministry of Health was aimed at scrutinizing their involvement as Intermediate Bodies, particularly in the project evaluating and selecting process and consequently in their implementation. At the beneficiaries, nine projects were checked.

Considering the relatively slight progress in drawing funds and due to low number of completed projects, the SAO could not evaluate the fulfilment of the Swiss-Czech cooperation. The fulfilment of the given objectives should be achieved by implementing the projects agreed by the Swiss side. Among the said projects were: „Tram line Nove Sady“ in Olomouc, „Public transport for everyone – the town of Beroun“, „Developing a new technological centre of the Czech Police“, „Modernisation and enlargement of the home for the elderly“ in Bilovec, and „Home for the elderly“ in Roznov pod Radhostem.

In the audit, the auditors detected some systemic imperfections such as complex multilevel organizational structure of the Programme of Cooperation at the national level including Intermediate Bodies which increased the time and human resources demands. Some Intermediate Bodies did not perform delegated activities in the entire extent (Ministry of the Interior), or their activities de facto merged with other responsibilities (Intermediate Body and intermediary in the case of the Ministry of Health). The rules for the procurement of small tenders were not unified across the Programme of cooperation. It could cause problems to the beneficiaries in the phase of projects realization. The Ministry of Finance and the Ministry of the Interior did not comply with the Act on Financial Control as regards performing the public administration control.

The SAO pointed out the long approval phase of projects which was affected significantly by the two-round method of projects evaluation, by the need for translation of documents into and from English, and by the multilevel organizational structure at the national level. The applied method of control of public procurements before an announcement also increased the administrative burden and prolonged the time.

Based on the facts detected in this audit, the SAO recommended to simplify the organizational structure at the national level, especially not to create intermediate steps in the form of Intermediate Bodies, to unify procedures for the procurement of small-scale tenders, enforce a smaller number of different types of help (e.g., programmes and projects instead of programmes, funds, the block grant, individual projects, and sub-projects) so as to achieve greater clarity for applicants and the public for the remaining period of implementation of the Swiss-Czech Cooperation Programme and for the future foreign aid of a similar nature. Furthermore, the SAO recommended paying due attention to the implementation phase of the Programme of Cooperation to minimize the risk of failure to meet the term limit for reimbursement.

The audit was coordinated with the Swiss Federal Audit Office as regards the topic and time. The Swiss Federal Audit Office carried out the audit of the Programme of Cooperation in the Czech Republic in the first half of 2013. A joint report “Funds earmarked for the implementation of the Swiss-Czech Cooperation Programme to reduce economic and social disparities within the enlarged European Union” represents the result of cooperation between the two institutions.

Communication Department
Supreme Audit Office

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