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On the spot checks (OSC)

On the spot checks (OSC). 2012 02 01-02 Virginijus Virbickas (v.virbickas@cpva.lt). LEGAL BASE (national level). Main document : Rules on project financing and management approved by the order of the minister of finance (2007-12-19), articles 152 to 160 .

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On the spot checks (OSC)

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  1. On the spot checks (OSC) 2012 02 01-02 Virginijus Virbickas (v.virbickas@cpva.lt)

  2. LEGAL BASE (national level) Main document: Rules on project financing and management approved by the order of the minister of finance (2007-12-19),articles 152 to 160. Scope: main aspects of the on the spot checks: - responsibility attributed to the implementing agency(IA); - obligatory character of the OSCs on the national level; - possibility of sampling (project level); - types of OSC (planned/unplanned); - general rules on planning of the OSC; - obligation for the IB to have internal procedures for OSC; - obligation to fill-in the OSC checklist (objective of the OSC and content); - other gen. rules on preparation for and carrying out of the OSC. SF 2007-2013 m.

  3. CLARIFICATION Within the structural assistance frameworks there are 3 possible on site visits during different phases: • EVALUATION of the application; objective: fact finding/advice to B; optional. • IMPLEMENTATION of the project (!) – ON THE SPOT CHECK. objective: justification of expenditure before it’s paid out; obligatory (in principle). • EX POST monitoring. objective: durability of the project; carried out on selected projects (ex: risk assessment). SF 2007-2013 m.

  4. General procedures for the OSC • Within CPMA the OSC are carried out: • Up to march 2010 : Quality assurance and control division; • From march 2010: structural assistance department and (or) finance department (usually – by both); • OSC are carried out by at least 2 persons: • 1 project manager + 1 finance officer (usually). • At least onceduring the project lifetime (except for technical assistance projects – in some cases OSC carried out every 2 years) SF 2007-2013 m.

  5. Objectives of the OSC • The OSC is defined by its objectives and scope. • Objective of the OSC (general in nature): • Proper implementation (Ascertain as to whether the beneficiary is implementing the grant agreement properly); • Progress(Ascertain as to whether the progressof project activities corresponds to the information set out in the documents submitted to the CPMA(payment claims, reports, supporting documents etc.); • Achievements and Results (activities/indicators); Checkthe achievements and the results of the Projectby comparing them to those set out in the grant agreement; • Other aspects of the project • Prevention(especiallyforintermediate OSC inbigscaleprojects); SF 2007-2013 m.

  6. Types of OSC PLANNED • Listed in the annual plan for the OSCs; • Has a general purpose spelled-out previously; • Usually carried out at the end of the project implementation term. UNPLANNED • Not listed in the annual plan (ex. implemented earlier) • Carried out (mostly) with the specific purpose(incorrect or misleading information, information in the press etc.); • Usually carried out when need arises. Type of the OSC is irrelevant for the scope, content or the participants of the OSC. All the aspects, listed in the OSC check list must be verified at least once. SF 2007-2013 m.

  7. OSC: step by step (7 steps) We can artificially distinguish those OSC related steps: • Planning; • Decision (on carrying out of OSC) making; • Preparation; • Actual carrying out of OSC; • Filling-in of the OSC check listandthereport; • Transferring information to the SFMIS (IT system); • Follow-up (discrepanciesand irregularities) SF 2007-2013 m.

  8. 1. Planning • When: plan is established by the responsible person at the beginning of each year; • Information source: IT systems (SFMIS and CPMA IT system); • ApprovedbytheheadoftheUnitofStructuralassistance department. • Renewal:astheneedarises. • Problems: Because of the dynamics of the projects (postponing, early implementation) the plan is „difficult“ to implement to theletter, thusit‘sindicative. • Important: to havetheplanasup-to-dateaspossiblebecauseoftheplanningofstaff (medicalequipmentexpert, engineers etc.) andotherressources; SF 2007-2013 m.

  9. 2. Decision making • TIMING: • Mainfocus- progressoftheproject; • OSC usuallycarriedoutat theendoftheprojectimplementation; • WHO: • Project manager (planned OSC); • Person resp. for OSC (unplanned OSC). SF 2007-2013 m.

  10. 3. Preparation • Important: communicationwiththebeneficiary; • Asforthepreparatoryworkforhim; • Asforthepersons, thatmight be calledin to assistduringthe OSC (constructioncompanyrepresentatives etc.); • Notification: inwrittingnolaterthan3 w. daysbeforethe OSC. exceptionismadeforthecaseswhenthenotificationofthebeneficiarymayaffecttheresultsofthe OSC; • Regsitrationofthe OSC ontheregistrerofthe OSC; • Analyseinformationavailable to CPMA; • Pre-preparethe OSC checklist (formisgeneratedfrom SFMIS); • Possibilityofsamplingwithintheproject (notobligatory); SF 2007-2013 m.

  11. 4. Actual OSC I The OSC consists of two types of control: • Activites control (documents + fact): • Documents (order, legal status/nature of activity of B.) • Copies vs. Originals; • Documents vs. factual circumstance. • Financial control (documents + accounting): • a separate accounting system or an adequate accounting code for all transaction in theproject (accounting system). • copies of payment claims and original supporting documents for the expenses and payment of expenses (documents). SF 2007-2013 m.

  12. 4. Actual OSC II • Quality– correspondance of goods/services to thecontract; • Quantity – scope; • Timing– deadlines; • Natureof use – premises/goods; • Sustainabledevelopment – complience with the principle/measures; • Gender equality/nondiscrimination - complience with the principle/measures; • Visibilitymeasures(includedin „Quality“, quantity, timingcontrol) SF 2007-2013 m.

  13. 4. Actual OSC III MOST COMMON PROBLEMS: • B did‘tdoitshomework(preparationforthe OSC): • Documentsnotprepared (losingtime); • Partoffacilities/suppliesnotaccessibleorpartlyaccessible. • Uncooperative B (not very common); • Changeofpersonswhohavebeenworkingwiththeproject; • Partofthedocuments kept inelectronicformat; • Unclear documents (forthepurposesofthe OSC). SF 2007-2013 m.

  14. 5. Check list& Report • REQUIREMENTS / Practice • FORM approved by the order of the minister of finance; • 2 exemplars; • Filled–in obligatory for each OSC ; • Usually filled-in on site (otherwise sent by mail); • Signed by those invoved in the OSC (B and CPMA); refusal to sign (?); • COMPOSITION (III parts) • I part: general information (automaticaly generated and exported from SFMIS); • II part: filled in manually (taken from the form approved); • III part : Report: • Results and findings of the OSC; • Recommendations and obligations (to do) for the B; • Might be of significance for the ex post control. SF 2007-2013 m.

  15. 6. Transferring information to the SFMIS • Registration The OSC is registeredwithinSFMIS; Deadline – 10 workingdaysfromthe OSC. • Uploading of documents (.pdf) CopyoftheOSC checklist + Report. SF 2007-2013 m.

  16. 7. Follow-up • SFMIS – monitoringtool(+ possibilityofplanning also). • Follow-upondeadlinesfor recommendations/obligations to B; • Monitoringofthedisrepancies; • „Finalized“ Forthefinalpayment to be maidthe OSC status onthe SFMIS must be „finalized“. • Conditionsfor„finalized“: • Nodiscripanciesidentified; • Discrepancieseliminated (correctedordulyexplained); • Impossible to eliminateordulyexplainthediscrepancy (insignificantdiscrepancy); • Initiationoftheinvestigationonthe (possible) irregularity. SF 2007-2013 m.

  17. MOST COMMON IRREGULARITIES Inthiscasewemeandeviations, notapprovedbyCPMA / violatingcontractualarrangements. DOCUMENTS: • Lackofdocuments; • Copiesdoesnotcorrespond to theoriginalsubmittedonsite (rare); • Disorder. • WORKS: • Deviationfromthe Grant Agreement (changeofplaceworks are beingdone); • Deviationfromthecontract (technicalspecifications, technicalproject etc.); - Changeofmaterials, quality, quantityofworks; - Works declaredascompleted are actuallynotdone. SF 2007-2013 m.

  18. MOST COMMON IRREGULARITIES II • SUPPLIES: • Deviationfromthe Grant Agreement (changeofplaceworks are beingdone); • Deviationfromthecontract – models /technicalcharacteristics(worse). • SERVICES: • Lackproofthatserviceshaveactuallybeenprovided (mostcommonforworks – technicalprojectexpertise, works‘ supervision, relevantreportsasproofofservicesprovided); • ExtentofservicesprovidedServicesprovideddon’t correspond to thecontractualprovisions. OTHER (Deviation from the Grant Agreement): • Facilities/supplies are notused at all; • Facilities/suppliesusednotaccording to thepurpose, specifiedintheGrant Agreement; SF 2007-2013 m.

  19. MEASURES TAKEN • In the OSC check-list • Things to do for Beneficiary (Obligations regarding the discrepancies/implementation of the project); • Recomendations. • POSSIBLE OUTCOMES: • Discrepancies - Corrected / eliminated / explained; • If NOT – investigation and possible reduction of support amount (other measures). The investigation is carried out by the CPMA. Findings& Recommendations submitted to IB. Intermediate Body makes a decision. SF 2007-2013 m.

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