Annex 5 to the AAR – The Internal Control Template for Budget

Implementation

Characteristics of DG policy environment:

Summary: DG DEV is a policy making DG dealing both with political relations with ACP countries
and development programmes with all developing countries. DG DEV has a financial responsibility
only for its administrative budget, amounting to MEUR 2.79 for commitment appropriations (CA). DG
DEV also manages two operational budget lines, i.e. 'Coordination and raising awareness on
development issues' (budget line 21.0802 with MEUR 9.03 in CA) and 'Commodity agreement' (budget
line 21.0704 with an amount of MEUR 3.50 in CA).
Key inherent risks in this environment :
ƒ Given the limited financial volume, the management mode and the use of procedures, DEV
considers its inherent risk in the financial area as low.
ƒ The major risks faced by DG DEV are of political nature, since they are closely related to its
role of policy making, programming and political relations with partner countries.

Management mode:
The centralised management mode is applied to
all programmes. Number of Commitment and Payments

450

Key figures: 400

350
Number of Commitments and Payments

A. Administrative budget appropriation 300

authorised: 250
Series1
Series2
200

150

21 0102 11– Other management expenditure (C1) 100

50

MEUR 2.59 0
1 2 3 4 5 6 7
B Line:2101- 210704- 210802- Total

21.010404- Coordination and raising awareness –

Administrative expenditure
MEUR 0.20

B. Operational budget appropriations authorised:

210704 – Commodity agreements

MEUR 3.50

210802 - Coordination and Raising Awareness:

MEUR 9.03

Management and control systems : stages and main actors

In the financial circuit adopted by DG DEV the financial cell, operating within the Resources Unit, is
responsible for the ex-ante financial initiation and verification whilst the operational initiation and
verification functions lie within four Units: Unit DGA01 "Resources", Unit A/2 "Aid effectiveness and
relationships with Member States and EEA countries", Unit A/4 "Information, Communication and
IT", Unit B/1 "Economic development: Infrastructure and communication networks, trade and regional
integration".

AAR 2008 DG DEV - Final

Selection process (of
beneficiaries, intermediaries,
agencies, contractors etc.),
including preventive measures
Communication and information
measures to improve the quality of
financial management and
provision of supporting data by
beneficiaries, contractors and
intermediaries
Detective and corrective
controls:
Checks and monitoring during the
initial phases of the
programme/contract
Checks and monitoring during the
final/ closure phases of the
programme/contract
Preventive and corrective
controls and audit:
Desk reviews, on-the-spot audits
carried out either ex ante or ex
post.
Feedback which enables control activities to be optimised
Verification that processes are
working as designed
IAC, IAS, ECA
recommendations on the
AAR 2008 DG DEV - Final
Public procurement procedures (open call for tenders) are
mainly used in the Coordination and Raising awareness budget
line (the 21.0802) with the exception of an audiovisual
programme which finances grants (project grants) through an
open call for proposals.
• Transparency measures: calls for tender are published in the
Official Journal and the EUROPA website. Updated
information and FAQ are posted regularly on the website.
• Adequate communication to unsuccessful tenderers.
• Computerised accounting system is used to record the
contracts and the transactions related to the contracts in
ABAC.
• Technical training in procurement as well as information
campaigns and work-shops on ethics and integrity are given
to all staff involved in the procurement process.
• All staff involved in financial management has the
responsibility to alert their Director-General, the Secretary-
General or OLAF if they suspect any irregular, illegal or
criminal activity.
ƒ The financial circuit chosen is the partially decentralised
financial circuit which appropriately addresses the
accounting risks, provides for segregation of duties and
compliance with accounting rules through the financial
verification of files by the central financial cell. The
financial cell, operating within the Resources Unit,
undertakes ex-ante financial initiation and verification.
Four, out of a total of nineteen, operational units have
responsibilities for operational initiation and verification.
ƒ In the final processes, external audits can be requested for
the grants awarded.
ƒ DG DEV has no ex-post controls in place to make sample
based checks on the accuracy of transactions. However, as
the financial initiation and verification is centralised, and
performed after the operational initiation and verification,
the risk of accounting incorrectly a particular transaction is
limited.
ƒ On the spot audits are requested – using external contractor
– when there are suspicions regarding specific contracts.
ƒ Checks over the main GL accounts (e.g. cost accounts, pre-
financing) are carried out by the financial cell every two
months, as well as a follow-up of recovery orders. The
control issues are appropriately addressed in the accounting
quality project.
The 2008 audit from DG Budget (Report DG BUDG of
7/02/2008) concerning the "Validation of local systems"
concluded positively that the financial management systems in
DG DEV meet the validation criteria drawn up by the
Accounting officer.
DEV's Internal Control Co-ordinator oversees the
implementation of internal control systems by making use as
functioning of the system and their
follow up
High level management
reporting (e.g. to the Director
General) and its role in monitoring
problem issues
AAR 2008 DG DEV - Final
well of the recommendations issued by the various audit bodies.
ƒ With regard to financial management, a Report of
indicators is regularly sent to Management and the AOSDs
to inform them about budget implementation.
ƒ Regular reports are made to the Management for the
follow-up of DEV's objectives and activities.