Executive summary

The general responsibilities of the Audit Agency as indicated in the Framework Agreement are laid down in Law no.90/2016 “On the organization and functioning of the Audit Agency for the EU-accredited Assistance Programmes in the Republic of Albania”. According to this law the Agency is a budgetary public legal entity organized as an Autonomous Agency, under the supervision of the Prime Minister. Article 2 of this Law defines the mission statement of the Audit Agency:

  • The Audit Agency shall audit the management and control systems related to actions, transactions and annual accounts of the EU financial aid granted as pre-accession and post- accessing
  • Through the audits, the Audit Agency shall make sure that the management, internal control, internal audit, oversight, and accounting systems are in line with international auditing standards, the Framework Agreement, the EU applicable regulations and the Audit Agency’s Audit

During the year 2021 AA has planned and carried out the following activities for IPA I and IPA II Programmes under indirect management:

  • System audit to verify the effective functioning and fulfillment of the key controls, within risk areas identified, in the management and control structures for
  • Audit of operations to verify the legality and regularity of the underlying transaction Verifying expenditures declared to the Commission.
  • Audit of accounts to verify the completeness, accuracy and veracity of the annual financial reports or statements and the underlying annual accounts
  • Follow-up of the previous findings and

The expenditure declared to the EC and covered by the audit activities of the Agency during the year 2021 are the following:

 

 

Programme

 Total expenditure declared for FY 2020 in EUR (EU+NC)
IPARD II 10,836,929.92
IPA II Annual Country Action Programmes 10,121,254.25
 

IPA National Programmes (TAIB Component)

 7,471,964.64

 

The structures audited by AA during the year 2020 are:

 

  1. The National Fund has central budgetary competence and acts as central treasury entity. NF main responsibilities are:
    • Holding and organizing the central IPARD bank accounts;

 

  • Requesting funds and receiving all payments from the Union budget;
  • Authorizing the transfer of payments to the operating structure;
  • Returning funds to the Union budget following recovery orders issued by the Commission;
  • Support NAO in preparing financial reporting to the Commission;
  • Operating computer based accrual accounting system that provides accurate, complete and reliable information in a timely
  1. The NAO Support Directorate is a structure designated within the Ministry of Finance, under CoM Decision No30, dated 18.02.2016, and will support the NAO in carrying out the tasks and responsibilities detailed as stipulated in Article 2(4) of the Annex A to the Framework The NAO Support Directorate shall assist the NAO in fulfilling his/her tasks in particular those related to the efficient and effective functioning of the internal control systems for the implementation of IPA II assistance. The NAO Support Directorate will provide direct support to the NAO in respect of the following tasks:
  • Providing assurance about the legality and regularity of underlying transactions
  • Putting into place effective and proportionate anti-fraud measures taking into account the risks identified and ensure the identification and immediate communication of any irregularity
  • Being responsible for monitoring the continuous fulfilment by the Management Structure and the Operating Structures of the applicable requirements set out in points (a), (b) and (d) of Article 12(3) and Annex B to the Framework Agreement for IPA II and in case of failure to satisfy these requirements for informing the European Commission without delay and taking any appropriate safeguard measures regarding payments made or contracts signed
  • Ensuring the existence as well as efficient and effective functioning of the internal control systems for the implementation of IPA II assistance both in Management and Operational Structure bodies
  • Ensuring reporting on the management and control systems and review the programming and implementation capacities of staff within Operating Structures involved in the programming and implementation of the actions
  • Ensuring that a reporting and information system is put in place and functioning
  • Following-up the findings of audit reports from the audit authority, in accordance with Article 17 of the Framework Agreement for IPA II and Article 12 of the IPA II Implementing Regulation 447/2014
  • Taking account, when drawing up and submitting financial reports or statements and payment applications of the results of all audits carried out by or under the responsibility of the Audit Authority
  • Immediately notifying the European Commission of any substantial change concerning the management and control systems for examination and approval in advance of their implementation

 

  • Coordinating, whenever relevant, the preparation of consolidated action plans addressing all outstanding issues
  1. The Managing Authority is a Directory in the Ministry of Agriculture and Rural Development. MA is public body acting at national level, in charge of preparing and implementing the IPARD programmes, including selection of measures and publicity, coordination, evaluation, monitoring and reporting of the
  2. Pursuant to the Council Minister Decision 719, on 31.10.2014, IPARD Agency is the organizational part of the Ministry of Agriculture, Rural Development and Water Administration, which, among others, carries out the following tasks for implementation of EU and national measures:
  • Issues the calls for applications and publicizing terms and conditions for eligibility and accepts the applications,
  • Decides on the eligibility of the applications
  • Approves the payment claims
  • Executes transfer of funds to the beneficiaries
  • Establishes own and separate accounting,
  • Reports to the
  1. IPA Operating structure which includes CFCU, IPA Units and NIPAC SO established to prepare, implement and manage the IPA II The operating structure is responsible for preparation, implementation, information and visibility, monitoring and reporting of programmes, and evaluation thereof whenever relevant, in accordance with the principle of sound financial management. It is responsible for ensuring the legality and regularity of the expenditure incurred in the implementation of the programmes under its responsibility.

As regards the management of a programme, the operating structure:

 

  • monitors the implementation of the programme, proposes amendments, as needed, and provides to the sectoral monitoring committee information on the progress of the programme in achieving its objectives, in particular being based on set milestones and related indicators (targets), as well as financial data;
  • delivers all the necessary information for the purposes of the reports drawn up by the NIPAC and the NAO and submitted to the Commission as provided for in Article 59 of this It may be required to draw up a comprehensive annual report covering the full financial year, to be submitted by the NIPAC to the Commission, after examination by the responsible sectoral monitoring committee;
  • shares within the operating structure any information that is relevant to the execution of the tasks allocated and to the implementation of actions;
  • is responsible for drawing up an evaluation plan and conducting, as appropriate, ex-ante, interim and ex-post evaluations of the programmes it manages, following the provisions of Article 55 of this

As regards the selection and control of actions and financial management, the operating structure:

 

  • ensures that actions are selected for funding and approved in accordance with the procedures and criteria applicable to the policy area or programme;
  • arranges for procurement and grant award procedures and contracting;
  • sets up procedures to ensure retention of all documents regarding procurement, grant award, contracting, financial management, controls and audits required to ensure an adequate audit trail;
  • makes payments to, and recovery from, the recipients of IPA II assistance;
  • ensures that all bodies within the operating structure involved in the implementation of actions maintain either a separate accounting system or an adequate accounting codification for all transactions relating to an action;
  • ensures that the NAO receives all necessary information on the procedures and management verifications carried out in relation to expenditure;
  • sets up an accrual based accounting system which records and stores, in computerised form, accounting records for each action/ activity and which supports all the data required for drawing up payment request and annual financial report or statement and making commitments and payments and monitoring the implementation of the action;
  • sets up a system for timely reporting of irregularities and for effective and proportionate anti- fraud measures, taking into account the risks identified;
  • sets up a system for the recognition of all amounts due and for the recording in a debtors’ ledger of all such debts, including irregularities, prior to their
  • verifies that the expenditure incurred, paid and declared to the NAO complies with applicable Union and national law, the programme, the conditions for support of the action and the conditions of the contract, the goods or services have been delivered, and the payment requests by the recipient are
  • ensures internal audit of the bodies within the operating structure;
  • ensures compliance with information, publicity, transparency, visibility and communication requirements

Based on the requirements of article 23 (2) of Commission Implementing Regulation (EU) No 447/2014 on the specific rules for implementing Regulation (EU) 231/2014 of the European Parliament and of the Council establishing an Instrument for Pre- accession Assistance (IPA II) (hereinafter referred to as the “IPA II Implementing Regulation”), Clause 5, point 3 (b) of Annex A of the FwA IPA II, the Audit Authority has drawn up and has submitted to the Commission and the Government of the Republic of Albania, with a copy to the NIPAC and the NAO the following:

  • in March 2021, the Annual Audit Opinion for the year 2020 in accordance with the second subparagraph of Article 60(5) of the Financial Regulation and following the model set out in Annex E to the FwA for IPA II, on the annual financial reports or statements and the underlying annual accounts for the financial year 2020, covering their completeness, accuracy and veracity and on the functioning of the management, control and supervision system and the legality and regularity of the underlying transactions;

 

  • in March 2021, together with the Annual Audit Opinion, the Annual Audit Activity Report for the year 2020 following the model in Annex D to the FwA IPA II and setting out the findings from the audits carried out in accordance with the Audit Strategy 2020-2022 and 2021-2023 and supporting the Annual Audit Opinion for the year 2020. The Annual Audit Activity Report sets out, inter alia, any deficiencies found in the management, control and supervision systems and any corrective measures taken or planned by the NAO, National Fund and/or the operating structures