REPUBLIC OF BULGARIA
NATIONAL AUDIT OFFICE
R E P O R T
on the results of financial and performance audit of the implementation of Programme BG 9911 "Justice and Home Affairs" and of the Central Financing and Contracting Unit (CFCU) with the Ministry of Finance
A team from Department VIII - Specific Audits carried out financial audit and performance audit of the implementation of Programme BG 9911 "Justice and Home Affairs" and of the Central Financing and Contracting Unit (CFCU) with the Ministry of Finance.
The audit was carried out on the grounds of order P-67 dated 28.05.2002 of the President of the National Audit Office (NAO) and in conformity with the EU Regulation for Phare Programme.
The audit report was submitted on 24.01.2003 within the term, specified by the law, accompanied by a letter ref. No. 060000670/13.02.2003. The Ministry of finance informed the NAO President that it accepts the report with no comments, remarks or objections.
Audit report No.0600006702 for financial audit and performance audit, carried out under Phare programme BG 9911 was adopted with a decision at a meeting of the National Audit Office on February 27, 2003.
The following findings were ascertained as a result of the audit, carried out by the NAO:
I. Financial Management of the Programme
1. Administrative Management and Internal Control
The financial management of Programme BG9911 "Justice and Home Affairs" was implemented by the CFCU with the Ministry of Finance. An authorized Programme Manager, having a Deputy Minister standing was appointed as well as a CFCU Director and experts. Job descriptions of the CFCU experts have been drawn up according to the PHARE procedures. The internal and external risks were identified. The internal control system is the most significant element of the MF measures, aimed at policy, preventing corruption, misuse and illegal utilisation of funds under the programme. A preliminary check and double signature system were established for disbursements under the programme, as well as arrangements for tender procedures of different projects. The requirement for preliminary approval by DEC in Sofia has been observed.
2. Tender Procedures
Informal advice procedures (2), direct contracting (8), international tender (8), framework agreement (1) and twinning agreements (4) were used in selecting contractors of the programme. All direct contracting and contract extensions with the contractors, as well as the tender procedures and documents have been agreed upon and approved by DEC. The Evaluation Panel reports on the tenders held were approved by the authorized CFCU manager.
The tenders were held in compliance with the Financial Memorandum requirements, DIS and the EC regulations.
3. Financial accountability
The financial accountability before the European Commission was carried out according to DIS Provisions, using Perseus system, under the management of the PAO and the CFCU Director. All contracts and disbursements were entered in the PHARE financial accounting system PERSEUS. All disbursements were duly entered in the accounts.
EC FINANCIAL ACCOUNTING SYSTEM - PHACSY /PERSEUS
The CFCU accounting using PERSEUS system has been performed since 1999, when the programme was initially launched. Reports on the exchange of information to and from Brussels are carried out directly via e-mail. No failures in the CFCU activity with the Perseus system have been registered. Two persons have access to the system - Senior Financial Manager and Senior Tender and Contracts Manager. All transactions were made through special interest accounts of the Programme in euro, opened by the National fund. Following the consent of DEC, an account in euro was opened at the Bulgarian Foreign Trade Bank - BULBANK-Headquarters- acc.No.34 99926 132.
It was ascertained that as of 02.12.2002 the overall approved amount under the Programme by the NF of the CFCU was 9,021,837.66 euro. The first approved sum under acc. No. 34 99926 132 amounts to 11 690.00 and was made on 23.10.2000. As of 08.11.2002 funds, amounting o 7 633 742.54 euro were disbursed. In line with contracted terms, 9 007 819.79 euro have to be absorbed by December 31, 2002 which represents 94,82% of the total budget, amounting to 9,5 mln. euro. The interests accrued on the accounts in euro are managed by the National Fund (NF).
2. PROGRAMME IMPLEMENTATION UNDER DIFFERENT PROJECTS
The overall objective of the Programme is to prepare Bulgaria for EU accession through development of the legislation in specific areas of justice and home affairs, by continuing approximation with the EU requirements and improvement of the institutional and administrative capacity, necessary for its implementation. The projects are in conformity with the Accession partnership:
· Development of effective boarder control;
· Fight against organized crime;
· Implementation of international treaties, related to the legislation of the Shengen countries;
· Improvement of the effectiveness of the Judiciary.
The immediate objectives of the Programme are:
1. Strengthening the border control in Bulgaria through the introduction of operative standards and practices for the Bulgarian boarder police, based on the best European practices. The support rendered for improvement of the border control will assist Bulgaria in its preparation for EU accession and will guarantee that the accepted strategies for fighting illegal immigration and international crime will be implemented.
2. Strengthening the institutional capacity of the Ministry of the Interior, aimed at development of police offices in line with the EU standards and alignment of legislation with the acquis in the field of justice and home affairs: development of information systems and solving management issues.
3. Supporting the Ministry of Justice in strengthening the independence and achieving effective operation of the judiciary, considering the recommendations of the EC Annual report on the progress of Bulgaria in the process of accession from 1998 and the recommendations of experts in the field of justice and home affairs, who visited Bulgaria in May 1998 and January 1999.
The institutional development programme is implemented through four Twinning Projects.
The financial situation of the Programme BG 9911 "Justice and Home Affairs" under projects as of 08.11.2002 is as follows: (ref. encl. TABLE)
Absorption of funds under the programme
As of November 8, 2002, 7 633 742.54 euro or 84.75% of the committed budget have been absorbed. According to the programme forecast, by the end of 2002, when the term for disbursements under the programme expires, according to the contracted agreements, funds, amounting to 9 007 844.79 Euro will be disbursed, which is 94,82% of the committed funds under the financial memorandum, amounting to 9 500 000 euro. The highest rate of absorption of funds is achieved under project BG9911-1 Institutional strengthening of the Bulgarian border police - 91,78% of the committed amount, followed by project BG 9911-2 - 85.19% and project BG 9911-2 - 70,89% of the contracted funds.
CONCLUSIONS
1. The Objectives of PHARE Programme BG 9911 have been achieved.
Its input has been considerable in establishing capacity and practical experience, skills and experience in aligning our legislation to the European one and implementation of the Acquis communautaire in the justice and home affairs system.
1.1. Four of the twinning projects have been successfully implemented and have contributed to the improvement of the administrative capacity in the Ministry of Justice and the Ministry of Home Affairs. Especially good results have been achieved under the Twinning project of the Ministries of Home Affairs of Bulgaria and Spain, where all planned objectives have been achieved. The Project has contributed to the achievement of better effectiveness in the activity of the Ministry of Home Affairs. Some of the results achieved under the Twinning project have surpassed the planned outputs. The good organization of the project implementation , the good professional skills of the leading experts, involved in the implementation of the project, the individual merits of the PAA and the unconditional support on the part of the management of the Ministry of home affairs have contributed to this end. A system has been set up for informing the staff of the ministry on the technical support rendered and the experience acquired for implementation of the acquis communautaire, in view of giving access to the information to a greater part of the staff.
1.2. The programme has supported the establishment of a legal basis, necessary for the adoption of the acquis. Concrete outputs have been achieved in:
a) Justice: draft on the amendments to the Judiciary Act -first hearing in the National Assembly; draft for amendments to the State Security Act and draft amendments and supplements to the Criminal Code have been submitted to the National Assembly; a long-term system for training of prosecutors and magistrates has been established; the judiciary administration in the Act on Amendments and Supplements of the Judiciary Act; a plan for legislative changes, regulating the administration process in different units of the judiciary.
b) Home Affairs: Draft on amendments and supplements to the Ministry of Home Affairs Act, concerning the personal data protection; adoption of a new Personal Data Act and ratification of Convention 108 of the EC; a concept and policy for police management has been elaborated; a model for development of the police and police career has been set up in line with EU standards; an integrated system for automated criminal analysis has been developed, in compliance with the EU standards, aimed at counteracting organized crime; an overall document has been approved in the Ministry of home affairs for planning an automated information system for investigation and on 4.10.2002 the new automated system for discovering lost vehicles has been put into operation with actual data; training programmes for learning police jargon in French, German and English have been developed; a new methodology has been introduced for specialised training in police jargon; a National contact point was set up; an institutional model for setting up a system for processing and analysis of working information has been approved; IT training facilities have been ensured; the job descriptions and work places in the new Centre for police investigations have been approved; 14 courses have been held on 7 Enfopol topics; prerequisites for changing the behaviour and thinking of police officers have been created.
c) Border Police: Bill on the Boarder Guard; secondary legislation - Regulation on the border check points and Training regulations; approved plan for modifying the organisational structure of the border police; two projects of international agreements have been developed which form the basis for signing international agreements with neighbouring EU member states; concepts have been approved for setting up contact services and services for exchange of liaison officers; a framework partnership agreement has been adopted between the National Border Police and the Federal Ministry of Home Affairs of Germany, enacted January 2003 and funding has been ensured from the budget of the Federal Republic of Germany for a period of 4 years; new structure and training organization at the Centre for staff specialization and qualification has been set up; new training programmes, complied with the EU standards have been drawn up; training of multiplicators; foreign language training programme has been established; Manual for the Bulgarian border police was drawn up.
1.3. The implementation of the overall project for the Bulgarian Border Police has been successful and it forms the basis for further steps for building up a new model of updated border police, complied with the EU standards as well as stressing the need of strengthening the Bulgarian-Turkish border and the "blue border" which will be in future the external border of the enlarged EU. The activities implemented in this direction surpass the objectives planned and the elaborated framework plan for launching working partnerships between identical services of the National border police and the Federal ministry of home affairs of the Federal Republic of Germany, starting January 2003, which will be funded by the budget of Germany for a period of 4 years and will provide for the working capacity of the Bulgarian border police.
2. Twenty three contracts are being implemented under the Programme: 4 - Twinning project, 2 - service contracts and 1 framework agreement, 16 supply contracts, signed under Phare procedures. The reports on the tenders held and members of the Evaluation Committees have been approved by the authorized head of CFCU and DEC. As a result of the tendering procedures, additional quantities have been agreed under some of the supply contracts. Generally speaking, CFCU has observed the requirements of the Practical Contracting Guide and DIS manual. The declarations for impartiality and confidentiality and the evaluation papers are available.
3. Absorption of funds. As of November 8, 2002, a sum of 7 633 742.54 euro has been absorbed, which is 84.75% of the contracted budget by the end of 2002, amounting to 9 007 844.79 euro. This represents 94,82% absorption compared to the Financial memorandum - 9 500 000.00 euro. The accountability of disbursements is in line with the EC regulations.
3.1. The largest absorption rate has been achieved under Project BG 9911.01- Institutional Strengthening of the Bulgarian border police- 91.78% of the committed funds, followed by Project BG 9911.02 - Institutional Strengthening of the Bulgarian police: updating the criminal information system and improvement of management skills - 85,19% and Project BG 9911.03 - 70,89% of the committed funds.
3.2. Under the twinning agreement under Project BG9911.03 the absorption of funds amounts to 685,016.87 euro or this constitutes 58.7% from the committed 1, 167 575.00 euro. The balance amounts to 482,558.13 euro or 41.3%. No funds have been absorbed for some of the activities. This is due to some delay in the implementation of the activities under the project, insufficient administrative capacity, that is skills and experience for implementing PHARE procedures and requirements and the difficulties, encountered in the coordination of the activity under the project in the judiciary. The statute of the project management unit has been determined in August 2002, two months before the expiry term of the programme. The experts of the unit have not been trained to work with PHARE programme. According to the decisions of he National Assembly, the implementation of the projects related to the harmonization of the Bulgarian legislation with the EU one and achievement of the membership criteria in the pre-accession period is a priority for the management of each ministry.
4. No system has been established for dissemination of information and informing the staff of the Ministry of justice on the technical assistance rendered and the experience gained for the adoption of the Acquis communautaire, aimed at affording the opportunity for access to information to a greater range of experts, in view of avoiding monopoly on information by a certain circle of civil servants.