1

THE CABINET OF MINISTERS OF THE REPUBLIC OF LATVIA

February 26, 2008Regulations No.126

Riga(Minutes No.12 Paragraph17)

Procedures for Implementation, Monitoring, Evaluation and Audit of Economic Area Financial Mechanism and Norwegian Financial Mechanism

Issued pursuant to European Economic Area

Financial Mechanism and

Norwegian Financial Mechanism

Management Law

Article18,Clause1

I.General Provisions

1.These Regulations shall determine procedures by which institutions involved in the management of European Economic Area Financial Mechanism and Norwegian Financial Mechanism shall ensure the performance of implementation, monitoring, evaluation and audit of financial mechanisms.

2.Focal Point shall implement the Technical Assistance Fundon the basis of grant agreement and contracts concluded between the Focal Point and Intermediate Bodies.

II.Procedure for Individual Project Approval and Implementation

3.Focal Point shall inform the Intermediate Body about the planned term of announcement of an open call of individual project’s applications (hereinafter –call).

4.Call guidelines elaborated by the Intermediate Body shall be submitted to the Focal Point.

5.Focal Point shall evaluate the call guidelines and submit them for reconciliation in the Steering Committee.

6.After reconciliation of the call guidelines in the Steering Committeethe Intermediate Body shall in accordance with procedures specified in regulatory acts submit them for consideration in the Cabinet of Ministers.

7.After approval of the call guidelines the Focal Point shall announce the open call by publishingan announcement in accordance with procedures specified in the call guidelines. Before announcement of the call the Focal Point shall electronically agree with Intermediate Bodies on the announcement text.

8.Intermediate Body shall organize the call and ensure evaluation of individual project’s applications (hereinafter – project’s applications) in accordance with the call guidelines.

9.After evaluation of individual project’s applications the Intermediate Body shall send to the Focal Point the following:

9.1project’s applications complying with the administrative evaluation criteria (together with electronic version of applications on an electronic data carrier (CD));

9.2 list of evaluated individual projects’ applications arranged in priority order according to the quality and specific evaluation criteria assessment, indicating separately individual projects which do not comply with administrative evaluation criteria;

9.3decision of the Intermediate Body about the compliance of project’s applications with the quality and specific evaluation criteria which approves the assessment of project’s applications;

9.4 list of project’s applications to be sent to the Financial Mechanism Office (hereinafter – Office) including project’s application with the highest assessment according to the quality and specific evaluation criteria and which co-financing amount required from the financial mechanisms covers the financing amount available within the call. Reasoned opinion on included project’s applications shall be added to the list.

10. Focal Point shall evaluate project’s applications specified in the sub-clause 9.4 of these Regulations, and, if necessary, request additional explanations from the Intermediate Body about the project’s applications and submit documents specified in sub-clauses9.2 and 9.4 for reconciliation in the Steering Committee.

11.On the basis of the list of project’s applicationswhich is agreed in the Steering Committee and which shall be submitted to the Office the Focal Point shall take a decision to send project’s application to the Office so as the European Economic Area Financial Mechanism Committee or Norwegian Foreign Affairs Ministry can take a final decision on its approval, rejection, or refusal to send it to the Office, and inform the Intermediate Body about the decision within five working days.

12.Within seven days after receiving information from the Focal Point the Intermediate Body shall inform applicant of the individual project’s applicationabout the Focal Point’s decision about the progress of project’s application.

13.Focal Point shall send to the Office the project’s application together with justification for each project’s application.

14.In case the Focal Point receives a request from the Office for additional explanations or corrections of the project’s application submitted to the Office it shall inform electronically the Intermediate Body about the need of such explanations or corrections.

15.Intermediate Body shall ensure requesting additional explanations and corrections from the applicant of the individual project’s application and submit them electronically to the Focal Point in the set term.

16.Focal Point shall in the set term submit to the Office received additional explanations or corrections.

17.In case the Focal Point receives from theEuropean Economic Area Financial Mechanism Committee or Norwegian Foreign Affairs Ministry a decision on rejections of the project’s application it shall within five working days inform the Intermediate Body. Within seven working days after receiving information from the Focal Point the Intermediate Body shall inform in writing the applicant of the individual project’s application.

18. After receiving decision from the European Economic Area Financial Mechanism Committee or Norwegian Foreign Affairs Ministry on rejection of the project’s application or receiving information from the applicant of the individual project’s application that it refuses to conclude the grant agreement and implementation of individual project, the Focal Point shall evaluate possibility to send additional project’s application to the Office.

19. Taking into account corresponding priorities and financing amount available within the call, as well as on the basis of evaluated project’s applications list agreed in the Steering Committee, the Focal Point shall evaluate the possibility to send to the Office the project’s application with the second highest assessment and request from the Intermediate Body a reasoned opinion on corresponding project’s application.

20.Focal Point shall evaluate the project’s application mentioned in the Clause 19 of these Regulations and reasoned opinion of the Intermediate Body; if necessary, it shall request from the Intermediate Body additional explanations about the project’s application and on the basis of evaluated project’s applications list agreed in the Steering Committee take a decision on sending the project’s application to the Office.

21. After receivinga grant offer letter from the Office the Focal Point shall within five working days send a copy of the grant offer letter to the Intermediate Body. Intermediate Body shall inform the applicant of the individual project’s application about the approved project’s application and send a copy of the grant offer letter.

22.On request from the Focal Point the Intermediate Body shall ensure requesting additional information necessary for preparing of the grant agreement from the applicant of the individual project’s application and submit it to the Focal Point in the set term.

23.The Focal Point shall ensure conclusion of the grant agreement with the European Economic Area Financial Mechanism Committee on financing of each individual project approved by the European Economic Area Financial Mechanism Committee and with Norwegian Foreign Affairs Ministry on financing of each individual project approved by the Norwegian Foreign Affairs Ministry. Grant agreement shall be signed by the Head of Focal Point on behalf of the Republic of Latvia. After conclusion of the grant agreement the Focal Point within ten working days shall send a copy to the Agency and Paying Authority.

24.Central Finance and Contracting Agency (hereafter – Agency) in cooperation with the Focal Point shall prepare a sample of cooperation agreement on implementation of the individual project to be signed between the individual project’s co-financing receiver and Intermediate Body and submit it for reconciliation in the Steering Committee.

25. After signing the grant agreement the Agency shall conclude a cooperation agreement on implementation of the individual project with the individual project’s co-financing receiver and Intermediate Body. Agency shall within ten working days send a copy of the agreement to the Focal Point and Paying Authority.

26.Individual project’s co-financing receiver shall implement the individual project in accordance with the grant agreement and cooperation agreement on implementation of the individual project ensuring separate accounting for each individual project and fulfilment of the publicity requirements of individual projects.

27. In case during the individual project implementation it is necessary to amend individual project implementation conditions specified in the grant agreement or project implementation plan annexed to the grant agreement the individual project’s co-financing receiver, Focal Point, Paying Authority, Agency or Intermediate Body shall propose amendments to the grant agreement. Paying Authority, Agency and Intermediate Body shall submit to the Focal Point proposals for amendments to the grant agreement.

28.Individual project’s co-financing receivershall submit a request for amendments to the Agency. Agency shall evaluate solidity and necessity of the request for amendments. In case the request for amendments influences goals or results of the project or envisages amendments to the draft budget exceeding 15% of project activity or budget position the Agency shall request from the Intermediate Body to give an opinion on the request for amendments.

29.Agency shall submit to the Focal Point the evaluated request for amendments together with assessment of necessity and solidity of such amendments.

30.Focal Point shall take a decision on approval or rejection of the request for amendments. Focal Point is entitled to request additional explanations regarding the request for amendments from the Agency, Intermediate Body or individual project’s co-financing receiver.

31. If the Focal Point rejects the request for amendments it shall inform the Agency and Intermediate Body specifying reasons for rejection. Agency shall inform the individual project’s co-financing receiver about the Focal Point’s decision.

32. In case the Focal Point supports the request for amendments it shall evaluate whether according to the grant agreement the request for amendments shall be agreed with the Office, European Economic Area Financial Mechanism Committee or Norwegian Foreign Affairs Ministry.

33. In case the request for amendments shall be agreed with the European Economic Area Financial Mechanism Committee or Norwegian Foreign Affairs Ministry the Focal Point shall submit to the Office the request for amendments together with its justification to agree it with the European Economic Area Financial Mechanism Committee or Norwegian Foreign Affairs Ministry.

34. In case the request for amendments shall be agreed with the Office the Focal Point shall submit the request for amendments together with justification to the Office for reconciliation.

35.If necessary, the Focal Point shall request from the Agency, Intermediate Body or individual project’s co-financing receiver information for preparation of adjusted project implementation plan and submit it to the Office.

36.After reconciliation of the request for amendments to the grant agreement with the Office, European Economic Area Financial Mechanism Committee or Norwegian Foreign Affairs Ministry and after receivingaddendum to the grant agreement or adjusted project implementation plan the Focal Point shall send to the Agency and Paying Authority a copy ofaddendum to the grant agreement or a copy of adjusted project implementation plan.

37.In case the request for amendments shall not be agreed with the Office, European Economic Area Financial Mechanism Committee or Norwegian Foreign Affairs Ministry the Focal Point shall submit to the Office information about the changesin project implementation conditions or adjusted project implementation plan.

38.The Focal Point shall send to the Agency and Paying Authority information about the changesin project implementation conditions or a copy of the adjusted project implementation plan.

39.Focal Point shall ensure reconciliation of amendments to the grant agreement proposed by the Focal Point, Paying Authority, Agency or Intermediate Body with the Office, European Economic Area Financial Mechanism Committee or Norwegian Foreign Affairs Ministry, as well as ensure their approval. After approval of amendments to the grant agreement the Focal Point shall send a copy of addendum to the grant agreement,adjusted project implementation plan or information about the changes in project implementation conditions to the Paying Authority and Agency.

40.Agency shall send a copy of addendum to the grant agreement, copy of the adjusted project implementation plan or information about the changes in project implementation conditions to the Intermediate Body and individual project’s co-financing receiver, as well as introduce necessary amendments to the cooperation agreement regarding individual project implementation. After signing amendments to the above mentioned cooperation agreement the Agency shall send a copy of it to the Focal point and Paying Authority.

III.Procedure for Approval and Implementation of Programme and Block Grant

41. Intermediary shall prepare and submit to the Focal Point the application of programme or block grant accordingto requirements specified in financial mechanisms’ management documents.

42. Focal Point shall evaluate the application of programme or block grant according to requirements specified in financial mechanisms’ management documents and submit it for reconciliation in the Steering Committee.

43. After reconciliation of the application in the Steering Committee the Focal Point shall take a decision on sending the application of programme or block grant to the Office so as the European Economic Area Financial Mechanism Committee or Norwegian Foreign Affairs Ministry can take a final decision on its approval, rejection, or refusal to send it to the Office, and inform the Intermediary about the decision within five working days.

44. After taking decision about sending the application of programme or block grant to the Office the Focal Point shall send the application together with the justification to the Office.

45.In case the Focal Point receives from the Office a request for additional explanations or corrections to the application it shall inform electronically the Intermediary about additional explanations or corrections.

46.Intermediary shall submit electronically to the Focal Point necessary additional explanations or corrections to the application of programme or block grant in the set term.

47.Focal Point shall submit additional explanations or corrections to the application of programme or block grant to the Office in the set term.

48. In case the Focal Point receives from the European Economic Area Financial Mechanism Committee or Norwegian Foreign Affairs Ministry a reasoned decision about rejection of the application of programme or block grant the Focal Point shall within five working days inform the Intermediary.

49. Within seven days after receivingthe grant offer letter from the Office the Focal Point shall send information to the Intermediary about the approved application of programme or block grant.

50.After receiving information about approval of the application of programme or block grant the Intermediary in cooperation with the Intermediate Body shall develop draft open call guidelines of subprojects and submit it to the Cabinet of Ministers in accordance with the procedures specified in the regulatory acts.

51. On request from the Focal Point the Intermediary shall submit to the Focal Point additional information necessary for conclusion of the grant agreement in the set term.

52.Focal Point shall conclude the grant agreement with the European Economic Area Financial Mechanism Committee and Norwegian Foreign Affairs Ministry on financing of the approved programme or block grant. Grant agreement shall be signed by the Head of Focal Point on behalf of the Republic of Latvia. After conclusion of the grant agreement the Focal Point within 10 working days shall send a copy to the Agency and Paying Authority.

53.Agency in cooperation with the Focal Point shall prepare a sample of draft cooperation agreement on implementation of the programme or block grant and sample of draft cooperation agreement on implementation of the programme or specific forms of grant assistance. Agency shall submit sample of draft cooperation agreement for reconciliation in the Steering Committee.

54. After signing the grant agreement the Agency shall conclude a cooperation agreement with Intermediary and Intermediate Body on implementation of the programme or block grant. In case of specific forms of grant assistance the Agency shall conclude a cooperation agreement with the Intermediary about the implementation of block grant. The Agency shall within ten working days send a copy of the agreement to the Focal Point and Paying Authority.

55. After signing the grant agreement and approval of subproject’s applications open call guidelines in the Cabinet of Ministers the Intermediary shall announce the open callof subproject’s applications.

56.Applicant of the subproject’s application shall prepare a subproject’s application and submit it to the Intermediary in accordance with the requirements specified in financial mechanisms’ management documents and subproject’s application open call guidelines.

57.Intermediary shall establish and chair the evaluation commission. Commission shall evaluate subproject’s applications according to the procedure and evaluation criteria specified in the call guidelines.

58.After evaluation of the subproject’s application the Intermediary shall on the basis of suggestions made by the evaluation commission take a decision on approval or rejection of the subproject’s application. Intermediary shall indicate in the decision on approval of subproject’s application the utmost financing amount to be allocated for coverage of eligible costs.

59.Intermediary shall in the set term inform the applicant of subproject about the decision made and send to the Focal Point a list of approved and rejected subproject’s applications and decision of the Intermediary to approve or reject subproject’s applications.

60.Focal Point shall submit the list of approved and rejected subproject’s applications to the Steering Committee for information.

61.After approval of the subproject’s application the Intermediary shall conclude a contract withthe subproject’s co-financing receiver on implementation of the subproject.

62.Intermediary within the term set in the cooperation agreement on implementation of the programme or block grant shall gather, examand approve the request for subprojects’ expenses coverage submitted by the subprojects’ co-financing receiver, source documents and information about the progress of subprojects implementation.