Suspension of 2007-2013 reimbursements
In early 2015 the European Commission imposed Suspensions on three 2007-2013 European Structural and Investment Fund (ESIF) programmes following the publication of the 2014 Annual Control Report (ACR). The report audited a sample of 2014 project activity and highlighted instances where projects were found to have discrepancies.
In general, these were in three categories:
- procurement rules not applied effectively;
- ineligible project expenditure identified;
- Lack of audit trail (a lack of documentation to support specific transactions).
The Suspensions apply to three of the four 2007-2013 programmes: European Social Fund (ESF) programmes for both the Highlands and Islands and Lowlands and Uplands, and the European Regional Development Fund (ERDF) for the Lowlands and Uplands.
The projects themeslves have not been directly affected. The Scottish Government has continued to pay projects for valid claims submitted.
Suspensions Action Plan
Scottish Government established an Action Plan in consultation with the Commission in response to the ACR findings. The plan sets out a comprehensive programme of work with the organisations running the projects. This included improving internal management and control procedures and, where documentation could not be found for initial audits, locating the relevant paperwork. Scottish Government guidance on the management of the Funds is also being updated.
The action plan is designed to lower the Total Projected Error Rate (TPER) for the 2014 ESF and ERDF programme activity, contributing to a positive ACR for 2015 and increasing levels of assurance.
Implications for the 2014-2020 programmes
The approach to compliance and audit in the 2014-20 programmes reflects the Action Plan addressing the 2007-2013 Suspensions. The approach places the audit burden on organisations with the capacity and capability to manage the significant administrative requirements associated with the Funds. These organisations will act as Lead Partners and will have overall responsibility for Strategic Interventions and Operations. This will limit and simplify the audit and compliance responsibilities of smaller organisations.