2.
ENGAGEMENT CONTEXT
2.1.
Context
Article 154 of the Financial Regulation (4) (‘FR’) applicable to the general budget of the European Union (‘EU’) sets out the methods of implementing the budget, including ‘indirect management’. Under indirect management, the Commission can entrust budget implementation tasks to the countries, organisations and bodies (further referred to as ‘entities’) indicated in Article 62 of the FR. The following entities may be concerned:
— third countries or the bodies they have designated e.g. Ministry of Interior, Kingdom of Cambodia;
— international organisations and their agencies e.g. United Nations Development Programme (UNDP);
— public law bodies e.g. Kreditanstalt für Wiederaufbau (KfW);
— bodies governed by private law but with a public service mission, to the extent that they provide adequate financial guarantees e.g. Cassa Depositi e Prestiti (CDP).
When such entities manage EU funds, they are required to guarantee a level of protection of the EU's financial interests equivalent to that required under the FR. More specifically, they must meet requirements with regard to nine ‘pillars’. These pillars relate to:
(1) the internal control system;
(2) the accounting system;
(3) an independent external audit;
as well as rules and procedures for:
(4) providing financing from EU funds through grants;
(5) procurement;
(6) financial instruments (5)
and also:
(7) exclusion from access to funding;
(8) publication of information on recipients;
(9) protection of personal data.
Entities wishing to work with EU funds under the indirect management mode must therefore undergo a comprehensive
pillar assessment
. Based on the results of the pillar assessment, the Commission will decide whether: (i) it can entrust budget implementation tasks to the entity; and (ii) it can conclude specific agreements (i.e. indirect management delegation agreements) with the entity.
2.2.
Description of the entity subject to the assessment
<
Provide a description of the entity. Suggested maximum: 2 pages.
Main features and characteristics of the entity, organisational structure, nature of activities and operations, etc
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2.3.
Criteria used for the assessment and materiality
For each pillar there are three levels of criteria that have been defined by the European Commission through the formulation of (key) questions in
Annex 2 and 2a
of the terms of reference (
Assessment questionnaire and criteria
and
Assessment questionnaire
). To determine what is a material weakness or deficiency in systems, controls, rules and procedures, we have taken into account the criteria and the levels of importance (i.e. the scoring thresholds) defined by the Commission, as these factors might influence the Commission's decision to entrust budget implementation tasks under indirect management to the entity.
Level 1 (Financial Regulation)
For each pillar there is
one
overarching level 1 question (in
Annex 2
Assessment questionnaire and criteria
) defined on the basis of the Financial Regulation. Only two answers are possible:
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