The legislative changes are the result of activities of the working groups established at the initiative of the Deputy Prime Minister Iliyana Tsanova, and reflect the proposals discussed at two roundtables held in early September and October. They involved all stakeholders in the management of EU funds - management and control bodies, representatives of municipalities, industry and business organizations.
With amendment to decree №70 of the Council of Ministers from 2010, a Coordinating Council to the government is established, which will provide expert level assistance by discussing current issues related to the management of EU funds. This format makes the coordination between the various actors in the system better, as they will be able to share best practices with each other, coordinate their positions and harmonize procedures in order to be more effective in their work. An important goal is to improve communication at all levels, so that everyone can benefit from the experience of others, as well as to seek consensus when issues arise.
Chairman of the Board is the Deputy Prime Minister on Management of EU funds, and its members include representatives of the managing authorities, the audit authority, the certifying authority, the Public Procurement Agency, the Public Financial Inspection Agency, land the National Association of Municipalities in the Republic of Bulgaria. Representatives of the National Audit Office and industry and employers' organisations will participate as observers.
The Decree provides for the establishment of a Financial Corrections Council. It will act as a mediator in disputes between beneficiaries and managing authorities, and will seek to approximate positions and decide specific cases, in order to avoid legal proceedings.
The Council will support the government in coordinating the process of identifying and imposing financial corrections in connection with the violations found in procurement and contracts on projects co-financed by the European Union. The Council will examine and give opinion on specific cases relating to the identification and imposition of financial corrections. The goal is to achieve better coordination between control authorities and align their practices of imposing financial corrections, which will improve the implementation of projects. Chairman of the Financial Corrections Council is the Deputy Prime Minister on the Management of EU Funds. Its members include representatives of managing authorities, the Public Procurement Agency and the Public Financial Inspection Agency. If necessary, the work of the Council will be assisted by external experts.
By Decree of the Council of Ministers, the Methodology for Determining the Amount Financial Corrections was revised and amended.
The expert group on financial corrections reviewed the effect of applying the current Methodology for Determining the Amount of Financial Corrections, adopted by Decree 162 of the Council of Ministers, effective as of June, 24, 2014, and outlined the scenarios where the contracting authority has not made a violation but yet a financial correction is imposed. The need for clear criteria emerged, to determine when a financial correction should not be borne by the beneficiary. The aim is to restore fairness and predictability in the management of EU funds and in the imposition of financial corrections in particular.
The financial corrections measure risk factors in the implementation of project and their control. At present, the management and control system needs to be improved and adjusted in order to boost its efficiency and effectiveness in protecting national financial interests. A decision is made to keep the current methodology, which is fully consistent with the methodology applied by the Commission, as this would prevent the accumulation of errors identified by the European Commission.
The revised and amended methodology clearly regulates that it could be used to identify violations that cannot be attributed to the acts or omissions of the contracting authority, and sets specifies cases where financial corrections should not be borne by the beneficiaries, namely when:
- The beneficiary has fully complied with the provisions of the applicable law;
- The beneficiary has complied with a decision of the Consumer Protection Commission (CPC) or the Supreme Administrative Court (SAC) on a violation determined by the Managing Authority or Audit of EU Funds Executive Agency
- The tender call or documentation includes requirements or evaluation criteria that were subject to control by the CPC and SAC.
The proposed amendments regulate the circumstances in which the body imposing the financial correction may be flexible and impose a smaller amount (up to 10%).
In order to ensure legal certainty, the following rule is set: when a violation is properly identified and the right financial correction is imposed, in line with previous Guidelines of the European Commission, and under the provisions of Decree 134 respectively, at present a greater financial correction shall not be imposed.