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					     Procedures for the Government Audit of the Structural Funds, the Cohesion Fund and the
                                   European Fisheries Fund




1.     Introduction

    The Slovak Republic, as a member state of the European Union, is responsible for the audit of operational
programmes and/or programming documents financed from the Structural Funds, the Cohesion Fund, the
European Fisheries Fund, as well as under other instruments of financial support from abroad.
     The purpose of the Procedures for Government Audit of the Structural Funds, the Cohesion Fund and the
European Fisheries Funds (hereinafter “Procedures”) is to regulate the performance of audit pursuant to Articles
10 - 13 of Commission Regulation (EC) No 438/2001 laying down detailed rules for the implementation of Council
Regulation (EC) No 1260/1999 as regards the management and control systems for assistance granted under the
Structural Funds as amended by Commission Regulation (EC) No 2335/2002, Articles 9 - 12 of Commission
Regulation (EC) No 1386/2002 of 29 July 2002 laying down detailed rules for the implementation of Council
Regulation (EC) No 1164/94 as regards the management and control systems for assistance granted from the
Cohesion Fund and the procedure for making financial corrections, Article 62 of Council Regulation (EC)
No 1083/2006 laying down general provisions on the European Regional Development Fund, the European
Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999, Articles 16, 17, 18 and 23 of
Commission Regulation (EC) No 1828/2006 setting out rules for the implementation of Council Regulation (EC)
No 1083/2006 laying down general provisions on the European Regional Development Fund, the European
Social Fund and the Cohesion Fund and of Regulation (EC) No 1080/2006 of the European Parliament and of the
Council on the European Regional Development Fund, Article 61 of Council Regulation (EC) No 1198/2006 on
the European Fisheries Fund, and Articles 42, 43, 44 and 49 of Commission Regulation (EC) No 498/2007 laying
down detailed rules for the implementation of Council Regulation (EC) No 1198/2006 on the European Fisheries
Fund.
    The Ministry of Finance of the Slovak Republic performs the function of the audit authority pursuant to Act
No. 502/2001 on Financial Control and Internal Audit and on amendments to certain other acts as amended,
Slovak Government Resolution No. 494 of 24 May 2006 on the progression of works aimed at ensuring the
performance of the audit authority functions in connection with the control system for the 2007 – 2013
programming period, Slovak Government Resolution No. 832 of 8 October 2006 on the draft update of the
National Strategic Reference Framework of the Slovak Republic for 2007–2013, and Slovak Government
Resolution No. 225 of 7 March 2007 on the draft operational programme Fisheries for 2007–2013. At the same
time, MFSR performs the tasks of the authority pursuant to Article 10 of Regulation No. 438/2001 and Article 9 of
Regulation No. 1386/2002.
     These Procedures lay down the basic rules, objectives and methods for performing the government audit of
programmes funded by the EU and by other financial instruments from abroad. These Procedures also set out the
principles of coordination in the planning, execution and monitoring of government audits performed by the Audit
and Control Section of the MFSR acting as audit authority pursuant to Article 62 of Council Regulation (EC)
No 1083/2006 laying down general provisions on the European Regional Development Fund, the European
Social Fund and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 and pursuant to Article 61 of
Council Regulation (EC) No 1198/2006 on the European Fisheries Fund, and acting as authority pursuant to
Article 10 of Commission Regulation (EC) No 438/2001 laying down detailed rules for the implementation of
Council Regulation (EC) No 1260/1999 as regards the management and control systems for assistance granted
under the Structural Funds as amended by Commission Regulation (EC) No 2335/2002, and Article 9 of
Commission Regulation (EC) No 1386/2002 of 29 July 2002 laying down detailed rules for the implementation of
Council Regulation (EC) No 1164/94 as regards the management and control systems for assistance granted
from the Cohesion Fund and the procedure for making financial corrections, as well as by other bodies and
persons participating in the performance of government audit.
    The purpose is to ensure compliance with the EC legislation, Slovak legislation, international treating binding
upon the Slovak Republic, and requirements of the European Commission. The procedures apply to the
programming periods of 2004–2006 and 2007–2013 and to the performance of government audit until 2017
and are binding upon all the authorities and persons participating in government audit performance.
     The Procedures are based on the relevant provisions of the EC regulations referred to herein and reflect the
internationally-recognised auditing standards. The Audit and Control Section of the MFSR has decided to apply
the International Standards for the Professional Practice of Internal Auditing, as one of the recommended
standards in line with the instructions of the Commission, Annex V of Commission Regulation (EC) No 1828/2006
setting out rules for the implementation of Council Regulation (EC) No 1083/2006 laying down general provisions
on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and of
Regulation (EC) No 1080/2006 of the European Parliament and of the Council on the European Regional




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Development Fund, and Commission Regulation (EC) No 498/2007 laying down detailed rules for the
implementation of Council Regulation (EC) No 1198/2006 on the European Fisheries Fund.
    The obligations ensuing from the aforementioned EC regulations will be implemented in line with Act
No. 502/2001 on Financial Control and Internal Audit and on amendments to certain other acts as amended.



2.     Legal framework

a)   Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural
     Funds;
b)   Commission Regulation (EC) No 438/2001 of 2 March 2001 laying down detailed rules for the implementation
     of Council Regulation (EC) No 1260/1999 as regards the management and control systems for assistance
     granted under the Structural Funds as amended by Commission Regulation (EC) No 2355/2002 (hereinafter
     “Regulation No 438/2001”);
c)   Council Regulation (EC) No 1164/1994 of 16 May 1994 establishing a Cohesion Fund;
d)   Commission Regulation (EC) No 1386/2002 of 29 July 2002 laying down detailed rules for the
     implementation of Council Regulation (EC) No 1164/94 as regards the management and control systems for
     assistance granted from the Cohesion Fund and the procedure for making financial corrections (hereinafter
     “Regulation No 1386/2002”);
e)   Commission Regulation (EC) No 1080/2006 of 5 July 2006 on the European Regional Development Fund
     and repealing Regulation (EC) No 1783/1999;
f)   Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European
     Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation
     (EC) No 1260/1999 (hereinafter “Regulation No 1083/2006”);
g)   Council Regulation (EC) No 1198/2006 of 27 July 2006 on the European Fisheries Fund (hereinafter
     “Regulation No 1198/2006”);
h)   Commission Regulation (EC) No 1828/2006 of 8 December 2006 setting out rules for the implementation of
     Council Regulation (EC) No 1083/2006 laying down general provisions on the European Regional
     Development Fund, the European Social Fund and the Cohesion Fund and of Regulation (EC)
     No č.1080/2006 of the European Parliament and of the Council on the European Regional Development
     Fund (hereinafter “Regulation No 1828/2006”)
i)   Commission Regulation (EC) No 498/2007 laying down detailed rules for the implementation of Council
     Regulation (EC) No 1198/2006 on the European Fisheries Fund (hereinafter “Regulation No 498/2007”);
j)   Regulation (EC) No 1081/2006 of 5 July 2006 of the European Parliament and of the Council on the
     European Social Fund and repealing Regulation (EC) No 1784/1999;
k)   Council Regulation (EC) No 1084/2006 of 11 July 2006 establishing a Cohesion Fund and repealing
     Regulation (EC) No 1164/94;
l)   Act No. 502/2001 on Financial Control and Internal Audit and on amendments to certain other acts as
     amended (hereinafter “Act on Financial Control and Internal Audit”).

    The other relevant regulations of the EC and of the Slovak Republic are quoted in the “Concept of the
Financial Management System of the Structural Funds”, “Concept of the Financial Management System of the
Cohesion Fund”, “Financial Management System of the Structural Funds and the Cohesion Fund for the 2007-
2013 Programming Period” and “Financial Management System of the European Fisheries Fund for the 2007-
2013 Programming Period”, and also “Guidance of MA CSF on the Structural Funds Implementation for the 2004–
2006 Programming Period” as amended.



3.     Basic terms and definitions

     For the purpose of these Procedures:
Audit trail – means a detailed description of the management and implementation of the Funds assistance at all
levels, encompassing the flow of information, documents, financial resources and control.
Audited person – means a body of public administration or its internal organisational unit, another legal or
natural person to which public funds are provided, or another legal or natural person meeting the conditions laid
down in the Act on Financial Control and Internal Audit or in separate regulations. Within the framework of



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performing government audit of the funds, the audited person means, in particular, the central coordinating
authority, coordinators of horizontal priorities, managing authority, intermediate body under the managing
authority, paying unit, paying authority, certification body, final beneficiary, aid recipient, beneficiary and final
recipient.
Audit group – is composed of the head and members of the audit group.
Audit body – MFSR, Financial Control Administration, or another ministry insofar as it performs government audit
of the funds in compliance with Act on Financial Control and Internal Audit.
Central Coordination Authority for NSRF Operational Programmes – the main authority in Slovakia
responsible for the effective management and disbursement of the SF and CF with a view to ensuring
coordination of the SF and CF management processes. The Ministry of Construction and Regional Development
of the Slovak Republic performs the CCA function in the Slovak Republic.
Certifying authority – a national, regional or local public authority or body designated by Member State to certify
statements of expenditure and applications for payment before they are sent to the Commission; In the Slovak
Republic, the certifying authority also performs the role of the authority responsible for the drawing up of
applications for payment, receipt of payments from the Commission, and for implementation of payments. The
functions of the certifying authority in the 2007-2013 programming period are performed by European and
                                         1
International Affairs Section of the MFSR .
Partial government audit report – a document drawn up after the provisional partial government audit report
has been discussed, which is delivered to the audited person, and contains the essential elements laid down in
the Act on Financial Control and Internal Audit .
Audit group members – a group of at least two persons who are the employees of MFSR, body participating in
government audit and invited persons, performing government audit based on a mandate to perform government
audit.
Document – official written proof or another evidence (e.g. record from a technical data carrier) relating to the
implementation of financial operations. It is a basic link in the verification of findings/irregularities. A document
may also take the form of a written statement by the responsible representative of the audited person on the
subject-matter of the government audit, presented upon request of the audit body.
European Regional Development Fund – one of the financial instruments of the EU structural and regional
policy designed to support the achievement of strategic goals in the area of economic and social development by
narrowing gaps between disadvantaged EC regions, as well as between individual social groups.
European Fisheries Fund – a fund the objective of which is to facilitate implementation of measures aimed at
ensuring permanently sustainable fisheries and diversifying economic activities in EC fishing areas.
European Social Fund – one of the financial instruments of the EC structural and regional policy supporting the
achievement of strategic objectives, particularly in the field of employment policy, through specific activities
focusing on improving professional skills, educational systems and subsequent growth in the labour potential of
EC citizens

Cohesion Fund – a fund earmarked for those EU member states whose gross national product per capita is
below 90% of the EU average. It is designed to strengthen the economic and social cohesion of the EU and
support, in particular, projects in the area of transport infrastructure and the environment.
Final beneficiary (FB) – a body, organisation, legal person, natural person or an administrative unit which, in
order to implement a project, receives funding from the national budget intended for co-financing and funding from
EU Structural Funds, except for funds provided under the state aid and de minimis schemes (applies to the 2004
– 2006 programming period).
Final recipient (FR) – for the 2004-2006 programming period, a body, organisation, legal person, natural person
or an administrative unit to which the final beneficiary implementing a national ESF-supported project provides
funding from the EU and national budget for co-financing under the terms and conditions laid down in the
contract.
Final recipient – for the 2007-2013 programming period, a body, organisation, legal person, natural person or an
administrative unit to which the final beneficiary implementing a national project funded from the Structural Funds
provides funding from the EU and national budget for co-financing under the terms and conditions laid down in a
contract within ESF.
Internationally recognised auditing standards – according to Commission guidance and Regulation
No 1828/2006, the auditing standards of IFAC/ISA, IIA and INTOSAI.


1
 §3 of Act No. 502/2001 Coll. on Financial Control and Internal Audit and on amendments to certain other acts
as amended


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Deficiency – a negative deviation from the desirable state, condition or situation, identified during a government
audit.
Irregularity – any infringement of a provision of Community law resulting from an act or omission by an economic
operator which has, or would have, the effect of prejudicing the general budget of the European Union by
charging an unjustified item of expenditure to the general budget, pursuant to Council Regulation (EC)
No 1083/2006, Commission Regulation 1681/1994 as amended by Commission Regulation No 2035/2005.
Recommendation – suggestion by the head or member of an audit group:
    a)   to remedy or minimise an identified deficiency;
    b)   to improve the management and control system, and prevent or mitigate risks.
Operation – any project or a group of projects implemented by the final beneficiary, aid recipient or beneficiary;
the project means a plan of activities, similar in terms of content and form, containing a description of the situation
and relations, institutional framework, financial coverage and technical aspects of implementation, presented
typically in standardised project form.
Eligible expenditure – expenditures which have been actually effected within the period of time set in the non-
refundable grant contract as expenditures incurred by FB/AR/B/FR in conformity with the relevant laws and
regulations of the EC and SR and the relevant contracts.
Audit authority - a national, regional or local public authority or body, functionally independent of the managing
authority and the certifying authority, designated by the Member State for each operational programme and
responsible for verifying the proper functioning of the management and control system. During the 2007-2013
programming period, the function of the audit authority in respect of all operational programmes is performed by
the Audit and Control Section of the MFSR.
Body of public administration – a public sector body according to Section 3 of Act No. 523/2004 on Budgetary
Rules as amended, and a legal person through which EU funds are provided.
Body participating in government audit – an organisational unit of a body of public administration, financial
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control administration performing government audit , functionally independent of the bodies ensuring the
management and control system - MA for CSF, CCA, MA, IBMA, PU, PA/CA, or of the bodies/units performing
the managerial, monitoring and other implementation functions, with which the MFSR has concluded an
agreement on the rules of cooperation in audit (except for the financial control administration and/or bodies
performing government audit within the 2004–2006 programming period).
Paying unit – an organisational unit of a body of public administration or another legal person responsible for the
transfer of funds from the Structural Funds, CF, EFF and from the national budget for the co-financing of
FB/AR/B.
Paying authority – a body designated by the Member State for the purpose of drawing up and submitting
applications for payment and receiving payments from the Commission. The paying authority is responsible for
certifying the statements of expenditure based on which it submits applications for payment from the Commission.
The function of the paying authority in the Slovak Republic for the 2004-2006 programming period is performed by
the European and International Affairs Section of the MFSR.
Provisional partial government audit report – a document drawn up in the course of government audit if the
audit is carried out also in other than public bodies (in particular, final beneficiary, beneficiary, aid recipient, final
recipient or a third person).
Provisional government audit report – a document drawn up in the course of government audit, which contains
the essential elements listed in 9.13.1 and which is provided to the audited person for information. The provisional
government audit report serves as a basis for drawing up the government audit report.
Beneficiary (B) – a body, organisation, legal person, natural person or an administrative unit which, in order to
implement a project or operations, receives funding from the national budget intended for co-financing and
funding from the EU Structural Funds, CF or EFF. With respect to the financial engineering instruments, the
recipients are the persons administering venture capital funds, guarantee funds and loan funds (applies to the
2007-2013 programming period).
Invited person – an employee of another public body, except for the Supreme Audit Office of the Slovak
Republic, or an employee of a legal or natural person, invited to participate in an audit upon request by the head
of the audit body whenever the purpose, complexity or specific orientation of the audit require specific expertise;
such persons may only participate with the consent of their employer, be it the head of the public body or the legal
or natural person concerned;
Aid recipient (AR) – an authority, organisation, legal person or natural person which, for the purpose of
implementing a project, receives funds from the national budget intended for co-financing and funds from the

2
 Act No. 502/2001 Coll. on Financial Control and Internal Audit and on amendments to certain other acts as
amended


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Structural Funds from an aid provider under state aid schemes and de minimis schemes (applies to the 2004–
2006 programming period).
Managing authority – national, regional or local public authority or a public or private body designated by the
Member State to manage the operational programme.
Risk – probability of the occurrence of an event with an adverse impact on the ability to achieve set objectives.
Government audit report – a document drawn up after the provisional government audit report has been
discussed, which is delivered to the audited person and contains the government audit conclusions set out in the
provisional government audit report, as well as other essential elements in accordance with the Act on Financial
Control and Internal Audit.
Intermediate body under managing authority – a general government body or another legal person performing
certain tasks delegated by or on behalf of the MA. The scope and definition of the IBMA tasks falls under the
competence of the MA and is a part of the authorisation on the delegation of powers.
Structural Funds – instruments of EC structural policy used for the attainment of its objectives.
The Structural Funds in the 2004-2006 programming period include:
    a)   European Regional Development Fund;
    b)   European Social Fund;
    c)   European Agricultural Guidance and Guarantee Fund – Guidance Section;
    d)   Financial Instrument for Fishery Guidance.
The Structural Funds in the 2007–2013 programming period include:
    a)   European Regional Development Fund;
    b)   European Social Fund.
Third persons – legal and natural persons who, in relation to the audited person, provide deliverables, goods,
works or services, and partners of FB/AR/B/FR . In the performance of government audit, the third persons are
obliged to cooperate in compliance with the Act on Financial Control and Internal Audit .
                        3
Accounting document - a verifiable accounting record which must contain:

    a)   verbal and numerical identification of the accounting document;
    b)   content of the accounting transaction and identification of parties thereto;
    c)   financial sum or information on the unit price and quantity;
    d)   date of the accounting document;
    e)   date of the accounting transaction, unless identical with the date of the accounting document;
    f)   signature of the person responsible for the transaction within the accounting unit and signature of the
         person responsible for the booking of transaction;
    g)   identification of the accounts to which the accounting transaction is booked for those accounting units
         that use double-entry accounting, unless implied by the software application.
Government audit – for the purposes of these Procedures, the government audit means an independent and
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objective activity of verification, evaluation and assurance , which focuses in particular on:
    a)   the verification of the effective functioning of the management and control system of an operational
                      5
         programme , which is performed mainly as a system audit;
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    b)   verification of the expenditure declared to the Commission on an appropriate sample of operations ,
         performed as audit of operations.
Findings – facts relating to the audited person, ascertained by the audit body in the course of government audit.
     Further terms relating to the Structural Funds, CF and EFF for the years 2004-2006 and 2007-2013 are
defined in the following documents: “Concept of the Financial Management System of the Structural Funds”,
“Concept of the Financial Management System of the Cohesion Fund”, “Financial Management System of the
Structural Funds and the Cohesion Fund for the 2007-2013 Programming Period”, “Financial Management


3
  Act No. 431/2002 Coll. on Accounting as amended
4
  Fourth part of Act No. 502/2001 Coll. on Financial Control and Internal Audit and on amendments to certain
other acts as amended;
5
  For example Article 62(a) of Council Regulation (EC) No 1083/2006, Article 61(a) of Council Regulation (EC)
No 1198/2006, Article 10(1)(a) of Commission Regulation (EC) No 438/2001, Article 9(1)(a) of Commission Regulation
(EC) No 1386/2002;
6
  For example Article 62(b) of Council Regulation (EC) No 1083/2006, Article 61(b) of Council Regulation (EC)
No 1198/2006, Article 10(1)(b) of Commission Regulation (EC) No 438/2001, Article 9(1)(b) of Commission Regulation
(EC) No 1386/2002;


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     System of the European Fisheries Fund for the 2007-2013 Programming Period”, “Management System of the
     Structural Funds and the Cohesion Fund for the 2007-2013 Programming Period”, and guidances of MA CSF and
     CCA on the implementation of the Structural Funds and the Cohesion Fund for the 2004–2006 Programming
     Period.



     4.        Responsibility and obligations of the Audit and Control Section of the MFSR

          The Audit and Control Section of the MFSR is responsible for the execution of government audit in
     performing the tasks ensuing from Article 10 of Regulation No 438/2001, Article 9 of Regulation No 1386/2002,
     Article 62 of Regulation No 1083/2006 and Article 61 of Regulation No 1198/2006.
          The Audit and Control Section of the MFSR coordinates the planning, execution and monitoring of the results
     of the government audit performed under these Procedures by all bodies participating in the government audit
     performance.
          In the process of performing the activities under Article 10 of Regulation No 438/2001, Article 9 of Regulation
     No 1386/2002, Article 62 of Regulation No 1083/2006 and Article 61 of Regulation No 1198/2006 and, in relation
     to the bodies participating in government audit, the Audit and Control Section of the MFSR is responsible, in
     particular, for:
          a) ensuring that government audit is performed with the objective of verifying the effectiveness of the
             functioning of the management and control systems of an operational programme;
          b) ensuring that audits of operations are performed on appropriate samples to verify the expenditure
             declared to the Commission;
          c) government audit performance;
          d) the drawing up of the annual plan of government audits for the respective calendar year;
          e) cooperation in the drawing up of the annual plan of government audits for the respective calendar year
             with the bodies participating in government audit ,
          f) ensuring methodological supervision over the bodies participating in government audit and the invited
             persons;
          g) providing qualified staff for government audit performance;
          h) ensuring that, in the course of government audit, due account is taken of the internationally recognised
             auditing standards;
          i) ensuring the training of staff engaged in government audit performance;
          j) monitoring the results of government audit;
          k) cooperation in the performance of audit by external entities, e.g. the Commission or European Court of
             Auditors;
          l) ensuring cooperation in the provision of information on government audits to the paying authority or
             certifying authority in connection with the drawing up of applications for payment to the Commission;
          m) timely registration of the results of government audit into ITMS or CEDIS.
         In relation to the Commission, the Audit and Control Section of the MFSR is – according to Article 62 of
     Regulation No 1083/2006 or Article 61 of Regulation No 1198/2006 for the 2007-2013 programming period 2007
     – 2013 – obliged:
          a)    to submit, within deadline, an audit strategy along with the indicative plan for government audits and
                subsequent updates thereof (applies only to the operational programmes of the Structural Funds and the
                Cohesion Fund),
          b)    to submit, within deadline, an annual control report on operational programme;
          c)    to issue, within deadline, an opinion as to whether the management and control system of an operational
                programme is functioning sufficiently effectively;
d)              to submit a declaration on partial winding-up of an operational programme, where necessary, submit,
                within deadline a declaration on the winding-up of an operational programme;
          e)    to submit, within deadline, a final control report on an operational programme;



     5.        Bodies participating in government audit and invited persons

         In addition to the MFSR, also other entities may be engaged in the performance of government audit
     provided that they meet the conditions set by the Audit and Control Section of the MFSR:
          a)    attestation of independence of MA CSF, CCA, MA, IBMA, PU, PA/CA and other bodies participating in
                the management and implementation of funds, performing the related ex-ante and ongoing financial
                controls, i.e. controls under Article 4 of Regulation No 438/2001, Article 4 of Regulation No 1386/2002,
                Article 60 of Regulation No 1083/2006 and/or Article 59 of Regulation No 1198/2006;
          b)    provision of the material, technical and human capacities for the performance of government audit.



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     Compliance with these conditions is a prerequisite to the signature of an agreement on the rules of
cooperation between the audit authority and bodies participating in government audit; the agreement is a
precondition to the participation of such bodies in verification pursuant to Article 62 of Regulation No 1083/2006
and Article 61 of Regulation No 1198/2006 during the 2007-2013 programming period. The condition requiring the
existence of an agreement on the rules of cooperation between the audit authority and bodies participating in
government audit does not apply to the financial control administrations because they are organisations
subordinated to the MFSR. The condition requiring the existence of an agreement on the rules of cooperation
does not apply to the performance of government audits within the 2004-2006 programming period.
    The bodies participating in government audit will be engaged in the performance of government audits within
the 2007-2013 programming period based on the verification of compliance with the criteria set by the audit
authority. These criteria, apart from the conditions stipulated in the first paragraph of this chapter, include:
     a)    evaluation of activities within the 2004–2006 programming period (to be used only during the first
           verification of compliance with the criteria);
     b)    compliance with the EC and Slovak legislation;
     c)    compliance with the International Standards for the Professional Practice of Internal Auditing;
     d)    quality and relevance of government audit reports;
     e)    qualification and expertise of the staff;
     f)    compliance with instructions and directions given the audit authority;
    The description of the supervision and quality control of the bodies participating in government audit is part of
Agreements on the rules of cooperation between the audit authority and bodies participating in government audit.
     The bodies participating in government audit are obliged:
     a)    to attest their independence of the bodies performing managerial, certification, paying, monitoring and
           implementing functions within the funds’ management and control systems;
     b)    to draw up their internal procedures for government audit performance (depending on their activity) in
           compliance with this document and guidances of the Audit and Control Section of the MFSR;
     c)    to send the approved internal procedures to the Audit and Control Section of the MFSR within 10 days of
           their approval;
     d)    to cooperate in the preparation of the audit strategy and annual plan of government audits with the Audit
           and Control Section of the MFSR;
     e)    to draw up their annual plans of government audits in conformity with the approved annual plan of
           government audit prepared by the Audit and Control Section of the MFSR and update them as
           necessary;
     f)    to ensure the execution of government audits in compliance with the approved annual plan of
           government audits and, in the case of unplanned audits, based on mutual agreement;
     g)    to provide qualified staff and, in cooperation with the MFSR, further develop the government auditors’
           skills and expertise in compliance with the Act on Financial Control and Internal Audit;
     h)    to provide information on the prepared and already performed government audits and, upon request,
           also the related documents, to the Audit and Control Section of the MFSR;
     i)    to take due account of the IIA standards in the performance of government audit;
     j)    to abide by the methodological guidance of the Audit and Control Section of the MFSR;
     k)    to send government audit reports to the Audit and Control Section of the MFSR in those cases where the
           head of audit group is not an employee of the MFSR ,
     l)    to send any changes in the contact data to the Audit and Control Section of the MFSR within 5 days of
           their coming into effect.



6.        Independence

    The audit bodies performing government audits in accordance with these Procedures must be
organisationally and functionally independent of the managing authority for CSF, CCA, MA, IBMA, PA/CA, PU,
FB/AR/B/FR, and of the bodies/units performing managerial, paying, monitoring and other implementing
functions.



7.        Planning and sampling

     This part of the Procedures specifies the basic approach of the Audit and Control Section of the MFSR to
planning and to the coordination of planning with the bodies participating in government audit. The details are
outlined in the audit strategy and in the individual annual plans of government audits.




                                                          7
      The MFSR plans government audits centrally on the basis of a mutual agreement with the respective senior
officials of the bodies participating in government audit and of the invited persons, taking into account their
personnel capacities in line with the concluded agreements on the rules of cooperation.
    After a mutual agreement with the respective senior officials of the bodies participating in government audit,
the MFSR may request the performance of government audit by the means of a letter, by sending the plan of
government audits to the body participating in government audit or by entering the plan of government audits into
CEDIS.
     Planning serves to optimise the individual audit activities, to prevent the duplication of activities in this area
and to optimise the deployment of human resources. The Audit and Control Section of the MFSR will arrange the
selection of the sample to be subject to the audit of operations in such a way as to prevent multiple audit groups
carrying out government audit under these Procedures concurrently from performing government audit of the
same project at an audited person.
     Within the framework of planning and sampling, the MFSR draws up the audit strategy and the annual plans
of government audits.
     For the 2007 – 2013 programming period, the audit strategy must, pursuant to Regulation No. 1083/2006,
be drawn up within nine months of the approval of all operational programmes in the Slovak Republic. The audit
strategy is subject to approval by the Minister of Finance of the Slovak Republic. After approval by the Minister of
Finance of the Slovak Republic, the audit strategy will be submitted for approval by the Commission.
     The audit strategy for the 2008 – 2015 period will be drawn up in line with the requirements of the
Commission. The audit strategy will include the authorities performing government audit, the sampling method for
audits of operations and the indicative plan of government audits with a view to ensuring that the main bodies are
audited and that audits are spread evenly throughout the programming period. The main bodies include, in
particular, managing authorities, the certifying authority, intermediate bodies under managing authorities and
paying units.
    The audit strategy will be based mainly on the following:
    a)   a risk analysis;
    b)   the conclusions stipulated in the report setting out the results of an assessment of the systems set up
         (Compliance Assessment Report) and the opinion provided to the Commission pursuant to Article 71(2)
         of Regulation No. 1083/2006;
    c)   knowledge obtained from previous audits, controls and certification verifications carried out during the
         2004 – 2006 programming period, which will also be taken into account in the drawing up of the risk
         analysis.
    The foregoing provisions apply accordingly to the drawing up of the audit strategy for the 2004 – 2006
programming period.
     The annual plan of government audits represents a detailed elaboration of the audit strategy for the
respective year. The Audit and Control Section of the MFSR reviews the annual plan of government audits semi-
annually and updates it, if necessary. The annual plan of government audits is only updated if it is necessary to
increase/reduce the number of government audits compared with the plan for the respective year, or if it is
necessary to change the subject of government audits. The re-scheduling of government audits within a given
year is not considered a change of plan. Every change must be duly justified and recorded in the annual plan
performance assessment. The annual plan of government audits and the related updates and amendments are
subject to approval by the Minister of Finance of the Slovak Republic. After mutual confirmation, the bodies
participating in government audit are obliged to reflect the annual plan of government audits for the respective
calendar year and its updates prepared by the Audit and Control Section of the MFSR in their annual plans of
government audits, which they submit to the head of the competent body for approval.
    The annual plan of government audits is based, in particular, on the following:
    a)   the legislative requirements of the EC and the Slovak Republic;
    b)   the audit strategy;
    c)   the results of the risk analysis;
    d)   the results of random sampling;
    e)   knowledge obtained from previous completed government audits, internal audits, controls, control
         actions, audits by the Commission, audits by the European Court of Auditors;
    f)   proposals and suggestions by the paying authority/certifying authority;
    g)   knowledge of the degree of implementation of measures taken by audited/controlled entities/persons for
         the elimination of deficiencies discovered during control and audit actions/government audits in the
         previous period;
    h)   recommendations and suggestions by external institutions performing audit and control;
    i)   the amount of time required to carry out government audits;
    j)   the personnel capacities of audit bodies;
    k)   programming documents;
    l)   proposals and suggestions of the audit bodies;



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     m) proposals and suggestions of authorities involved in SF and CF management and implementation;
     n) the amount of eligible expenditure declared by the Slovak Republic in applications for payment sent to
        the European Commission during the programming period.
    In the drawing up of the annual plan of government audits, the MFSR requests the information necessary for
planning (e.g. data on eligible expenditure declared to the Commission, the assessment of risk areas, information
about the personnel capacities, etc.) from the PA/CA, MA, IBMA, PU, and also from the bodies participating in
government audit.
     In the 2007 – 2013 programming period, the sample of operations verified every year by means of an audit of
operations is based on the random statistical sampling method. The sampling is carried out using specialised
software. The random sampling method makes it possible to conclude, based on the results of the audit of
operations, on the legality and regularity of the overall expenditure, from which the sample was taken. The sample
to be audited every twelve months is selected from amongst those operations, for which expenditure has been
declared to the Commission for the respective operational programme during the year preceding the year in which
the annual control report is communicated to the Commission.
     The Audit and Control Section of the MFSR regularly reviews the coverage provided by the random sample,
in particular due to the need to have sufficient audit assurance for the declarations provided at partial and final
closure for each operational programme. The Audit and Control Section of the MFSR decides on the basis of
professional judgment whether it is necessary to audit a complementary sample of additional operations in order
to take account of specific risk factors (e.g. the suspicion of fraud, the suspicion of incorrect procedure when
selecting projects or signing the non-refundable grant contract) and to guarantee for each operational programme
sufficient coverage of different types of operation, beneficiaries, intermediate bodies and priority axes. The results
of the complementary sample audits are analysed separately from those of the random sample. Specifically,
irregularities detected in the complementary sample are not taken into account in the calculation of the error rate
of the random sample. Also those expenditures not declared to the Commission may be verified within the
framework of the complementary sample audit.



8.        The main objectives and subject of government audit

     Government audit has the following main objectives:
     a)    to provide an assurance of adequate setup and effective functioning of operational programme
           managing and control systems;
     b)    to provide an assurance of the eligibility of expenditure declared to the Commission, using a suitable
           sample of operations.
     The subject of government audit verification constitutes mainly the following:
     a)    the setup and effectiveness of functioning of management and control systems;
     b)    audit trail sufficiency;
     c)    compliance with the conditions for the provision of public funds, compliance with the objectives
           determined in the project and in the non-refundable grant contract for the financing of the project;
     d)    compliance of performed financial operations with generally binding legislative acts, internal managing
           acts, manuals and other regulations;
     e)    timely transfer of the approved grant amount from the funds, within limits determined in the Concept of
           Financing of Projects Supported from the Structural Funds for 2004 – 2006, the Concept of Financing of
           Projects Supported from the Pre-Accession Funds, the Transition Facility and the Cohesion Fund for
           2004 – 2006, the Concept of the Financial Management System of the Structural Funds, the Concept of
           the Financial Management System of the Cohesion Fund, the Strategy of Financing from the Structural
           Funds and the Cohesion Fund for the 2007 – 2013 Programming Period, the Strategy of Financing from
           the European Fisheries Fund for 2007 – 2013, the Financial Management System of the Structural
           Funds and the Cohesion Fund for the 2007 – 2013 Programming Period, and the Financial Management
           System of the European Fisheries Fund for the 2007 – 2013 Programming Period, as well as other
           regulations of the EC and the Slovak Republic;
     f)    compliance with the principles of cost effectiveness, efficacy, efficiency and purposefulness in the use of
           public funds in accordance with the Act on Financial Control and Internal Audit;
     g)    the procedure and results of verification under Article 4 of Regulation No. 438/2001, Article 4 of
           Regulation No. 1386/2002, Article 13 of Regulation No. 1828/2006 and Article 39 of Regulation
           No. 498/2007;
     h)    the degree of implementation of recommendations and measures for the elimination of deficiencies
           discovered in the government audit and for removing their causes.




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9.        Government audit performance procedure

     Government audit performance is based on the audit strategy and the annual plan of government audits. The
main objectives of a particular government audit are based on the focus of government audits, which is a part of
the annual plan of government audits.
     After an agreement with the respective senior officers of the bodies participating in government audit and
invited persons, the Audit and Control Section of the MFSR establishes an audit group composed of the head and
the members of the audit group. The audit group has at least two members, including its head. In the event of
termination of the audit group head’s civil service/employment, his/her direct superior ensures the continuation of
government audit by appointing a new head for the audit group and by performing other necessary acts.



9.1 Obligations and powers of the head and the members of the audit group

     In the course of government audit performance, the members of the audit group cooperate with the head of
the audit group and ensure the performance of government audit in line with his/her instructions.
     The head of the audit group may delegate his/her obligations to the audit group members, with the exception
of his/her responsibility for the organisational and methodological management and the processing of government
audit results. The obligations and responsibilities of the head and the members of the audit group concerning the
government audit report apply accordingly also to the provisional government audit report, the provisional partial
government audit report, the partial government audit report and the related documents.



9.1.1      Obligations of the head of the audit group

     The head of the audit group:
     a) is responsible for the organisational and methodological management of government audit work in line
        with the government audit performance programme;
     b) charges selected audit group members with tasks in audited persons in the course of government audit;
     c) arranges the drawing up of the mandate to perform government audit, the notification of government
        audit performance and the government audit performance programme;
     d) arranges the delivery of the notification of government audit performance to the audited person prior to
        its commencement and, on suspicion that this would thwart government audit performance, he/she
        arranges the delivery of the notification of government audit performance on the date of commencement;
     e) coordinates and performs government audit and the verification of documents pursuant to the mandate
        to perform government audit and the government audit performance programme;
     f) identifies and assesses the risks of the audited persons;
     g) approves the provisional partial and the partial government audit report if government audit is also
        performed at FB/AR/B/FR or third persons. The approval has the form of a qualitative assessment of the
        partial report;
     h) determines the structure in which audit group members are to submit the supporting documents for the
        government audit report to him/her;
     i) facilitates and coordinates the drawing up of the government audit report;
     j) arranges the delivery of the provisional government audit report and the government audit report to the
        audited person and to the respective central government body head; arranges the discussion of the
        provisional government audit report with the audited person;
     k) ensures that the drawn-up government audit file is complete;
     l) arranges the entry of relevant data into information systems – ITMS/CEDIS;
     m) suggests to the authorised superior officer of the Audit and Control Section of the MFSR to perform a
        verification of the implementation of recommendations and measures and to include it in the annual plan
        of government audits;
     n) monitors the implementation of recommendations and measures by the audited person;
     o) provides for the assessment of the effectiveness and quality of the measures adopted by the audited
        person;
     p) in the event that the audited person failed to send a report on the implementation of measures for the
        elimination of the deficiencies discovered in government audit and for removing their causes, he/she
        notifies the audited person of this non-fulfilled obligation in a letter;
     q) provides for the assessment/determination of whether the discovered deficiencies also constitute
        irregularities. Where irregularities are discovered during the performance of government audit, he/she is
        responsible for the following:
        qa) assignment of an irregularity code pursuant to the typology of irregularities according to OLAF
               codes;




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         qb) drawing up of a report on a discovered irregularity, which comprises part of the government audit
              file;
         qc) recording of the irregularity in the ITMS and CEDIS information system;
         qd) ensuring that the MA, IBMA, PA/CA and PU are informed of the discovered irregularities by
              submitting a written report on a discovered irregularity;
    r)   ensures that documents pertaining to the performance of government audit are delivered to the Audit
         and Control Section of the MFSR in both electronic and written form for archiving purposes;
    s)   arranges the archiving of the final documents from government audit;
    t)   in the event of a discovered breach of financial discipline under Act No. 523/2004 Coll. on Budgetary
         Rules for Public Administration and on amendments to certain other acts as amended, which had been
         caused by MA, IBMA, PU, PA/CA, FB, AR, B, FR or by a third party, the head of the audit group ensures
         that one copy of the government audit report is forwarded to the respective administrative body.
    u)   carries out other activities related to government audit performance.



9.1.2 Obligations of audit group members

    Audit group members:
    a)   draw up the mandate to perform government audit, the notification of government audit performance
         and/or the government audit performance programme, if this task was assigned to them by the head of
         the audit group;
    b)   perform government audit in line with the government audit performance programme;
    c)   cooperate with the head of the audit group in the identification and assessment of the risks of the audited
         person;
    d)   collect information about the audited person – in particular: the organisational structure of the audited
         person, the audited person’s written procedures associated with the subject of government audit, job
         descriptions and other information and documents related to government audit performance;
    e)   analyse and evaluate the data obtained;
    f)   are responsible for drawing up the provisional partial government audit report and the partial government
         audit report, if government audit is also performed at FB/AR/B/FR or third persons;
    g)   are responsible for the prepared proposals and supporting documents for the individual parts of the
         government audit report;
    h)   participate in the drawing up of the government audit report;
    i)   prepare worksheets for the work performed, control checklists and written interview records;
    j)   prepare the government audit file;
    k)   carry out the instructions of the head of the audit group or an audit group member authorised by him/her
         pertaining to government audit performance; they also carry out other activities associated with
         government audit performance.



9.2 Preparation for government audit performance

   Preparation for government audit performance starts with taking the first demonstrable steps. Audit group
members:
    a)   attend a preliminary audit group meeting prior to the drawing up of the mandate to perform
         government audit, at which they specify the following:
         aa)   audit performance tactics (timing, member availability, distribution of tasks);
         ab)   the agenda of the initial meeting with the audited person;
         ac)   deficiencies and problems identified in previous audits and controls;
         ad)   any organisational and other changes in the audited person and their impact on the audited
               person;
         ae)   documents that will have to be requested from the audited person;
         af)   the risks identified in the audit strategy and/or the approved annual plan of government audits;
         ag)   the audit period;
         ah)   government audit objectives;
         ai)   government audit scope and the steps of individual government audit phases;
         aj)   the overall government audit duration and dates of the individual phases.
    b)   carry out an analysis of information about the audited person.
    Audit group members:
         ba)   acquaint themselves with the audited person’s working procedures;




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         bb)    acquaint themselves with past system audit reports and operations audit reports or other potential
                audit and control reports;
         bc)    acquire information about the audited person (in particular contact information, legal form, statute,
                information from the Companies Register, organisational structure, management system,
                employee powers and responsibilities, etc.) in line with generally binding legislative acts;
         bd)    acquaint themselves with the legislative framework governing the given field of examination (the
                Slovak legislation, EC regulations, programming documents, concepts, procedures, etc.);
         be)    determine the form of financing, examine accounting and also gather information about
                irregularities and other facts recorded in ITMS, if available.
    c)   collect the necessary documentation, information and data pertaining to the audited person. Audit
         group members may acquire the individual pieces of information from already existing documents
         archived in the files of government audits already performed, from websites, ITMS, CEDIS, the media
         and other sources of information, in compliance with generally binding legislative acts.
    d)   carry out other activities identified by the head or the members of the audit group.
    In the course of preparation for government audit performance, audit group members draw up the following
documents:
    a)   mandate to perform government audit;
    b)   notification of government audit commencement;
    c)   other documents as the head of the audit group may specify.




9.3 Mandate to perform government audit

    The mandate to perform government audit contains, in particular, the number of the mandate; the provision of
a generally binding legislative act, under which the audit body is entitled to perform government audit; the name
and registered office of the audit body, the names and surnames of employees of the audit body and the invited
persons performing the government audit, identifying the head of the audit group; the date of mandate issuance;
the main objective(s) of government audit; the name of the audited person and the signature of the head of the
audit body.
    In the event that the head of the audit group is an employee of the MFSR, the mandate to perform
government audit is issued by the Minister of Finance of the Slovak Republic. If the head of the audit group is an
employee of another central government body, the mandate to perform government audit is issued by the
respective head of the central government body or the minister of the central government body. If the head of the
audit group is an employee of the Financial Control Administration, the mandate to perform government audit is
issued by the Director of Financial Control Administration.


Amendment to the mandate to perform government audit
    An amendment to the mandate to perform government audit is drawn up if the need arises in the course of
government audit works to change or complement data in the mandate to perform government audit. The process
of drawing up and approving the amendment is identical with that of drawing up the mandate to perform
government audit.



9.4 Notification of government audit commencement

     An audit group member delivers a notification of government audit commencement to the statutory body or
the head of the audited person. The notification of government audit commencement can, for example, be sent as
a letter via post, by fax, in electronic form or in person. The head of the audit group arranges the delivery of the
notification at least 5 working days prior to the commencement of government audit, unless the notification of
government audit commencement could thwart its purpose. In such an event, he/she will deliver the notification of
government audit commencement to the audited person at the latest upon government audit commencement.
     The notification of government audit commencement is drawn up on the basis of an issued mandate to
perform government audit. The notification of government audit commencement is signed by the competent head
of the audit group.




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9.5 Initial meeting with the audited person

    An initial meeting with the designated responsible representatives of the audited person is held in the
beginning of government audit.
    At the initial meeting, audit group members are obliged to present to the audited person the mandate to
perform government audit, as well as their identity cards or service IDs.
    The head or an authorised member of the audit group will acquaint the audited person’s representatives with
the objectives and the subject of government audit, as well as the foreseen time schedule. At the same time, an
audit group member may request the necessary documentation in writing.
     During the meeting, audit group members may also ascertain other facts, such as contact data, identify which
of the audited person’s organisational units and employees are responsible for the audited activities, the audited
person’s contact person who is to communicate with the audit group members on behalf of the audited person in
the course of government audit performance; they may also agree with the audited person’s responsible
representatives upon the date of the next meeting.
    If the requested documents are provided at the initial meeting, a member of the audit group will confirm their
receipt in writing. If fulfilling the government audit purpose requires that the submitted documentation be removed
from the audited person’s premises, an audit group member issues a written confirmation of its removal and
ensures that the documentation is protected against loss, destruction, damage and misuse.
     After the initial meeting with the audited person, an audit group member designated by the head of the audit
group draws up minutes of the initial meeting with the audited person. The minutes include the names of the
participating persons and members of the audit group and the audited person, the information obtained and the
conclusions following from the meeting.



9.6 Government audit performance programme

    The head of the audit group draws up the government audit performance programme. If the head of the audit
group is an employee of the MFSR, the government audit performance programme is approved by the authorised
superior officer at the Audit and Control Section of the MFSR. If the head of the audit group is an employee of
another central government body, he/she will send the government audit performance programme to the
respective superior officer at the Audit and Control Section of the MFSR for approval in electronic form. After the
respective superior officer at the Audit and Control Section of the MFSR demonstrably endorses the government
audit performance programme (e.g. via e-mail), it is approved by the authorised senior officer at the central
government body of which the head of the audit group is an employee.
    Before this document is drawn up, audit group members must have available the necessary documentation
and information pertaining to the audited person.
     The government audit performance programme is archived in electronic form in the respective MFSR
directory pertaining to the particular government audit. The original copy of the government audit performance
programme is deposited in the government audit file.
     After the government audit performance programme is approved, the head of the audit group ensures that it
is sent to the audit group members and that government audit commencement is recorded in the appropriate
information system (e.g. CEDIS, ITMS).
    The government audit performance programme serves for detailed elaboration of the set government audit
objectives, the identification of persons (group members) responsible for the individual partial objectives,
government audit specification (specific audit procedures and steps) through which partial objectives are to be
achieved.
    The government audit performance programme includes, in particular, the following information:
    a)   The numerical identification of the government audit assigned by the Audit and Control Section of the
         MFSR in the annual plan of government audits.
    b)   the date of commencement of government audit performance;
    c)   the generally binding legislative act authorising the audit body to perform government audit;
    d)   the name and registered office of the audit body;
    e)   the names and surnames of audit group members;
    f)   the name and registered office of the audited person;
    g)   the audit period;
    h)   foreseen government audit performance duration;
    i)   government audit objectives;
    j)   a description of partial objectives and the designation of audit group members responsible for the
         individual partial objectives;



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    k) government audit subject, including specific audit areas;
    l) if government audit is to be performed as an audit of operations, the government audit performance
       programme includes the ITMS number of the selected project, the project title and the name, registered
       office and the identification number (IČO) of the FB/AR/B/FR;
    m) a signature of the employee approving the government audit performance programme;
    n) the government audit time schedule;
    o) the date of the government audit performance programme issuance.
    The government audit time schedule lists the audit group members responsible and the deadlines for the
achievement of partial objectives and selected activities.


Change of the government audit performance programme
     A change of the government audit performance programme is drawn up if it is necessary to change the data
specified in the government audit performance programme (e.g. if the need arises during government audit work
to replace the head of the audit group, replace audit group members or extend government audit to include an
additional audit area). The preparation and approval process is identical with that of the government audit
performance programme. Changes to the government audit performance programme are implemented in the form
of amendments to the government audit performance programme.
    The head of the audit group provides for the recording of a change of the government audit performance
programme in the appropriate information system (e.g. CEDIS, ITMS).




9.7 Requisition of documents, written materials and information

      Documents, written materials and information pertaining to government audit (including documentation and
statements) are typically requested from the audited person in writing in at least two copies. Written form is
necessary if required to demonstrate this act. One copy serves for the audited person’s purposes. The other copy
is intended for subsequent archiving in the government audit file; it must bear the confirmation of acceptance by
the audited person’s responsible representative. The request must indicate the deadline, by which the requested
information is to be submitted to the audit group. The request is typically submitted at the initial meeting. With a
view to accelerating government audit, it is also possible to submit the request to the audited person prior to the
initial meeting. If necessary, also further requests for the submission of information may be submitted to the
audited person in the course of government audit. The preparation of the request for documents, written materials
and information regarding government audit and its submission to the audited person is arranged by the head of
the audit group or an audit group member appointed by him/her.



9.8 Control checklist for retroactive government audit control

     The control checklist for retroactive government audit control serves to ensure that all the activities leading to
the identified government audit results were duly carried out and documented. The control checklist for retroactive
government audit control is being drawn up continuously by the head of the audit group or an audit group member
designated by him/her, and is subsequently confirmed by the audit group head’s signature on a prescribed form.



9.9 Government audit performance

    Government audit is performed as:
    a)   a system audit;
    b)   an audit of operations;
    In justified cases, both the system audit and the audit of operations may be performed within the same
government audit.
    In the 2004 – 2006 programming period, government audit may be performed at the following entities:
    a)   managing authority for CSF;
    b)   OSG Unit of Protection of EU Financial Interests and Fight Against Corruption;
    c)   managing authority (including the activity of the monitoring committee);
    d)   intermediate body under managing authority;
    e)   paying authority;



                                                         14
    f)   paying unit;
    g)   FB/AR/FR;
    h)   third person (verification is only performed if necessary).
    In the 2007 – 2013 programming period, government audit may be performed at the following entities:
    a)   Central Coordinating Authority;
    b)   OSG Unit of Protection of EU Financial Interests and Fight Against Corruption;
    c)   coordinators of horizontal priorities;
    d)   managing authority (including the activity of the monitoring committee);
    e)   intermediate body under managing authority;
    f)   certifying authority;
    g)   paying unit;
    h)   B/FR;
    i)   third person (verification is only performed if necessary).
   In the course of government audit work, the actual facts are ascertained by means of their verification and
sample testing. The following activities are performed in the course of government audit performance:
    a)   information and documents submitted by the audited person are verified;
    b)   sample testing is carried out;
    c)   the audited person’s employees are interviewed;
    d)   other activities are performed as may be necessary to determine the actual state of affairs, discover
         deficiencies, etc.
    In the course of government audit performance, audit group members are obliged to draw up the following
documents:


The control checklist
    In the course of government audit work, audit group members use control checklists, which contain questions
serving to verify the audit areas. The questions represent a manual for verifying the individual government audit
objectives stipulated in the government audit performance programme. The control checklists contain specific
control questions which, when answered, allow the respective audit group member to conclude that the given
objective was fulfilled. Audit group members draw up the control checklist on the basis of the objectives and the
focus of government audit, as well as the particularities of the programming document under verification.
     The head of the audit group approves the prepared control checklists before they are completed in the
course of government audit work. By his/her approval, the head of the audit group warrants that the control
checklists are sufficiently detailed – i.e. that the detail and scope of the control questions ensures the fulfilment of
the objectives set in the government audit performance programme.
     The conclusions stipulated in the control checklist are based on and supported by the work performed, which
is described in the related worksheets for the work performed by audit group members, and must correspond to
the findings specified on the worksheets for the work performed by audit group members.


Worksheet for the work performed
     In the course of government audit work, audit group members draw up worksheets for the work performed,
where they record the performed work and all the discovered facts, verified documents and materials. They serve
as the basis for the documentation of findings/deficiencies. A worksheet should be detailed enough to present a
clear outcome of the verification also to an uninvolved third party. The audit group member documents all the
discovered facts which are important for acquiring evidence, demonstrating the performed work and achieving the
government audit objectives. The worksheet for the work performed is being completed continuously throughout
the course of government audit performance.
     The worksheet for the work performed indicates the objective (or several objectives) to be achieved by
verification. The objective must be identical with that indicated in the government audit performance programme
and may be specified more closely or expanded, if necessary. The main objective of government audit is to obtain
assurance – e.g. to obtain assurance of the management and control system effectiveness, expenditure eligibility
of verified projects, compliance of the examined processes with the EC and the Slovak Republic’s legislation, etc.
      Deficiencies recorded on the worksheets for the work performed must be duly supported by evidence. The
evidence attached to the worksheets for the work performed typically comprises copies of documents, based on
which the deficiencies were identified. Evidence does not need to be attached to the worksheet, if such evidence
will be part of the government audit report. An audit group member will always attach a clear and legible stamp (or
handwritten) identification to photocopies of evidence of the identified deficiencies, stating, for example:
“Conformity with original authenticated by”, date, legible name and signature of the audit group member
performing the authentication.



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     Audit group members draw up and submit worksheets for the work performed continuously throughout the
course of government audit performance. In the course of government audit, an audit group member draws up
multiple worksheets, depending on the number of verified objectives and activities. Each audit group member is
responsible for the contents of his/her worksheets for the work performed; he/she must inspect them prior to
submission to the head of the audit group and sign them, thereby certifying that they are complete and correct.
The head of the audit group approves the content of the worksheet for the work performed in writing or
electronically, or calls upon the audit group member to complete it or clarify the included data. If the head of the
audit group is an employee of another central government body, the worksheet of the head of the audit group is
approved by the senior officer of the body participating in government audit. The approval has the form of a
qualitative assessment of the worksheet for the work performed, which constitutes confirmation of its
comprehensibility and sufficiency, of the conclusions and adequate evidence to support the conclusions. The
head of the audit group approves the worksheets for the work performed by his/her signature. In justified cases
(such as when the head and the members of the audit group work in different places), it is acceptable to approve
the worksheets for the work performed electronically.
     The head of the audit group describes his/her activity in the worksheet for the work performed in accordance
with the above. Worksheets for the work performed drawn up by the head of the audit group are approved by
his/her authorised senior officer.




Interview record
     This document is used for documenting important interviews concerning the audited person in connection
with government audit performance, if any such interviews took place. At least two audit group members always
participate in the interview. It serves solely for the purposes of audit group members and comprises part of the
government audit file. An audit group member participating in the interview may request the participating
representative of the audited person to sign the interview record. Upon the audited person’s request, an audit
group member may provide the interview record to the audited person.


    Audit group members also draw up other documents in the course of government audit performance, as may
be required by the head of the audit group.



9.9.1    System audit procedure

    System audit is performed at the following levels:
    a)   MA for CSF, CCA, CHP;
    b)   MA, IBMA, PU, PA, CA.
    If necessary, system audit may also be performed at the level of FB, AR, B, FR and third persons.
   The verification of the management and control system setup and the testing of its adequate functioning
comprise the key activities performed within the framework of system audit.

    In the course of system audit, audit group members:
    a)   define the main risks that may affect the achievement of the audited person’s stated objectives – when
         formulating the main risks, audit group members mainly use information about the audited person
         obtained in the course of preparation for government audit performance;
    b)   select the key elements of the management and control system, which are to be verified and assessed in
         government audit, based on the key elements of the management and control system to be verified
         within the framework of the respective operational programme pursuant to the audit strategy and the
         annual plan of government audits, taking into account the risks defined in the course of preparation for
         government audit performance.
    c)   verify the adequateness of setup of the selected management and control systems and/or the selected
         key elements of a management and control system;
    d)   select a sample for the testing of management and control systems and/or the selected key elements of
         a management and control system;
    e)   perform the testing of management and control systems and/or the selected key elements of
         management and control systems;
    f)   record the discovered deficiencies;
    g)   evaluate the testing and prepare the auditors’ partial opinions (assurances);
    h)   draw up the final opinion (assurance) with regard to the management and control system.




                                                         16
    If necessary, a test is performed to verify all the levels of an operation (a walk-through test) in government
audits where this is possible. The test aims to verify the performed work procedures and to discover risks in the
audit area. The results of the walk-through test are used for a closer specification of the partial objectives of
system audit.
    In the course of system audit performance, the audit group members verify, whether the management and
control system (and/or the selected key elements of the management and control system) complies with the
assessment criteria set for the given key element of the management and control system. An identified non-
compliance with the assessment criteria represents a risk of ineligible expenditure that had been certified and
subsequently declared to the Commission.
     The key elements of the management and control system, as well as the assessment criteria (requirements)
for the individual management and control system key elements follow from the applicable EC Regulations
Nos. 1083/2006, 1828/2006 (1198/2006 and 498/2007 for the OP Fisheries) and serve for the assessment of
effective setup of the respective management and control system and the verification of its functioning.
    System audit is implemented as:
    a)       the verification of system setup;
    b)       the testing of systems.


Verification of system setup
     An audit group member checks, whether the setup of systems (the selected key elements of a management
and control system) complies with the relevant standards and rules; he/she verifies, whether selected documents
comply with the stipulated requirements and checks the adequateness of management and control systems
setup. To this end he/she uses the submitted internal manuals of procedures and, if necessary, conducts
interviews with the audited person’s employees. The verification including the results is recorded in the
worksheets for the work performed and in the control checklists.


Testing of systems
     An audit group member tests a selected sample to verify the functioning and the effectiveness of the
established management and control system and/or the selected key elements of management and control
systems. The testing is aimed at verifying compliance with procedures and standards by means of examination of
written materials and files, where necessary complemented by interviews with the relevant employees. The
verified documents and the results are recorded in the worksheets for the work performed and in the control
checklists. Two testing methods are applied:
    a)       testing of mechanism compliance (verification testing) is performed as the verification of demonstrability
             of the management and control mechanism and/or selected key element (e.g. whether the relevant
             employee prepared and signed the documents);
    b)       testing of mechanism quality (performance testing) is performed by repeating the management and
             control mechanism and/or selected key element, thereby verifying, whether the employee actually
             performed the prescribed procedure – i.e. whether he/she actually prepared or inspected the document
             in accordance with the prescribed procedure (e.g. recalculation of financial data in the relevant
             document).
    A system audit typically includes both the system setup verification and the system testing.
    The verification of setup and the testing of management and control systems results in 4 degrees of
assurance:
        st
    1        degree of assurance: The system under verification functions correctly, minimal improvements are
              needed. No deficiencies or only minimal deficiencies were discovered.
        nd
    2        degree of assurance: The system under verification functions correctly; however, certain improvements
              are needed. The discovered deficiencies do not have a great impact on the correct functioning of the
              system’s key elements or the management and control system as a whole. Recommendations were
              formulated, which the audited person should implement.
        rd
    3 degree of assurance: The system functions partially, substantial improvements are needed. Deficiencies
       were discovered that constitute irregularities or that could lead to the occurrence of an irregularity. The
       identified deficiencies have a significant impact on the functioning of the system’s key elements or the
       management and control system as a whole. The audited person must adopt recommendations or an
       action plan to remove the discovered deficiencies.
     th
    4 degree of assurance: The system does not function (a substantial part of the system does not function). A
       large number of deficiencies were identified that could lead to the occurrence of an irregularity or that
       cause an irregularity. The impact on effective functioning of the system’s key elements is significant – the



                                                           17
         elements under verification are nearly or completely non-functional. The deficiencies are wide-ranging
         and systemic. A formalised action plan must be adopted at a level above the audited person, the degree
         of action plan performance must be continuously monitored and evaluated.
    The verified sample of expenditure declared to the Commission does not include expenditure verified by
system audit.
    Within the framework of system verification, system audit also focuses on the verification of problem areas
concerning expenditure not yet declared to the Commission, with the aim of prevention and timely identification of
problems.
    A more detailed procedure of system audit performance, including the definition of key elements and
assessment criteria for the given key elements, will be laid down in a methodological guideline on system audit
performance, which will be issued by the Audit and Control Section of the MFSR.




9.9.2    Operations audit procedure
    The audit of operations is implemented in the form of testing and examination of a selected sample of
operations at the following levels:
    a)   FB/AR/B/FR;
    b)   third persons (only to the extent of providing cooperation in compliance with the Act on Financial Control
         and Internal Audit);
    c)   MA/IBMA/PU/PA/CA.
     It is performed as a 100% verification of the selected sample, with the entire relevant documentation within
an operation being examined. Only the verified amount of funds declared to the Commission within the framework
of operations audit at the FB, AR, B or FR is counted towards verified expenditure.
    In the audit of operations, audit group members focus mainly on obtaining information about the following
areas and documents associated with the expenditure under verification:
    a) NRG contracts;
    b) accounting documents;
    c) documents demonstrating the payment of expenditure claimed;
    d) documents demonstrating expenditure eligibility and information on the use of the funds provided in line
       with the objectives and aims stated in the operational programme and in the NRG contract;
    e) lease agreements;
    f) bank account statements;
    g) public procurement documentation;
    h) documentation of the project selection process;
    i) documentation concerning the delivery of goods, works and services;
    j) payment applications;
    k) monitoring reports;
    l) reports of the results of on-the-spot verifications and monitoring visits;
    m) documentation of the preparation and announcement of calls;
    n) submitted reports of previous controls or audits and the measures adopted, reports on the
       implementation of measures for the elimination of the deficiencies discovered in government audit and
       for removing their causes;
    o) programming documents;
    p) other relevant documentation demonstrating the legitimacy and eligibility of expenditure in line with the
       applicable rules.

     In the course of audit of operations, in particular the compliance with the following fundamental conditions is
verified:
    a)   the operation complies with the approved selection and assessment criteria for the operational
         programme, it was carried out in line with the operations approval process and complies with all the
         applicable conditions pertaining to the objectives to be achieved;
    b)   the declared eligible expenditure corresponds to the accounting records and accounting documents
         maintained by the FB, AR, B and FR and complies with the existing expenditure eligibility conditions;
    c)   the expenditure declared by the FB, AR, B and FR is in compliance with Community and national rules;
    d)   public contribution was paid to the FB, AR and B in accordance with the relevant provisions of EC
         regulations – e.g. Article 32 of Regulation No. 1260/1999, Regulation No. 448/2004, Article 80 of
         Regulation No. 1083/2006, Article 80 of Regulation No. 1198/2006, etc.
     It follows from the above conditions that audit group members will primarily focus on the verification of the
following:



                                                        18
    a) compliance of expenditure declared by the FB/AR/B/FR with the standards and rules of the EC and the
       Slovak Republic;
    b) compliance of the non-refundable grant contract with the rules of the EC and the Slovak Republic;
    c) observance of the selection and assessment criteria during the selection of projects within the individual
       operational programmes; subsequent implementation must be in accordance with the approved
       decisions and conditions concerning the fulfilment of the project objectives;
    d) compliance of declared expenditure with the accounting documents kept with the FB/AR/B/FR;
    e) observance of the stipulated deadlines;
    f) compliance of the type and timing of the respective expenditure within an implemented operation with
       EC regulations and with the NRG contract; whether it corresponds to the approved description of the
       operation and work actually carried out;
    g) payment of the EC financial contributions to the FB, AR, B, FR in full and without unreasonable delay;
    h) observance of the rules on disclosure and publicity;
    i) observance of public procurement rules pursuant to applicable legislation and further standards of the
       EC and the Slovak Republic;
    j) verification of adherence to the principle of equal opportunities and environmental protection by the
       FB/AR/B/FR;
    k) the physical project implementation;
    l) compliance with the defined audit trail;
    m) an effective going concern and the utilisation of project implementation outputs also after the project is
       completed (project sustainability);
    n) compliance with the NRG contract terms and conditions;
    o) observance of state aid rules pursuant to applicable legislation of the EC and the Slovak Republic;
    p) fulfilment of the NSRF horizontal priorities.
    The operations audit results serve as a basis for obtaining adequate assurance of functioning of the
management and control systems and affect the opinion on the functioning of the systems, which the audit
authority submits annually to the Commission along with the annual control report on each operational
programme.



9.10     Deficiencies

     After the examination and verification of the audited areas, audit group members analyse the individual
findings to ascertain, whether they do not constitute deficiencies and, subsequently, formulate recommendations
with regard to the deficiencies discovered. For example the following are deemed as deficiencies:
    a)    violation of and failure to observe international contracts binding upon the Slovak Republic, which were
          ratified and promulgated as laid down by a law;
    b)    violation of and failure to observe EC legislation;
    c)    violation of and failure to observe laws and other generally binding legislative acts of the Slovak Republic
          and resolutions of the Slovak Government;
    d)    violation of and failure to observe internal regulatory acts, directives, guidelines and manuals;
    e)    violation of and failure to observe NRG contract terms and conditions;
    f)    non-compliance with the cost effectiveness, efficacy, efficiency and purposefulness in the management
          of material, financial, human and other resources;
    g)    non-compliance with the principles of sound management, best practice and public governance;
    h)    breach of security of information systems (e.g. ITMS, IFAS).
    A deficiency description includes the following:
    a)    the condition required under applicable legislation of the EC and the Slovak Republic, the signed NRG
          contract, approved work procedures, principles, guidelines or other standards;
    b)    the discovered state of affairs, including an exact description of where the finding was identified;
    c)    indication of the discrepancy compared to the required condition.
     Deficiencies may or may not have a financial impact. Deficiencies with a financial impact are rounded off to 2
decimal places. If a deficiency is found, audit group members identify whether it constitutes breach of financial
discipline under the relevant provision in §31 of Act No. 523/2004 Coll. on Budgetary Rules for Public
Administration and on amendments to certain other acts as amended. In the event of a breach of financial
discipline, audit group members proceed in accordance with Section 9.14 of these Procedures.



9.11     Irregularities

     As a follow-up to the definition under Section 3, an irregularity occurs not only through breach of a provision
of the Community law, but also through breach of the legislative acts of the Slovak Republic, international



                                                         19
conventions and the associated agreements, which would or could have the effect of actually or potentially
prejudicing the Community budget, and thus jeopardising the EC financial interests. The breach may result from
an economic operator’s act or omission to act as obliged.
    The occurrence of an irregularity can also be directly related to a breach of financial discipline under §31(1)
of Act No. 523/2004 Coll. on Budgetary Rules for Public Administration and on amendments to certain other acts
as amended. The provision of §31 of the said Act defines the individual types of breach of financial discipline.
     An irregularity may constitute missing, untrue or counterfeit accounting records, missing or incomplete
documentation, a counterfeit NRG application, ineligible expenditures, a non-existent economic operator, refusal
of control, fraud, counterfeiting, violation of public procurement acts, etc.
    If an audit group member discovers an irregularity or a suspected irregularity in the course of government
audit performance, he/she proceeds in accordance with Resolution of the Government of the Slovak Republic
No. 547/2007 on a draft national strategy for protecting the financial interests of the European Community in the
Slovak Republic, and with guidance issued by CCA, MA, CA/PA and the Audit and Control Section of the MFSR
governing the procedure of reporting and recording of irregularities.



9.12     Recommendations

    Recommendations by the head and the members of the audit group represent proposals to remedy or
minimise a discovered deficiency, proposals to improve the management and control system and proposals to
prevent or mitigate risks.
     The recommendations aim to improve the quality of management and control systems, prevent or mitigate
the identified risks, eliminate deficiencies and adopt preventive measures. Recommendations are drawn up on
the basis of an assessment of the deficiencies resulting from violations of standards or sound management
principles, the actual discovered state of affairs and the associated evidence, the reasons for the existing state of
affairs and the consequences that arose or could arise due to non-compliance with the stipulated criteria and
procedures.



9.13     Drawing up of the government audit report

        Government audit is performed at the level of CCA/MA/IBMA/PU/ PA/CA/CHP/FB/AR/B/FR/third persons
(only to the extent of providing cooperation in compliance with the Act on Financial Control and Internal Audit).
        Where government audit is performed at the level of FB/AR/B/FR/third persons, the provisional partial
government audit report is drawn up first, followed by the partial government audit report with respect to each
verification performed at the individual audited persons, with the exception of third persons, in which case the
findings/deficiencies will be included in the respective government audit report at the level of the FB/AR/B/FR.
The results of partial government audit reports serve as a basis for the preparation of the provisional government
audit report and, subsequently, the government audit report.




9.13.1     Provisional government audit report

    Drawing up of the provisional government audit report
     In the course of government audit performance, audit group members record the government audit
performance procedure and the findings in work materials (e.g. worksheets for the work performed, the control
checklist), which they then deposit in the government audit file along with copies of supporting documents. These
materials should document the work of audit group members, the positive findings as well as the discovered
deficiencies, their effects and the proposed recommendations. After fulfilling the government audit objectives and
verifying the audit areas, audit group members formulate the findings, deficiencies and recommendations. These
are based on verified facts, an assessment of the state of affairs, the submitted documents and the consideration
of the audited person’s comments and proposals processed on the basis of requests for the submission of
information, which was submitted to the audited person during government audit and on which the audited person
commented. Deficiencies discovered in government audit are documented on an ongoing basis in the course of
government audit performance. An provisional government audit report is drawn up on the basis of the findings
following from government audit performance.



                                                        20
     The responsibility for drawing up the provisional government audit report rests with the head of the audit
group and it is approved by the authorised superior officer at the Audit and Control Section of the MFSR. Audit
group members are responsible for defining and submitting sufficient documentation to support the discovered
deficiencies and for drawing up the relevant recommendation. They submit their supporting documents for the
provisional government audit report to the head of the audit group within a deadline stipulated by him/her.
    The provisional government audit report is drawn up at least in the following structure:
Summary
1. Introduction
2. Objectives, scope and methodology used
3. Work performed
4. Deficiencies discovered and recommendations made
5. Conclusion
Annexes
    The provisional government audit report contains, in particular, the following essential elements:
    a) identification of the audit body;
    b) the number of the written mandate, on the basis of which government audit was performed;
    c) the date of issuance of the mandate to perform government audit;
    d) government audit number (from CEDIS);
    e) the names and surnames of audit group members;
    f) the designation and address of the audited person, as well as an identification number, if assigned;
    g) the subject of government audit and the audit period;
    h) the place and time of government audit performance;
    i) the description of the discovered facts and the description of any deficiencies discovered in government
       audit, listing the violated generally applicable legislative acts; EC legislation; concluded contracts;
       international agreements, which are binding upon the Slovak Republic and on the basis of which Slovak
       Republic receives funding from abroad; and issued decisions, indicating the accounting documents,
       other documents and written materials that demonstrate the deficiencies discovered in government audit;
    j) recommendations for improvements of management and other activities of the audited person, if
       necessary given the seriousness of the findings;
    k) expression of the discovered deficiencies in financial terms;
    l) information concerning the preparation and the contents of the partial government audit report, if any;
    m) the deadline for the submission of the audited person’s objections to the provisional government audit
       report;
    n) the date of drawing up of the provisional government audit report;
    o) signatures of audit group members;
    p) copies of written documents relating to the discovered deficiencies, authenticated by an audit group
       member;
    q) other data, where this is required in view of the government audit subject and the seriousness of the
       findings.
     A single provisional government audit report is drawn up for each government audit; the recipients include the
following    audited     persons   pursuant     to     the   government      audit  performance       programme:
CCA/MA/IBMA/CA/PA/PU/OSG Unit of Protection of EU Financial Interests and Fight Against Corruption/CHP.
     The process of drawing up the provisional government audit report applies accordingly also to the provisional
partial government audit report, with the exception of approval of the provisional partial report, as this is
performed by the relevant audit group head.
    The procedure from the preparation of the provisional government audit report up to the government audit
report is outlined in figure No. 1.


Submission of the provisional government audit report to the audited person for information
     After the wording of the provisional government audit report is approved, a designated audit group member
submits the report to the audited person for information and the audited person is then given at least 5 working
days to present its objections, in writing, to the veracity and demonstrability of deficiencies identified by the
government audit and to the recommendations made in the provisional government audit report. The submission
of the provisional government audit report to the audited person must be demonstrable (e.g. confirmed by the
audited person’s signature or delivered by registered mail).


Verification of the legitimacy of objections
    After receiving the audited person’s written objections to the veracity and demonstrability of deficiencies
identified in government audit and to the recommendations made in the provisional report, audit group members
acquaint themselves with the objections. The head of the audit group provides for the verification of the legitimacy


                                                        21
of the objections and notifies the audited person of their illegitimacy in writing at the latest by the date of
discussion of the provisional government audit report (§35(5)(b) of the Act on Financial Control and Internal
Audit). The written notification pursuant to the preceding sentence constitutes the provision of information as to
which objections the audit body deems as unjustified, as well as the reasons why the audit body deems these
objections as unjustified.
    Audit group members incorporate legitimate objections in the government audit report in accordance with
clause 9.13.2.




                                                       22
   Figure No. 1                      The procedure of drawing up the government audit report



  GA - level             GA - level                  GA - level                    GA - level   GA - level    GA - level
 FB/AR/B/FR             FB/AR/B/FR                  FB/AR/B/FR                      CCA/        MA/IBMA      PU/or PA/CA
                                                                                   CSF/CHP

  Interim partial         Interim partial             Interim partial
 government audit        government audit            government audit
      report                  report                      report
approved by head of     approved by head of         approved by head of
AG, notified to audit   AG, notified to audit       AG, notified to audit
     authority               authority                   authority




      Discussion              Discussion                Discussion




 Partial government       Partial government         Partial government
    audit report             audit report               audit report




                                                              Interim government
                                                                  audit report


                                                                  Discussion



                                                          Government audit report




                                                         23
   If the audited person does not send objections as outlined above within the stipulated deadline, audit group
members will deem the audited person as not having any objections.


Discussion of the provisional government audit report
    Typically based on a mutual agreement, the head of the audit group notifies the audited person of the date
and place of discussion of the provisional government audit report.
    The participants in the discussion of the provisional government audit report include audit group members,
the audited person’s statutory body or a person authorised by the statutory body, the responsible
employees/representatives of the audited person and, depending on the seriousness of deficiencies listed in the
provisional government audit report, also the authorised superior officer of the Audit and Control Section of the
MFSR and of the body participating in government audit.
    During the discussion, the head/member of the audit group informs the audited person about government
audit results and, where necessary, requests additional information. The discussion is aimed mainly at objections,
which the audit body regarded as unjustified.
    At the discussion of the provisional government audit report, the audit group members and the audited
person attempt to agree the deadlines for the following:
    a)   taking account of the recommendations listed in the government audit report by adopting measures for
         the elimination of the deficiencies discovered in government audit and for removing their causes;
         notifying the audit body in writing either of the measures or of the reasons why the recommendations
         cannot be taken into account;
    b)   the adoption of measures for the elimination of the deficiencies discovered in government audit and for
         removing their causes, where recommendations for such deficiencies are not listed in the government
         audit report, and their written communication to the audit body;
    c)   the submission of a written report on the implementation of measures for the elimination of the
         deficiencies discovered in government audit and for removing their causes, and on taking account of the
         recommendations included in the government audit report.
     An audit group member draws up minutes of the discussion of the provisional government audit report. The
minutes of the discussion of the provisional government audit report are signed by the head and the members of
the audit group, as well as by the audited person’s responsible employee. If the minutes are not signed by the
audited person’s responsible employee, this fact is recorded in the minutes. If the participants cannot meet again
in person to sign the minutes of the discussion of the provisional government audit report, an audit group member
can demonstrably (e.g. by registered mail) deliver the minutes signed by the audit group members present at the
discussion to the audited person in two signed copies and request that, after acceptance, the audited person sign
the minutes of the discussion of the provisional government audit report and deliver it to the audit body. The
audited person retains the second copy for its own purposes.
    Failure to sign the minutes of the discussion of the provisional government audit report by the audited person
does not affect the course and completion of government audit.
     The minutes of the discussion of the provisional government audit report indicates the date and place of
discussion of the provisional government audit report, the names of the participating audit group members
(including the audit group head, if present), the results of the discussion of the provisional government audit report
and, where applicable, the audited person’s confirmation that the documents and written materials provided for
government audit purposes were returned.
     The process of discussing the provisional government audit report applies accordingly also to the provisional
partial government audit report.



9.13.2 Government audit report

    Drawing up of the government audit report
    If the objections by the audited person to the deficiencies and facts contained in the provisional government
audit report are found justified, the head of the audit group ensures that they are incorporated in the government
audit report. The government audit report also incorporates any other justified suggestions and information
provided by the audited person during the discussion of the provisional government audit report.
     The integration of justified objections and comments of the audited person with regard to the deficiencies and
of the conclusions of the discussion of the provisional government audit report results in the government audit
report.
    Apart from the essential elements of the provisional government audit report with the exception of (m), the
government audit report also includes the following:



                                                         24
    a)   the date of delivery of the provisional government audit report to the audited person;
    b)   information stating whether the audited person filed objections to the veracity and demonstrability of
         deficiencies identified in government audit and to recommendations made in the provisional government
         audit report;
    c)   the date of discussion of the provisional government audit report;
    d)   the method of settlement of objections to the veracity and demonstrability of deficiencies identified in
         government audit and to recommendations made in the provisional government audit report (especially
         the result of their verification);
    e)   the essential elements of the provisional government audit report listed under (i) and (j) above, also
         taking account of the results of the provisional government audit report discussion indicated in the
         minutes of the discussion;
    f)   the deadline for the adoption of measures for the elimination of the deficiencies discovered in
         government audit and for removing their causes, and for their written communication to the audit body;
    g)   the deadline for the submission of a written report on the implementation of measures for the elimination
         of the deficiencies discovered in government audit and for removing their causes.
    The government audit report stipulates the deadlines agreed during the discussion of the provisional
government audit report. If audit group members fail to agree with the audited person upon the specified
deadlines during the discussion of the provisional government audit report, the deadlines are determined by the
head of the audit group.
    The government audit report must contain at least the copies of the accounting documents, other documents
and written materials demonstrating the deficiencies, authenticated by an audit group member with a view to
securing relevant evidence for administrative and court proceedings.
    The responsibility for drawing up the government audit report rests with the head of the audit group and it is
approved by the authorised superior officer of the central government body of which the head of the audit group is
an employee.
    If government audit is performed as a system audit, an Executive Summary is appended to the government
audit report, listing the main deficiencies found and recommendations made on the basis of the performed system
audit.


    Submission of the government audit report
    The head of the audit group ensures that a sufficient number of copies of the government audit report is
prepared and delivered to the audited person and possibly other relevant bodies (e,g, the police presidium, law
enforcement authorities).
    A copy of the government audit report, including its annexes, is delivered to: the audited person, the Audit
and Control Section of the MFSR, the relevant body participating in government audit/invited person and, in the
event of breach of financial discipline, also the relevant financial control administration for the purposes of
administrative proceedings. The government audit report is sent in electronic form to the paying/certifying
authority, the respective managing authority, the intermediate body and the paying unit.
    The serving of the government audit report to the audited person must be demonstrable (e.g. confirmed by
the audited person’s signature or delivered by registered mail). Government audit is concluded on the date of
serving of the government audit report to the audited person. If the audited person refuses to accept the
government audit report, it is deemed as served on the date of such refusal to accept. The service of a partial
report concludes the segment of the government audit covered by the partial report.
    The above procedures for the drawing up and the submission of the government audit report apply
accordingly also for the drawing up and the submission of the partial government audit report.



9.13.3   Other information resulting from government audit
    In the course of preparing the government audit report, the head of the audit group completes the following
documentation:
    a)   Notes for future government audits – the document is drawn up if the information in question could be
         essential to the next government audit or to the verification of the implementation of recommendations
         and measures (follow up).
    b)   The control checklist for retroactive government audit control – it serves to provide assurance that all the
         activities leading to the identified government audit results were duly performed and documented. The
         document must be drawn up prior to the preparation of the government audit file table of contents.




                                                        25
    c)    Communication of experience obtained in government audit - the document includes material knowledge
          obtained in the course of government audit, which should be communicated to all the employees of audit
          bodies.



9.14      Administrative proceedings
     in the event of a discovered breach of financial discipline under Act No. 523/2004 Coll. on Budgetary Rules
for Public Administration and on amendments to certain other acts as amended, which had been caused by MA,
IBMA, PU, PA/CA, FB, AR, B, FR, or by a third party, the head of the audit group ensures that one copy of the
government audit report is forwarded to the respective administrative body.




9.15     Drawing up and archiving of the government audit file
     In the course of every government audit, audit group members collect documents related to the government
audit. Audit group members deposit all working materials from the government audit in a government audit file.
When contributing to the government audit file, audit group members must ensure that the documents in question
are logically arranged, complete, relevant and intelligible. Working materials may be stored in written or
computerised form. For convenience, each government audit file is located in a separate folder and all the
documents and annexes deposited in the file are listed in the file table of contents. After the completion of
government audit, the head of the audit group submits the file to the Audit and Control Section of the MFSR for
the approval of completeness and for archiving.
    The government audit file includes, in particular, the following documents:
    1.    Mandate to perform government audit
    2.    Notification of government audit commencement
    3.    Record of government audit opening (if any)
    4.    Requisition of documents, written materials and information
    5.    Government audit performance programme
    6.    Records of conducted interviews (if any)
    7.    Worksheet for the work performed
    8.    Control checklists
    9.    Provisional partial government audit report
    10.   Provisional government audit report
    11.   Confirmation of submission of the provisional government audit report to the audited person
    12.   Minutes of the discussion of the provisional government audit report
    13.   The audited person’s comments on the provisional government audit report
    14.   Partial government audit report
    15.   Government audit report
    16.   Confirmation of acceptance/non-acceptance of the government audit report
    17.   Report on a discovered irregularity (only if an irregularity is discovered in the course of government
          audit)
    18.   Report on the adoption of measures for the elimination of the deficiencies discovered in government
          audit and for removing their causes
    19.   Report on the implementation of measures for the elimination of the deficiencies discovered in
          government audit and for removing their causes
    20.   Record of the verification of implementation of recommendations and measures
    21.   Notes for future government audits
    22.   Control checklist for retroactive government audit control
    23.   Communication of experience obtained in government audit
    24.   E-mails and other correspondence sent and received (if any)
    25.   Other evidence and documents supporting the government audit conclusions, which were not included in
          the government audit report
    The documents listed under 18 – 20 are deposited in the file after they are received or drawn-up.
     For the sake of clear identification of each government audit, the plan and the central record of audits use
standardised government audit identification by a unique alpha-numerical code (the government audit number).
The code marks every document comprising part of the government audit file. In the event that government audit
is performed at multiple audited persons, the government audit may be assigned several codes.
The head of the audit group submits the government audit file to the Audit and Control Section of the MFSR
without undue delay. The Audit and Control Section of the MFSR archives the government audit file for each
government audit. If necessary, a body participating in government audit may make a copy of the government



                                                       26
audit file submitted to the Audit and Control Section of the MFSR or to create its own file containing the relevant
documents in the course of government audit.



9.16     Verification of the implementation of recommendations and measures
     Within a deadline stipulated in the government audit report, the audited person is obliged to submit a written
report on the adoption of measures for the elimination of the deficiencies discovered in government audit and for
removing their causes and a written report on the implementation of measures for the elimination of the
deficiencies discovered in government audit and for removing their causes.
     After receiving the audited person’s report on the adoption of measures for the elimination of the deficiencies
discovered in government audit, the respective audit group head assesses the measures listed in the submitted
report on the adoption of measures for the elimination of the deficiencies discovered in government audit. If, on
the basis of such assessment, the head of the audit group reasonably expects in view of the seriousness of the
deficiencies discovered in government audit that the measures will be ineffective, the head of the audit group will
ask the audited person within the stipulated deadline in writing to revise the measures for the elimination of
deficiencies.
     If the audited person fails to comply with its obligation to send a report on the adoption of measures for the
elimination of the deficiencies discovered in government audit or a revised report on the adoption of measures for
the elimination of the deficiencies discovered in government audit within the stipulated deadlines, the head of the
audit group will issue a written notice to the audited person, notifying it of its failure to comply and of further
relevant steps that will be taken in the event of non-compliance with the given obligation.
    The report on the implementation of measures for the elimination of the deficiencies discovered in
government audit and for removing their causes must include supporting documentation or information (if the
implementation of the recommendation and of the measure cannot be supported by documentary evidence)
demonstrating the implementation of the recommendation and the measure.
   The head of the audit group is responsible for verifying the implementation of recommendations and
measures following from government audit.
    The aim of verification of the implementation of recommendations and measures is to find out which
recommendations and measures the audited person implemented, whether the adopted measures took into
account the recommendations, and to assess the degree of implementation.
    There are three methods of verifying the implementation of recommendations and measures:
    a)   documentary verification;
    b)   on-the-spot verification;
    c)   verification of the management and control system.
     Documentary verification is performed as the control of documentation supporting the report on the
implementation of measures for the elimination of the deficiencies discovered in government audit and for
removing their causes, or of data in information systems (e.g. updating of procedures, data input into the
information system…), which the head of the audit group carries out within one month of the delivery of the report
on the implementation of measures for the elimination of the deficiencies discovered in government audit and for
removing their causes.
    If the degree of implementation of recommendations and measures was insufficient or if the
recommendations were not implemented, the head of the audit group informs the relevant minister (and, if
necessary, also the APA Director General) in writing, sending a copy of the letter to the authorised superior officer
at the Audit and Control Section of the MFSR. A Record of the verification of the implementation of
recommendations and measures is produced as a result of documentary verification of implementation of
recommendations and measures.
     In the event of recommendations and measures that cannot be verified by the means of documentary
verification on the basis of supporting documentation attached to the report on the implementation of measures
for the elimination of the deficiencies discovered in government audit and for removing their causes, and thus on-
the-spot verification or management and control system verification is necessary, the head of the audit
group immediately informs the Audit and Control Section of the MFSR in writing of the recommendations and
measures that cannot be verified by the means of documentary verification. The Audit and Control Section of the
MFSR provides for verification of the implementation of these recommendations and measures by incorporating
them in planned or extraordinary government audits. In such cases, the implementation of recommendations and
measures is verified either within the performance of the designated government audit or separately. If the
deficiencies in question are identified again (failure to implement recommendations and measures), the audit
body imposes a fine on the audited person pursuant to Act No. 502/2001 Coll. on Financial Control and Internal
Audit and on amendment to certain other acts as amended.




                                                        27
9.17    Final provisions

      These Procedures will be applied accordingly also in audit of other instruments of financial aid to the Slovak
Republic from abroad on the basis of international agreements binding upon the Slovak Republic, which were
ratified and promulgated as laid down by a law.
    Details concerning the essential elements of documents, specimen forms and details of the activities
specified in the individual articles of these Procedures will be laid down by methodological guidelines issued by
the MFSR no later than by 30 September 2008. In the event of amendments to these Procedures, the MFSR
updates the methodological guidelines at the latest within 2 months of the approval of the amendments to these
Procedures by the Ministry of Finance of the Slovak Republic. The MFSR sends updated Procedures and
methodological guidelines to the bodies participating in government audit immediately after approval. The
methodological guidelines issued are binding upon all audit bodies.
     The following is repealed as of the date of effect of these Procedures: Manual for the performance of internal
audit of management and control systems of the Structural Funds and the Cohesion Fund, published in the
Finančný spravodajca (Financial Newsletter) journal No. 4/2004; Update of the Manual for the performance of
internal audit of management and control systems of the Structural Funds and the Cohesion Fund, published in
the Finančný spravodajca journal No. 4/2005; Procedures for the financial control of the Structural Funds and the
                    rd
Cohesion Fund (3 version); Procedures for the audit of the Structural Funds, the Cohesion Fund and the
European Fisheries Fund for the 2007 – 2013 programming period, approved by Slovak Government Resolution
No. 1035 of 5 December 2007; Principles for coordinating the planning and performance of ex post financial
controls of European Union resources and resources from other financial assistance instruments from abroad,
approved by Slovak Government Resolution No. 206 of 1 March 2006. Financial control and internal audit
procedures initiated before 1 June 2008 shall be concluded in accordance with the previous legislation.
   The approved plan of government audits prepared in accordance with the procedures stipulated in Slovak
Government Resolution No. 206 of 1 March 2006 is not affected by the coming into effect of these Procedures.
    Audit bodies are obliged to incorporate the Procedures in their internal manuals no later than by 31 October
2008. In the event of amendments to the Procedures by the Ministry of Finance of the Slovak Republic, audit
bodies are obliged to incorporate the amendments to the Procedures within one month of the issuance of
methodological guidelines by the MFSR.
      The Procedures will also be updated on the basis of suggestions by audit bodies.



10.     Validity and Effect

   The Procedures are valid as of the date of their approval by the Government of the Slovak Republic and
come into effect as of 1 September 2008.
   Any potential amendments to the Procedures are subject to approval by the Minister of Finance of the Slovak
Republic.




List of acronyms

AG                                           audit group
CEDIS                                        Central Electronic Database Information System
CCA                                          central coordinating authority
CO     CA                                    certifying authority
CSF                                          Community Support Framework
VAT                                          value-added tax
EFF                                          European Fisheries Fund
the Commission                               the European Commission
ERDF                                         European Regional Development Fund
EC                                           European Community
ESF                                          European Social Fund
EU                                           European Union
funds                                        Structural Funds, the Cohesion Fund, the European
                                             Fisheries Fund
IČO                                          identification number of organisation
IIA                                          Institute of Internal Auditors



                                                        28
IFAC      International Federation of Accountants
INTOSAI   International Organization of Supreme Audit Institutions
ISA       International Standard on Auditing
IFAS      Integrated Fund Accounting System
ITMS      IT monitoring system
CF        Cohesion Fund
FB        final beneficiary
CHP       coordinators of horizontal priorities
KU        final recipient
MFSR      Ministry of Finance of the Slovak Republic
NRG       non-refundable grant
SAO SR    Supreme Audit Office of the Slovak Republic
NSRF      National strategic reference framework
B         beneficiary
PU        paying unit
PA        paying authority
AR        aid recipient
APA       Agricultural Paying Agency
MA        managing authority
MA CSF    managing authority for the Community Support
          Framework
IBMA      intermediate body under managing authority
SF        Structural Funds
OSG       Office of the Slovak Government
GA        government audit




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