The Council Regulation (EC) No 1085/2006 was a basis for establishing the Instrument for Pre-Accession Assistance (IPA) for candidate countries for EU membership and potential candidate countries.
With a view to using the IPA funds, this EC Regulation sets down the requirements for establishing a systemfor management and control of the European funds. The designation of an Audit Authority for audit of the effective functioning of IPA management and control systems and verification of the accounting information provided to the EC, wasa condition as well. To that effect with Decision of the Government of the Republic of Macedonia of 31 July 2007 according to the requirements of the European Commission,within the State Audit Office was designated a functionally independent Audit Authority for pre-accession funds of the European Union in the Republic of Macedonia, for carrying out audit of the setup and functionality of structural and control systems for management of European Union pre-accession funds in the Republic of Macedonia.
In November 2007 with amendment of the Law on the State Audit (“Official Gazette of the RM” No. 133/2007) Chapter III.- b the competences and mandate of the Audit Authority were regulated. The mandate of the Audit Authority was also defined in Annex А to the Framework Agreement between the Republic of Macedonia and the Commission of the European Communities on the rules for co-operation concerning EC-financial assistance to the Republic of Macedonia in the framework of implementation of the assistance under the instrument for pre-accession assistance (Framework Agreement) and in Article 16 of the Sectoral Agreement between the Government of the Republic of Macedonia and the Commission of the European Communities on the rules for co-operation concerning EC-financial assistance to the Republic of Macedonia and the implementation of the assistance under Component V (IPARD) of the instrument for pre-accession assistance (Sectoral Agreement).
The mandate and competences of the Audit Authority is to conduct audit of the system for implementation, management and control of the EU pre-accession assistance in the Republic of Macedonia under decentralized management with and without ex-ante control by the European Commission.
The Audit Authority within the State Audit Office (SAO) functioned independently from SAO’s organizational parts in the period from 2007 until 2011, and the cooperation with SAO was realized according to Memorandum of Understanding signed in August 2007. The Audit Authority started to fulfill its competences as laid down by the Law, following the Government Decision for designation of Ivan Ignjatov as Head of the Audit Authority and assigning 4 auditors, employees of the SAO, to perform working tasks in the Audit Authority.
In March 2008 the European Commission approved the Project “Technical Assistance for Capacity Building to the Audit Authority”. Project was implemented in the period April 2008 - March 2009, through eight missions of a foreign expert engaged by the Company Crown Agents – United Kingdom. Global objective of the project was to provide technical assistance to the Audit Authority in establishing and strengthening its competences in accordance with the requirements of the IPA regulations.
The Republic of Macedonia was conferred the rightto manage the pre-accession assistance funds in a decentralised mannerin 2009 and 2010for the IPA Components:Regional Development (July 2009),Human Resources Development(October 2009), Rural Development, measures 101, 103 and 302 (December 2009) and Transition Assistance and Institution Building(December 2010).
In the period2007-2010 the Audit Authority has strengthened its capacities by employing 18 persons and assigning 5 persons from the State Audit Office.
Recommendations of the European Commission to ensure functional independence of the Audit Authority, were followed by adopting a separate Law for audit of instrument for pre-accession assistance (IPA) in May 2010, (“Official Gazette” of RM No. 66/2010) which regulates the subject matter of audit, organization and competences of the Audit Authority and manner of conducting the audit of the instrument for pre-accession assistance in RM.
According to the Law on audit of instrument for pre-accession assistance (IPA), on19 May 2011, with Decision of the Government of the Republic of Macedonia, Vladimir Bahcovanovski was appointed as the first General IPA Auditor. In June2011 the Audit Authority for audit of instrument for pre-accession assistance was registered at the Central Register of the Republic of Macedonia as a new legal entity.
After designation of the Audit Authority as an individual legal entity, all the 28 employees were taken over from the State Audit Office to the new legal entity - Audit Authority for audit of instrument for pre-accession assistance to continue conducting audit of IPA.
In order to promote the cooperation between the State Audit Office and Audit Authority, Memorandum of Understanding was signed in October 2011 defining mutual relationsin executing competences within the scope of work of both institutions, as well as exchange of data and experiences, expecting in this way to increase the efficiency of cooperation maintained so far.
On 12 May 2012 the Government of the Republic of Macedonia has adopted a Decision on appointing Leposava Apostolovski Velinov as an acting General IPA Auditor, and on 29 May 2012 with governmental Decision the same person was appointed as General IPA Auditor.
In June 2012 was opened a new account of the Audit Authority as a primary budget user.
By September 2013, the Audit Authority has been exercising its authorities with 31 employees.
Twenty seven employees of the Audit Authority including the General IPA Auditor, have acquired the Certificate for Certified State Auditor out of whom 24 employees passed the exam for certified state auditor in 2013.
Continual education and professional upgrading of the auditors has been maintained since the very beginnings of the Audit Authority through attending specialized training in the country and abroad, such as seminars on financial management of cohesion fund and structural funds, management and monitoring of operational EU- financed programmes, irregularities, procurement according to PRAG, internal and external audit and accountancy, international public sector accountancy standards, organized by TAIEX, INTERACT, CEF, European Court of Auditors, directorates of the European Commission, Institute of Public Administration, Dublin, Ireland, UNDP, Secretariat for European Affairs, as well as participation and attendance in regular technical meetings with representatives of relevant directorates-general of the European Commission, on-the-job training and individual professional upgrading.
The Audit Authority carries out audit of IPA in compliance with internationally accepted auditing standards, and according to annual audit work plans it carries out during the year audit of the IPA management and control system (system audit), audit of operations and financial audit.
The first Audit Strategy of the Audit Authority for the period 2009 – 2011 was adopted in December 2008. The Audit Strategy 2011 – 2013 sets out the planning process which covers the subject matter and manner of conducting the audit (audit universe) and manner of development of Audit Authority capacities for performing audit work. The action plan included in this Strategy is a link between the current situation and objectives of the audit universe by explaining which actions need to be taken to achieve the planned strategic objectives.
The Development Strategy of the Audit Authority for audit of instrument for pre-accession assistance 2012-2014 was adopted in February 2012.
Strategic Plan of the Audit Authority 2013-2015 was adopted in 2013. By fulfilling the objectives set out in it, the Audit Authority will continue to contribute to the promoting of the process of IPA management, accountability and transparency in using the fundsthrough giving auditors’ recommendations towards efficient and sound functioning of the system in order to protect the national and Community’s interests.
The Audit Authority by 30 September every year adopts annual audit work plans per IPA component, which are submitted to the relevant directorates general of the European Commission and to the National Authorising Officer before the beginning of each reference year.
The Audit Authority within legally set terms submits to the European Commission, Competent Accrediting Officer and National Authorising Officer the following:
- Annual audit opinion and Annual audit activity report by IPA component separately,
- Annual report on the effectiveness of the management and control system for IPA component for Rural Development,
- Annual audit opinion and Annual report on the accounts and statement of expenditure for IPA component for Rural Development, and
- Annual audit opinion on the Statement of Assurance issued by the National Authorising Officer
According to the Law, audit of the Audit Authority operations is performed by an audit firm, the European Commission and the European Court of Auditors. The report from the audit performed by the audit firm is submitted to the Government of the Republic of Macedonia by 30th June in the current year at the latest.