GAP Assessment Report_Ver1-MoD Comments

This project is co-financed by the European Union and the Republic of Turkey

Genel Yorum: 1) Raporda yer alan Ajans isimlerinin düzeltilmesi sağlanacaktır.2) Ajansın yasal statüsüne ilişkin raporda yer alan görüşlerin (sayfa 16-17 ile sayfa 58-59)

ayrıca daha detaylı olarak değerlendirilmesi sağlanacaktır.

Technical Assistance for the Capacity Improvement in the Economic and Social Cohesion (ESC) Policy (Phase II), in Turkey

EUROPEAID: 130083/D/SER/TRTR2009/0322.01-01/001

Component 1 Improved participatory programming and coordination capacity

of the Strategic Coordinator

Activity 1.7 Gap Assessment and Need Assessment and Road Map for Development Agencies

Draft Gap assessment report

Contents0. Acronyms........................................................................................................................................ 41. Executive summary......................................................................................................................... 52. Introduction................................................................................................................................... 113. Legal basis for IPA accreditation of DAs (Marandei).....................................................................134. Legal framework of DAs................................................................................................................15

4.1. Overview................................................................................................................................ 154.2. Law on DAs............................................................................................................................ 164.3. Decrees on Establishment.....................................................................................................214.4. Secondary legislation.............................................................................................................214.5. Operational documents and manuals.....................................................................................244.6. Conclusions on legislative framework....................................................................................26

5. Institutional framework of DAs.......................................................................................................275.1. Overview................................................................................................................................ 275.2. Internal organisational framework..........................................................................................275.3. External relations and networks.........................................................................................32315.4. Partnership principle...............................................................................................................325.5. Conclusions on institutional framework..................................................................................33

6. Analysis of DAs compliance with each IPA Accreditation criteria..................................................33Criterion 1 (a).................................................................................................................................... 34Criterion 1 (b).................................................................................................................................... 35Criterion 1 (c).................................................................................................................................... 38Criterion 1 (d.1)................................................................................................................................. 54Criterion 1 (d.2)................................................................................................................................. 55Criterion 1 (d.3)................................................................................................................................. 56Criterion 1 (e).................................................................................................................................... 57Criterion 1 (f)..................................................................................................................................... 59Criterion 2 (a)................................................................................................................................ 6160Criterion 2 (b.1)............................................................................................................................. 6261Criterion 2 (b.2)............................................................................................................................. 6463Criterion 2 (c)................................................................................................................................ 6564Criterion 3 (a)................................................................................................................................ 6665Criterion 3 (b)................................................................................................................................ 6766Criterion 3 (c)................................................................................................................................ 6867Criterion 3 (d)................................................................................................................................ 7069Criterion 3 (e)................................................................................................................................ 7271Criterion 3 (f)................................................................................................................................. 7372Criterion 3 (g)................................................................................................................................ 7675Criterion 3 (j)................................................................................................................................. 7675Criterion 3 (j)................................................................................................................................. 7776Criterion 3 (k)................................................................................................................................ 7978Criterion 3 (l)................................................................................................................................. 7978Criterion 3 (m)............................................................................................................................... 8079Criterion 3 (n)................................................................................................................................ 8180Criterion 4 (a)................................................................................................................................ 8281Criterion 4 (b)................................................................................................................................ 8685Criterion 5 (i)................................................................................................................................. 8685Criterion 5 (ii)................................................................................................................................ 8988Criterion 5 (iii)............................................................................................................................... 9291

7. Overall conclusions...................................................................................................................94937.1 Strengths and weaknesses.................................................................................................94937.2 Summary on DA compliance with IPA accreditation............................................................9897

8. Annexes (will be attached)....................................................................................................1031021) Terms of Reference of the Gap Assessment Report.........................................................103102

page 2 of 103

2) Methodology of Gap assessment (abridged version)........................................................1031023) Summary report on DA interviews.....................................................................................1031024) Summary table with DA questions and answers to Gap Assessment questionnaire.........1031025) Minutes of the discussion at the workshop on 19 April 2013.............................................1031026) Table with NUTs 2 regions and DAs in Turkey..................................................................103102

page 3 of 103

0. Acronyms

CA Contracting Authority

COCOF Committee of the Coordination of the Funds of the European Committee

EU European Union

DA Development Agency

HR Human Resources

IB Intermediate Body

INTOSAI International Standards of Supreme Audit Institutions

IPA Instrument for Pre-Accession

ISPAS International Public Sector Accounting Standards

GAR Gap Assessment Report

MoD Ministry of Development

NUTSNomenclature of territorial units for statistics (EUROSTAT, European Commission)

OP Operational Programme

OS Operational Structure

PRAG Practical Guide to Contract Procedures for EU External Actions

R Recommendation

RDP Regional Development Plan

page 4 of 103

1. Executive summary

This Gap Assessment Report includes six sections as follows:

Introduction Analysis of the legal basis for IPA accreditation Analysis of the current legal framework of DAs Analysis of the current institutional framework of DAs Analysis of DAs likely compliance with each IPA accreditation criterion Overall conclusions

The introduction's section provides the context of the gap assessment: for the future IPA programming period 2014-2020, the Ministry of Development is planning to involve the Development Agencies in the delivery of IPA funds. Therefore, a team of experts contracted under the EU funded technical assistance to the Ministry of Development was engaged to conduct a gap assessment of the capacity of the 26 Development Agencies to undertake the role of Specific Bodies (Intermediate Bodies) for delivery of EU IPA funds in Turkey.

The section on the legal basis for IPA accreditation presents the key EU Regulations that have been considered by the experts to conclude on the likely preparedness of the Development Agencies to undertake the role of Specific Bodies for delivery of IPA funds. In addition to IPA and Financial Regulations, the consultants have also considered a number of guidance documents issued by the European Commission, for instance the Guidance on Assessment of Management and Control Systems as well as on Management Verifications, and all relevant documents issued by COCOF on issues relating to effective financial management.

The analysis of the current legal and institutional framework of the Development Agencies provides an insight into the set of stipulations that support their functioning. The work of Agencies is regulated by an umbrella Law, with a set of secondary legislation and operative regulations defining operative principles. The Agencies work under guidance of and funding by, the Ministry of Development, whilst at the same time managing a large network of regional and local level relationships with both public authorities and the private sector. The assessment concludes that the legal and institutional framework is generally compatible with the requirements of the IPA and Financial Regulations. However, a Delegation Agreement would need to be stipulated between Ministry of Development and Development Agencies, which details the functions delegated to the DAs and all applicable rules for the implementation of IPA funds when the time comes1.

The section on DAs likely compliance with each IPA accreditation criterion contains the core of the gap assessment analysis and conclusions, with recommendations on forward looking.

1 On the one side, the term Delegation Agreement is used in the Financial Regulation to refer to delegation of functions. On the other side, the IPA Implementing Regulation art. 31 makes the stipulation of such agreements compulsory: “Article 31Specific bodiesWithin the overall framework defined by the structures and authorities as set out in Article 21, the functions described in Article 28 may be grouped and assigned to specific bodies within or outside the operating structures initially designated. This grouping and assignation shall respect the appropriate segregationof duties imposed by Regulation (EC, Euratom) No 1605/2002 and ensure that the final responsibility for the functions described in the said Article shall remain with the operating structure initially designated. Such a restructuring shall be formalized in written agreements and shall be subject to accreditation by the national

authorizing officer and the conferral of management by the Commission”.

page 5 of 103

Analysis is presented in relation to each of the accreditation criteria listed under annex I to the IPA Implementing Regulation2.

Finally, the Report presents the overall conclusions by highlighting the strengths and weaknesses of the current system.

Among the strengths:

In a relatively short time (less than 3 years) MoD, together with the 26 Development Agencies, have set a very powerful system of delivery of public grant funds with important and positive accumulations of knowledge and experience both at central and regional level. Important responsibilities under the regional development policy are decentralized at regional level, from Ministry of Development to Development Agencies, within a coherent approach, that leads to inclusive partnership towards promotion of projects having regional impact. In this sense, the evolution of the legal and institutional framework regarding the regional development policy has prompted both significant accumulations of expertise, as well as responsibilities assumed at both central and regional level.

Although DAs are relatively young organizations, in their first three years of activity, they have built significant administrative capacity through the preparation of Regional Development Plans as well as the design, launch and delivery of a number of regional-level grant schemes and other support initiatives financed by the Turkish Government, addressed to both the private and the public sector. As a result, they are managing a portfolio of 4,1212,812 grant contracts with an overall budget of approx. 350675 million euros.

Development Agencies form a very powerful network for the potential delivery of EU funds, since, in addition to the above-mentioned experience, they have available trained human resources (971 employees overall in 2012), and fully equipped offices in each (NUTS 3 level) county of Turkey. Through this network, Development Agencies have been able to provide detailed information and guidance to both grant applicants and grant beneficiaries.

All DAs work under standardized working procedures provided by MoD, mostly focused on the delivery of grant schemes and other aid instruments financed by the MoD. One important characteristic of the system is the Management Information System called KAYS that is provided by the Ministry of Development and accessible on-line. Significant steps have also been carried out to ensure that grant applicants can submit their project proposals on line. Presently, this is the case but applicants have still to deliver also hand copies of the proposals.

Operational procedures for implementation of grant schemes and other support mechanisms contain detailed steps, formats and guidance, which allow transparent and efficient implementation of support mechanisms. The procedures are closely in line with the EU External Aid procedures. The Agencies have generally achieved high level of visibility for their activities. Information about funding opportunities is widely spread, high number of applications is received,

2 Exception made for criterion 3(h) as not applicable to the Development Agencies.

page 6 of 103

Erol OHTAMIŞ, 04/18/13,

Updated figures including 2012 Grant Schemes, however the evaluations of project applications for some 2012 programmes have not completed yet.

and large number of projects is supported. Such a situation provides solid grounds for functioning of the Agencies as Intermediate Bodies.

The human resources are adequate both in terms of number and quality. The DAs benefit of very well educated staff, properly selected and trained and highly enthusiastic.

However, a number of weaknesses were also identified, as follows:

Development Agencies do not work on the basis of multi-annual programming and no disbursement deadlines are in place. Manuals of Procedures, which are in Turkish language, are insufficiently developed, missing comprehensive audit trails for each relevant process and sub-process.

The staff’s turnover rate is high in most of the DAs mainly due to low carrier prospective. The DAs have not developed a retention policy as part of the DAs HR policies and no individual personal development plans and career paths have been prepared for their staff. No rotation policy is in place for sensitive posts.

A significant weakness on the operational level, as regards the potential role of the DAs as Intermediate Bodies, is the lack of experience in EU programmes. Only some of the Agencies have implemented EU/IPA financed projects (as grant beneficiaries or end recipients of the assistance), the same goes for the Agencies’ staff. Moreover, the DAs capacity to initiate and/or promote large regional investment projects in partnership is still underdeveloped.

Thirteen out of twenty-six Development Agencies do not employ an internal auditor. A mechanism of Statements of Assurance on functioning of the DA management to beand control system are not provided to MoD is not in place. The Irregularity Management and Reporting function is insufficiently developed within almost all DAs.

The Report provides recommendations in reference to each of the identified gaps.

The Report does also include six annexes: the Terms of Reference of the Gap Assessment Report, the methodological approach to the preparation of the Report, summary report with interviews carried out at Development Agencies, answers provided by the 26 Development Agencies in the self-assessment questionnaire, minutes of GAR workshop ad table with NUTS 2 regions and DAs in Turkey.

The following is a categorized summary of the recommendations presented in the Gap Assessment Report:

Legal and institutional set up

page 7 of 103

R1. The legislation should define in more detail the functions and tasks of the Development Agencies or, as an alternative, an Operational Agreement could stipulate the roles and tasks of the Development Agencies under the current arrangements with MoD.

R2. When taking over the role of the Specific Bodies under IPA, the Development Agencies would need to sign a Delegation Agreement with the Head of the relevant Operating Structure, which define in detail the delegated functions and tasks of the Development Agencies as delegated Specific Bodies. Clear separation of duties between the functions of DAs as Specific Bodies, and other DAs activities, should be ensured.

R3. It is recommended that tasks are defined in a way that clear separation of duties between the IB and other Agencies operations and activities is ensured.The operational procedures should be updated regularly in order to reflect latest developments in EU External Aid procedures.

R4. The Administrative Board should not have a role under selection procedures for the award of grant contracts.

Management and Development of Human Resources

R5. The legal provisions for DAs staff should allow the Administrative Board the necessary decision making freedom for the HR Policy design and implementation for which it is responsible.

R6. The HR policies and HR staff status in the DAs should be reviewed to enable effective HR management with the view to ensure adequate number and quality of staff at all levels.

R7. HR policies should be implemented through actions plan with clear objectives, deadlines and responsibilities, in line with the DAs objectives and work plans.

R8. A harmonized manual of HR procedures should be prepared by and for all DAs, with MoD support, for a common understanding and implementation of the HR functions.

R9. Organizational charts and job descriptions should be improved in order to ensure clear definition of roles and responsibilities at all levels, as well as appropriate segregation of duties and tasks.

R10. The workload and staff planning should be updated in line with the objectives and work plans, so that sufficient number is ensured for the continuity of operations and a balanced workload for the staff in all units,

R11. Staff development plans should be annually reviewed, to ensure adequate staff quality in line with the DA needs towards the achieving the objectives.

R12. A competence management projects should be developed for all DAs aiming to improve their overall administrative capacity for managing public funds.

Grant Schemes Implementation and Financial Management

page 8 of 103


This recommendation is not explained under respective criteria in the report. Therefore, it is not clear.


Clarification is needed.

R13. The procedures for delivery of grant schemes should be regularly updated in order to reflect latest developments in EU External Aid procedures.

R14. Training for Development Agencies should be organized on latest EU public procurement rules and procedures.

R15. Development Agencies should prepare implementation plans for grant schemes and other support measures, containing detailed description and timing of every step in the process. R16. The current procedure for verification and validation of expenditure should be improved by including all checks included under the Commission Guidance document on management verifications3. Specific checks on compliance of expenditure with relevant EU policies should be included under the procedure.

R17. The procedure on irregularity management and reporting should be improved by clear assignment of responsibilities for each sub-process, and further specification of the whistle blowing procedure. The responsibilities of the Irregularity Officer should be specified both under the procedure and the relevant job description.

R18. Irregularity Officers should undertake regular training, and subsequently they should deliver training on irregularities to their colleagues within each DAs, so that each of the staff is clear on how to recognize and treat irregularities. Irregularity officers should also collaborate with the Risk Coordinator in reference to risks associated to irregularities management and reporting, and report on irregularities to Ministry of Development.

Monitoring & Evaluation

R19. The MoD should provide the Agencies with comprehensive written instructions on preparation of Regional Development Plans. The instructions should include guidance in application of partnership principle, instructions for analysis, steps of procedure, examples and recommendations in relation to regional objectives.

R20. MoD should extend the performance framework for DAs activities by including targets on economic and social performance of the grant/loan funds, disbursement targets (such as N+3 targets) and other delivery’s targets.

Internal Control

R21. Development Agencies should ensure that their internal control systems are functioning effectively and efficiently in accordance with art. 32 of the Financial Regulation and international internal control standards and practice. They should ensure that Public Internal Financial Control principles are enforced (irrespective on the fact that, according to the current legislation, they are not subject to the Public Finance Administration and Control Law).

3 This Guidance document designed for managing verifications under Structural Funds, is currently used under IPA, too http://www.interact-eu.net/downloads/399/Guidance_Document_on_Management_Verifications_.pdf COCOF (Commission) Guidance document on management verifications to be carried out by Member States on operations co-financed by the Structural Funds and the Cohesion Fund for the 2007 – 2013 programming period, 5/6/2008

page 9 of 103

http://www.interact-eu.net/downloads/399/Guidance_Document_on_Management_Verifications_.pdf

R22. An annual Statement of Assurance on the effective functioning of DA’s management and control system should be provided by DAs to MoD in order to provide reasonable assurance on the legality and regularity of the underlying transactions. The Statement of Assurance should also include information concerning any changes in the systems and controls.

R23. Development Agencies should apply risk management procedures, including nomination of responsible risk coordinator, holding of regular risk management meetings and application of transparent and standardized procedures. R24. All DAs should have an internal auditor or, in case internal audit is outsourced, the independence of the contracted auditors should be ensured. Audit reports, prepared in accordance with relevant international standards, should focus on functioning of the management and control systems within the DA as well as the reliability of accounting information, so that they can provide the DA legal representative with the necessary information for drawing up an annual statement of assurance4. Internal Auditors should be appropriately and regularly trained and a formal mechanism of collaboration among them should be established.

R25. The Manual of Procedures should be improved. Inter alia, improvement should cover continuity of operations; responsibilities for recording and reporting on exceptions; reconciliation procedures. DAs accounting procedures following accepted accounting principles should ensure full and transparent accounting, with separate accounts or a separate accounting codification for different activities, and handover procedure in case staff member leaves the body.

R26. Reporting on implementation of grant schemes financed by MoD should provide, in addition to details on implementation as well as on deviations from plans, systematic analysis of errors reported at any level. The on-line control system KAYS, if appropriately developed, could effectively assist this process.

4 The DA annual statement of assurance will certify that: The management and control procedures are fully respected, the payments are made in full conformity

with the manual of procedures, as well as all applicable legislation, checks and financial controls are true and comprehensive, the four eyes principle and segregation of duties are respected;

The management and control systems are functioning effectively in practice as designed and described in the manual of procedures or any improvements of the manual of procedures are necessary;

If there are any potential internal control weaknesses, either in design or operating effectiveness, misinterpretation of particular processes/activities and control, incorrect implementation, need for correction, redesign of the existing and development and implementation of new processes/activities and controls;

Reporting and information system is functioning (e.g. Communication and Reporting procedure is respected);

Risk management activities have been carried-out properly and the appropriate actions have been taken;

Irregularities are being identified and corrective actions are being implemented; Audit recommendations have been followed-up and implemented.

page 10 of 103

2. Introduction

Background

Turkey is responsible for the implementation of IPA programmes according to the Decentralized Implementation System (DIS) (article 11, Regulation 718/2007).

In this context, the Ministry of Development (formerly the State Planning Organization (DPT), acting as the Strategic Coordinator (SC), prepared the Strategic Coherence Framework (SCF), - a macro level strategic document- for the IPA components III (Regional Development) and IV (Human Resources Development) and it coordinates the regional development policy of the Republic of Turkey by preparing the main policy documents regarding the economic, social and cultural development, and providing for the effective and efficient use of the public resources allocated for public investments. Moreover, the Ministry of Development is responsible for the coordination of the 26 Development Agencies.

In February 2006, the Law of the Establishment and Duties of Development Agencies was passed. The main role of Development Agencies, according to the law, is to contribute to the elaboration and delivery of regional plan and programmes, as well as contributing to the improvement of the capacity of the regions concerning rural and local development. It is highlighted that Development Agencies are the regional hubs for the support to small and medium-size enterprises and new entrepreneurs in the fields of management, production, promotion, marketing, technology, financing, organization and labor force training.

By the end ofIn 2009, the 26 Development Agencies had been established. The following year, all Development Agencies started functioning, preparing Regional Development Plans as well as a number of grant schemes financed under the State budget. Although some of the Development Agencies are involved in the delivery of a number of IPA funded projects under Components III and IV (Regional Competitiveness Operational Programmes and Human Resource Development Operational Programme) in the capacity of end recipients of the assistance, currently, the Ministry of Development and the Development Agencies, are not part of any of the Operating Structures established by the Republic of Turkey to manage the EU IPA assistance.

For the future IPA programming period 2014-2020, the Ministry of Development is planning to involve the Development Agencies in the delivery of IPA funds. In this context, one of the most relevant activities addressed the development of the institutional capacity for Development Agencies to undertake the role of Intermediate Bodies for the IPA funds. Consequently, it became essential to undertake gap-filling studies regarding the institutional and legal framework and human resources capacity for Development Agencies, and to elaborate a road map for them in order to become, in the near future, Intermediate Bodies for the implementation of IPA funds.

page 11 of 103

Objectives of the assignment

Specific objectives have been set of this assignment with the view to contribute to the achievement of its overall objective: ” To strengthen the administrative capacity of Turkey in the management and implementation of EU funds at regional level in order to enhance the effective and efficient functioning of IPA components III”.- To strengthen the role of the DAs as crucial actors in the economic and social cohesion

of Turkey to EU at regional level,- To determine the conditions for DAs to acquire the Intermediate Body status,

- To improve the DA’s management, implementation and control capacity for the EU funds,

- To analyze the DA’s organization, structure and procedure for being Intermediate Body.

- To establish the way forward, the decision to be taken and the timing for the DAs to become Intermediate Body.

- To establish the Operating Structure/Managing Authority functions and responsibilities in the process of delegating tasks to the IB and the set of obligations and responsibilities that governs relations between the Operating Structure and the IB.

Based on review of the current DAs' institutional set up, organization and management and control systems, this document presents the conclusions of the gap assessment analysis made by the consultants on the preparedness of the 26 Development Agencies, to fulfill certain delegated functions in conformity with article 31 of the EC Regulation No 718/2007.

Methodology

The methodological approach, largely detailed and approved by the MoD is presented in Annex 2. The analysis for the implementation of the approach went through 3 stages:

1. Initial desk researchAn initial detailed analysis of the objectives of the tasks and of the available documents took place during the inception period with the view to have a better understanding of the requirements of the task and to develop the most suitable methodology. The information collected during this stage allowed us to better understand the context of the task and to identify the priorities and focuses of the approach as well as to prepare the appropriate tools, such as the questionnaires to be used for the data collection and processing. At the same time the relevant regulatory documents for the task were identified and collected.

2. Data collection and processingThe data categories to be collected and processed were defined in direct relation to the objective of our analysis: the identification of compliance with the IPA accreditation criteria of the 26 DAs.

The necessary information for the integrated analysis was gathered through four main channels: Comprehensive desk research of all regulatory documents for the establishment and

functioning of the DAs. Comprehensive questionnaire developed and sent to all DAs for filling in and answers

processed. Interviews performed with representatives of 5 sample DAs, during site visits to their

head offices.

page 12 of 103

Information and documents provided by the MoD during meetings and interviews.

3. Comprehensive analysis of collected data, identification of gaps and elaboration of recommendations for their filling in.

The approach all along the process was closely in line with the methodology proposed in IPA Implementing Regulation and detailed in its Annex I. It was outside the scope of the assignment to consult the audit reports issued by internal and/or external auditors on the activity of the Development Agencies. Moreover, the methodology agreed with the Ministry of Development for the gap assessment did not include interviews with the users of the Development Agencies’ services.

3. Legal basis for IPA accreditation of DAs (Marandei)

Two key EU set of Regulations are relevant for IPA accreditation of DAs:

IPA Regulation and IPA Implementing Regulation Council Regulation (EC) No 1085/2006 of 17 July 2006 establishing an Instrument for Pre-Accession Assistance (IPA), and Commission Regulation (EC) No 718/2007 of 12 June 2007 implementing Council Regulation (EC) No 1085/2006 establishing an instrument for pre-accession assistance (IPA), and subsequent amendments.

The EU Financial Regulation and the RAP (Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002], and, Commission Delegated Regulation (EU) No 1268/2012 of 29 October 2012 on the rules of application of Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council on the financial rules applicable to the general budget of the Union - RAP).

According to Council Regulation (EC) No 1085/2006 of 17 July 2006 establishing an Instrument for Pre-Accession Assistance (IPA Regulation ), recital (21) “assistance should be managed in accordance with the rules for External Aid contained in Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 on the Financial Regulation applicable to the general budget of the European Communities” [now repealed by Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002].

Moreover, Article 20 of IPA Regulation on “Coherence, compatibility and coordination” stipulates that “1. Programmes and projects financed under this Regulation shall be consistent with EU policies. They shall comply with the agreements concluded by the Community and its Member States with the beneficiary countries and respect commitments under multilateral agreements to which they are parties”. The above two provisions imply that IPA funds are to be disbursed in compliance with relevant EU policies (such as public procurement, State aid and any other applicable policy i.e. in compliance with other EU Regulations to be identified) as well as in compliance with the Financing Agreement between the European Commission and the Republic of Turkey.

Annex I to the IPA Implementing Regulation establishes the IPA accreditation criteria.

page 13 of 103

This set of Regulations is complemented by applicable international standards (such as those established by INTOSAI, the ISPAS, COSO) and a number of guidance documents issued by the European Commission, for instance, the Guidance on Assessment of Management and Control Systems as well as on Management Verifications, and all relevant documents issued by COCOF on issues relating to effective financial management.

In addition to the above, having in mind that the new IPA Regulation for the period 2014-2020 is not yet approved, the draft Regulations for EU Structural Funds 2014-2020 should be taken into due account, since these documents provide an insight into the European Commission approach to management and control of EU funds during the next programming period. Similarly, the Financial Regulation anticipates that a number of delegated acts will be issued by the Commission to clarify the approach to be followed for a number of specific issues (such as delegation of functions, sensitive posts, monitoring conflict of interests etc.).

In light of the above, the assessment presented in this document meets a limitation due to the fact that the regulatory framework for 2014-2020 is still not final.

A second limitation is that the accreditation of any Specific Body under IPA is not done in isolation, but only in the context of the system the Specific Body belongs to and within which the Body is delegated to execute certain functions. Therefore, the assessment should be done vis-à-vis of detailed assumptions on the delegated functions, as per Delegation Agreement and in the overall context of the Agreements between the European Commission and the Republic of Turkey, as well as between the National Authorizing Officer and the Head of the Operating Structure.

Finally, it is stressed that this Gap Assessment Report should be updated as soon as additional legally relevant documents become available, such as:

New IPA Regulation, Delegated acts issued by the European Commission to enforce the Financial

Regulation, Financing Agreement EU-Republic of Turkey on IPA 2014-2020 and for the relevant

Operational Programme or Sectorial Support Programme financed under IPA, Agreement between NAO and the HOS of the relevant Operating Structure.

page 14 of 103


Please give the full name (maybe in the footnote section)

4. Legal framework of DAs

4.1. Overview

The functioning of the DAs has been regulated by the umbrella law ‘’Law on Establishment and Duties of Development Agencies’’ (Law No. 5449, approved by the Council of Ministers on 25.01.2006 and ratified by the President of the Republic and published in the National Gazette on 08.02.2006). The Law provides the overall context of functioning of the DAs with indication of their organizational framework, duties and responsibilities. The Law includes the list ofdefined The territorial units for statistics at NUTS 1, 2, 3 level as an annex.

The actual establishment of the DAs is regulated by the three Establishment Decrees of the Council of Ministers:

- No. 10050 (6th July 2006), establishing 2 DAs – Adana (covering TR62 NUTS 2 region) and Izmir (covering TR31 NUTS 2 region);

- No. 14036 (22nd November 2008), establishing 8 DAs – Istanbul (covering TR10 NUTS 2 region), Konya (covering TR52 NUTS 2 region), Samsun (covering TR83 NUTS 2 region), Erzurum (covering TRA1 NUTS 2 region), Van (covering TRB2 NUTS 2 region), Adıyaman (covering TRC1 NUTS 2 region), Diyarbakır (covering TRC2 NUTS 2 region) and Batman (covering TRC3 NUTS 2 region);

- Nº 15236 (25th July 2009), establishing 16 DAs – Tekirdağ (covering TR21 NUTS 2 region), Balıkesir(covering R22 NUTS 2 region), Denizli (covering TR32 NUTS 2 region), Küthaya (covering TR33 NUTS 2 region), Bursa (covering TR41 NUTS 2 region), Kocaeli (covering TR42 NUTS 2 region), Ankara (covering TR 51 NUTS 2 region), Isparta (covering TR 61 NUTS 2 region), Hatay (covering TR63 NUTS 2 region), Nevşehir (covering TR71 NUTS 2 region), Kayseri (covering TR72 NUTS 2 region), Zonguldak (covering TR81 NUTS 2 region), Kastamonu (covering TR82 NUTS 2 region), Trabzon (covering TR90 NUTS 2 region), Kars (covering TRA2 NUTS 2 region) and Malatya (covering TRB1 NUTS 2 region)5.

The Establishment Decrees were amended by:- Amendments to the establishment decrees (Decree No: 2009/15433), in relation to

further defining details and roles of the Development Council, Administrative Board and Secretary General.

The DAs’ operations are also regulated by the following secondary legislation:- Regulation on Development Agencies working procedures and principles,

(published on 25.07.2006 in Official Gazette No. 26239) where a number of articles have been cancelled due to the Council of State Decision No T.16/03/2009, E.2006/5588, K.2009/1879 which decided that certain subjects have to be regulated by a higher authority than the MoD;

- Regulation on Development Agencies’ Employment (Decree No: 2006/262396);- Regulation on Development Agencies’ Budget and Accounting (Decree No:

2006/26303);- Regulation on Development Agencies’ Supporting Projects and Activityies

Supports (Decree No: 2008/27048);

5 See Annex 1 listing NUTS Regions in Turkey 6 Same reference as Regulation on DAs working procedures, since both Regulations are published in the same Official Gazette.

page 15 of 103

- Auditing Regulations of Development Agencies (Decree No: 2009/27308);- Development Agencies Goods, Services and Construction Purchase and

Contracting Procedures (Decree No: 2009/27308).

In addition to the legislative documents, the MoD has developed a set of Manuals and Procedures which are legally binding for the DAs and grant beneficiaries. They are the following ones:

- The Guideline for the Management of DA supports, setting rules and procedures for the management of financial and technical support provided by the DAs;

- The Project Implementation Guide/Manual for project beneficiaries, explaining the contractual obligations of grant beneficiaries including procurement and monitoring activities;

- The Procurement Manual for the grant beneficiaries as an annex of the Project Implementation Guide.

The functions and obligations of the DAs are defined by the legislation. The DAs do not have Delegation Agreement7 with the MoD. However, in the framework of other aid facilities DAs have signed separate agreements (for example, the agreement signed by the Diyarbakır-based DA for the cross-border programme between Turkey and Syria).

Even though DAs might earn some revenue from very few of its activities, they are not profit-oriented organizations, and almost all activities of DAs are free of charge. Moreover, DAs are not expected to prepare income statement (profit and loss statement). Therefore, they might be regarded as non-profit oriented organizations.

4.2. Law on DAs

According to law 5449/2006, DAs are public entities with legal personality subject to the provisions of the private law in all their proceedings except the ones regulated by the Law 5449/2006. As such, they are not part of the public administration of the Republic of Turkey. However, the Turkish Constitutional Court Decision No. 2007/91 states that due to use of public power and authority, the procedures, source of income and links to the central administration, the DAs are without no doubt public entities.

Following the article 27 of the Law nº 5449/2006, the DAs are not subject to the Public Finance Administration and Control Law (Law no. 5018), the Public Procurement Law (Law no. 2886) and the new Public Procurement Law (Law no. 4734).

Duties and responsibilities

The Law on Establishment and Duties of Development Agencies sets out the principles and procedures regarding the establishment, duties, authorities and coordination of the DAs which were organized for the purpose of accelerating regional development, ensuring sustainability and reducing inter-regional and intra-regional development disparities through enhancing the cooperation among public sector, private sector and non-governmental organizations, ensuring the efficient and appropriate utilization of resources and stimulating

7 As defined by Financial Regulation art. 2(f): "delegation agreement" means an agreement concluded with entities and persons entrusted with budget implementation tasks pursuant to points (i) to (viii) of Article 58(1)(c);.

page 16 of 103

local potential (art. 1 Law 5449/2006). It is highlighted that the above-mentioned purpose positions the DAs as organizations assigned by MoD to deliver the established regional policy within the respective NUTS2 areas. DAs can be therefore defined as bodies governed by private law with a public service mission.

The Law defines responsibilities of the MoD (formerly State Planning Organization) and DAs.

As regards the MoD, the following functions are described under the law 5449/2006 as follows:

Article 4-State Planning Organization shall be responsible for the coordination of Agencies at national level8. State Planning Organization shall:

a) Take precautions to decrease the inter-regional and intra-regional development disparities; provide consultancy and guidance for agencies on planning, programming and project designing; monitor and evaluate the implementation of plans and programmes,

b) By determining the principles and procedures regarding the assessment of institutional performance of agencies and performance of programmes in implementation, it shall either evaluate them or have them evaluated9,

c) Determine the principles and procedures concerning the allocation of the national and international funds intended for regional development to agencies and their use,

d) Provide inter-agency cooperation and support joint project generation,e) Ensure cooperation and coordination between related institutions and organizations

at central level in order that agencies can carry out their functions effectively and efficiently,

f) Approve the Annual Working Programmes of the agencies,g) Approve the Secretary General of the agency selected and proposed, among the

candidates having appropriate qualities, by the Administrative Board, h) Determine the principles and procedures concerning plans and programmes, aids

and transfers, qualifications and recruitment of the personnel, use of budgeting and accounting standards, activity reports, monitoring, evaluation and auditing; and principles and procedures regarding working of the investment support offices by taking into account the opinions of related public institutions and establishments.

As regards the DAs, the following functions are described under the law 5449/2006 as follows:

Article 5- Duties and authorities of the agency are as follow:

a) To provide technical support to the planning studies of local authorities,b) To support the activities and projects ensuring the implementation of regional plan

and programmes; to monitor and evaluate the implementation process of activities and projects supported within this context and to present results to the Under secretariat of State Planning Organization,

[c)] To contribute into the improvement of the capacity of the region concerning the rural and local development in accordance with the regional plans and programmes, and support the projects within this contextextent,

8Bold inserted by the author of this report’s section9Bold inserted by the author of this report’s section

page 17 of 103


. There is not any official translation of the Law. Therefore, the translation provided to you could be improved when needed.

c)[d)] To monitor other projects implemented by public sector, private sector and non-governmental organizations in the region and considered as important in terms of regional plan and programmes,

d)[e)] To improve cooperation in between public sector, private sector and non-governmental organizations to achieve regional development objectives,

e)[f)] To use or have them used the resources allocated to agency in pursuant to Article 4 (c) of this Law, in conformity with regional plan and programmes,

f)[g)] To carry out researches, or to have them carried out, concerning the determination of resources and opportunities of the region, acceleration of economic and social development and enhancement of competitiveness, and to support other researches carried out by other persons, organizations and institutions,

g)[h)] To promote, or have them promoted, business and investment facilities of the region at national and international level, in close cooperation with other related institutions,

h)[i)] To follow and coordinate centrally the permission and license transactions and other administrative transactions of the investors in regional provinces within the extent of the duties and authorities of public institutions and organizations, in order to finalize them within the time stated in the related legislation,

i)[j)] To support small and medium-size enterprises and new entrepreneurs in the fields such as management, production, promotion, marketing, technology, financing, organization and labor force training, by ensuring cooperation with other related institutions,

j)[k)] To promote activities related to bilateral or multilateral international programmes to which Turkey has participated in the region and to contribute to the development of projects within the context of these programmes,

k)[l)] To prepare a web-site to broadcast updated activities and financial structure of the agency and other matters concerning the agency.

It is observed that, whilst the legislation in force clearly establishes the MoD role to supervise the functions delegated to the DAs (art. 4), the functions delegated to the DAs are not explicitly defined under the law. In fact, the DAs “duties and authorities” as defined under the law are, rather than a list of functions in the meaning of the IPA Implementing Regulation art. 28 [such as for example ‘’(f) arranging for tendering procedures, grant award procedures, the ensuing contracting, and making payments to, and recovery from, the final beneficiary, ‘’(i) setting up, maintaining and updating the reporting and information system’’, ‘’(j) carrying out verifications covering administrative, financial, technical and physical aspects of operations, as appropriate to ensure that the expenditure declared has actually been incurred in accordance with applicable rules, the products or services have been delivered in accordance with the approval decision, and the payment requests by the final beneficiary are correct’’, ‘’(k) ensuring internal audit of its different constituting bodies’’, ‘’(l) ensuring internal audit of its different constituting bodies’’, ‘’(m) ensuring compliance with the information and publicity requirements’], a list of regional policy objectives, which also includes some specific tasks.

page 18 of 103

Since specific Delegation Agreements do not exist between the MoD and DAs, and the Law presently represents the sole basis for delegation of functions from MoD to DAs, it is observed that the current national legislation is not a sufficient basis for clearly defining the functions currently delegated from MoD to DAs.

Organizational Structure of the Development Agencies

The law defines the DAs’ organizational structure, as consisting of Development Council, Administrative Board, General Secretariat and Investment Support Offices. The internal organizational structure, following the Law provisions, is presented in details in the point 3.2. According to the Law, the Development Council plays a consultative and advisory role, whilst the Administrative Board is a decision making body, consisting of representatives of regional, local authorities, chambers of commerce, private and/or public sector. Some of the duties and responsibilities of the Administrative Board, such as ‘’to approve the proposals concerning giving support to the programmes, projects and activities submitted by the General Secretariat and the aids to individuals and organizations’’ are not entirely in line with the EU and IPA principles of transparency and equal treatments of all candidates. For some of duties and responsibilities, such as ‘’to decide recruiting and dismissing of the personnel’’ it is technically questionable whether such decision should be done by the Secretary General (operational level).

The Secretariat General is the executive body. While the duties and authorities generally correspond to the provisions of IPA Implementing Regulation (Article 28), in particular the right (Article 14 f) of the Law) ‘’to assess project and activity proposals of private sector, non-governmental organizations and local administrations in order toand make suggestions to Administrative Board for providing financial support’’ would appear to confer discretionary power to the Secretary General over granting of aid to the private sector that is not in line with EU and IPA provisions.

NOTE: ‘’to monitor, evaluate, audit the supported projects and activities; and prepare reports’’ could be a task of the Secretary General that is then delegated downward the organizational structure.

Personnel regime, budget and audit

The personnel status, HR management responsibilities and some procedural provisions are established through Law 5449 and Regulations 26239/2006. These two legal documents on the one hand provide for a certain number of criteria which define the status of the DAs personnel and, on the other hand, establish some conditions and limitations which would hinder the decisions making freedom of the DAs regarding the quantity and quality adequacy of staff for the future IB role of the DAs. Thus:

Law 5449/2006

- Defines the support staff and includes here categories which otherwise would require staff with specialized qualification for performing duties and tasks for the IB role (e.g. HR expert and financial expert).

page 19 of 103


Explanation is needed.

- Establishes a list of qualifications which have to be met by candidates for expert job positions, limiting the possibility of defining expert job positions for other important qualifications, such as HR expert which would be needed for managing the HR functions required for IB.

- Establishes a ceiling for the support staff to 20% of the total number of the DA staff.

- dDecides that the total of annual personnel expenditure of the agency shall not exceed fifteen percent of the revenues of the latest year’s final budget,

- Establishes that the number of personnel employed from the public institutions cannot exceed 30% of the total number of the personnel.

Regulation 26239/2006- In addition to the law, it provides for the definition of the expert staff, as being the staff

who perform tasks that require specific, professional and technical knowledge in the Agency and also reiterates the definition of the support staff,

- Establishes responsibilities for the HR policy and for the HR implementation, monitoring and development within the DAs structure, including for recruitment, staff planning and training. According to its provisions, the DA HR policy is decided by the Administrative Boards at the proposal of the Secretary General,

The areas of limitations imposed by the above mentioned legal documents are HR policy related and therefore they should be subject to decisions at the Administrative Board level, according to the specific staff.

DAs’ revenues consist of national funding from local and national level, financial sources provided by EU and other funds, aids and grants provided by national and international institutions and organizations, revenues from own activities and revenues from the previous years. “Own activities” are not defined under the law; however, interviewed Agencies said that they do not have any. “Revenues from the previous years” are also not defined under the law. Most likely these refer to the grant funds unused, that can be assigned to, and spent in the following years for grant schemes. The complex definition in the Article 19 of the Law does not allow clear understanding of financing proportions. In particular, “revenues” and “funds” should be clearly separated in the accounting in conformity to the international accounting standards for the public sector, with “revenues” classified in the profit and loss account and “funds” to be granted as public aid classified in the balance sheet (unless these funds could be retained by the Development Agencies and used for other purposes than public aid to eligible beneficiaries).

The expenditures of the Agencies include: Planning, programming and project expenses, Expenses for supporting projects and activities, Research and development expenses, Promotion and education expenses, Purchase of moveable and immoveable property as well as services, administrative and personnel expenses, other expenses related to the duties. The definition of expenditures is somewhat inconsistent. For instance ‘’Administrative and personnel expenses’’ are not the same level and type as ‘’Planning, programming’’ expenses. In some cases these two types of expenditures might even overlap. More adequate solution would be separation on ‘’personnel’’ and ‘’sub-contracting’’ or ‘’external service’’ categories. This unclear formulation could cause issues in relation to the IPA Accreditation criterion 3.j. ‘’Accounting principles – ensuring full and transparent accounting following accepted accounting principles’’.

page 20 of 103

4.3. Decrees on Establishment

The three Decrees of Establishment are each defining the locations and geographical coverage of the DAs established by the respective Decree. In addition to that, the Decrees define precisely the composition of the Development Boards with indication of represented organizations and share of representations per each county/region. In this sense the Decrees guarantee equal representations of all involved regions within every DA. The Decrees limit the number of employees in the DAs for the first year of their operations to 30 experts and 5 or 6 support staff.

Amendments to the establishment decrees

Amendments to Establishment Decrees further regulate the role, responsibilities and operations of the Development Council, Administrative Board and Secretary General. Rules of procedure for functioning of both bodies are presented in details, including decision-making process, logistics etc.

4.4. Secondary legislation

A set of secondary legislation further defines rules of operations of the DAs.

Regulation on Development Agencies working procedures and principles

The Regulation was largely amended by the Turkish Constitutional Court Decision No. 2007/91. A number of articles were cancelled. What remains in power is largely related to functioning of the Investment Support Offices. The Council of Ministers’ Decision No. 2009/15433 (Official Gazette No. 27353 published on 18.09.2009) replaced the articles cancelled by the Council of State Decision in the Regulation of DAs working procedures.

Regulation on Development Agencies’ Employment

The Regulation sets the responsibilities for the DA HR Policy preparation, approval and implementation within DA and sets a list of HR principles, which governs this policy.

Two important elements need to be commented here:

- According to art. 4 ” the objective of the DA HR Policy is to ensure the employment of the staff that has competency in their field and the needed qualifications at national and international level, and to develop the staff’s competencies and ensure their sustainability, so that the Agency can perform its tasks in efficient and effective way”. No reference is made here to staff number adequacy.

- One important principle of the HR policy is missing: the Equal Opportunities Policy principle of not discriminating on the basis of gender, sexual orientation, genetic characteristics, age, nationality, race, ethnic origin religion, political views, social origin, family status or responsibilities, disability or trade union membership. This principle should apply to all HR activities, including the management of existing staff and in the recruitment of new staff.

page 21 of 103

While a brief reference is made for “equal and suitable opportunities to the staff in terms of professional and personal training and development”, no such reference is made for employment and other HR management areas.

According to this Regulation, the staffs are employed with contractual status as per the employment legislation, for undetermined period.

The Regulation describes staff planning and recruitment process, employment arrangements and rules. It defines the qualification, employment, working procedures and determines rights and responsibilities of the staff.

Four comments are made regarding procedural provisions of these Regulations:

- Art. 10(2) introduces an age discrimination criterion (under age of 50 by the time of application) which would need to be revised,

- No clear reference is made regarding the setting of the eligibility and selection criteria in relation to the job descriptions requirements, but rather in relation to the legal requirements for expert position,

- While the recruitment and selection procedures refer rather to administrative steps, these procedures need to be further developed at DA level for the technical aspects,

- No reference is made for the staff performance appraisal either in term of HR principles, responsibilities or procedures.

The provisions of this Regulation are related to the following IPA accreditation criteria:- 1.(a) Ethics and integrity policies,- 1.(b) Irregularity management and reporting,- 1.(c) Staff planning, recruitment and appraisal,- 1.(d) Sensitive functions and conflict of interest,- 1.(e) Establishment of legal bases for bodies and individuals, - 1.(f2) Formal Establishment of accountability, responsibility, delegated responsibility,

Further details and references to the Regulation are provided under section 6 below.

Regulation on Development Agencies’ Budget and Accounting

The Regulation defines preparation and implementation of budgets, management and control of financial resources, accounts and financial statements in line with the accounting standards used for keeping records and reporting timely, accurate and according to international standards.

According to the Regulation formulations the preparation of budgets, the identification and collection of revenues, expenditures made, the asset management, accounts and records, will be in line with the basic concepts of accounting principles generally accepted accounting and budget related legislation and international standards.

Following this, it can be assumed that generally the Regulation contributes to the fulfillment of the below IPA accreditation criteria. Nevertheless, further analysis is provided under section 6 below, in the sections related to relevant accreditation criteria.

page 22 of 103


Not clear.


The age limit is also used in the public sector as 35.

The provisions of this Regulation are related to the IPA accreditation criteria:- 3.(h) Budgetary procedures to ensure availability of funds – ensuring that the NA can

fulfill its legal contractual commitments regardless of delays or interruptions in funding from Commission,

- 3.(j) Accounting procedures – ensuring full and transparent accounting following accepted accounting principles,

- 3.(k) Reconciliation procedures – ensuring that wherever possible accounting procedures are reconciled against 3rd party information,

- 3.(l) Reporting of exceptions

Regulation on Development Agencies’ Supporting Projects and Activities

The Regulation provides principles and rules related to the support of projects and activities provided by the Agencies. It refers to the beneficiaries of support measures – public institutions and agencies, non-governmental organizations, and other natural or legal persons – and concerns management, implementation, monitoring, evaluation and audit of the assistance to be provided. The types of interventions are described under the section ‘’Guidelines for management of DAs support’’.

The Regulation is based on the EU External Aid procurement rules and the PRAG Manual. It can therefore be assumed that sufficient level of transparency and equal opportunities is applied in allocation of the Agencies’ financial assistance. Further analysis in relation to this Regulation is provided in the below section related to specific criteria. This Regulation is supplemented by the operational documents ‘’Guidelines for management of Development Agencies’ support’’, ‘’The project implementation Manual/Guide for project beneficiaries’’ and ‘’Procurement Manual for grant beneficiaries’’.

The provisions of this Regulation are related to the following IPA accreditation criteria:- 2.(b1, 2) Objective setting and allocation of resources against objectives,

- 2.(c) Planning of the implementation process,

- 3.(a) Verification procedures – enabling double-check of all steps in a transaction,

- 3.(c) Rules of each type of procurement and grant calls – ensuring appropriate legal framework for all such commitment processes,

- 3.(d) Procedures (including checklists) for each step of procurement and grant calls,

- 3.(e) Publicity rules and procedures,

- 3.(f) Payment procedures,

- 3. (g) Procedures for monitoring delivery of co-financing.

Auditing Regulations of Development Agencies

The purpose of this Regulation is to define Development Agencies’ competency standards for financial management, internal and external audit and determine the procedures and principles.

The provisions of this Regulation are related to the IPA accreditation criteria:- 4(a) Internal audit including handling of audit reports and recommendations - 4(b) Evaluation – ensuring that top managers are provided with information

concerning the assessment of impacts of interventions (in addition to the other information they receive about legality, regularity and operational procedures).

page 23 of 103

The Regulation describes extensively the role and functions of the Internal Auditor. As seen in practice and presented under the specific criteria section below, half of the Agencies do not employ an Internal Auditor. Further elaboration on this issue is presented under section 6 below.

Development Agencies Goods, Services and Construction Purchase and Contracting Procedures

Not being subject to the Public Procurement Law (Law no. 2886) and the new Public Procurement Law (Law no. 4734), the Agencies have to follow a set of specific procurement rules for implementing their internal procedures.

The Regulation provides Development Agencies with instructions on the purchase of goods, services and acquisition of works. The Regulation is aimed at standardization of DAs procedures for spending, and ensuring easier monitoring and evaluation. The Regulation also provides a set of standardized forms in support of the relevant processes.

The procedures are based on principles of openness, transparency, reliability, accountability, equal treatment to ensure competition, and confidentiality. It can be assumed that the procedures are in line with the good practice on EU level and comparable with the Turkish Public Procurement Law and EU External Aid Procurement Procedures.

4.5. Operational documents and manuals

A set of operational Manuals has been prepared by the MoD to supplement the provisions of the Law and Regulations. The use of these Manuals is legally binding for the Agencies and beneficiaries of the Agencies’ support.

The Guideline for the Management of DA supports

The Manual supplements the Law and the Regulation on Development Agencies’ Supporting Projects and Activities. In the first part, the Manual provides description of the institutional framework, including organizational structure and responsibilities of individual units/departments. It also elaborates on ethic clauses.

The second part of the Manual provides details on implementation of Agencies’ support. The Agencies apply three types of support mechanisms.

The first type is direct support through grant schemes which is provided on the basis of public calls for proposals. The instructions in the Manual follow closely the provisions of the EU External Aid procurement procedures and PRAG Manual. The requirements such as publicity, openness and transparency, equal treatment of all applicants, clear setting of eligibility and evaluation criteria and pre-defined evaluation process, based on work of external assessors, are covered. It can be concluded that the instructions provided are in line with EU good practice for grant schemes delivery.

page 24 of 103

The second type of interventions is direct technical assistance, where the Agencies enable institutions and companies to engage consultancy or support services to build their capacities. The technical assistance is again allocated on the basis of transparent public calls for proposals.

The third type of interventions is guided project, which is a strategic project, closely in line with the regional development priorities and plans. “Guided projects” do generally support investment in local infrastructure, innovation development zones or similar.

In addition to these interventions, the Manual defines subsidizing of interest rate and giving out loans. However, in practice these two initiatives have not yet been implemented.

The Project Implementation Guide/Manual for project beneficiaries

The second Manual is the Project Implementation Guide for project beneficiaries. The document provides detailed instructions for project implementation, including: notifications and amendment of contract, project documentation and accounting, reporting and monitoring provisions. The Manual also elaborates on risk assessment to be done by the Agencies with the beneficiaries, clearly indicating the criteria. The document only partially (in the part of contract addenda, reporting, monitoring) draws lessons from the EU External Aid procedures (either from PRAG Manual or General Conditions for Grant Schemes). References for some other parts (for instance risk assessment) are not available under EU External Aid procedures. Nevertheless, it seems that the document provides sufficient basis for transparent implementing procedures in line with EU good practice.

The Procurement Manual for the grant beneficiaries

The last of the operational Manuals is the Procurement Manual for grant beneficiaries. The Manual provides instructions for secondary procurement from grants contract with a set of formats and examples. The Manual is prepared on the basis of EU External Aid rules and PRAG Manual and should be sufficiently in line with the formulation from the Annex IV to the EU External Aid Grant Contracts:

‘’The contract must be awarded to the most cost-effective tender (i.e., the tender offering the best price-quality ratio), or, in case of works or supply contracts not involving after-sales service, the sole award criterion should be the price. Contracts must be awarded in accordance with transparency and fair competition, avoiding any conflicts of interest’’

However, the Procurement Manual only applies when beneficiaries are NGOs or private companies (SMEs). In case of public sector beneficiaries, their usual procurement procedures (Turkish procurement law) apply. It is assumed that also these procedures correspond sufficiently to the Annex IV definition presented above.

HR management procedures manuals

There is no dedicated procedures manual developed for human resources management of the 26 DAs to cover the four main areas of the HR (staff planning, recruitment& selection, training, performance appraisal) which are subject to criterion 1.c). While general recruitment

page 25 of 103


Needs more formal wording.

and selection procedures are provided by Regulations 26239 of 2006, no other procedures were legally regulated or harmonized in any way.

In the absence of such a document, the DAs developed their own sets of procedures, and at the same time some outsourced part of the HR functions and/or HR procedures preparation (e.g. workload analysis and staff planning).

Although the DAs staffs have a contractual legal status, the recruitment and selection process is performed according to the civil servants legal procedures, presented in the Regulation 26239/25.07.2006. The recruitment and selection process is organized by the DAs accordingly; however, there is no set of detailed recruitment and selection procedures developed by the Agencies.

There are Agencies where some of the HR functions have been performed without dedicated procedures (e.g. induction training) and at the same time, there are Agencies where certain HR functions have not been performed at all (e.g. workload analysis and/or staff planning), the HR management decisions being made at Secretary General level based on experience based estimations.

4.6. Conclusions on legislative framework

The legislative framework of the DAs is provided at three levels. The first level is the “Law on Establishment and Duties of Development Agencies” (Law No. 5449, approved by the Council of Ministers on 25.01.2006 and approved by the President of the Republic as published in the National Gazette on 08.02.2006). The second level is the secondary legislation provided by the Governmental Decisions. The first three decrees are dedicated to establishment of the 26 Agencies, further elaborating on functions and responsibilities. Another 6 decrees regulate on DAs working rules and procedures, Agencies’ personnel, Budgeting and Accounting, Project and Activity Support, Auditing and Agencies procurement rules. The third level of legislative framework is the operational procedures regulating: Management of DAs Support, Project Implementation and Procurement of Grant beneficiaries.

The legislative framework is generally covering all aspects of DAs activities. Some specific tasks and operations are not covered as mentioned in the section 6 below on specific accreditation criteria. There are however some discrepancies in the legislation, that should be remedied in view of IPA accreditation. They mostly relate to: lack of comprehensive description of DAs tasks in the Law, unclear status of DAs as public or private law bodies, statutory issues of DAs staff and unclear definition of accounting principles in the Law.

page 26 of 103


?

5. Institutional framework of DAs

5.1. Overview

Following the Law on Establishment and Functions of the Development Agencies, these are not part of the public administration of the Republic of Turkey. They are (public, according to the Constitutional Court Decision No. 2007/91) bodies on the regional level ‘’organized for the purpose of accelerating regional development, ensuring sustainability and reducing inter-regional and intra-regional development disparities in accordance with the principles and policies set in the National Development Plan and Programmes through enhancing the cooperation among public sector, private sector and non-governmental organizations, ensuring the efficient and appropriate utilization of resources and stimulating local potential’’ (Art. 1 of the Law 5449).

The Agencies are under direct supervision of the MoD and execute their tasks in close cooperation with the regional and local stakeholders, who have representatives in the Development Council.

5.2. Internal organizational framework

As defined in the Law 5449 and the Establishment Decrees, the Agencies’ organizational structure consists of:

- Development Council,

- Administrative Board,

- General Secretariat,

- Investment Support Offices.

Development Council

Development Council is a consultative body established to ‘’enhance the cooperation among public institutions, private sector, non-governmental organizations, universities and local governments in the region and to direct/guide the agency’’ (Art. 8 of the Law 5449). The Development Council consists of 100 representatives of the provinces. These include public sector representatives, civil society and private sector representatives. The Decrees on Establishment provide detailed number of representations from each region.

The duties of the Development Council include (Art. 9 of the Law 5449):

- To select respectively the representatives of private sector and/or non-governmental organizations and their doubled associate members who shall take place in Administrative Board in the regions composed of a single province,

- To discuss and evaluate annual activity and internal audit reports of the agency and to make recommendations to Administrative Board,

- To make recommendations to Administrative Board regarding problems and solution proposals, promotion, potential and priorities of the region,

- To report the results of the meeting to the Under secretariat of State Planning Organization and publish conclusion notice of meeting.

page 27 of 103


DAs are part of the public administration of the Republic of Turkey.

It can be assumed that the Development Councils not only contribute to efficiency of the Agencies’ operations but also play an important role in promoting partnership and participation principle in the regions.

Administrative Board

According to the Law 5449 the Administrative Board is the decision making body of the agency. The Administrative Board consists of Governors of provinces, Mayors of metropolitan municipalities, representatives of the Chamber of Commerce and Industry and representatives of the NGO or/and private sector (Art. 10 of the Law 5449).

Duties and authorities of Administrative Board are as follow (Art. 11 of the Law 5449):- To accept the annual work programme and submit it to The Under-secretariat of State

Planning Organization for approval,- To revise the budget according to the needs during the year,

- To approve annual financial report and the results of final budget,

- To decide purchase, sale and rent of movable and immovable properties and purchase of service,

- To submit six-month interim report and annual activity report to the Under secretariat of State Planning Organization,

- To approve the budget of the Agency and submit it to Under secretariat of State Planning Organization,

- To approve the proposals concerning giving support to the programmes, projects and activities submitted by the General Secretariat and the aids to individuals and organizations,

- To accept donations and grants extended to the Agency

- To decide recruiting and dismissing of the personnel,

- To approve the service units determined by Secretary General and the division of labor among them,

- To identify the Secretary General and submit to the Under secretariat of State Planning Organization for approval,

- To determine the limit of authority of secretary general about the issues concerning purchase, sale and rent of the movable properties except vehicles, and purchase of service.

Determining the limits clearly, Administrative Board may delegate some of its duties and authorities to Secretary General whenever necessary. As mentioned under section 4 above, some of the duties of the Administrative Board might not be fully in line with the accreditation criterion 1 (d.3) if IPA Implementing Regulation.

General Secretariat

According to the Law 5449, the General Secretariat is the executive body of the agency. Secretary General is the superior Chief of Secretariat General and investment support offices. Secretary General is responsible to the Administrative Board.

page 28 of 103

The Duties and Authorities of Secretary General include (Art. 14 of the Law 5449):

- To implement the decisions of Administrative Board,

- To prepare annual work plan and budget, and submit them to Administrative Board,

- To collect revenues of the Agency, to make the expenditures in accordance with the procedures and principles to be determined by the Article 4, and according to the budget and decisions of Administrative Board,

- To decide on the purchase, sale and rent of moveable properties except for vehicles, and purchase of service according to the limits to be determined by Administrative Board,

- To engage in/organize activities for improving project generation and implementation capacity of people, institutions and organizations in the region,

- To assess project and activity proposals of private sector, non-governmental organizations and local administrations and make suggestions to Administrative Board for providing financial support,

- To monitor, evaluate, audit the supported projects and activities; and prepare reports,

- To cooperate and develop joint projects with domestic and foreign institutions and agencies related to regional development,

- To provide technical assistance to planning studies of local authorities,

- To determine the performance criteria of personnel and evaluate their performance,

- To make proposals to the Administrative Board related to personnel’s recruitment and termination of contracts,

- To attend the national and international meetings about regional development on behalf of the Secretariat General of the agency and carry out foreign contacts.

- To perform secretarial works and other services within the sphere of duties of the agency,

- To use authorities delegated by Administrative Board.

Some of the tasks of the Secretary General are further delegated to lower organizational structures in the Agencies as described below.

Investment Support Offices

Investment support offices composed of maximum five experts one of which is coordinator are established in the provinces of the region with the decision of the Administrative Board (Art. 15 of the Law 5449). The duties and authorities of the Investment Support Offices are as follows (Art. 16 of the Law 5449):

- To follow and coordinate centrally the permission and license transactions of investors in private sector within duties and authorities of public institutions and organizations and other administrative works and transactions on time specified in the related legislation or, if no specific time was given, urgently on behalf of the Administrative Board in the provinces of the region; and to monitor the investments,

- To inform and guide the investor in accordance with the application conditions and required documents within the framework of the related legislation,

- To carry out pre-examination about the applications,

- To carry out the transactions stated in the regulations to be enacted under the article 4,

page 29 of 103

- To inform the Governorship and Secretariat General about the works and transactions.

In the assessment interviews it has been established that in some cases the Investment Support Offices implement additional tasks, supporting other units/departments of the Agencies.

In addition to the definitions within the Law, the Guidelines for Management of DA support, presented in the Point 2.5, further define the internal structure of the Agencies indicatively, by describing likely organizational units/departments required for the management of grant scheme programmes. The Guidelines provide pro-forma organizational chart which is being used, with small modifications, by all the Agencies visited in the assessment interviews. The Guidelines further define responsibilities of specific units/departments within the Agencies in relation to implementation of support initiatives (Point 1.3.2.2. of the Guidelines for Management of DA support):

Planning, Programming and Coordination Unit - Preparation of regional plans and programmes in the framework of the support to

be provided in accordance with the schedule and budget allocation plan for financial support,

- Preparation of annual work programme and budget to be allocated to the planned support,

Programme Management Unit- Creating general framework and implementation mechanism,

- Determine the scope of support programmes, the application requirements and evaluation criteria,

- To prepare and distribute publications, guidelines for supporting applications,

- To support promotion of the region by taking necessary measures,

- Organizing training and project preparation for potential applicants,

- To provide answers to questions posed by the potential applicants,

- Receive applications under calls for proposals and make appropriate records,

- If necessary make and publish corrections to the calls for proposals,

- Determine criteria for selection of external assessors and organize selection process,

- Evaluate performance of external independent assessors,

- Plan and manage project selection and evaluation process,

- Inform the Secretary General who is proposed for project support,

- Organize assessment committee (evaluation committee), identify the final list of successful applicants upon the decision of the Administrative Board and publish the list,

- Prepare the contracts and invite the successful applicants to sign,

- Insert the basic information on successful projects into information system,

page 30 of 103

Monitoring and evaluation unit- Evaluate the performance of the programme at the level of indicators,

- Monitor a set of indicators to determine efficiency on the level of projects implemented by beneficiaries,

- Implement risk analysis and monitoring visits prior to contract signature,

- After the signature of the contract verify the accuracy of information, evaluate the capacity of beneficiaries and prepare roadmap for implementation of the project; arrange for pre-payments with the Accounting and Payment Unit,

- Training of beneficiaries about the implementation process and monitoring,

- Ensure the overall coordination of the information system,

- Answer questions of the beneficiaries during the implementation process,

- Arrange contract amendments, termination, early warning reports and the corrective measures,

- Process and verify the beneficiaries’ payment requests,

- Carry out monitoring visits with the projects,

- Support the challenges and issues faced by the beneficiaries,

- Implement a regular project and programme risk analysis,

- Prepare ratings report every six months,

- Support the evaluation of programmes and projects,

- Assess the impact of the results of competed projects.

Accounting and Payment Unit- Ensure compliance with the Monitoring and Evaluation Units requests for pre-

payments to beneficiaries, - Check the financial management of the supported projects,

- Evaluate beneficiaries’ payment requests submitted by the Monitoring and Evaluation Unit and ensure timely payment,

- Manage repayments due to cancellation of contract, fraud or similar,

- Support Agency’s financial operations,

- Ensure activity level financial control for support operations implemented by the Agency.

As regards to the description of tasks of specific departments in relation to implementation of support initiatives, it can be seen that tasks are relatively well defined in relation to implementation of grant schemes and other support mechanisms. What however remains open is the separation of tasks in reference to different Agencies’ activities. For instance, when Agencies are implementing several activities, e.g. national grant schemes, preparation or implementation of IPA projects or other initiatives (like CBC Turkey-Syria) each department is covering the tasks related to these programmes, without clear separation or allocation of staffs between them. In addition to that, some departments such as for example Investment Support Offices do often implement tasks of other departments (e.g. assist in info-days, promotion, consultancy to potential applicants or monitoring) without this being properly reflected in the description of tasks.

page 31 of 103

5.3. External relations and networks

The external relations of the Agencies are facilitated on various levels. The first level is closely connected with the Agencies’ organizational structure. The Development Council has 100 members coming from all the provinces covered by respective Agency. The members represent many sectors and organizations, so that it can be assumed that these organizations and sectors are directly informed about the Agencies’ activities through the Development Council members. The Administrative Board members are also representatives of the provinces covered by the Agency, therefore, contributing to further networking and raising awareness within their environments.

The second level of external relations is connected to legal provisions. The Agencies are by definition under the law obliged to ‘’provide support to local authorities’’, ‘’support regional plan and programmes’’, ‘’improve cooperation between public, private and non-governmental sector’’. In order to be able to efficiently implement these tasks, it is necessary for the Agency to closely connect with all these entities.

The third level of external relations applies to operational tasks. When implementing support initiatives the Agencies are obliged to implement a wide promotion of their activities. In this sense, they are arranging public announcements and building contacts with potential applicants and other users of Agencies’ services.

It can be concluded that the legal framework and operational procedures provide sufficient basis for transparent external relations and wide publicity of Agencies’ activities. As further described in the specific criteria section, this situation adequately responds to the IPA Accreditation Criteria 2 (e) Publicity rules and procedures.

5.4. Partnership principle

According to the Commission Staff Working Document: The partnership principle in the implementation of the Common Strategic Framework Funds - elements for a European Code of Conduct on Partnership (SWD (2012) 106, of 24.04.2012) ‘’The partnership principle implies close cooperation between public authorities at national, regional and local levels in the Member States and with the private and third sectors. Partners should be actively involved throughout the whole programme cycle — preparation, implementation, monitoring and evaluation. Partnership must be seen in close connection with the multi-level governance approach and the subsidiarity and proportionality principles’’.

When applying this definition to the context of the Development Agencies in Turkey, this practically means that a wide partnership must be assured throughout the implementation of support initiatives, from preparation of the programmes to implementation, monitoring and evaluation. As mentioned in the previous section, these principles are largely respected through participation of the Development Council in implementation of the Agencies’ operations.

However, within the overall context, specific consideration needs to be given to the process of programming, including preparation of regional development plans. Since the whole implementation cycle depends on the properly implemented programming exercise, it is of

page 32 of 103

outermost importance that strong participation of different stakeholders is assured in the process. It is considered that the existing legal framework does not provide sufficient guidance for efficient and standardized programming exercise, though in practice (as learned during the interviews) the Agencies generally apply EU comparable practice. Preparation of uniform rules and practical recommendations could significantly contribute to fulfillment of IPA accreditation criteria under Point 5. Communication. Regular coordination meetings between different bodies to exchange information on all aspects of planning and implementation.

Furthermore, the low number of guided projects and large projects initiated by regional partnerships under the IPA Operational Programmes 2007-2013 might suggest that, in addition to the need for DAs to gain experience in development of large projects, partnerships mechanisms are to be strengthened in all regions.

5.5. Conclusions on institutional framework

The organizational context following from the role defined by the Law, secondary legislation and operational procedure was assessed from several perspectives. Internally the organizational structure consists of Development Council as advisory body, Administrative Board and Secretariat General. The tasks are operatively implemented by departments which are usually defined in accordance with specific operational tasks: Planning Department, Project Management Department, Monitoring and Evaluation Department and Financing Department. While the tasks are properly allocated to respective departments, it remains unclear how activities related to different programmes and initiatives are divided within departments.

Externally the DAs connect with regional stakeholders, aiming at realization of regional objectives. While in practice the interviewed Agencies apply proper level of networking and enforce the partnership principle, it has been established that no written or formal guidelines for preparation of regional development plan and action plans exist.

6. Analysis of DAs compliance with each IPA Accreditation criteria

The analysis under this section is based on the statistical survey of all 26 DAs and 5 additional in-depth personal interviews with 5 Development Agencies located in Ankara, Samsun, Bursa, Diyarbakır and Kars. The statistical survey used the principle of yes/no questions while the interviews were largely based on standardized pre-defined open questions. In addition to the survey and interviews, various documentation was collected and analyzed. Apart from legislation and operational procedures obtained from the MoD, the assessors collected annual reports, reports on implementation of grant schemes, organizational charts and descriptions of jobs for different positions, examples of internal procedures and publications.

Presentation of Agencies’ resources

Physical resources

Development Agencies’ premises are between 510 and 3800 square meters large. Most have around 1000 square meters, which means an average of approximately 30-40 square meters per employee. The Agencies generally have also investment support offices in the

page 33 of 103

provinces under their jurisdiction. The 5 interviewed Agencies reported that premises are normally rented but most DAs are considering investments into own facilities. In the 5 interviewed Agencies the premises appeared to be adequately equipped, with modern computer equipment and access to Internet. All the interviewed Agencies had sufficient transport facilities either in their ownership or sub-contracted. Human resources

The 26 Development Agencies have between 27 and 47 employees. In the interviewed Agencies the average proportion of support staff is approximately 20%, 65% are specialists and 15% managers. In addition, DAs sub-contract cleaning, security, transport and other services. There seem to be significant differences in staffs’ fluctuation. In the interviewed Agencies, Diyarbakır Development Agency did only recruited 3 new staffs in the last 12 months, while in Kars 12 new employees were recruited in the last 12 months.Among the greatest challenges related to human resources, the issues related to contract employment and additional needs for training were mentioned. Some of the Agencies have expressed need for additional staff. Other resources – networks, information, databases etc.

All interviewed Development Agencies make available to own staffs IT equipment, PCs connected in internal network, modern conference rooms and Internet connection.Since their establishment, all Development Agencies have launched and managed several grant schemes financed from national funds. The grant amounts are normally between 100.000 and 500.000 TL depending on the type and objectives of grant schemes. The average number of awarded grants depends on the type and number of grant schemes launched. On average the Agencies manage between 50 and 100 grant contracts every year.

Criterion 1 (a)

1(a) Ethics and integrity policies

Description

The personal and professional integrity and ethical values of management and staff is one of the elements of the control environment of each organization. This includes a supportive attitude toward internal control at all times throughout the organization.

Every person involved in the organization has to maintain and demonstrate personal and professional integrity and ethical values and has to comply with the applicable codes of conduct at all times. Moreover, public organizations should make integrity and ethical values visible to the public in their mission and core values.

In each DA there is a code of ethics for the employees and all employees are aware of the code of ethics. It would appear that such a code is the same as adopted by the Government for all public administrations. The Code of Ethics is published by some DAs in their web page. Within each of the interviewed Development Agency there is a commission for ethics. Within Annual DA’s Training Plan Curricula, the Code of Ethics is included.

page 34 of 103


Is the average for the 5 DAs visited or for all 26?

There is a declaration of confidentiality and impartiality signed by all employees, and such declaration includes acknowledgement of the Code of Ethics, also. Declarations of confidentiality and impartiality are also signed by external assessors and other support staff.

Recommendations

Not applicable.

Gap fiche 1 - Ethics and Integrity Policy

Accreditation criterion: 1(a) Ethics and integrity policies – ensuring the culture for the organization required by top management is understood throughout the organization.

Findings

In each DA there is a code of ethics for the employees and all employees are aware of the code of ethics.There is a declaration of confidentiality and impartiality signed by all employees.

TargetDAs staffs demonstrate personal and professional integrity and ethical values share the organizational culture and exhibit a supportive attitude towards internal control.

Gap description No gap was found under this criterion.

Criterion 1 (b)

1(b) Irregularity Management and Reporting

Description

According to Article 19 of the IPA Implementing Regulation on Anti-fraud measures:

“1. Beneficiary countries shall ensure investigation and effective treatment of suspected cases of fraud and irregularities and shall ensure the functioning of a control and reporting mechanism equivalent to that referred to in Commission Regulation (EC) No 1828/2006. In the case of suspected fraud or irregularity, the Commission shall be informed without delay.

2. Furthermore, beneficiary countries shall take any appropriate measure to prevent and counter any active or passive corruption practices at any stage of the procurement procedure or grant award procedure or during the implementation of corresponding contracts”.

It is highlighted that the importance of the “reporting mechanism” derives from the fact that information and statistics on the causes of irregularities (types of errors and fraud mechanisms) is of great help for prevention of further irregularities.

Within Operating Structures under IPA, irregularity management and reporting is generally organized as follows:

1) Participation in the identification and alerting of suspected irregularities, including the issue of documents equivalent to “primary administrative or judicial finding” – PACA as defined by Article 27 of EC Regulation 1828/2006 – all staffs including internal auditors, and any external auditor,

page 35 of 103

2) Undertaking appropriate measures to prevent irregularities, promoting the culture of alerting on irregularities – Irregularity Officer,

3) Deciding whether an alerted case is to be confirmed and treated as an irregularity - legal representative of the institution,

4) Reporting and follow up mechanisms – Irregularity Officer,5) Recovery – Accounting and Financial Officers.

In the self-assessment questionnaire, only 19 DAs reported that an Irregularity Officer was appointed. However, the findings during the interviews show that in none of the visited DAs, an Irregularity officer has been formally appointed, such responsibility being either undertaken by the Secretary General or delegated to the Legal Expert or to the Head of the Monitoring and Evaluation Unit.

The answers may depend on different understanding of the role of the Irregularity Officer within each DA. The current procedure does not provide for appointment of an Irregularity Officer, and therefore this role is not formally described under the procedure and/or any of the job descriptions. This is further confirmed by the fact that not all DAs staffs are clear on who is the Irregularity Officer as long as the role is not notified within the organization, and that roles and responsibilities of the Irregularity Officer are not clearly defined and communicated to all staffs (7 DA respondents out of 26). Eight respondents out of 26 also stated that adequate segregation of duties for Irregularity Officer is not ensured. Yet from the self-evaluation questionnaires, it would appear that in 8 out of 26 DAs the whistle blowing procedure is not notified to the staffs. DAs consider that there is no procedure to indicate that the chain of reporting is corrupted; in 10 DAs out of 26, the staffs are not notified on how whistle blowers are protected.

Responses in the self-assessment questionnaires also focus on the procedure on irregularities as established under the “Guidelines for the Management of DAs supports” prepared by the Ministry of Development and in use by all DAs. According to 4 DAs out of 26, the procedure on irregularities would not cover follow up of actions taken to deal with an irregularity and staffs are not notified about the reporting lines – to whom should an irregularity be reported. Two DAs out of 26 appreciated that the current internal manual of procedures does not cover all the following: prevention, detection, treating and reporting on irregularities. Moreover, not all the staffs were notified the procedure on irregularities (2 responses out of 26). As regards training on irregularities, 7 DAs out of 19 declared that staffs “are not trained to recognized irregularities”. However, during the interviews it was possible to verify that the definition of irregularities is well understood in all DAs.

Finally, from the interviews it was understood that irregularities are reported within each DAs but overall information on irregularities across DAs is not available.

Some irregularities were reported either in 2012 or in 2013. Among the reported irregularities, the following common case was mentioned: set of second hand machines/equipment procured when only new machines/equipment is eligible.

16 DAs out of 26 responded that no irregularities were reported during the last year (2012).

page 36 of 103

Recommendations

The procedure on irregularity management and reporting should be improved by clear assignment of responsibilities for each sub-process within each DAs, and further specification of the whistle blowing procedure.

The responsibilities of the Irregularity Officer should be specified both under the procedure and the relevant job description.

Irregularity Officers should undertake regular training, and subsequently they should deliver training on irregularities to their colleagues within each DAs, so that each of the staff is clear on how to recognize and treat irregularities.

Irregularity officers should also collaborate with the Risk Coordinator in reference to risks associated to irregularities management and reporting, and report on irregularities to Ministry of Development.

Gap fiche 2 - Irregularity Management and ReportingAccreditation criterion: 1 (b) Irregularity management and reporting – ensuring possible irregularities noted lower down the organization are reported appropriately and followed-up, including protection for 'whistle-blowers'

Findings

Responsibilities for irregularity management and reporting are not clearly assigned within all DAs. Reporting lines are established within DAs; however irregularities are not reported to MoD so that overall information and statistics on irregularities are not available and cannot be used for prevention purposes. DAs staffs are not sufficiently trained to recognize irregularities.

TargetIn order to deliver IPA funds, DAs are to properly organize irregularity management and reporting according to the principles on anti-fraud measures established by the IPA implementing regulation.

Gap description

Procedures on irregularity management and reporting do not adequately cover organizational responsibility and action to be undertaken in relation to each irregularity management and reporting sub-process (prevention, detection, treating and reporting).Irregularity Officer is not formally appointed in all DAs.DAs staffs are not adequately trained on irregularities.

page 37 of 103

Criterion 1 (c)

1(c) Staff planning, recruitment, training and appraisal (including sensitive post management) – ensuring adequate numbers and quality of staff are in place at all levels

Organizational chart, job positions and job descriptions

Description

The organizational chart represents a typically hierarchical arrangement of lines of authority, communications, rights and duties of an organization and it determines how the roles, power and responsibilities are assigned, controlled, and coordinated, and how information flows between the different levels of management and employees.

Such a structure is developed according to the organization's role, strategy and objectives and it represents a framework by which an organization communicates, develops goals and then works on achieving those goals.

An efficient organizational structure helps to properly define everyone's role within the organization. A clear definition of the responsibilities and standing of each person within the organization creates an understanding of what is expected from each individual, and how individual performance can affect the efficiency of the entire organization.

One of the principles that hold an organizational structure together is the hierarchy of command. Respect for the authority of management and the executive team creates a functional line of communication. Instructions given by the top level are validated by the belief in the hierarchy structure of the organization. Everyone in the company can follow the trail of responsibility for projects, and employees understand who they report to and how the management structure affects their jobs.

All the 26 DAs confirmed the existence of an approved, detailed organizational chart identifying all job positions.

The findings during the visits to the 5 selected DAs show organizational charts with a similar structure. The chart model includes 3 levels of authority/decision making power (the Administrative Board, the Secretary General and heads of units), an internal auditor, a legal advisor, and the Development Council with an advisory role.

All charts were prepared on the basis of a standard format delivered by the MoD to all DAs (Guidelines for the Management of the DAs Support), with a certain degree of flexibility for customization. All of them include similar departments with slight variations in names:

- Planning, programming and coordination unit,- Programme management unit,- Monitoring & evaluation unit,- Support/services unit (administrative, human resources management, financial

services, IT),- Investment units (for each of the provinces of the region)

Two of the visited DAs also include a communication/promotion/publicity/ PR unit.

page 38 of 103

http://www.investorguide.com/definition/strategy.html

http://www.businessdictionary.com/definition/organization.html

http://www.businessdictionary.com/definition/levels-of-management.html

http://www.businessdictionary.com/definition/information-flow.html

http://www.businessdictionary.com/definition/responsibility.html

http://www.investorguide.com/definition/power.html

http://www.businessdictionary.com/definition/roles.html

http://www.investorwords.com/9440/determine.html

http://www.investorguide.com/definition/duty.html

http://www.businessdictionary.com/definition/arrangement.html

http://www.businessdictionary.com/definition/hierarchical.html

The statistics collected during the site visits show the existing number of job positions within the DAs structures:

Agency Secretary General

Internal Auditor

Legal advisor

Strategy, Planning& Programming Unit

Programme Management Unit

Monitoring & Evaluation Unit

Support Services Unit

Investment Supports Unit

Promotion/ Publicity/ PR

Total

Ankara 1 1 1 7 8 10 6 2 5 41 Samsun 1 1 1 6 4 8 8 8 - 37 Bursa 1 1 1 6 7 7 8 5 - 36 Diyarbakir 1 - 1 6 6 6 7 8 - 35 Kars 1 - 1 7 6 4 5 8 3 35 Total 5 3 5 32 31 35 34 31 8 184

The organizational structure model and allocation of staff in the visited DAs is presented in the chart below. The communication unit is only present in Ankara and Kars DAs.

The visited DAs confirmed the existence of internal regulations for organization and functions defining the departments roles and relations and some also have prepared process flow charts assisted by the IT systems. However the charts are developed to the unit level only (with some exceptions for the Services units) without the identification of the job positions operating within each unit and of their role to achieving the department role and objectives.

According to the questionnaire filled in by the DAs, all 26 have job descriptions prepared for all job positions in the agencies. For the 5 visited DAs the job descriptions structures were analyzed. The formats, developed by each DA, vary among agencies. While some of them have more developed formats, for others the job descriptions are only brief lists of tasks.

All the 26 DAs stated the existence of a HR department or position within the agencies, however only 25 confirmed that this position covers all the HR functions (staff planning, recruitment and selection, staff performance appraisal, staff development and training planning).

page 39 of 103

Job descriptions for the HR positions were analyzed during the visits paid to the selected DAs. According to their content, the HR positions cover both human resources management functions and personnel employment contracts administration. The estimations by the HR job holders is that more than 60% of the time is spent for HR management functions for which more specialized competencies are needed.

In some agencies some of the HR activities were subcontracted (e.g. workload analysis), but these were one off exercises, which were neither continued nor very well understood, and they were performed for accreditation purposes mainly. With one exception, in all visited DAs, the need was identified for development of HR competencies and skills of HR staff, to better perform the HR management functions and tasks.

For the future role of IBs there is a need for a clear identification of the separation of functions and segregation and duties. While the current organizational chart model allows for the identification of separation of functions, the segregation of duties and tasks is not identifiable.

The job descriptions need to be reviewed in all DAs to ensure that they include all the elements which define the role and the responsibilities of the job position within the department such as: job title, level of the position, role of the position, reporting lines, tasks and responsibilities, specific requirements for filling the position, accountability limits (the decision making freedom that the job holder has for fulfilling his/her responsibilities); delegation of responsibilities (the areas and types of responsibilities which can be delegated); replacement in case of job holder absence (to ensure continuity of operations) and internal and external representation relations (power of signature, authorization to release statements on behalf of the Agency etc.).

The HR job descriptions would also need to be reviewed to ensure that all HR management functions (staff planning, recruitment and selection, staff performance appraisal, staff development planning and training) and tasks are covered.

Recommendations

1. Organizational charts broken down to job position level within all units, showing the job position titles with the view to clearly show:- All existing job positions within the units with their role within the unit- The segregation of duties and tasks

2. Job descriptions reviewed in all DAs to ensure that they include all the elements which define the role and the responsibilities of the job position within the department such as:

- Job title and level of the position,

- Role of the position,

- Reporting lines,

- Tasks and responsibilities,

- Specific requirements for filling the position,

- Accountability limits (the decision making freedom that the job holder has for fulfilling his/her responsibilities);

page 40 of 103

- Delegation of responsibilities and tasks (the areas and types of responsibilities which can be delegated);

- Replacement in case of job holder absence (to ensure continuity of operations)

- Internal and external representation relations (power of signature, authorization to release statements on behalf of the Agency etc.).

3. HR job positions reviewed to ensure they cover all HR functions and duties. For more effectiveness in the HR management, these could be allocated to 2 job positions within a dedicated HR management sub-unit, as follows:

- HR manager10 – expert position, with accountability for all HR functions and duties

- Personnel officer11- support staff position reporting to the HR manager

-

Gap fiche 3 - Organizational chart, job positions and job descriptions

Accreditation criterion: 1.c) Staff planning, recruitment, training and appraisal (including sensitive post management) – ensuring adequate numbers and quality of staff are in place at all levels

Finding

Organizational charts developed to the unit level without the identification of the job positions to enable identification of roles and segregation of duties.

Job descriptions do not cover all the elements which define the role and the duties of the job position within the department, accountability limits and reporting lines.

HR job positions and job descriptions insufficiently defined

Target

Organizational chart developed to the job positions level to enable identification or roles and segregation of duties and tasks.

Job descriptions cover all the elements which define the roles and duties of the job positions, accountability and reporting lines

HR job descriptions defined to cover all HR functions

Gap description

Organizational structures insufficiently developed and defined to allow identification of adequate number and quality of staff at all levels and positions,

level of accountability and reporting lines

10 HR manager prepares the Human Resources policy and strategy, is responsible for the implementation of the HR policy implementation framework (staff planning, recruitment and selection, staff performance appraisal and staff development) with the view to achieve the role and objectives of the organization.11 Personnel officer manages the logistics of the recruitment process. For the hired staff he/she arranges for health screenings and communicates company procedures, policies, and benefit. He/she maintains records, prepares documents and inputs or retrieves payroll and benefit information. He/she may calculate wages and record them for payroll. Personnel officer may be responsible for or help with correspondence, auditing, manuals, and accident reports and keeps track of changes in employee status (employee transfers, wage and benefit changes, address changes, license or certification additions or losses, and reason for termination).

page 41 of 103

1. Staff number adequacy

The decrees of Council of Ministries for the establishment of the DAs provided for a total of 36 staff, of which 30 experts and 6 support staff.

The statistics presented by the DAs per 31.12.2012 show an increased number of staff since the establishment, with some exceptions for which the number of total staff has decreased:

- Bursa - 32 employees (except the Secretary General),

- Diyarbakır- 35 employees

- Kırıkkale- 27 employees

- Zonguldak - 27 employeesThe staff number and structure identified during the interviews with the visited DAs also show a slight increase in the total number of staff (including Secretary General, legal expert, auditor and investment offices), with the exception of Bursa and Diyarbakır:

DA Payroll staff Outsourced staff

Outsourced staff/

payroll staff%

Experts Support staff

Total of which new (less

than 1 year)

Ankara 38 6 44 10 15 34.00Samsun 33 5 38 9 9 23.70Bursa 27 6 33 3 7 21.21Diyarbakır 29 6 35 2 17 48.57Kars 30 5 35 9 11 31.43

According to statistics presented in the table above, the highest increase has been in the number of experts. However, due to the legal limitation of the support staff to maximum 20% of the total staff, a number of support services have been outsourced and therefore the staffs fulfilling these tasks are not on the DAs payroll. In some of the cases the increase of this staff category is higher than the increase of the experts’ number.

From the figures presented by the 26 DAs in the submitted questionnaires there are indications that the situation is similar in other agencies.

In order to increase the work efficiency there is a need for a detailed workload analysis in all departments, for all categories of tasks and staff, including those related to support services, and for an update of the staff structure.

In terms of staff quantity, the legal constraint determined by the provisions of art. 20 of Law 5449/2006 on the "Establishment and Duties of the Development Agencies", which places a limit to the total of annual personnel expenditure to maximum fifteen percent of the revenues of the latest year’s final budget has not been a problem for the DAs so far as the unspent funds from the previous year were transferred to the current year keeping the percentage below 15%. This might however become a constraint in case the whole funding is spent and meeting the objectives for the following year would require a higher number of staffs. Although for the time being the DAs consider the current number of staff satisfactory, they seem to believe that a potential Intermediate Body role would need a staff increase in number and quality in order to accommodate all the relevant functions.

page 42 of 103

It is important to point out that the provision limiting the total annual expenditure for personnel to maximum fifteen percent of the revenues of the latest year’s final budget might become a serious constraint in case DAs are to perform as IPA specific Bodies. Although such a provision, as included in the law, might have a rationale under the current arrangements, the assessment of the adequacy of quantity of staff required by the IPA implementing regulation would depend on the scope of the delegated functions and the volumes of activity, rather than on the amount of “expenditure for staff” in relation to “revenues” (irrespective on how the latter are defined).

Thus, the cap on expenditure for personnel under IPA may result in: i) The need of limiting the functions delegated to DAs in such a way that the

(potentially maximum) DA available personnel is able to perform all such functions effectively and/or

ii) The need of fine tuning the volumes of assistance (“revenues”) on the number of DA staff that could be available according to the law, through methods for decreasing workloads (for example, sampling of checks rather than 100% checks and the like) and/or

iii) The need for DAs to increasing outsourcing practices, which would also increase operational risks. In principle, however, such limitation on the “total expenditure for personnel” meaning de facto a “limitation on the total number of personnel”, would not appear to be compatible with accreditation criterion 1(c).

Workload analysis and staff planning

Description

Workload analysis

Among the 26 DA, 22 stated the existence of workload analysis procedures and 21 having performed the analysis, with the view to outline the number of people needed for carrying out planned activities and meet established objectives.

However these numbers could be questionable further to the findings of the 5 DAs visits when it appeared that some of the DAs which stated the existence of workload procedures and having them applied, in fact outsourced the analysis and have not updated it on a yearly basis and/or not fed its outcomes into the work plan of the following year. The only exception was Bursa DA where workload analysis procedure is in place, the analysis has been performed on a yearly basis and fed into the staff plan, and Diyarbakır where workload analysis is performed regularly but the outcomes do not feed into the staff planning process.

Staff planning

According to the answers to the questionnaires, 24 DAs of the 26 prepare staff plans: Izmir DA has no procedures and undertakes neither workload analysis nor a staff planning while Tekirdağ DA, although states the existence and performance of workload analysis does not prepare a staff plan. However it states that it takes into consideration the vacancies when planning.

page 43 of 103


Not clear.

Some contradictory answers along with the findings during the site visits could lead to the conclusion that not all agencies have dedicated staff planning procedures and/or a staff plan.

The findings of the visits also showed that in most of the cases, in the absence of a workload measurement system and a staff planning procedure, the staff plan is prepared at the Secretary General level with the involvement of the heads of units, based on judgment (upon experience) and as well as on staff complaints regarding overloads. An example: the staff in the monitoring and evaluation department currently manages an average of 15-16 contracts/person which is considered to be an acceptable workload, close to the maximum level of acceptance, strictly based on judgment without a formal measurement.

In some cases (e.g. Diyarbakır), although the current number of staff is considered satisfactory there are indications that workloads might be different between departments. Thus, while 15-16 contracts/person is considered an acceptable workload in the Monitoring &Evaluation Units, in some cases the current average workload is around 20 contracts/person which might be an indication of a staff overload in this unit.

Turnover

The statistics from the answers filled in the questionnaires show variations in the DAs staff turnover. While most of them have turnovers between 20% and 25% and even 30%, there are also extreme cases where the levels are much lower (e.g. Van, Aydın, Kocaeli, Kırıkkale, Diyarbakır, Bursa) or extremely high (e.g. İzmir, Mardin, Erzurum,Trabzon, Konya).Some of the figures may also indicate in an incorrect understanding of the questions as the number of new employees indicated in the answers is almost equal or higher than the total number of staff (Trabzon, Erzurum, Konya, Izmir).

”Exit” interviews are performed by 16 DAs. According to the findings from the visits, the interviews with the staff leaving the agency are more or less formal and without being recorded for retention policy development purposes. The main leaving reasons identified during visits:

- Low career prospects for the people coming from the private sectors, to which they return (Ankara, Bursa)

- High level of qualifications of staff who are looking for better opportunities for promotion in the ministries and have more expectations for career development (Ankara, Samsun)

- low level of life quality in the region (Kars)

- Logistics, such as the proximity of the working place to their residence (Ankara, Kars)

- Salary levels – differences according to the staff status (Kars),

- Personal reasons- it was not mentioned if among personal reasons, work dissatisfaction or lack of motivation were also included.

There is a need for developed procedures and training for workload analysis and staff planning preparation in all DAs, to elaborate on who, what, when and how they have to be prepared and also for a better understanding of the role of the workload analysis as a tool for the staff planning process, with the view to determine the adequate number of staff needed for achieving the objectives and activities of the following year work plan. The high turnovers need to be addressed through:

page 44 of 103

- The development of a retention policy based on the analysis of the main reasons for staff leaving,

- Setting clear objectives regarding the turnover decrease, as part of the HR strategy,

- Concrete actions in the annual work plans.

Recommendations

1. Harmonized sets of procedures prepared for the workload analysis and staff planning for all DAs,

2. Training of HR staff and DAs management in the use of procedures,3. Review the HR Policy documents in all DAs to include staff retention policy, setting

objectives and action plan for turnover decrease.

Gap fiche 4 - Workload analysis and staff planningAccreditation criterion: 1.c) Staff planning, recruitment, training and appraisal (including sensitive post management) – ensuring adequate numbers and quality of staff are in place at all levels

FindingWorkload analysis procedures missing and annual analysis not performed or yearly updated.Workload analysis outcomes not fed into the staff plan.Staff planning procedures missing and/or staff plan not prepared or prepared by experience based estimations.High turnover with no retention policy developed

Target Harmonized workload analysis and staff planning procedures prepared for all agenciesAnnual workload analysis and staff plan prepared according to proceduresRetention policy developed as part of the Human Resources policy of the DA

Gap description Human resources policy, procedures and plans insufficiently developed to ensure the adequate number of staff are in place at all levels

Recruitment, selection and induction training

Description

According to statistics from the questionnaires, in 24 DAs the recruitment plans are based on workload analyses and staff plans.

The findings during the site visit to Samsun show that, in the absence of annual workload analyses and of staff plans, the recruitment decisions are made at the Secretary General level based on estimations upon experience and it is to be assumed that decisions are made similarly in Izmir DA.

Although the DAs staff has a contractual legal status, the recruitment and selection process is performed according to the civil servants legal procedures, presented in the Regulation 26239/25.07.2006. The recruitment and selection process is organized by the DAs accordingly; however they do not have a set of detailed recruitment and selection procedures developed by the agencies.

page 45 of 103

The recruitment announcement is published both at national and local level, the recruitment and selections criteria are included and the candidates are announced about the results. The communication includes information on candidate’s compliance with the selection criteria. The interviews are camera recorded and the names of successful candidates are published on the agency website.

The whole process is fully transparent and there were no claims recorded so far. It is however important to say that the DAs staff Regulations in art. 10(2) contain an age discrimination which would need to be addressed: "For the expert staff employment, people that worked successfully on the following issues for at least five years in the private or public sector, and are under 50 years old by the time of the application, are taken to the verbal exam directly, without having to attend the KPSS".

Although the procedures are detailed and clear, the recruitment process faces some difficulties in particular situations mainly due to insufficient suitable candidates in the regions, such as for:

- The internal auditor position. Although for all DAs the organizational charts provide for an internal auditor position, in 13 DAs this position is not filled in due to lack of qualified candidates in the regions to comply with the legal requirements.

- Expert positions. In some DAs (e.g. Kars), there are difficulties in the recruitment process due to the lack of potential local candidates complying with the high job requirements. Therefore in some agencies, there are job positions occupied by staff recruited from other regions (e.g. from Ankara). On the other hand, the lack of transport infrastructure and low level of life quality in some regions make it difficult to attract and retain staff from more developed regions where the labor market offer is larger.

For the auditor post, due to the high legal requirements which reduce the number of suitable candidates, several options could be considered:

- A review of the requirements for the job occupier, accompanied by a dedicated training program.

- Procurement of internal audit services for a determined period.

The first option could also be considered in case of insufficient local candidates for the expert job positions, accompanied by attractive employment packages for both staff retention and attracting qualified staff from other regions.

According to the statistics collected through the questionnaires, induction training for the new staff has been delivered in 25 DAs according to the legal provisions (Law 5449/2006), however in two of these DAs this training has not been performed upon the basis of dedicated procedures. In one DA (Kastamonu) there are neither induction procedures in place nor induction training has been performed. Moreover, the findings of the site visits show that in some DAs, although the induction training is performed, no written dedicated procedures are in place and the process takes place according to instructions from the Secretary General level.

page 46 of 103

The Regulation no. 26239/2006, states that at the end of the probation period, an evaluation report must be prepared by the head of unit and the Secretary General for the new staff and submitted to the Administrative Board for approval. However, although the recruitment and selection as well as the probation period are legally regulated, the induction of new staff is not covered. Moreover, during the probation period, the new staffs are required to perform the job tasks similarly with regular staff.

Recommendations 1. Development of detailed and harmonized procedures for recruitment and selection in

all DAs.2. Recruitment and selection process to be prepared on the basis of the workload

analyses and staff plans to ensure that the number and of quality of staff are adequate for performing all the activities in the work plans and achieving the objectives.

3. Recruitment policies need to be developed with the view to attract more suitable candidates; e.g. attractive employment packages, review of recruitment and selection criteria accompanied by more developed and specialized training according to jobs requirements.

4. Preparation of harmonized induction training procedures and their implementation for all new staff, including a monitoring system to review progress during the probation period.

5. Amendment of art. 10. (2) for the age discrimination and 17. 2) regarding the duties of the new staff during the probation period.

Gap fiche 5 - Recruitment, selection and induction training

Accreditation criterion: 1.c) Staff planning, recruitment, training and appraisal (including sensitive post management) – ensuring adequate numbers and quality of staff are in place at all levels

Finding

Recruitment and selection procedures regulated by law, however there are no detailed procedures in place.The whole process is fully transparent. However the equal opportunity principle is not fully observed due to an age discrimination provision in the staff Regulations 26239/2006 (eligible candidates under age of 50).No recruitment policy developed to address difficulties in the recruitment processInduction training of new staff is not ruled by procedures and/or performed in all DAs.

Target

Harmonized and detailed procedures manual for recruitment and selection in all DAsEqual opportunities principles observed in the recruitment and selection process.Recruitment policies developed to attract more suitable candidates.Harmonized induction procedures prepared and induction programmes implemented, including objectives and performance progress monitoring, for all new comers in all DAs.

Gap description

Insufficiently developed HR policies for recruitment, selection and induction.No detailed procedures manual for recruitment and selection.Equal opportunities principle not fully observed in the recruitment process.No written induction procedures and induction training not performed in all DAs.

page 47 of 103


The age discrimination was on purpose. Is the amendment really needed?


DAs will say they have their own detailed procedures for recruitment. Is it necessary that these procedures are harmonized? Instead, having their own procedures might provide flexibility.


A common guideline for HR might be considered.

2. Staff quality adequacy

The staff quality in all DAs is generally high both in terms of education and specific knowledge and expertise.

As regards the DA current staff quality adequacy within the IPA working environment, it is to be highlighted that the lack of experience in working with updated PRAG (exception made for some very few DA staff with previous experience at CFCU), as well as with the overall framework of IPA and all other applicable EU Regulations, requires an intensive capacity building effort that cannot be based on relevant training only. The achievement of “staff quality adequacy” depends, inter alia, on progress along the experience learning curve. In this connection, stability of personnel and adequate seniority are also two important evaluation elements.

Staff appraisal, rewarding and motivation system

Description

Staff performance appraisalThe answers of 24 DAs confirm the existence of staff appraisal procedures in place and 20 agencies declare that staff appraisals have been performed at least once a year. At the same time 20 DAs stated that objectives and goals, including individual performance indicators, had been set for each employee.

The findings of the site visits to the 5 selected DAs show that in all cases the procedures only cover assessment of competencies12 and no procedures are available for performance appraisal based on individual performance objectives, nor have such individual objectives been set.

The competencies appraisal procedures vary among agencies. Description of criteria for each competency and scoring systems have been provided in the procedures. Scores are given by levels of competencies (in general 5 levels, with the exception of Kars where there are 7 levels) however, with the exception of Bursa, there are no descriptions provided for each level which allows for a higher degree of subjectivity in scoring.

While some of the procedures are pretty detailed and complete, others would need more development to increase the level of objectivity and to show how the outcomes of the appraisal feed into individual staff development plans. The statistics from the questionnaires show that in only 18 DAs the outcome of the appraisal process been used in the preparation of the training plan for the following period.

There are no individual performance objectives set and relevant performance indicators for measuring their achievement. Such indicators have not been set for any of the staff as it is considered that they are difficult to establish.

12 Competency: a specific range of skills, knowledge, or abilities.

page 48 of 103

Although setting individual objectives and indicators is not an easy exercise, they are a measurement tool for the staff performance progress and its contribution to the achievement of the DAs objectives. At the same time the results of such measurement would allow the identification of concrete measures for more efficient and effective work planning and performance improvement.

While the appraisal process is designed to improve job understanding, promote more effective job performance, and establish future goals for staff development, and provide staff members with feedback on their performance and accomplishments for the previous period, such benefits are not fully acknowledged in the absence of a financial rewarding system. Moreover, in some cases the appraisal process is not seen as a motivational element, but rather as a punitive one in case of poor performance.

Staff compliance with the job descriptions requirements is generally based on informal judgment, with one exception. In Diyarbakır the staff compliance with the job requirements is also certified by a quality institution on the basis of an internal self and management evaluation, through the means of a specially designed questionnaire, attesting the staff “competence”13 for the job.

Rewarding and motivation systemsA rewarding and recognition system formally set in the HR policy, communicated to all staff and implemented would have an important contribution to the DAs performance increase knowing that performance is a result of competence and motivation.

In most of the cases, in the DAs there are no rewarding and motivation systems formally set as part of Human Resources policies implementation. Only 13 DAs confirmed the existing of such a system as part of their HR policies, of which only 9 stated that the rewarding system include non-monetary incentives.

According to some visited DAs opinion (Bursa) motivating incentives (financial rewarding) is not possible for the time being due to legal constraints, which establish maximum salary levels for the staff, and no other financial payments can be made except salaries. In other DAs (Diyarbakır) however the evaluation outcomes are followed by financial rewards according to DA own schemes, whereby the level of incentives is determined in relation to the overall score of the appraisal.

In all visited DAs there are no non-monetary incentives ruled by procedures, however in practice such incentives and motivation tools are used, such as work recognition, residential training, paid studies, social events, pleasant and comfortable working environment, management style encouraging personal initiatives and open opinions.

13 Competence: the ability (combination of knowledge, skills and behaviors) of an individual to perform a specific job

page 49 of 103

Recommendations1. Identification of causes for the unachieved indicators and correction measures

established.2. New performance indicators set for the following period after each appraisal.3. Staff development plans set for the following period at the end of the appraisal

process and development needs identified included in the training analysis plan.4. Development of the DAs HR policy and strategy to include a rewarding and

motivation system with the view to align goals of the organization with goals of employees and encourage them to increase performance.

With this view, identification of the employees’ motivational factors and development of a formal rewarding and motivational strategy to address these factors

Gap fiche 6 - Staff appraisal, rewarding and motivation systemAccreditation criterion: 1.c) Staff planning, recruitment, training and appraisal (including sensitive post management) – ensuring adequate numbers and quality of staff are in place at all levels

Finding

Not all the DAs have staff performance appraisal procedures and/or performed appraisal at least once a year.None of the DAs have individual performance objectives and relevant indicators set for measuring their achievement. Indicators for competencies appraisal not fully described in all DAs.The appraisal outcomes do not feed into the TNA in all DAs.

Target

Complete set of harmonized procedures for staff performance appraisal developed, based on individual performance objectives and indicators, in line with the objectives of the DA and of the unit. The indicators for the competencies appraisals clearly defined to increase objectivity.Outcomes of the staff appraisals included in the training needs analysis for the following period.Development of the DAs HR policy and strategy to include a rewarding and motivation system with the view to align goals of the organization with goals of employees and encourage them to increase performance.

Gap description

Staff appraisal procedures do not include individual performance objectives and indicators.Staff performance appraisal not ruled by procedures and performed in all DAs.Outcomes of staff appraisal not fed into the training needs analysis.No HR policy developed for staff motivation and rewarding in all DAs.

Staff development, TNA and elaboration of training plan

Description

Staff development refers to the processes, programs and activities through which every organization develops, enhances and improves the skills, competencies and overall performance of its employees. The HR Department typically charts out a workable staff development roadmap comprising training programs and other initiatives to align with the corporate objectives and long-term organizational goals. The goal is to see measurable improvements in staff performance and overall productivity in the medium-to-long term period.

page 50 of 103

Staff development is a continuous process and involves meticulous and rigorous planning by the HR team and company management. Therefore it is important that at the end of each staff performance appraisal, an individual development plan is prepared for each employee which includes actions according to the identified needs.There could be several types of development actions, according to the specific job position requirements, among which:

- Career plans (which do not necessary relate to hierarchical positions accession),

- Horizontal mobility and job rotation maps,

- Substitutions matrixes,

- Job enrichment,

- Empowerment,

- Delegation of tasks and duties,

- Coaching,

- On the job training,

- Formal training.

It is important to point out that staff development activities are also a powerful motivational factor.The findings during the site visits show that such plans are not currently used or considered and no other actions except for formal training and the induction training for the new comers. According to art. 19 (1) of Regulations no. 26239/2006, ” all agency staff, in coherence with the qualification and need required by their tasks, will follow an internal training at least 10 days a year, within the framework of a program of which the procedures and principles will be suggested by the Secretariat General and decided by the Administrative Board”.According to statistics collected from the answers to the questionnaire, 22 DAs out of 26 prepare and implement a training plan for the following year, according to the legal obligation and 21 perform a training needs analysis. There are DAs (Istanbul, Hatay, Kastamonu, Van) which prepare a training plan without a prior needs analysis, while others undertake a training needs analysis without feeding it into a training plan (Tekirdağ, Malatya, Izmir).

However the statistics regarding the preparation of the training plans could have been influenced by the understanding of the question, as there are cases where the answer was Yes but it was completed by the comment ”in the work plan”. It could be therefore assumed that other agencies which also included the training activities in the DA overall work plan and not as a separate dedicated plan, could have answered No.

The findings during the visits to the 5 selected DAs show that the procedures differ between agencies. While in certain DAs the process is complete, based on dedicated procedures, and involve both staff and management (heads of units and Secretary General) and also takes into consideration the outcomes of the staff appraisal and the requirements of the job descriptions, as well as previous trainings and future needs for the implementation of the following year work plan (Bursa and Diyarbakır), in other cases the analysis is less comprehensive and is based mainly on staff preferences (Ankara) or the heads of units estimations (Kars).

page 51 of 103

Another finding was that not all training needs analyses are performed according to dedicated procedures. In Kars DA there are no training needs procedures and the needs are estimated by the heads of units. In the other agencies the training needs are collected from the staff through a questionnaire from a list of topics. The HR person is responsible for distribution, collecting and processing of questionnaires. In Samsun and Bursa the training needs collection is also performed through staff interviews by the HR responsible.

In Diyarbakır, in addition to specific needs identified by staff and management, four additional topics are compulsory for all staff (Code of ethics, quality management, information security, personal development).

No training activities were mentioned in any of the DAs for the managers (Secretary General and heads of units); although management skills should be a compulsory requirements for all managerial positions and the management competencies should be an important part of the performance criteria for them during the staff appraisals process. Paid studies are used in certain cases but rather as motivational factor than as part of personal development in relation to the DA management needs.

In most of the visited DAs the training plan activities and the relevant resources are included in the annual work plan and budget which contains a dedicated lump sum for training activities. In addition external sources are used such as: trainings delivered through the MoD programmes and other similar institutions, as well as EU funded programmes.

One of the main constraints identified by some agencies during the site visits regarding the training plan implementations was related to time, as some of the employees proposed for trainings are not always available during the scheduled periods.

Recommendations

1. Preparation of complete and harmonized procedures for training needs analysis for staff in all DAs, which would include the following steps:- Take stock of job descriptions,

- Analyze staff performance assessment reports/ personal development plans prepared at the end of the appraisal process,

- Previous trainings included in the training data base,

- Assessment reports of previous trainings,

- Interview staff members including managers at all levels to assess their skills in relation to needs, based on dedicated questionnaires,

- Process the information collected and prepare draft of the training plan including assessment tools for each action in the plan

- Estimate internal and external financial resources for all actions in the plan

- Analyze the draft plan together with the heads of units and Secretary General and make necessary amendments then submit for approval.

page 52 of 103

2. Training plans prepared according to dedicated procedures which also include activities for training activities monitoring and evaluation and training data base preparation.

Gap fiche 7 - Staff development, TNA and elaboration of training planAccreditation criterion: 1.c) Staff planning, recruitment, training and appraisal (including sensitive post management) – ensuring adequate numbers and quality of staff are in place at all levels

Finding

Not all DAs have dedicated procedures in place for training needs analysis (TNA) and staff planning. TNA procedures vary and, while in some DAs they are more comprehensive, in others they are less developed.There are DAs which prepare training plans without performing a TNA and others which perform a TNA without feeding it into a training plan.There are no management skills development needs identified and included in the training plan for the managerial position, except for paid studies used rather as a motivational factor.

Target

Complete and harmonized procedures for training needs analysis (also including outcomes of the staff performance appraisal and of the previous trainings taken), and for the training plan preparation (including procedures and tools for monitoring and evaluation of the planned training activities and training data base preparation).Training plans prepared in all DAs according to procedures.Financial resources needed for the training plan implementation, identified in the plan.

Gap description

Training needs analysis and training plan procedures not in place for all DAs.Training needs analysis and staff plans not prepared in all DAsTraining needs procedures incomplete, not including outcomes of the staff performance appraisals in most DAs.

HRD computerized data bases

Description

All the HR management functions and activities generate records that need to be captured and managed in the record keeping systems.

24 DAs declared that there is a data base of all the trainings undertaken by each employee (since the date of employment) and 22 that they have a data base system established for HR development, including relevant information, plans and performance appraisals outcome for each member of the staff.

The findings during the interviews with the 5 selected DAs however show that there are cases when such data bases are not in place, but rather separate files in the DA IT system.

An integrated central management information system (KAYSKYES) has been contracted by the MoD, in order to enhance the institutional capacity of the DAs and to increase the effectiveness of all working processes. The system will be ready for implementation in maximum 2 years. According to planning, the HRM module is expected to be prepared in March 2014.All the HR management functions need to be captured and managed in the computerized record keeping systems.

page 53 of 103

Recommendations

In the HR management module design, it is important that all relevant functions, procedures, documents and reports are included and all relevant data are collected, processed and extracted. At the same time cross functional integration will be needed both within HR department and functions and also outside the HR (e.g. financial) which helps in generating the reports to support HR planning and decision-making.

Since the system will be centralized for all DAs, the harmonization of the HR management procedures, including all types of documents and reports to be generated by the system14, will be a precondition, therefore this step would need to be taken as soon as possible.

Gap fiche 8 - HRD computerized data basesAccreditation criterion: 1.c) Staff planning, recruitment, training and appraisal (including sensitive post management) – ensuring adequate numbers and quality of staff are in place at all levels

Finding

HR computerized data basis of all staff management are not in place in all DAs, but rather separate files in the DA IT system.An integrated central management information system (KAYSKYES) has been contracted by the MoD. The HR Module expected in March 2014

TargetComputerized HR data bases of all staff management relevant information, including trainings, plans and performance appraisals outcome for each member of the staff.


Criterion 1 (d.1)

1(d.1) Sensitive functions and conflicts of interest – ensuring that staff in 'sensitive posts' are identified (i.e. those where the staff may become vulnerable to undue influence by the nature of their contacts with third parties or the information they have)

DescriptionAccording to the questionnaires, 20 of the 26 DAs have the sensitive posts defined. As it came out during the interviews with the 5 visited DAs, even if the sensitive posts had been identified within the agencies, such identifications have not been formalized (except for BEBKA DA).Most of the interviewed DAs identified the following posts as being sensitive:

- Secretary General

- Internal auditor

- Heads of Units

- Accounting officer,

- Reconciliation officer,

- Procurement officer,

- Monitoring & evaluation officers

- Financial officer

- Payment authorizing officer.

14 Recommended reference: International Records Management Trust- ”Training in Electronic Records

Management” Module 5 ”Managing personnel Records in an Electronic Environment”- General Editor, Laura Millar: http://irmt.org/documents/educ_training/term%20modules/IRMT%20TERM%20Module%205.pdf

page 54 of 103

Other sensitive posts identified during interviews referred to: human resource responsible, responsible for the selection of assessors, assistant to the Secretary General, all staff of the departments involved in programme planning, management and monitoring.

Recommendations

A formal identification of all sensitive posts in DAs and appropriate policies should be developed as part of the agency HR policy.

Gap fiche 9 - Sensitive functions and conflicts of interestsAccreditation criterion: d.1) Sensitive functions and conflicts of interest – ensuring that staff in 'sensitive posts' are identified

Finding Sensitive posts not formally identified in DAs.

Target Ensuring that staff in ‘sensitive posts’ is identified in all DAs.

Gap description Sensitive posts not formally identified in all DAs.

Criterion 1 (d.2)

1(d.2) Sensitive functions and conflicts of interest – ensuring that appropriate controls (including, where appropriate, rotation policies) are applied to sensitive postsDescriptionWith one exception (Kastamonu) all Agencies are aware of the potential conflict of interests and all members of the staff signed a declaration committing to communicate any conflict of interests, which may arise during the accomplishment of their tasks within the Agency.

During the interviews all DAs showed high awareness regarding avoidance of conflicts of interests’ situations for both their own staff and for other persons involved in the operations’ selection process. The understanding of the formulation ‘’conflict of interests’’ is generally in line with the formulation contained in the Financial Regulation No 966/2012. The persons having personal or business relations with the applicants and direct suppliers are excluded from selection, procurement and implementation processes. The independent assessors involved in the selection process for the grant schemes are regularly checked and evaluated in relation to any potential conflict of interests.

According to the information received during interviews, none of the agencies have established appropriate controls policies (including, where appropriate, rotation policies) as part of the HR policies, except for a ”substitution plan” and declarations of avoidance of conflict of interests signed by all staff.

page 55 of 103

Recommendations

Development of the DAs HR Policy to include a dedicated section for control over sensitive posts.

Gap fiche 10 - Sensitive functions and conflicts of interestsAccreditation criterion: (d.2) Sensitive functions and conflicts of interest – ensuring that appropriate controls (including, where appropriate, rotation policies) are applied to sensitive posts

Finding

With one exception all agencies are aware of the potential conflict of interest and all members of the staff signed a declaration; however, no appropriate controls (such as rotation policies) are applied to sensitive posts as part of the HR policies.

TargetAppropriate controls (including, where appropriate, rotation policies) applied to sensitive posts as part of the HR policies of DAs.

Gap description Appropriate control not developed as part of the HR policy

Criterion 1 (d.3)

1(d.3) Sensitive functions and conflicts of interest – ensuring that procedures exist to identify and avoid conflicts of interests

Description

18 DAs confirmed the existence of procedures established to identify and avoid conflicts of interests. The existence of such procedures was also confirmed by the 5 interviewed DAs.

In terms of segregation of duties between programming and programme monitoring, all 26 DAs confirmed that such segregation exists within the agency. More clarifications were received during the visits to the 5 DAs which explained that this segregation is ensured through the allocation of these tasks to two separate units: “Development and Planning Unit” which is responsible for programming, and the “Monitoring and Evaluation Unit” which is responsible for “programme” monitoring.

Similarly, the adequate segregation of duties between project selection and verification of payment applications was also clarified through the allocation of theses duties to two different units: Programme Management Unit responsible for project selection and the Monitoring and Evaluation Unit responsible for verification of payment applications and also all 26 DAs confirmed this segregation.

In terms of segregation of duties between accounting and reconciliation, to being ensured by two different persons (the accounting officer for accounting and the financial officer for reconciliation), one agency (Kastamonu) did not confirm this segregation in its questionnaire, although such a segregation is also a national legal obligation.

page 56 of 103


Appropriate control for sensitive posts or? Needs clarification.

Recommendations

Harmonized procedures over sensitive posts should to be developed for all DAs.

Gap fiche 11 - Sensitive functions and conflicts of ınterest

Accreditation criterion: (d.3) Sensitive functions and conflicts of interest – ensuring that procedures exist to identify and avoid conflicts of interests

FindingOnly 18 DAs confirmed the existence of procedures to identify and avoid conflicts of interests.Except for one DA all segregations of duties are ensured.

TargetProcedures are in place to identify and avoid conflicts of interests as well as to ensure segregation of duties in all DAs.

Gap description Procedures over sensitive posts not developed in all DAs.

Criterion 1 (e)

1(e) Establishment of legal bases for bodies and individuals – ensuring bodies and individuals have full legal authority to fulfill their functions

Description

In the survey a large majority of the Agencies (23) confirmed that the legislation or other applicable rules of procedures clearly define the mandate, responsibilities and authority limits of the Agency.

To the question ‘’Do you identify any significant problem that needs to be improved in the current legislation on DA with regard to providing DAs with full legal authority to fulfill their functions’’ 9 Agencies have replied with ‘’yes’’. When this issue was further examined with the 5 interviewed Agencies, it was established that in principle the interviewees confirm the appropriateness of the legislation in relation to providing DAs with full legal authority to fulfill their functions. However, some of the specific provisions seem to be limiting for further development of the Agencies. The most significant issue seems to be the status of the Agencies’ staffs, who are contractual agents with less favorable position as civil servants. This status has in several Agencies caused significant turnover of staff as described more in details under analysis of compliance with accreditation criterion 1. (c).

Other areas of possible improvements are related to simplification of procurement procedures and amendments of operational steps in the selection procedure. The interviewed Agencies have concretely mentioned possible extension of the administrative check in the grant scheme implementation and moving the preliminary/consolatory monitoring visits to the time immediately after the assessors check.

The Agencies have also commented on the role of the Administrative Board in the selection process. Though in the cases of 5 interviews Agencies the Administrative Boards have not exercised the right to amend the decision of the assessors or assessment committee the question still remains to whether the role of the Administrative Board could cause potential conflict of interest in the procedure.

page 57 of 103

During the interviews it has been established that the Agencies hold regular mutual consultations and also attend coordination meetings with the MoD, where potential improvements in relation to the legislation or operational procedures are communicated.

Based on the desk research, it is considered that the existing description of Agencies’ task does not sufficiently cover all responsibilities and activities in respect of the implementation of existing grant schemes and potential functioning of the intermediate bodies under IPA. The IPA Implementing Regulation (Article 31) namely states that ‘’final responsibility for the functions described in the said Article shall remain with the operating structure initially designated. Such a restructuring shall be formalized in written agreements and shall be subject to accreditation by the national authorizing officer and the conferral of management by the Commission’’. Thus, in order to act as Intermediate Bodies under IPA, the Agencies will need to sign a Delegation Agreement with the Body Responsible for the Operational Programme.

The operational procedures of the Agencies are largely based on earlier versions of PRAG Manual (2008) and have not been significantly amended. Though they generally remain in line with the EU External Aid procedures, they would need to be amended to the newer PRAG versions to be fully compliant.

Recommendations

1. The status of the Agencies’ staff should be defined in a way that sufficient sustainability and maintenance of experience and knowledge within the Agencies is ensured.

2. When DA is acting as IB under IPA programmes, the role of the Administrative Board should not interfere with the selection procedures.

[3.] When taking over the role of the Intermediate Bodies the Agencies would need to sign a Delegation Agreement with the Body Responsible for the Operational ProgrammeMoD, defining in details the tasks of the Agencies as the IB. It is important that the tasks are defined in a way that clear separation of duties between the IB and other Agencies operations and activities is ensured.

3.[4.] The legislation should define better the roles and tasks of the Agencies. 4.[5.] The operational procedures should be updated regularly in order to reflect latest

developments in EU External Aid procedures.

Gap fiche 12 - Description of duties and authorities of the DAs, Role of the Administrative Board and definition of expenditure and revenues of the Agencies

Accreditation criterion: 1(e) Establishment of legal bases for bodies and individuals – ensuring that procedures and individuals have full legal authority to fulfill their functionsFinancial regulation: Art. 58.1(c)vi

Findings

- Description of DAs task does not seem to be comprehensive

- Absence of Delegation Agreement between DAs and MoD

- Role of Administrative Board in the selection procedure is questionable

- Legal status of DAs might prevent them from making payments to beneficiaries

Target - Thorough description of tasks either by Law or through a Delegation Agreement

- Delegation Agreement signed between the DAs and the MoD, defining in details the role and divisions of responsibilities.

- Amendments in the Law, removing the Administrative Board’s authority to participate in the selection process

page 58 of 103


The authority of Administrative Board in the selection process could be amended with the Delegation Agreement for the respective OP.


There isn’t any explanation about it in the text of criteria.

- Either legal status of DAs changed or payments implemented through third body, for instance CFCU.

Gap description

- The present description of duties and authorities of the Agency lacks detailed elaboration of tasks in relation to IPA accreditation criteria. For instance the duties such as: arranging for tendering procedures, grant award procedures, setting up, maintaining and updating the reporting and information system, carrying out verifications, ensuring internal audit etc. are missing.

- Presently only the legislation and the operational procedures describe the roles, responsibilities and authorities of the DAs. In order to take over the role of Intermediate Bodies the Agencies would need to sign a specific Delegation Agreement with the MoD.

- The present descriptions in the Law give the Administrative Board authority to cancel the projects proposed by independent assessors and assessment committee before final approval. This might not be necessarily in line with the principles of transparency and equal treatment.

- Being governed by the private law, according to the new Financial Regulation the Agencies could not have possibility to execute payments.

Criterion 1 (f)

1(f) Formal establishment of accountability, responsibility, delegated responsibility, and any necessary related authority for all tasks and positions throughout the organization: – Mission statements, job descriptions etc. are up to date and known

Description

The large majority of the Agencies in the survey confirmed the correspondence with the criterion. All of the Agencies have mission statements and have confirmed that the job descriptions of the staff include tasks related to implementation of grant schemes. Only 3 of the surveyed Agencies have answered that they do not have up-to-date job descriptions while 1 Agency answered negatively to the question about delegation of jobs according to responsibilities and 1 Agency answered that their staff are not aware of the mission statement. With the 5 interviewed Agencies it has been established that all have mission statements, which are reflecting their purpose as defined by the Legislation for the DAs and the objectives of their regions. The assessors have obtained the examples of the mission statements. For instance, the mission statement of Samsun Agency is ‘’Successfully implementing necessary plans, programmes and activities in order to maintain sustainable development in the areas of economic, social and cultural life, together with our stakeholders in the Middle Black Sea, as well as developing ourselves and our Region with a participative governance understanding’’. The mission properly reflects the regional priorities and includes reference to partnership principle. In socio-economic sense the missions of the Agencies are somewhat connected to the typology and sector priorities. The mission statements usually reflect the regional priorities as defined in the Regional Development Plans. The process is normally a result of wider participation process, with contributions by different stakeholders. The regions covered by the interviewed Development Agencies are very different as regards socio-economic specifics and development level. While the Ankara and Bursa Development Agencies cover

page 59 of 103

some of the most developed regions in the country, the TRA2 region covered by the Kars-based Development Agency is second to last in the development ranking.

page 60 of 103

Recommendations

None

Gap fiche 13 - Formal establishment of accountability, responsibility, delegated responsibility, and any necessary related authority for all tasks and positions throughout the organization

Accreditation criterion: 1(f) Formal establishment of accountability, responsibility, delegated responsibility, and any necessary related authority for all tasks and positions throughout the organization: – Mission statements, job descriptions etc. are up to date and known

Findings

Development Agencies have updated and adequate missions statements which are in line with their activities and objectives. In most of the cases the definition of mission statements is result of internal discussion and participation exercise. The staffs are aware of the mission statements as well as of their responsibilities, each signing the job descriptions (examples showed to assessors).

Target Mission statements, job descriptions etc. are up to date and known.Gap description No gap was found under this criterion.

Criterion 2 (a)

2(a) Risk identification, assessment and management – ensuring that risks are identified and management, in particular that adequate control resources are applied in all areas, in function of the significance of different risks they mitigate

Description

The majorities of the Agencies (22) has clear procedures for identification of risks and are systematically collecting the risks in a register and performing risk analysis. The same number of Agencies estimates of the significance of risks and assessing the likelihood of their occurring and determines the steps necessary for mitigating of risks. 21 Agencies have nominated a risk coordinator and analyze risks regularly, including estimation of the significance of risks, assessing likelihood of their occurring and determining steps to mitigate them. 16 Agencies have regular 6 monthly risk meetings while 10 do not apply that practice. All of the interviewed Agencies have developed internal risk management procedures, have nominated risk coordinator and hold regular coordination meetings. The assessors have been shown and presented the internal risk management procedures in the interviewed Agencies. The example of Kars Agency’s internal risk management procedures shows that there is a nominated risk coordinator (from Monitoring and Evaluation Unit). Each of the Agency’s departments allocates another expert into risk coordination team. The team has undergone specialized training in 2012. Each of the dedicated members of risk coordination team identifies the risks within their own units, based on predefined registering procedure. The risk management team holds regular quarterly meetings, prepares reports and submits findings to the Secretary General and Administrative Board.

The definitions in legislation, operational procedures and internal procedures of the Agencies ensure that the risks are identified in thorough and standardized way throughout the organization. The functions of the risk management are clearly defined and divided.

page 61 of 103

It is however not clear why some of the surveyed Agencies have not nominated a risk coordinator nor applied regular risk management meetings.

Recommendation

In order to be in line with the IPA accreditation criterion, all Agencies should apply risk management procedures, including nomination of responsible risk coordinator, holding of regular risk management meetings and application of transparent and standardized procedures. The examples of the interviewed Agencies can be taken as a reference.

Gap fiche 14 - Risk ManagementAccreditation criterion: 2 (a) Risk identification, assessment and management – ensuring that risks are identified and management, in particular that adequate control resources are applied in all areas, in function of the significance of different risks they mitigate

Findings

A number of surveyed Agencies do not seem to have nominated risk coordinator nor apply risk management procedures or hold regular risk management meetings. Lack of proper risk management in those agencies could be in contradiction with the IPA Accreditation Criterion.

TargetAll Agencies applying risk management procedures, including nomination of responsible risk coordinator, holding of regular risk management meetings and application of transparent and standardized procedures

Gap descriptionA number of Agencies not applying proper risk management. Lack of clear and transparent procedure, absence of risk manager and regular risk management meetings.

Criterion 2 (b.1)

2(b.1) Objective setting and allocation of resources against objectives – ensuring that appropriate (and measurable) objectives at output and impact level are established at all levels and understood throughout the organization

Description

22 Agencies have replied that they have clearly set objectives while 23 replied that mechanisms (criteria and key performance indicators) for assessing and measuring the DA achievements are in place. Significantly lower proportion, 15 agencies, have in-place corrective measures in-place to eliminate discrepancies. 19 Agencies have made a comparative analysis of results against original plans while 18 address the objectives in workload analysis.

The 5 interviewed Agencies have mentioned that the broader objectives are defined in the framework of legislation while further definitions are done in line with the regional objectives. Most of the interviewed Agencies’ objectives directly reflect the objectives of Regional Development Plans (RDPs). The Agency in Kars has presented examples of objectives in the Regional Development Plans, which are further-on reflected in the Agency’s objectives. The RDP objectives are: Improved quality of life, increase in productivity and value added in livestock production and agriculture, tourism development and support to tourism SMEs, increasing SME competitiveness in the region. Similarly to this example also other Agencies align their objectives with the RDPs.

page 62 of 103

It has been established during the interviews that the Agencies have not been provided with comprehensive and written instructions and guidance in preparation of RDPs. Most of them have developed relatively efficient internal procedures, but in order to have a standardized approach the MoD should provide respective guidance.

Four of the interviewed Agencies are preparing analysis of level of achievements and are planning resources against objectives. The assessors have obtained the annual report of Diyarbakır Agency which transparently indicates comparison of achievements against plans. In majority of indicators the plans were achieved as planned.

The issue of indicators has been examined in interviews with the 5 Agencies. The indicators established by the Ministry of Development15 are linked to the performance of the Development Agency (output indicators, such as number of workshops organized, number of projects monitored). In the earlier mentioned case, the Diyarbakır Agency has gone a step further, since it has further broken down indicators proposed by the MoD, to better monitor their internal performance. For instance the indicator ‘’number of workshops’’, has further been broken down by specific types of workshops.

The assessors however found out that none of the interviewed Agencies measures final impact of their activities (for instance indicators such as new employments, increase in revenues of the SMEs or similar are not applied nor measured). The Development Agencies will implement an impact assessment of the grant schemes, within 3 years after the conclusion.

Recommendations

The MoD should provide the Agencies with comprehensive written instructions on preparation of Regional Development Plans. The instructions should include guidance in application of partnership principle, instructions for analysis, steps of procedure, examples and recommendations in relation to regional objectives.

The Agencies should be instructed to prepare comparative analysis of results against original objectives, with indication of reasons for potential discrepancies and proposal of corrective measures.

The existing set of output indicators should be supplemented by results/impact indicators, such as newly created full time equivalent jobs, increase in revenue of SMEs, increased exports and similar.

15 The legal base for performance assessment of DAs is the Article 4 (beer) on General Coordination of Law No. 5449: “MoD is responsible for determining the rules and procedures for institutional performance of DAs and the performance of programmes implemented by DAs, and is responsible for conducting these performance assessments.” The regulation for the performance assessment is under preparation. Up to now, DAs were informed via official correspondences about the performance indicators determined by the MoD.

page 63 of 103

Gap fiche 15 - Objective setting, definition of indicators and measurement of Agencies’ performance

Accreditation criterion: 2 (b.1) Objective setting and allocation of resources against objectives – ensuring that appropriate (and measurable) objectives at output and impact level are established at all levels and understood throughout the organization

Findings

Absence of standardized and comprehensive instructions on regional planning – regional development plans and action plansAbsence of measurement of Agencies’ performance at the impact level.Absence of comparative analysis of results against planned objectives and reasons for discrepancies.

Target

Agencies having comprehensive written procedures on drafting of Regional Development Plans and Action Plans.Agencies having a system of measurement of objectives and outputs at all levels, including the impact level.All Agencies applying a transparent analysis of results against planned objectives, with identification of reasons for discrepancies and corrective measures.

Gap description

The Agencies do not have standardized and comprehensive procedures for preparation of Regional Development Plans and Action Plans. This could cause inefficiency and make comparison between Agencies difficult.The Agencies are measuring the achievement of their objectives and consequentially planning the resources against objectives. However the measurement is only done at the level of direct outputs, but not also at the impact level. The indicators such as increased employment or increased revenues of SMEs are not measured.A number of Agencies are not performing analysis of results against original plans nor are analyzing reasons for discrepancies.

Criterion 2 (b.2)

2(b.2) Objective setting and allocation of resources against objectives – ensuring that resources are appropriately allocated against those objectives respecting transparent sound financial management principles

Description

The large majority of the Agencies (24) are planning the budget in accordance with the planned resources needed for the following year.

All of the interviewed Agencies plan their resources in accordance with the objectives. Based on the annual plans the expected activities in the coming year are defined in details with resources required. These include human resources, external services, planned travel and planned purchase of material resources. Separate planning is implemented for the planned support activities. The Agencies plan expected grant schemes and other support actions for the coming year and define objectives (on the level of support actions, for instance number of applications received, number of projects managed) and consequentially the resources needed. Representing a good practice example the BEBKA Agency applies a detailed planning exercise where list of all expected activities is prepared and each is estimated as to the resources needed for the implementation. The estimation is implemented on the basis of standardized quantified criteria. Following the detailed estimation the BEBKA is able to plan for instance whether the existing human resources are sufficient or new employments are

page 64 of 103

needed for full and efficient implementation of next year’s activities. The financial aspect of resources is planned in line with the existing practice and market standards.

Recommendations

None

Gap fiche 16- Objective setting and allocation of resources in accordance with the objectivesAccreditation criterion: 2. (b.2) Objective setting and allocation of resources against objectives – ensuring that resources are appropriately allocated against those objectives respecting transparent sound financial management principles

FindingsBased on the 5 interviews, it can be assumed that the sound financial management principles are respected. The large majority of the Agencies are planning resources against objectives.

TargetResources are appropriately allocated against objectives respecting transparent sound financial management principles.

Gap description No gap was found under this criterion.Criterion 2 (c)

2(c) Planning of the implementation process – ensuring clear planning of steps needed to deliver objectives - including timing and responsibility for each step, and critical path analyses where necessary

Description

A high number of Agencies (23) prepare the implementation plan for grant schemes. A slightly lower number (18) describes the implementation plans with detailed steps, critical path analysis etc.

All 5 interviewed Agencies prepare implementation plan for grant schemes with detailed planning of steps. The implementation plan, prepared at the beginning of each year includes planned dates for publication of calls for proposals, timing of info-days and training workshops, indicative planning of evaluation procedure and signature of the contract. In some cases the grant scheme implementation plans were delayed for external reasons. For 2012 the MoD has recommended the Agencies to postpone the publications of the calls for proposals until October due to the introduction of new online project application system, therefore in some Agencies the evaluation procedure has not been completed to this date. It has been mentioned during the interviews that the MoD is beginning to introduce multiannual planning of grant scheme programmes and other support measures.

Only 10 of 26 Agencies have confirmed that they apply multi-annual budget planning process. Some of the interviewed Agencies have introduced provisional multi-annual budget planning process, where resources and support measures are planned for the period of 3 years. However this planning approach is still only provisional due to budget allocations from the national level which are awarded annually.

page 65 of 103

Recommendation

All Agencies should prepare the implementation plans for grant schemes and other support measures, containing detailed description and timing of every step in the process.

Gap fiche 17 - Planning of Implementation ProcessAccreditation criterion: 2. (c) Planning of the implementation process – ensuring clear planning of steps needed to deliver objectives - including timing and responsibility for each step, and critical path analyses where necessary

FindingsSeveral Agencies are not preparing implementation plan for grant schemes and other support measures. Even more Agencies failed to prepared implementation plans with detailed description of each step.

TargetAll Agencies preparing the implementation plans for grant schemes and other support measures, with clear timing and indication of every step

Gap description

Some of the Agencies need to comply with the procedures by preparing implementation plan for grant schemes and other support measures. A number of Agencies that prepare implementation plan lacking timing and description of every step in the process, need to improve their planning approach.

Criterion 3 (a)

3(a) Verification procedures – ensuring double-check of all steps in a transaction (ex-ante and, where appropriate, ex-post)

Description

All but one surveyed Agencies have confirmed that there are procedures in-place ensuring double checks in transactions.

The standard procedures and format documentation provided by the MoD stipulate strict checks and verifications of different tasks. The verifications within the Agencies are largely implemented applying ex-ante verification principle. Examples are: prior approval of annual work plan, annual report, publication documents for calls for proposals, lists of successful applicants, reports and payments requests from grant beneficiaries etc.

Each formal step in procurement, selection, verification, financial monitoring and payments, is subject to double-checking, normally firstly by a responsible employee/specialist and after that by the direct superior (Head of Department/Unit). In most of the cases, when concerning payments, financial management, procurement or selection process, the final verification check is done by the Secretary General.

The assessors have been provided with examples of checklists related to verification checks, where the different hierarchy level was obvious from the document (with steps in procedure and signatures evidence).

page 66 of 103

Recommendations

None

Gap fiche 18 - Verification ProceduresAccreditation criterion: 3(a) Verification procedures – ensuring double-check of all steps in a transaction (ex-ante and, where appropriate, ex-post)

Findings The existing procedures within the Agencies ensure double-checks for all steps of the procedure.

Target Ensuring double-check of all steps in a transaction (ex-ante and, where appropriate, ex-post).

Gap description

No gap was found under this criterion.

Criterion 3 (b)

3(b) Procedures for supervision by accountable management of tasks delegated to subordinates (including annual statements of assurance from subordinate actors) – ensuring that responsibility is supported by active supervision - and not merely considered a passive or theoretical concept

Description

All the Agencies have confirmed that there is an active supervision by management of the tasks delegated to subordinates. 20 of the total 26 Agencies organize regular weekly staff meetings and transfer minutes in written to staff.

Following the provisions of the Law and secondary legislation the hierarchy in the Agencies is organized at 4 levels. The highest level is the Administrative Board which takes strategic decisions and has authority for approval of a number of operational issues including employment and dismissal of staff. The second level is the Secretary General who is in fact operationally responsible for work of the Agency, but reports to the Administrative Board. The third level of hierarchy are the Heads of Units/Departments which report to the Secretary General and are each responsible for the activities within their respective departments. The fourth level is the specialists and support staff implementing directly operational tasks.

During the interviews of the 5 Agencies it has been established that the size and organization of Agencies allows for active participation of the Agency management in the implementation of the tasks. From the sample organizational charts provided by the interviewed Agencies it can be seen that each Head of Department/Unit normally supervises between 5 and 7 staff. This number allows Heads of Units to be in direct daily contacts with their staff and hold active coordination, supervision and support. The overall size of Agencies allows the Secretaries General to have good overview of the activities and also directly take part in specific decisions and activities. As described in the previous point the Heads of Units/Departments practically always approve check-lists, while the Secretaries General are required to do so for more important decisions.

page 67 of 103

Depending on the quality of job and post descriptions, elaborated more in details under Criterion 1.(c) the specialists are each responsible for specific tasks related to implementation of grant scheme, support initiatives and other Agencies’ activities. The framework of the tasks is communicated to the staff in written and is in fact contained in their description of work. Inside of this framework the tasks are further distributed and agreed based on operational needs. While some of the Agencies apply a strict communication procedure, others rely more on informal communication.

NOTE: The analysis of this criterion refers to “supervision of delegated functions” within the Development Agency. The effectiveness of supervision by MoD of functions delegated to DAs was not analyzed under this section. It is also highlighted that, according to the current procedure, DAs do not issue and provide MoD with statements of assurance on the functioning of their management and control systems. The subject is further analyzed in the context of accreditation criterion 5(iii).

Recommendations

None

Gap fiche 19 - Supervision of Delegated FunctionsAccreditation criterion: 3(b) Procedures for supervision by accountable management of tasks delegated to subordinates (including annual statements of assurance from subordinate actors) – ensuring that responsibility is supported by active supervision - and not merely considered a passive or theoretical concept.

Findings

The size and organizational arrangements of the Agencies allow direct and active supervision by the management of the tasks allocated to subordinates.

TargetProcedures for supervision by accountable management of tasks delegated to subordinates are in place.


Criterion 3 (c)

3(c) Rules for each type of procurement and grant calls – ensuring appropriate legal framework for all such commitment processes

Description

The Agencies are implementing initiatives that are either covered by the Law on Establishment or are implemented under separate agreements and contracts. In the scope of the Law on Establishment the Agencies are acting as managingcontracting authority for the initiatives financed from national budget composed of both central budget and main local partners’ contributions. and Overall coordination of DAs is ensuredcoordinated by the MoD. These initiatives include ‘’Guided projects’’, ‘’Technical Assistance projects’’ and ‘’Grant schemes’’. These measures are described in details in the next point. The Agencies were also supposed to implement activities of subsidizing SME loan interest rates and directly giving the loans, however these activities have not yet been

page 68 of 103

realized in practice. In the framework of its activities as defined by the Law the Agencies are also supporting local authorities and stakeholders in applications to IPA projects.

In addition to the activities covered by the Law the Agencies are implementing other initiatives. For instance the Diyarbakır Agency has been authorized to manage Turkey-Syria cross-border cooperation programme. The Kars Agency has been coordinator for the projects of Logistic Centre (financed from the Ministry of Transport) and Customs and Support Centre (financed by Directorate for Customs). Each of these separate initiatives is a subject to separate agreement between the Agency and respective financiers.

As far as the MoD initiatives are concerned a standardized and comprehensive set of procedures is available for every support mechanisms. The assessors have been provided with examples of Guidelines for Applicants and it can be confirmed that the procedures for grant calls are compliant with the EU External Aid procurement procedures and PRAG Manual. The Agencies apply high level of transparency and equal treatment of potential applicants.

In relation to the future role of the Agencies as Intermediate Bodies it is interesting what number of the Agencies and their staffs are familiar with IPA Programme. In the survey it has been established that 9 of the 26 Agencies have directly implemented projects under IPA. 13 Agencies have confirmed that their staffs were trained in PRAG Procurement procedures. 12 Agencies have transferred the knowledge and experiences of IPA Programme further to regional stakeholders. During the interviews with the 5 Agencies it has been established that a number of training events have been organized for Agencies’ staff in IPA procedures. In some cases (Kars Agency) the agencies staffs have obtained on-the-job experience while working for other institutions. Nevertheless, the Agencies expressed additional need for IPA-related type of training.

Recommendations

MoD should organize targeted training sessions for the staff of the DAs. The training should be delivered by experienced national and international trainers, covering the whole spectrum of procedures from procurement rules and procedures.

Gap fiche 20 - Rules for Public Procurement and Calls for Proposals

Accreditation criterion: 3(c) Rules for each type of procurement and grant calls – ensuring appropriate legal framework for all such commitment processes

FindingsOnly a limited number of Agencies familiar with the IPA procedures. A number of surveyed and interviewed Agencies expressing additional need for training and on-job training of staff in IPA.

TargetThe Agencies’ staff involved in work of the Intermediate Body is familiar with (whole spectrum of) IPA procedures.

Gap description

Though national procedures for implementation of grant schemes under responsibility of the Agencies are similar to the EU External Aid and PRAG procedures, it has been noted that additional specific training for IPA is needed. The training would ideally cover the whole spectrum of public procurement regulations and procedures.

page 69 of 103

Criterion 3 (d)

3(d) Procedures (including checklists) for each step of procurement and grant calls (e.g. Technical Specifications, Evaluation committees, reporting of exceptions etc.) – ensuring each member of staff is clear as to their task responsibilities in these areas

Description

A significant number of Agencies have implemented projects financed under IPA Programme. 15 Agencies have prepared a project under IPA financed Operational Programmes 2007-2013, lower than 10 MEUR. 6 Agencies have prepared project larger than 10 MEUR. 9 Agencies have confirmed that they have prepared projects from IPA Grant schemes. Of the interviewed Agencies, OKA (Samsun) has the highest level of experience in implementation of IPA financed projects. That Agency has managed a project financed from IPA OP for HR Development in the value of 400,000 EUR (Vocational training of unemployed). They have also been participating in a “Black Sea CBC project”, managed by a Moldovan applicant; value 800,000 EUR (Network of Business Incubators in Black-Sea Basin). In addition, they are preparing a large project, value above 20 MEUR, ‘’Logistic Centre’’ to be financed from IPA Competitiveness OP. During the last year all but one Agency have implemented grant schemes financed from national funds. All the interviewed Development Agencies have implemented support activities financed from the national funding. According to the Law on the Establishment and duties of Development Agencies the Development Agencies are entitled to provide three types of specific support. The first type of support is ‘’Guided Projects’’. These are large-scale strategic projects on the regional level, prepared and coordinated by the respective Agency and implemented by regional stakeholders. With exception of Samsun Development Agency (Congress Centre Project and Science Innovation Park Project) no other interviewees has so far implemented Guided Projects. The second type of assistance, implemented by all of the interviewees, is ‘’Technical Assistance’’ projects. These are small-scale projects supporting consultancy services and trainings of applicants. The potential applicants prepare proposals but the funds are transferred directly from the Development Agency to the service providers. By far most popular type of assistance are targeted ‘’grant schemes’’ providing financial assistance to concrete project initiatives. All of the interviewed Development Agencies have implemented grant schemes. Average number of applications is somewhere around 700, total value ranges between 40 and 50 MTL and an average annual number of supported projects is between 80 and 100. The legislation and operational procedures prepared by the Ministry of Development give clear instructions on implementation of all the above support mechanisms. The rules are largely based on EU External Aid procurement rules and apply high level of transparency and equal treatment of potential applicants. The grant scheme mechanism is based on public calls for proposals. Initially the priorities are set on the basis of regional priorities and Regional Development Plans. Examples of grant schemes implemented by the interviewed Agencies include: Support to SME competitiveness, Support to Research and Innovation in SMEs, Support to Tourism infrastructure, Support to Agriculture and food processing etc. The eligibility of applicants depends on the objectives: Economic Development, Innovation Support or similar target non-profit institutions as well as SMEs. The latter normally apply higher level of necessary co-financing (50%, while non-profit contribute with 10 to 25% co-financing). Infrastructure Support, HR and Social Development grant schemes are normally aimed at non-profit applicants. After application documents are prepared the Development

page 70 of 103


Is this statistic based on the input from 5 DAs or all?

Agency announces public call for proposals. Within the period until the deadline for submission, intensive promotion, training and support activities are implemented. After the closure of the Calls the selection process starts with the administrative compliance check implemented by the Development Agencies’ staff. Following this the technical evaluation is implemented by the independent assessors. Two assessors check every proposal and the average score is calculated on that basis. In case of high differences additional third evaluation is implemented. The results are submitted to the assessment committee (evaluation committee), consisting of 5 or 7 representatives of universities or similar. The assessment committee reviews proposal and implements preliminary clarification visit with the applicants. Following this the final proposal is submitted to the Administrative Board who either confirms the decision or rejects one or more proposed projects. The issue of Administrative Boards’ participation in the selection procedure is described under the criterion 1(e).

All steps of the selection process apply high level of transparency, impartiality and confidentiality. All participants in the process are regularly checked in reference to potential conflict of interest and are required to sign statements of impartiality and confidentiality.

Each step of procedure applies standardized documents and check-lists which are completed using 4-eyes principle. The responsibilities of staff are pre-defined and clearly communicated to each involved person.

The procurement by the grant beneficiaries is regulated by the Manual of Procedures prepared by the Ministry of Development in case of NGOs and private companies. For public sector beneficiaries their normal procurement procedures apply.

Recommendations

None

Gap fiche 21 - Procedures for Public Procurement and Calls for ProposalsAccreditation criterion: 3(d) Procedures (including checklists) for each step of procurement and grant calls (e.g. Technical Specifications, Evaluation committees, reporting of exceptions etc.) – ensuring each member of staff is clear as to their task responsibilities in these areas

Findings

The target of having transparent process, with coherent procedures and checklists for every step of the procedures seems to be sufficiently achieved using the existing procedures.

Target Procedures for each step of procurement and grant calls are in place.Gap description No gap was found under this criterion.

page 71 of 103


Buraya düzeltme gerekiyor.

Criterion 3 (e)

3(e) Publicity rules and procedures – ensuring that these Commission requirements are fulfilled

Description

The transparency and wide publicity of the funding opportunities represents one of the key elements of Agencies’ functioning. The Agencies have indeed made the best efforts to widely distribute the information regarding the grant schemes and other support mechanisms.

All of the surveyed Agencies have confirmed that the principles of transparency are fully respected and that the Agencies maintain regular contacts with stakeholders, informing them of new funding opportunities. All of the Agencies have organized a wide information and training campaign (info-days and training workshops). With exception of 1, all Agencies have nominated publicity officer and only 3 Agencies do not have publications plans available.

The interviews with the 5 selected Agencies have confirmed high level of awareness and efficiency as regards publication of the calls for proposals. The BEBKA Agency has provided a separate presentation related only to publicity issues. It could be seen that the Agency has implemented information days with 350 attendances in Bursa, 250 in Eskisehir and 120 in Bilecik. In addition to that the BEBKA has implemented 38 smaller information and training missions. Information about grant scheme calls for proposals has been published in local and national newspapers, on the web site of the Agency and the Ministry and on stakeholders’ web-sites (for instance local authorities and Chamber of Commerce). The grant scheme for the SME sector was further promoted through a billboard campaign. In addition to that the BEBKA has sent 600 direct information letters to stakeholders in the region. The assessors have been shown copies of publications in local newspapers and photographs of billboards. Similarly to BEBKA, the Kars Agency has implemented 26 info-days in all provinces of their region, implemented 11 additional trainings, and sent 600 letters to stakeholders and 35.000 SMS to potential applicants.

All of the interviewed Agencies manage technical assistance tables where advice is provided to potential applicants. They all manage enquiries and publish regularly list of frequently asked questions.

All of the surveyed Agencies confirmed publication of list of successful applicants. The interviewed Agencies have explained that the publications are made at the Agencies’ and Ministry’s web-sites. The assessors have been presented with publications materials including brochure on successful projects (in Bursa and Diyarbakır).

page 72 of 103

Recommendations

None

Gap fiche 22 - Publicity Rules and Procedures

Accreditation criterion: 3)(e) Publicity rules and procedures – ensuring that these Commission requirements are fulfilled

Findings

The Agencies apply high level of efficiency in publications of funding opportunities, supporting potential applicants and in publication of results of calls for proposals.

TargetPublicity rules and procedures are enforced ensuring full transparency and equal access to financing opportunities.


Criterion 3 (f)

3(f) Payment Procedures

Description

The legal framework for compliance with this accreditation criterion is given by the IPA Implementing Regulation art. 28 art. (h), (i), (j) and the Financial Regulation – particularly art. 30 (principle of sound financial management), art. 32 (internal control of budget implementation) and art. 88 (validation of expenditure). It is also recalled that before validating any expenditure under IPA, all relevant checks should be carried out including compliance with EU policies such as public procurement and State aid.

Extract from IPA IR art. 28…(h) ensuring that the national fund and the national authorizing officer receive all necessary information on the procedures and verifications carried out in relation to expenditure;(i) setting up, maintaining and updating the reporting and information system;(j) carrying out verifications to ensure that the expenditure declared has actually been incurred in accordance with applicable rules, the products or services have been delivered in accordance with the approval decision, and the payment requests by the final beneficiary are correct.These verifications shall cover administrative, financial, technical and physical aspects of operations, as appropriate;…

Under EU procedures, payments are processed in two steps: “validation of expenditure” further to management verifications (generally by an

“authorizing officer”) “implementation of payments” (by an accounting officer).

According to EU Financial Regulation art. 66(5):Each operation shall be subject at least to an ex ante control, based on a desk review of documents and on the available results of controls already carried out, relating to the operational and financial aspects of the operation. Ex ante controls shall comprise the initiation and the verification of an operation.

page 73 of 103

For a given transaction, the verification shall be carried out by staff other than those who initiated the operation. The staffs that carry out the verification shall not be subordinate to the members of staff who initiated the operation.

Development Agencies execute payments to grant beneficiaries. In doing so the Guide for Support Activities prepared by the Ministry of Development is enforced. This document is mandatory for the DAs. The payment procedure includes checklists and deadlines for verification of pre-financing and reimbursement claims, and the involved staffs are clearly aware about their responsibilities and procedures in relation to the verifications. However, checks do not include verification of compliance of the expenditure with State aid legislation.

Before executing each payment, a field visit to the beneficiary is carried out. All the interviewed Development Agencies apply on-site verification visits (i.e. on-the-spot checks). All grant beneficiaries are visited at least 3 times, at the time of beginning of the project, in the middle and after the closure of the project. Additional extraordinary visits can apply in case of foreseen deviations from contract stipulations.

According to responses provided by DAs under the self-assessment questionnaires (26 responses out of 26 respondents), grant beneficiaries are familiar with the procedure for payment and they have been provided with standard payment request. Grant beneficiaries receive detailed information on both reporting principles and how filling the standard reporting formats made available to them, which include a comprehensive list of accounting documents to be provided. Contract documents clearly specify and detail rules for eligibility of costs.

Grant beneficiaries are entitled to receive pre-payments. Depending on the type of the applicant and the risk assessment, the pre-financing amounts to 20-40% of the total grant. In case of the SMEs and NGOs the applicants are obliged to provide a guarantee for the co-financing allocation. The interviewed Development Agencies have normally required bank guarantee. In some cases, the guarantee was required to cover 10% of the total grant; in some other cases, the total value of pre-financing. In addition, grant beneficiaries manage (shared) project accounts where, in order to release funds, prior authorization by the respective Development Agency is required. The pre-payments are made within 45 days after grant contract’s signature. Additional interim payments are made within 3045 days after grant beneficiaries’ submission of reports and accompanying documents.During the interviews, DAs reported that in general they comply with all contractually established deadlines and therefore payments are made timely.

When asked whether the DA request an audit report for each application for reimbursement of expenditure, only 14 DAs responded affirmatively. However, 20 out of 26 DAs request an audit report for the final payment under the grant contract.

The legislation and the manuals regulate the dynamics, format and content of the financial reports submitted by Beneficiaries for reimbursement of grant expenditure. Beneficiaries are required to include into their reports all the financial documentation. The processing of reimbursement requests applies 100% checks of all supporting documents, using the 4 eyes principles. The responsibility for verification normally lies within the Monitoring and Evaluation Department, while General and Financial Department issue the payments.

page 74 of 103

Recommendations

To improve the current procedure for verification and validation of expenditure by including all checks included under the Commission Guidance document on management verifications16. Specific checks on compliance of expenditure with relevant EU policies should be included under the procedure.

Gap fiche 23 - Payment Procedures

Accreditation criterion: 3(f) Payment procedures (including procedures for confirmation of output delivery, and/or eligibility conditions, ‘on-the-spot’ where necessary) – ensuring that payments are made only for justified payment applications which fulfill all contractual requirements

Findings

Development Agencies execute payments to grant beneficiaries according to the procedure provided by the Ministry of Development, by performing comprehensive desk and on-the-spot checks. However, the procedure does not include check relating to compliance with State aid rules.Grant beneficiaries do receive appropriate guidance on how filling the applications for pre-financing and/or reimbursement.Payment applications are generally timely processed so that the contractually established deadlines (45 days from receipt of application to making the payment) are generally complied with.

TargetEnsuring that payments are made only for justified payment applications which fulfill all contractual requirements as well as all EU applicable stipulations.

Gap description

In order to perform as specific Bodies under IPA, DAs should include under the procedure also certain currently missing checks on compliance of expenditure with EU policies, for example in reference to State aid (under de minimis regulation or the GBR or the regional aid map and regional aid guidelines, if applicable).

16 This Guidance document designed for managing verifications under Structural Funds, is currently used under IPA, too http://www.interact-eu.net/downloads/399/Guidance_Document_on_Management_Verifications_.pdf COCOF (Commission) Guidance document on management verifications to be carried out by Member States on operations co-financed by the Structural Funds and the Cohesion Fund for the 2007 – 2013 programming period, 5/6/2008

page 75 of 103

http://www.interact-eu.net/downloads/399/Guidance_Document_on_Management_Verifications_.pdf

Criterion 3 (g)

3(g) Procedures for monitoring delivery of co-financing – ensuring that these Commission requirements are fulfilled

Description

This criterion refers to monitoring that grant beneficiaries provide their co-financing as established under calls for proposals and the applicable map of regional aid, according to the stipulated intensity of the aid.

Recommendations

None

Gap fiche 24 - Co-financing

Accreditation criterion: 3(g) Procedures for monitoring delivery of co-financing – ensuring that these Commission requirements are fulfilled

FindingsAll grant beneficiaries provide co-finance to the grant contract (generally up to 50%).

TargetThe delivery of co-financing by grant beneficiaries is checked by DAs before the final payment is made.

Gap description No gap is found under this criterion.

Criterion 3 (ij)

3(i) Procedures for continuity of operations

Description

A business continuity plan enables critical services to be continually delivered to users. Instead of focusing on resuming a business after critical operations have ceased, or recovering after a disaster, a business continuity plan endeavors to ensure that critical operations continue to be available.

A Business Continuity Plan (BCP) generally includes:

Plans, measures and arrangements to ensure the continuous delivery of critical services, which permits the organization to recover its facility, data and assets.

Identification of necessary resources to support business continuity, including personnel, information, equipment, financial allocations, legal counsel, infrastructure protection and accommodations.

Having a BCP enhances an organization's image with employees, shareholders and customers by demonstrating a proactive attitude. Additional benefits include improvement in overall organizational efficiency and identifying the relationship of assets and human and financial resources to critical services and deliverables.

page 76 of 103

According to the self-assessment questionnaire, a plan for continuity of operations is prepared in 19 DAs out of 26 respondents. 21 DAs do have procedures to deal with continuity of operations in case of loss of data or inability of access to data, and continuity of operation is ensured at 24 DAs in case key staff member is absent or leaves.

Recommendations

The procedure on continuity of operations could be eventually improved.

Gap fiche 25 - Procedures on Continuity of OperationsAccreditation criterion: 3(i) Procedures for continuity of operations – ensuring that significant risks to continuity (e.g. concerning loss of data, absence of individuals etc.) are identified and contingency plans put in place where possible

Findings

Not all DAs have a plan for continuity of operations, procedures to deal with continuity of operations in case of loss of data or inability of access to data, and continuity of operation ensured in case key staff member is absent or leaves.

TargetEnsuring that significant risks to continuity (e.g. concerning loss of data, absence of individuals etc.) are identified and contingency plans put in place where possible.

Gap descriptionPlan and procedures to deal with continuity of operations are missing or not enforced in some DAs.

Criterion 3 (j)

3(j) Accounting Procedures

Description

According to the IPA Implementing Regulation:…..

Article 20 Audit trailThe national authorizing officer shall ensure that all the relevant information is available to ensure at all times a sufficiently detailed audit trail. This information shall include documentary evidence of the authorization of payment applications, of the accounting and payment of such applications, and of the treatment of advances, guarantees and debts.

Article 28 Functions and responsibilities of the operating structure

(g) ensuring that all bodies involved in the implementation of operations maintain a separate accounting system or a separate accounting codification.

Moreover, under the Financial Regulation art. 68-69, the powers and duties of accounting officers are listed (which can be a useful benchmark for the job descriptions of DA accounting officers).

page 77 of 103

The rationale of the requirement of “maintaining a separate accounting system” (art. 28 IPA IR) for different activities originates from the need of ensuring an adequate audit trail of the accounting and payment of grant funds (art. 20 IPA IR)17. However, from the self-assessment questionnaire it would appear that 11 out of 26 DAs do not maintain a separate accounting system for different activities.

Yet according to the self-assessment questionnaire, the accounting system is compliant with accepted accounting principles and the accounting system is IT supported in all DAs (26 respondents out of 26). There is a procedure on the accounting system and instructions for accountants (25 respondents out of 26) whilst the procedure would include handover procedure, in case staff member leaves the body, in 23 DAs out of 26.

Recommendations

DAs accounting procedures following accepted accounting principles are to ensure full and transparent accounting, with separate accounts or a separate accounting codification for different activities, and handover procedure in case staff member leaves the body.

Gap fiche 26 - Accounting Procedures

Accreditation criterion: 3(j) Accounting procedures – ensuring full and transparent accounting following accepted accounting principles

Findings

All DAs implements their IT supported accounting system based on written procedures and instructions for accountants. However, not all DAs maintain a separate accounting system or a separate codification for different activities. In some cases, the accounting procedure does not include handover procedure, in case staff member leaves the body.

Target

In order to comply with the IPA IR, DAs are to maintain a separate accounting system or a separate accounting codification for different activities, under accounting procedures that ensure full and transparent accounting following accepted accounting principles.

Gap descriptionIn 11 DAs, the accounting system does not ensure maintenance of separate accounts or a separate accounting codification for different activities.

NOTE: The accounting officer position is by definition a sensitive position. According to art. 64 of the Financial Regulation on Segregation of duties, “The duties of authorizing officer and accounting officer shall be segregated and mutually exclusive”. The duties of the accounting officer must be also adequately segregated from the duties of the reconciliation officer.

17 Moreover, in case a body carries out both economic and non economic activities, these should be appropriately accounted/coded.

page 78 of 103


All agencies use the same codification defined by the regulation.


It is more likely that the survey question is not well-understood. Needs clarification for “separate accounting system for different activities.”

Criterion 3 (k)

3(k) Reconciliation Procedures

Description

Reconciliations procedures provide for reconciliation of records with the appropriate documents on a regular basis, e.g. the accounting records relating to bank accounts are reconciled with the corresponding bank statements.

According to the answers provided by DAs in the self-assessment questionnaire, reconciliation procedures are in place in 24 out of 26 DAs to ensure the completeness and correctness of the accounting information.

Recommendations

All DAs should have reconciliation procedures fully in place.

Gap fiche 27 - Reconciliation Procedures

Accreditation criterion: 3(k) Reconciliation procedures – ensuring that wherever possible accounting balances are reconciled against 3rd party information.

FindingsReconciliation procedures are in place in 24 out of 26 DAs to ensure the completeness and correctness of the accounting information

TargetEnsuring that wherever possible accounting balances are reconciled against 3rd party information.

Gap description In 2 DAs, reconciliation procedures are not in place.

Criterion 3 (l)

3(l) Reporting on exceptions

Description

Management intervention involving potential deviations from established policies, procedures or controls may become necessary in order to deal with exceptional circumstances or events that otherwise may not be handled appropriately by already existing standard procedures.

Provision on proper management intervention is necessary for all internal control systems because no system can be designed to anticipate every circumstance. When such exceptional circumstances arise, management intervention must be properly documented and disclosed to the appropriate level in order to get approval.

All instances of overriding of controls or deviations from established processes and procedures must be documented in exception reports, justified, and approved by the responsible person at appropriate level before action is taken.

page 79 of 103


All DAs have to have reconciliation procedures. It might be a misunderstanding of the 2 DAs, the question will be rechecked with the missing ones.

Under IPA, approved exceptions to normal procedures, unapproved exceptions and control failures, whenever identified, within Operating Structure must always be documented, recorded and logged centrally.

In the self-assessment questionnaire, DAs have stated that: The procedure defines what are the exceptions to normal procedures (16 DAs out of

25 respondents) The procedure defines the person responsible for recording and reporting on

exceptions (15 DAs out of 25 respondents) The procedure defines where the exceptions should be recorded (15 DAs out of 25

respondents) The procedure defines who should be informed when exceptions occur? (15 DAs out

25 respondents) Actions are taken in case exceptions from the procedures are identified (18 DAs out

of 25 respondents)

Recommendations

The procedure should clearly establish responsibilities for recording and reporting on exceptions, within each DA.

Gap fiche 28 - Reporting on ExceptionsAccreditation criterion: 3(l) Reporting of exceptions, inter alia, exceptions to normal procedures approved at appropriate level, unapproved exceptions and control failures whenever identified – ensuring variations to normal practices are always recorded and logged and reviewed at appropriate levels

Findings

Not all DAs are aware of how exceptions should be recorded and reported and who is in charge with logging, reviewing and approving exceptions, and taking any appropriate action in reference to exceptions.

TargetEnsuring variations to normal practices are always recorded and logged and reviewed at appropriate levels.

Gap descriptionProcedure on recording and reporting on exceptions needs to be improved.

Criterion 3 (m)

3(m) Security Procedures

PENDING INFORMATION BY MoD

Description

Target

Recommendations

page 80 of 103

Gap fiche 29 - Security ProceduresAccreditation criterion: 3(m) Security procedures (IT and otherwise) – ensuring that assets and data are kept secure from interference or physical damage

Findings .

Target .Gap description .

Criterion 3 (n)

3(n) Archiving Procedures

Description

IPA IR art. 28 (e) stipulates that the Operating Structure is to “set up procedures to ensure the retention of all documents required to ensure an adequate audit trail, in accordance with Article 20”.

The self-questionnaire provided the following information:

All DAs (26 responses) consider to have adequate equipment for secure keeping of documents / information. The archiving procedure defines and respects time limits (established by the law) for keeping the documents, as well as who has the right of access to documents.

During the field visits, the experts had the possibility to visit the DAs archives. The visits confirmed that physical archives are spacious and well organized.

Recommendations

None

Gap fiche 30 - Archiving Procedures

Accreditation criterion: 3(n) Archiving procedures – ensuring that documents will be available - at least for Commission review throughout the required periods for which they much be kept

Findings

Physical archives are spacious and well organized. The archiving procedure defines and respects time limits (established by the law) for keeping the documents, as well as who has the right of access to documents.

TargetEnsuring that documents will be available for review throughout the required periods for which they much be kept.

Gap description No gap is found under this criterion.

page 81 of 103

Criterion 4 (a)

4 (a) Internal Audit

Description

According to Regulation (EU, EURATOM) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002, art. 99, “the internal auditor shall advise his or her institution on dealing with risks, by issuing independent opinions on the quality of management and control systems and by issuing recommendations for improving the conditions of implementation of operations and promoting sound financial management”.

Internal audit within the DAs is subject to the Auditing Regulations of Development Agencies (Decree No: 2009/27308). The purpose of this Regulation is to define Development Agencies’ competency standards for financial management, internal and external audit, and to determine the procedures and principles in accordance with the Public Internal Financial Control Principles. Internal auditors recruited by DAs must have minimum 10 years of experience in the public administration in similar position.

However, in Turkey the function of internal audit is not clearly described in the founding legislation of the public institutions. Moreover, the latest Commission Progress Report for Turkey (2012) states that training so far was insufficient to ensure that the international audit techniques, concepts and best practices are adopted and understood by audit staff employed by the public administration18. Therefore, although it would not be appropriate to completely generalize the above statements to the DAs internal auditors, one should reasonably question whether the Although the Auditing Regulation of DAs foresees the compliance with international internal audit standards, DAs internal auditors would need capacity building supports to be fully prepared to undertake their responsibilities within the IPA working environment, in line with the requirements of the EU IPA Regulation, the Financial Regulation and the INTOSAI Guidelines for Internal Control Standards for the Public Sector19.

From the self-assessment questionnaires filled in by the DAs, it seems that 13 out of 26 internal audit posts within DAs are currently vacant, due to difficulties in recruiting candidates with the required seniority in the public administration for similar posts. This situation most likely explains why some of the DAs have not answered all questions in the section of the questionnaire relating to internal audit. From the self-assessment questionnaire, DAs have confirmed that there is a manual of procedures for internal audit (22 out of 26 respondents), that the internal audit procedure is in accordance with relevant legislation and there is a clear reporting line from internal audit to the top management. (23 out of 25 respondents). Moreover, there is an annual internal audit plan (22 out of 25 respondents) which is based on risk assessment (23 out of 25 respondents).

18Brussels, 10.10.2012 SWD(2012) 336 final Commission staff working document Turkey 2012 Progress Report

accompanying the document Communication from the Commission to the European Parliament and the Council Enlargement Strategy and Main Challenges 2012-2013 {COM(2012) 600 final} [See Chapter 32 Financial Control] http://ec.europa.eu/enlargement/pdf/key_documents/2012/package/tr_rapport_2012_en.pdf19 More specifically as regards auditing of EU funds, the European Commission has also issued manuals and guidelines on assessment of management and control systems and implementation of operations, and relevant audit methodologies.

page 82 of 103


The internal audit function for public institutions is regulated by a specific Law No.5018. In any case, the report content should be limited to the internal audit function of DAs rather than making overall assessment about the internal audit of public administrations of Turkey.

http://ec.europa.eu/enlargement/pdf/key_documents/2012/package/tr_rapport_2012_en.pdf

Finally, only 19 DAs out of 25 respondents, consider that the Internal Auditor has all necessary resources (certified staff, premises, equipment, etc.) to fulfill him/her duties.

Consultation of two annual/multi-annual audit plans by the Gap Assessment team 20 allowed to conclude that control areas are selected based on risk assessment and that the most risky areas are considered those related to the implementation of grant schemes (particularly according to BEBKA audit plan). However, no audit reports were consulted so that it is not possible to expand on compliance of audit activity with international standards and EU best practice.

BEBKA, AUDIT PLAN (9/12/2011), 2012-2013-2014 AREAS OF INSPECTION

Measure no.

Unit Control Area Year Risk Score

1 İDB Monitoring and Evaluation Process 2012 3,45

2 MİB Budget, Accounting and Purchasing Process 2012 3.15

3 PPKB Regional Plan, Work Programme and Annual Report Preparation Process

2012 2,70

4 PYB Call for Proposals for the Project Management Process 2013 2,55

5 PYB Investment Support Offices 2013 2,25

6 PYB Direct Business Support Process 2013 2.10

7 PYB Technical Support Process 2013 2.10

8 MİB Human Resource Management Process 2014 1,90

9 MİB Information Systems Management Process 2014 1,90

10 MİB Correspondence, Filing and Archiving Process 2014 1,50

11 MİB Movable Goods Management Process 2014 1,50Google translation

ANKARA, AUDIT PLAN 2013

No.

Process Supervised Field Type of Control

Risk Priority

1 Information systems management and IT security process

Technical processes

Risk-based internal

audit

High

2 Programme performance indicators to evaluate the effects of sectorial indicators determining the project's results and the process of providing data to the PMU

Indicator set Risk-based internal

audit

High

3 The general framework of implementation mechanisms and the beneficiary / BD / DK evaluation criteria and process

Project evaluation

Risk-based internal

audit

High

4 Regional plan and in line with corporate strategic plan for supports, the scope, timing and budget planning process

Strategy Risk-based internal

audit

High

5 Corporate identity creation and increasing awareness of the process of obtaining high-quality service providers and high-quality promotional materials

Introduction and organization

Risk-based internal

audit

High

6 To provide information to investors, to keep track of their work, coordinating and monitoring process

Guidance to entrepreneurs

Risk-based internal

audit

High

Google translation

20 Ankara-based DA, annual audit programme for 2013; BEBKA internal audit plan 2012-2014 (both in Turkish language).

page 83 of 103


The sentence is not clear.

As regards external audit, an external audit takes place annually. The Supreme Court of Auditors also audits DA accounts and expenditures.

Recommendations

All DAs should have an internal auditor or, in case internal audit is outsourced, the independence of the contracted auditors must be ensured. Audit reports, prepared in accordance with relevant international standards, should focus on functioning of the management and control systems within the DA as well as the reliability of accounting information, so that they can provide the DA legal representative with the necessary information for drawing up an annual statement of assurance21.Internal Auditors are to be appropriately and regularly trained and a formal mechanism of collaboration among them should be established.

Gap fiche 31 - Internal Audit including handling of audit reports and recommendationsAccreditation criterion: 4(a) Ensuring that top managers are provided with some independent reviews of the functioning of their systems at subordinate levels. May involve some ex-post transaction checking but should be more focused on effectiveness and efficiency of system and organization design.

Findings

Half of the DAs do not employ an internal auditor. Some of these DAs have identified temporary solutions such as part-time employment. Other DAs are considering the possibility of outsourcing this function.Effectiveness and efficiency of system and organization design are not the main focus of the audit plans.No evidence was found that internal audit work complies with international standards and EU best practice. However, at least in one case (BEBKA) the internal auditor undertook relevant training (in quality and quantity)22.No formal mechanisms of collaboration are in place among DAs internal auditors.

Target In order to comply with the Financial Regulation (as stipulated by the IPA Regulation recital 21) all DAs have to employ an internal auditor. In case internal audit is outsourced, the independence of the contracted auditors must be ensured.The internal audit plan is to be based on risk assessment and encompass audits aimed at verifying the effective functioning of the management and control systems as well as the reliability of accounting information. The

21 The DA annual statement of assurance will certify that:The management and control procedures are fully respected, the payments are made in full conformity with the manual of procedures, as well as all applicable legislation, checks and financial controls are true and comprehensive, the four eyes principle and segregation of duties are respected;The management and control systems are functioning effectively in practice as designed and described in the manual of procedures or any improvements of the manual of procedures are necessary;If there are any potential internal control weaknesses, either in design or operating effectiveness, misinterpretation of particular processes/activities and control, incorrect implementation, need for correction, redesign of the existing and development and implementation of new processes/activities and controls;Reporting and information system is functioning (e.g. Communication and Reporting procedure is respected);Risk management activities have been carried-out properly and the appropriate actions have been taken;Irregularities are being identified and corrective actions are being implemented;Audit recommendations have been followed-up and implemented.22 BEBKA Internal Auditor attended the following trainings: Assessment of Internal Controls (2 days); Public

Internal Auditors (3 days); Information Systems Auditing (3 days); International Internal Audit Standards and Professional Practice Framework, Seminar on New Releases and Updates (1 day); Corporate Risk Management Seminar (2 days); MS Access Training (3 days); Certified Public Auditor (5 days); Feasibility Preparation (5 days).

page 84 of 103


Secondary regulation of DAs foresee the compliance with international internal audit and public audit standards.Regulation on Audits Art 6 (2): Internal audit activities is conducted in a systematic and disciplined way in compliance with the international standards and public internal audit standards.


Could you provide a reference document for the content of annual statement of assurance in the footnote?

audit activity shall include audits of an appropriate sample of operations or transactions, and an examination of procedures.

Internal auditing must also comply with the standards of the International Organization of Supreme Audit Institutions (INTOSAI) and EU best practices.

Gap description

Internal Auditors are not formally appointed in each DA.All Internal Auditors need to be adequately trained in the relevant standards and working methodologies (including the execution of on-the-spot checks to grant beneficiaries premises on a sample basis, after the end of grant contracts and last payment is done).In order to ensure compliance with IPA/Financial Regulation, the main focus of audit reports need to be the functioning of the system in relation to delivery of public funds (lately, EU IPA funds).

INTERNAL AUDITOR: APPOINTMENT, POWERS AND DUTIES, INDEPENDENCE according to Regulation (EU, EURATOM) No 966/2012 of the European Parliament and of the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union (the EU Financial Regulation)

CHAPTER 9 Internal auditor Article 98 Appointment of the internal auditor 1. Each institution shall establish an internal auditing function which shall be performed in compliance with the relevant international standards. The internal auditor appointed by the institution shall be accountable to the latter for verifying the proper operation of budgetary implementation systems and procedures. The internal auditor may be neither authorizing officer nor accounting officer. ……….Article 99 Powers and duties of the internal auditor 1. The internal auditor shall advise his or her institution on dealing with risks, by issuing independent opinions on the quality of management and control systems and by issuing recommendations for improving the conditions of implementation of operations and promoting sound financial management. The internal auditor shall be responsible, in particular, for: (a) assessing the suitability and effectiveness of internal management systems and the performance of departments in implementing policies, programmes and actions by reference to the risks associated with them; (b) assessing the efficiency and effectiveness of the internal control and audit systems applicable to each budgetary implementation operation. 2. The internal auditor shall perform his or her duties in relation to all the institution's activities and departments. He or she shall enjoy full and unlimited access to all information required to perform his or her duties, if necessary on the spot access….N/A. The internal auditor shall take note of the annual report of the authorizing officers and any other pieces of information identified. 3. The internal auditor shall report to the institution on his or her findings and recommendations. The institution shall ensure that action is taken with regard to recommendations resulting from audits. The internal auditor shall also submit to the institution an annual internal audit report indicating the number and type of internal audits carried out, the recommendations made and the action taken with regard to those recommendations. 4. The institution shall make available the contact details of the internal auditor to any natural or legal person involved in expenditure operations, for the purposes of confidentially contacting the internal auditor. 5. ………….. N/A 6. The reports and findings of the internal auditor, as well as the report of the institution, shall be accessible to the public only after validation by the internal auditor of the action taken for their implementation. Article 100 Independence of the internal auditor 1. Special rules applicable to the internal auditor shall be laid down by the institution and shall be such as to guarantee that the internal auditor is totally independent in the performance of his or her duties, and to establish the internal auditor's responsibility. If the internal auditor is a member of staff, he or she shall exercise exclusive audit functions in full independence and assume responsibility as laid down in the Staff Regulations…. N/A. ….

page 85 of 103

Criterion 4 (b)

4 (b) Evaluation

Description

According to the procedures in force, Development Agencies will implement an impact assessment of the grant schemes, within 3 years after conclusion of each grant scheme. However, there is no mechanism for regular reporting on outputs and results of each grant contract, and/or aggregation of such information, so that inter alia it is not possible to benchmark cost-effectiveness of the intervention within each region and between regions.

Lack of a clear monitoring and performance framework may also hamper the effectiveness of impact evaluations.

Recommendations

Establish a performance framework in relation to the grant schemes implemented by DAs.

Gap fiche 32 - Assessment of Impacts of InterventionsAccreditation criterion: 4 (b) Evaluation –ensuring that top managers are provided with information concerning the assessment of impacts of interventions (in addition to the other information they receive about legality, regularity and operational procedures)

FindingsTheNo mechanism of programme closure report in place is not adequate for regular reporting on outputs and results of grant schemes managed by DAs.

TargetEnsuring that top managers are provided with information concerning the assessment of impacts of interventions.

Gap descriptionRegular monitoring of results of intervention is not in place. However, a monitoring module was recently added to the procedure and should soon become operational.

Criterion 5 (i)

5 (i) Regular Reporting (1)

Introductory Note

Since the Gap Assessment Report discusses compliance of Development Agencies vis-à-vis of each accreditation criterion, said compliance is discussed separately for accreditation criteria 5(i), 5(ii) and 5(iii) although these three accreditation criteria are strictly inter-related. It is highlighted that full DAs’ compliance with accreditation criteria 5(i), 5(ii) and 5(iii) would facilitate MoD to carry out appropriate supervision of the tasks delegated to DAs.

Description

In accordance with the Article 28 of the IPA Implementing Regulation, the Operating Structure is responsible for “programme monitoring and guiding the work of the Sectorial

page 86 of 103

Monitoring Committee as defined in Article 59, notably by providing the documents necessary for monitoring the quality of implementation of the programmes”.

The Commission has published guidelines which define monitoring as assessing performance against plans, and progress against targets. Monitoring seeks to answer the following questions:

Are the financial allocations being spent, in order to avoid de-commitment under the N+3 rule?

Are the outputs and results being achieved, in line with the targets at measure and priority axis level respectively?

If spending and outcomes are not happening according to the plan, what action is necessary to ensure the plan is met?

In light with the above, under IPA regular reporting is crucial in order to monitor OP progress with achievement of both financial and results targets.

As regards financial progress, this is carefully monitored in order to avoid automatic de-commitment of funds (N+3 rule). Therefore, commitments and disbursements are to be carefully planned on the basis of work plans for implementation of grant schemes and individual operations.

The IPA implementing regulation introduces the practice of multi-annual programme management into pre-accession funds for the first time. This is enshrined in Article 6 of the IPA Regulation and Article 6-8 of the IPA Implementing Regulation, but also Article 189 of the Financial Regulation23, with the following provision for Component III / IV:(a) Any portion of a budget commitment for such a multi-annual programme24 shall be automatically de-committed where, by 31 December of the third year following year “n” being the one in which the budget commitment was made:

(i) It has not been used for the purpose of pre-financing; or(ii) It has not been used for making intermediate payments; or(iii) No declaration of expenditure has been presented in relation to it.

(b) That part of budget commitments still open on 31 December 2017 for which a declaration of expenditure has not been made by 31 December 2018 shall be automatically de-committed.In practical terms, the budget allocated for a certain year MUST BE SPENT BY THE END OF THE FOLLOWING THIRD YEAR. In case funds are not disbursed on time, they have to be returned to the donor and/or they cannot be claimed.

Results targets refer to achievement of the intended economic and social performance targets.

23 The new Financial Regulation (Regulation (EU, EURATOM) No 966/2012 of the European Parliament and of

the Council of 25 October 2012 on the financial rules applicable to the general budget of the Union and repealing Council Regulation (EC, Euratom) No 1605/2002) states the following requirements regarding the automatic decommitment (N+3) rule: Article 178 De-commitment of appropriations; Article 175 Special provisions; Article 189 Financing agreements on the implementation of external actions. As regards de-commitment of funds under IPA, it stipulates that the rules will be those of the „sector agreements” (meaning the specific agreements between the European Commission and the Beneficiary country).24 “… regional development, human resources development …. components of Council Regulation (EC) No

1085/2006 of 17 July 2006 establishing an Instrument for Pre-Accession Assistance (IPA)” (Article 166, 3)

page 87 of 103

Work plans under IPA generally include also implementation targets that are analyzed by the Programme Authorities (NAO and European Commission) as benchmarks of administrative capacity of the Operating Structure. Example of implementation targets can be: time from publication of a call for proposal to signature of grant contracts; overall time to finalize a certain procurement procedure; rate of rejection of certain documents at ex-ante control, etc.

According to the legislation, every Development Agency prepares an annual work programme of activities and submits it for approval to the Ministry of Development. These annual work programmes are prepared on the basis of indicators defined by the Ministry of Development. These indicators are linked to the performance of the Development Agency (output indicators on implementation) but not to the final impact of the spending (for instance, indicators such as new employment, increase in revenues of the SMEs or similar are not included within the indicators established by MoD). The Development Agencies will implement an impact assessment of the grant schemes, within 3 years after the conclusion of each grant scheme.

The Development Agencies’ annual reports present the performance in view of the originally defined objectives and indicators. The interviewed Development Agencies did generally achieve the level of planned indicators; however, some delays occurred due to postponement of publication of grant schemes.

The budget planning is annual. It is activity based, with resources and planned activities being indicated in each work programme. The Development Agencies’ budget is fixed at 85%, with 15% of it depending on performance review implemented by the Ministry of Development.

It is legally possible to revise (make amendments to) the annual working programme during the year, and the same procedures for the approval of the annual work plan are followed for the revision as well, mainly agency submit the revised annual work plan (with the approval of Administrative Board) to the Ministry for approval. In 2012, most of the agencies revised their annual work plans to introduce a new call for proposal or to allocate some more money indicatively to 2012 CfPs from the budget year of 2013.

The Ministry organizes monthly coordination meetings of General Secretaries of all agencies. The meetings are headed by the Minister responsible for development, and cover all activities of agencies including the grant scheme programmes.

Recommendations

Multi-annual programmes, grant schemes and projects should include targets on economic and social performance of the grant/loan funds, disbursement and any other delivery’s targets.

page 88 of 103

Gap fiche 33 - Regular Reporting (1) Status of Planning of Programmes and ProjectsAccreditation criterion: 5. Regular coordination meetings between different bodies to exchange information on all aspects of planning and implementation e.g.: 5 (i) Regular reporting on status of planning of programmes and projects

Findings

Annual work plans are prepared by Development Agencies in the context of the annual process of budget approval. These annual plans contain some “implementation targets” (whose relevance has not been specifically analyzed) but do not contain indicators of result that could allow assessing progress towards the achievement of the public funds’ intended economic and social objectives. Moreover, no automatic de-commitment rules are in place, so that financial planning does not target the possibility to lose undisbursed funds.The progress on status of planning of programmes and projects is discussed through regular coordination meetings by DAs and MoD.

Target Regular reporting on status of planning of programmes and projects, discussed at regular coordination meetings between DAs and MoD.

Gap description

Multi-annual planning of programmes, grant schemes and projects is needed, including economic and social performance, disbursement and any other delivery’s targets.

Criterion 5 (ii)

5 (ii) Regular Reporting (2)

Description

Monitoring of implementation of the IPA financial assistance is based on two main tools: Reporting, consisting of preparation of Monitoring Reports every six months and

Sectorial Annual Implementation Reports once a year; Analysis of the Monitoring Reports by the Sectorial Monitoring Committee of which

the European Commission is a member.

In providing monitoring information to the European Commission on programme performance, Article 28 of the IPA Implementing Regulation also requires the functions of the Operating Structure to include “setting up, maintaining and updating the reporting and information system”. Article 168 then requires that “data exchange between the Commission and the beneficiary countries for the purpose of monitoring shall be carried out electronically, as provided for in the financing agreements”.

page 89 of 103

From the responses to the self-assessment questionnaires, it would appear that:

The manual of procedures define timelines, content and recipients of reports regarding the implementation of grant schemes and/or projects (co)financed by EU/national funds (24 responses out of 26 respondents).

The existing procedures define the DA obligation to report to Development Council / Administrative Board on measures and activities taken in order to achieve the DA objectives as planned (23 responses out of 25 respondents).

Responsibilities are established for preparing written reports addressed to national bodies and/or Development Council on implementation of grant schemes and/or projects (co)financed by EU/national funds (23 responses out of 26 respondents).

Arrangements are in place for top management to monitor the completeness, accuracy, quality, and timeliness of work related to implementation of grant schemes (25 responses out of 26 respondents).

Arrangements are in place for reporting in writing to national bodies and/or Development Council on implementation of grant schemes and/or projects (co)financed by EU/national funds (24 responses out of 26 respondents).

The information regarding the implementation of grant schemes are reported via two different channels:

1) The mid-term activity reports and the annual activity reports which are officially sent to the MoD, and the annual activity reports are published on the website of agency as well. The format of the report could be seen in the annual activity reports provided by the agencies we visited. The content of the activity report is described in the Regulation on Budgeting and Accounting (Section 5 – Article 89-93). The format of report is provided as an Annex-1 to this Regulation. The regular activity reports cover all activities of the agency.

2) Programme-specific reports: The process for the programme-specific reports is defined by the Guideline for the management of DA supports (DYK) and improved with the introduction of Monitoring Module of DAs’ Management Information System (KAYS) at the end of 2012. Thanks to the Monitoring Module, the MoD will be able to follow the progress online in each programme of all DAs. In addition, the system will enable the production of regular progress reports, whose format will be defined by the MoD. Indeed, the type of reports and their standard formats are defined in DYK, but the monitoring module will enable the improvement of these reports.Since the monitoring module has recently been developed, it was not applicable to the grant schemes before 2012, and the reports defined in DYK were prepared by DAs 25.

25 Page 90 of “The Guideline for the management of DA supports (DYK)”: 1) Programme Progress Report prepared by the Monitoring and Evaluation Unit of DA and submitted to the General SecretaryProgramme Progress Report (Annex I-14) is prepared by the Monitoring and Evaluation Unit on the purpose of presenting information about final situation of the programme implementation and monitoring activities, current and estimated problems, irregularities, solution suggestions, progress of the project and planned activities and it is submitted to the General Secretary in order to be conveyed to the Administrative Board. These reports are prepared once in two months, first of these reports is prepared in the third month after the inception of the project (after the delivery of bimonthly beneficiary declaration report starts).

page 90 of 103

Examples of written reports were made available to the team. Evidence was not found that reports include systematic analysis of errors reported at any level.

Regarding the annual activity reports, assessors received five recent samples from the DAs visited.

Recommendations

Reporting on implementation of grant schemes financed by MoD should provide, in addition to details on implementation as well as on deviations from plans, systematic analysis of errors reported at any level. The on-line control system KAYS, if appropriately developed, could effectively assist this process.

Gap fiche 34 - Regular Reporting (2) Status of Implementation compared to PlansAccreditation criterion:5 (ii) Regular reporting on project implementation compared to implementation plan

– Contracting processes (inter alia)– Progress of each tendering process against plan– Systematic analysis of errors reported at any level (e.g. by verifiers, ex-ante

controllers, auditors etc.) – Implementation of contracts – Costs of controls against benefits

Findings

The manual of procedures define timelines, content and recipients of reports regarding the implementation of grant schemes and/or projects (co)financed by national funds. Arrangements are in place for top management to monitor the completeness, accuracy, quality, and timeliness of work related to implementation of grant schemes.Reports do not include a systematic analysis of errors reported at any level.

TargetEnsuring that the quality of regular reporting allows top management to monitor the quality of delivery of grant schemes.

Gap descriptionQuality of reporting needs improvement. Reports should cover all aspects of implementation, including a systematic analysis of errors reported at any level.

2) Programme Closure Report prepared by the DA and submitted to the Ministry of Development Programme Closure Report (Annex iI-22 of DYK), in which achievements and qualities of the projects supported, the amount ofallocated financial support, and the level of achievingreaching the goals in assistance programme goals are evaluated, is prepared by the Monitoring and Evaluation Unit within the four months after the final payment is made. and latest in four months and The report is submitted to the General Secretary in order to be conveyed to the Administrative Board. Besides, itprogramme closure report is submitted to Ministry of Development, as well.

page 91 of 103

Criterion 5 (iii)

5 (iii) Regular Reporting (3)

Description

Internal control weaknesses can be identified by risk analysis, internal and external audit and system level verifications, detection of irregularities, recording of exceptions, other sources (media, external stakeholders).Correction of internal control weaknesses should be done by updating the procedures in the procedure manual and transmitted internally to all the staff and, when relevant, to other external bodies concerned. Any internal control weaknesses identified should be recorded and management responses shall be followed- up.

The follow-up procedure should consist in the preparation of a follow-up status report including the following information:

o Description of the issue,

o Root cause characteristics,

o Responsibility assigned to individual person,

o Action plan,

o Expected completion date,

o Status of completion including brief description of activities performed to

date, o Rationale for changing the action plan and/or expected date.

Escalation procedures should also be in place These should include procedures developed with the aim to ensure that adequate and appropriate measures and steps are undertaken by the appropriate level of authority in cases where recommendations provided by the relevant controlling instances as described above are not remedied within defined deadline, deadline is continuously postponed, recommendations appear in more than two consecutive follow-up reports etc., in a manner which will ensure the reason for the lack of remediation is observed and analyzed (lack of resources, priority wrongly assigned or changed in the meantime, other issues arising which require a change in the initial recommendation) and if necessary, other action plans is developed. Usually, the escalation procedures may be monitored and controlled by the operational personnel. However, in order to ensure an effective remediation, the procedures should enable a direct reporting channel and support from higher instances within the structure with the aim to either speed up or address the issue within higher management instances.

The responses to the self-assessment questionnaire provided by DAs on reporting on efficiency and effectiveness of the internal control system are as follows:

o The internal manual of procedures contains a procedure for recording and reporting

on internal control weaknesses (22 responses out of 26 respondents)o Arrangements are in place for regular reporting on appropriate levels on efficiency

and effectiveness of internal control (22 responses out of 26 respondents)o Internal control weaknesses are formally identified and recorded (20 responses out of

26 respondents)

page 92 of 103

o Internal control weaknesses are regularly communicated to DA top management (19

responses out of 26 respondents)o There is a person responsible for recording and reporting on internal control

weaknesses (19 responses out of 26 respondents)o There is a person responsible for coordination of the follow up activities (21

responses out of 26 respondents).

No Statement of Assurance on the effective functioning of the DA management and control system is provided by DA to MoD (on a yearly or more frequent basis).

Recommendations

Development Agencies should ensure that their internal control systems are functioning effectively and efficiently in accordance with art. 32 of the Financial Regulation and international internal control standards and practice. They should ensure Public Internal Financial Control principles (irrespective on the fact that, according to the current legislation, they are not subject to the Public Finance Administration and Control Law).

An annual Statement of Assurance on the effective functioning of DA management and control system should be provided by DA to MoD in order to provide reasonable assurance on the legality and regularity of the underlying transactions.

The Statement of Assurance should also include information concerning any changes in the systems and controls.

Gap fiche 35 - Regular Reporting (3) Efficiency and Effectiveness of Internal ControlAccreditation criterion: 5 (iii) Regular reporting at all appropriate levels on efficiency and effectiveness of internal control— ensuring all staff at all levels receive adequate regular information in order to fulfill their accountabilities.

Findings

Although arrangements are reportedly in place in almost all DAs for regular reporting on appropriate levels on efficiency and effectiveness of internal control, no Statement of Assurance on the effective functioning of the DA management and control system is provided by DA to MoD (on a yearly or more frequent basis).

Target

Ensuring that DA’s top management and MoD regularly receive detailed information and assurance on the efficiency and effectiveness of DA internal control and, more in general, of DA management and control system for implementing MoD grant funds.

Gap descriptionDAs reporting on efficiency and effectiveness of their internal control needs improvement.

page 93 of 103

7. Overall conclusions

7.1 Strengths and weaknesses

The system of Development Agencies is largely defined by the legislative and organizational framework and only to a lesser extent depends on the individual initiatives within the Agencies. The overall size and complexity of the system namely does not allow that each of the Agencies functions as own independent entity. In order to maintain the necessary effectiveness of the system, standardized approach in support actions and enable comparison of results between the Agencies and exchange of experiences, the MoD has developed comprehensive legislative framework, operational procedures and guidance and at the same time plays a strong coordination and mentoring role. In relation to strengths and weaknesses of the Agencies, this approach and coordination role of the MoD practically means that the areas which are thoroughly and comprehensively regulated by legislation and operational procedures usually represent strengths of the Agencies. On the other hand, the areas with less defined procedures or less guidance usually represent weaknesses of the Agencies.This section will discuss the strengths and weaknesses of the Development Agencies in relation to their future role as specific Bodies within an IPA Operating Structure. In doing so, underline strengths and weaknesses including at system level, meaning that in some instances, the identified strengths and weaknesses might depend on coordination and guidance elements rather than on individual DAs good practice or drawbacks.

Strengths

In a relatively short time (less than 3 years) MoD together with the 26 Development Agencies have set a very powerful system of delivery of public grant funds with important and positive accumulations of knowledge and experience both at central and regional level. Important responsibilities under the regional development policy are decentralized at regional level, from Ministry of Development to Development Agencies, within a coherent approach, that leads to inclusive partnership towards promotion of projects having regional impact. In this sense, the evolution of the legal and institutional framework regarding the regional development policy has prompted both significant accumulations of expertise, as well as responsibilities assumed at both central and regional level.

Although DAs are relatively young organizations, in their first three years of activity they have built significant administrative capacity through the preparation of Regional Development Plans as well as the design, launch and delivery of a number of regional-level grant schemes financed by the Government, addressed to both the private and the public sector. As a result, they are managing a portfolio of 2,812 grant contracts with an overall budget of approx. 350 million euros.

Development Agencies form a very powerful network for the delivery of EU funds, since, in addition to the above-mentioned experience, they have available trained human resources (971 employees overall in 2012), and fully equipped offices in each (NUTS 3 level) county of Turkey. Through this network, Development Agencies have been able to provide detailed information and guidance to both grant applicants and grant beneficiaries.

page 94 of 103

All DAs work under standardized working procedures provided by MoD, mostly focused on the delivery of grant schemes financed by the MoD. One important characteristic of the system is the Management Information System called KAYS that is provided by the Ministry of Development and accessible on-line. The first and the second module are already in-place, dealing with evaluation of projects and accounting system. The third and the fourth module – HR and performance management, will be developed in the coming year.

Significant steps have also been carried out to ensure that grant applicants can submit their project proposals through the web. Presently, this is the case but applicants have still to deliver also hand copies of the proposals.

A major strength of the DAs system is that the legislative and organizational framework is largely based on good practice examples from EU. The grant and financial management processes are designed on the basis of PRAG procedures and the principles established by the Financial Regulation. This means that Development Agencies are acquainted with IPA requirements and under adequate guidance they might move from existing procedures to fully IPA compatible procedures relatively easily and quickly. The same applies to potential applicants and beneficiaries that under IPA would apply similar rules and procedures than under IPA.

On the operational level the assessors would like to point out the following strengths:

- The Agencies have high level of awareness of the principles of transparency, avoiding conflict of interests and applying principles of equal opportunities for all potential applicants.

- Operational procedures for implementation of grant schemes and other support mechanisms contain detailed steps, formats and guidance, which allow transparent and efficient implementation of support mechanisms. The procedures are closely in line with the EU External Aid procedures.

- The Agencies have generally achieved high level of visibility for their activities. Information about funding opportunities is widely spread, high number of applications is received, large number of projects is supported. Such a situation provides solid grounds for functioning of the Agencies as Intermediate bodies.

The DAs benefit of a high level of material and human resources both in quantity and quality. The DAs office spaces and equipment allow for excellent working conditions and a motivating environment for the staff. All the visited DAs have sufficient working spaces, very well equipped and a pleasant working environment. For the time being all spaces are rented but there are plans for building new offices in the future. The human resources are adequate both in terms of number and quality. The DAs benefit of very well educated staff, properly selected and trained and highly enthusiastic.

The DAs will need to maintain and develop these important strengths by:

- Permanently updating the workload analysis and staff planning according to the objectives and work plans, so that sufficient number is ensured for the continuity of operations and a balanced workload for the staff in all units,

page 95 of 103

- Permanently developing the staff, mainly in the areas needed to increase efficiency and effectiveness of their performance towards the achieving the DA’s objectives.

WeaknessesWhen observed from the overall legislative and organizational perspective it can be concluded that the framework is relatively coherent, especially as regards the Law. In this connection, however, it is highlighted that:

- The legal status of the Development Agencies (whether they are private or public bodies subject to private law) is not fully clarified under the current legislation.

- There is no Delegation Agreement between MoD and DAs so that description of tasks and role of the Agencies, as foreseen under the legislation and a set of decrees, is not fully comprehensive.

- Development Agencies do not work on the basis of multi-annual programming and no disbursement deadlines are in place.

- Manuals of Procedures are insufficiently developed, missing comprehensive audit trails for each relevant process and sub-process.

Logically following from the level of legislation and the overall framework, some weaknesses are identified on the operational level as follows:

In general, the Human Resources functions in the DAs are not sufficiently developed.

There is one person in the DA assigned with the HR development duties; however this person is also responsible for the personnel employment contracts management for almost half of the working time.

The HR position in the DA is established at support staff level, according to the legal provisions, which limits the possibility to attract sufficiently qualified candidates and/or to develop existing staff to expert level.

The HR policies and procedures are not sufficiently developed in all DAs to fulfill all IPA accreditation criteria and sub-criteria.

The legal provisions which regulate the Human Resources policies and functions in the DAs are limiting the DAs freedom in making HR management decisions according to their specific needs for achieving the objectives.

The turnover rate is high in most of the DAs mainly due to low carrier prospective. The DAs have not developed a retention policy as part of the DAs HR policies and no individual personal development plans and/or career paths have been prepared for their staff.

No rotation policy is in place for sensitive posts. Statutory issues of employees should be approached in order to ensure higher

retention rates. Clear definition and separation of specific tasks, related to different programmes and

initiatives, within DA’s Departments/Units, needs to be ensured.

page 96 of 103

These weaknesses need to be addressed by taking all the necessary actions for filling in the gaps identified for each criterion and sub-criterion and by permanently improving the HR policies and functions according to the evolving needs of the DAs.

A significant weakness on the operational level, as regards the potential role of the DAs as Intermediate Bodies, is lack of experience and competencies in EU programmes. Only some of the Agencies have implemented EU/IPA financed projects (as grant beneficiaries or end recipients of the assistance), the same goes for the Agencies’ staff

Moreover, the DAs capacity to initiate and/or promote large regional investment projects in partnership is still underdeveloped.

Thirteen out of twenty Development Agencies do not employ an internal auditor. Statements of Assurance on functioning of the DA management and control system are not provided to MoD.

The Irregularity Management and Reporting function is insufficiently developed within almost all DAs.

It has been noted that some of the Agencies do not comply with the MoD procedures, for instance in relation to risk management (not applying procedures, not nominating risk coordinator). For these areas, specifically mentioned in the assessment of IPA criteria, ALL of the Agencies should apply same coherent principles.

Some of the Agencies do not properly measure their performance in relation to objectives. Such a situation does not only mean that the resources are not fully justified but also transfers potentially problematic issues to next period, without dealing with them properly.

page 97 of 103

7.2 Summary on DA compliance with IPA accreditation

The overall compliance with IPA accreditation criteria largely depends on the quality and comprehensiveness of legislative framework and operational procedures provided by the MoD. The areas with fewer instructions and guidance are generally further away from being likely compliant with IPA.

On the level of legislation it is recognized that the existing framework defines the role of the DAs relatively well, with few exceptions. However, when taking over the role of the Intermediate Bodies the existing legislative framework may not be enough. The DAs will need to sign a separate Delegation Agreement with the MoD, defining specifically the delegated functions, the specific tasks assigned and modus operandi of the DAs in the role of the Intermediate Bodies. The preparation of separate agreement will enable improvements in definition of tasks, but will also stipulate segregation of functions and separation of duties within DAs.

Following the requirements of the new EU Financial Regulations, the legal status of DAs as governed by the private law will need to be clearly defined.

The control environment is sufficiently developed within Development Agencies. Some gaps were however identified as regards irregularity management and human resource management.

With regard to the criteria under 1(c) ”Staff planning, recruitment, training and appraisal (including sensitive post management) – ensuring adequate numbers and quality of staff are in place at all levels”, it can be concluded that human resources are currently adequate both in terms of number and quality. However, permanent updating of workload analysis and staff planning would need to be performed according to the objectives and work plans, so that sufficient number is ensured for the continuity of operations and a balanced workload for the staff in all units. At the same time, the staff would need to be permanently developed, mainly in the areas needed to increase efficiency and effectiveness of their performance towards the IB role delegated tasks.

The HR policies, functions, procedures and staff will need to be developed to support this process.

As regards to the accreditation criteria under 2. Planning/Risk management, it can be concluded that the relevant procedures are generally in place. A significant remark in relation to these criteria is failure by some Agencies to comply with the rules and instructions. Some of the Agencies namely do not implement properly risk management procedures. Particularly problematic is the absence of measuring and analyzing performance. Another comment in relation to these criteria is absence of measurement of impact indicators. The system of the DAs’ support would best function on the principle of ultimately measuring the impact of the aid intervention. This would allow learning lessons for next periods and would improve efficiency of the system.

page 98 of 103

As regards to the accreditation criteria under 3. Control activities, it can be concluded that the system of DAs applies high level of transparency and equal treatment. The implementation of support mechanisms, including grant schemes is closely in line with the EU External Aid procedures. The Agencies follow the MoD instructions very closely and should have no significant problems to move to full IPA compatible rules and procedures.

In reference to accreditation criterion 4. Monitoring activities (Supervision of interventions), a gap was identified since Internal Auditors are not formally appointed in each DA. Moreover, Internal Auditors need to be adequately trained in the relevant standards and working methodologies (including the execution of on-the-spot checks to grant beneficiaries premises on a sample basis, after the end of grant contracts and last payment is done). Monitoring mechanisms need further development in relation to the evaluation of the results of aid support. In this respect, a monitoring module has been recently added to the procedure.

As regards accreditation criterion 5. Communication (ensuring that all actors receive information necessary to fulfill their role), multi-annual planning of programmes, grant schemes and projects is recommended, including economic and social performance, disbursement and any other delivery’s targets. Quality of reporting needs improvement. Reports should cover all aspects of implementation, including efficiency and effectiveness of internal control as well as a systematic analysis of errors reported at any level.

Criteria Code

Assessment criteriaGap Likely

ComplianceLikely Non-compliance

Fiche Low Medium High

1 (a)

1(a) Ethics and integrity policies – ensuring the culture for the organization required by top management is understood throughout the organization

1X

1 (b)

1(b) Irregularity management and reporting – ensuring possible irregularities noted lower down the organization are reported appropriately and followed-up, including protection for 'whistle-blowers'

2X

1 (c)

1(c) Staff planning, recruitment, training and appraisal (including sensitive post management) – ensuring adequate numbers and quality of staff are in place at all levels

3-4-5-6-

7X

1 (d.1)

1(d.1) Sensitive functions and conflicts of interest – ensuring that staff in 'sensitive posts' are identified (i.e. those where the staff may become vulnerable to undue influence by the nature of their contacts with third parties or the information they have)

9 X

1 (d.2)

1(d.2) Sensitive functions and conflicts of interest – ensuring that appropriate controls (including, where appropriate, rotation policies) are applied to sensitive posts

10X

page 99 of 103

Criteria Code




1 (d.3)

1(d.3) Sensitive functions and conflicts of interest – ensuring that procedures exist to identify and avoid conflicts of interests

11 X

1 (e)

1(e) Establishment of legal bases for bodies and individuals – ensuring bodies and individuals have full legal authority to fulfill their functions

12 X

1 (f)

1(f) Formal establishment of accountability, responsibility, delegated responsibility, and any necessary related authority for all tasks and positions throughout the organization: – Mission statements, job descriptions etc. are up to date and known

13 X

2 (a)

2(a) Risk identification, assessment and management – ensuring that risks are identified and management, in particular that adequate control resources are applied in all areas, in function of the significance of different risks they mitigate

14 X

2 (b.1)

2(b.1) Objective setting and allocation of resources against objectives – ensuring that appropriate (and measurable) objectives at output and impact level are established at all levels and understood throughout the organization

15X

2 (b.2)

2(b.2) Objective setting and allocation of resources against objectives – ensuring that resources are appropriately allocated against those objectives respecting transparent sound financial management principles

16X

2 (c)

2(c) Planning of the implementation process – ensuring clear planning of steps needed to deliver objectives - including timing and responsibility for each step, and critical path analyses where necessary

17

X

3 (a)

3(a) Verification procedures – ensuring double-check of all steps in a transaction (ex-ante and, where appropriate, ex-post)

18X

3 (b)

3(b) Procedures for supervision by accountable management of tasks delegated to subordinates (including annual statements of assurance from subordinate actors) – ensuring that responsibility is supported by active supervision - and not merely considered a passive or theoretical concept

19X

page 100 of 103

Criteria Code




3 (c)

3(c) Rules for each type of procurement and grant calls – ensuring appropriate legal framework for all such commitment processes

20X

3 (d)

3(d) Procedures (including checklists) for each step of procurement and grant calls (e.g. Technical Specifications, Evaluation committees, reporting of exceptions etc.) – ensuring each member of staff is clear as to their task responsibilities in these areas

21 X

3 (e)3(e) Publicity rules and procedures – ensuring that these Commission requirements are fulfilled

22 X

3 (f)

3(f) Payment procedures (including procedures for confirmation of output delivery, and/or eligibility conditions, ‘on-the-spot’ where necessary) – ensuring that payments are made only for justified payment applications which fulfill all contractual requirements

23 X

3 (g)3(g) Procedures for monitoring delivery of co-financing – ensuring that these Commission requirements are fulfilled

24 X

3 (h)

3(h) Budgetary procedures to ensure availability of funds (including funds necessary to maintain implementation if Commission funding is delayed or refused) – ensuring that the National Authority can fulfill its local contractual commitments regardless of delays or interruptions in funding from Commission

Not assessed

(not applicable

)

3 (i)

3(i) Procedures for continuity of operations – ensuring that significant risks to continuity (e.g. concerning loss of data, absence of individuals etc.) are identified and contingency plans put in place where possible

25X

3 (j)3(j) Accounting procedures – ensuring full and transparent accounting following accepted accounting principles

26 X

3 (k)3(k) Reconciliation procedures – ensuring that wherever possible accounting balances are reconciled against 3rd party information

27 X

3 (l)

3(l) Reporting of exceptions, inter alia, exceptions to normal procedures approved at appropriate level, unapproved exceptions and control failures whenever identified – ensuring variations to normal practices are always recorded and logged and reviewed at appropriate levels

28 X

3 (m)3(m) Security procedures (IT and otherwise) – ensuring that assets and data are kept secure from interference or physical damage

29

Information not yet available

3 (n) 3(n) Archiving procedures – ensuring that documents will be available - at least for Commission review throughout the required

30X

page 101 of 103

Criteria Code



Fiche Low Medium Highperiods for which they much be kept

4 (a)

4(a) Internal audit including handling of audit reports and recommendations (NB: distinct from control activities and management supervision) – ensuring that top managers are provided with some independent reviews of the functioning of their systems at subordinate levels. May involve some ex-post transaction checking but should be more focused on effectiveness and efficiency of system and organization design

31X

4 (b)

4(b) Evaluation – ensuring that top managers are provided with information concerning the assessment of impacts of interventions (in addition to the other information they receive about legality, regularity and operational procedures)

32 X

5 (i)5(i) Regular reporting on status of planning of programmes and projects

33 X

5 (ii)

5(ii) Regular reporting on project implementation compared to implementation plan

– Contracting processes (inter alia)– Progress of each tendering

process against plan– Systematic analysis of errors

reported at any level (e.g. by verifiers, ex-ante controllers, auditors etc.)

– Implementation of contracts– Costs of controls against benefits

34X

5 (iii)

(iii) Regular reporting at all appropriate levels on efficiency and effectiveness of internal control— ensuring all staff at all levels receive adequate regular information in order to fulfill their accountabilities.

35X

page 102 of 103

8. Annexes (will be attached)

1) Terms of Reference of the Gap Assessment Report2) Methodology of Gap assessment (abridged version)3) Summary report on DA interviews4) Summary table with DA questions and answers to Gap Assessment

questionnaire5) Minutes of the discussion at the workshop on 19 April 20136) Table with NUTs 2 regions and DAs in Turkey

page 103 of 103

Documents

GAP Assessment Report_Ver1-MoD Comments