6 Performance and risk management

6.1 Administration

The EEA and Norway Grants are allocated annually under Chapter 117, EEA and Norway Grants, of the budget (previously Chapter 116, Participation in international organisations). The size of the allocation in Norwegian krone depends on the value of the euro.

The Ministry of Foreign Affairs has administrative responsibility for the EEA and Norway Grants in Norway, and the Financial Mechanism Office (FMO), which serves as the secretariat, is responsible for the day-to-day administration. The FMO is administratively subordinate to the EFTA Secretariat, and its tasks include quality assurance, payments, control measures and information activities. The FMO is located in Brussels and employs around 50 people (March 2012). Iceland, Liechtenstein and Norway cooperate on management of the EEA and Norway Grants through the Financial Mechanism Committee (FMC), of which Norway is the head. The administrative expenses are covered by the Grants. A sum corresponding to 7.5 % of the total funds is set aside to cover the donors’ administrative expenses and expenses incurred by public agencies from the donor states participating as programme partners (DPPs).

Innovation Norway administers the Fund for the Promotion of Decent Work and Tripartite Dialogue. Innovation Norway is also the programme operator for the green industry innovation programmes in Bulgaria and Romania, and the maritime sector in Romania.

The ministry in each beneficiary state responsible for implementing the EEA and Norway Grants is specified in the MoU with that country. In most of them this is also the ministry that is responsible for the EU Structural Funds. A programme operator is appointed for each programme. In many cases this is the ministry responsible for the sector concerned; for example, the environment ministry is usually the programme operator for environmental programmes. The NGO Funds are always administered by an NGO.

The time limit for implementing the programmes is 1 April 2016.

6.2 Verifiable objectives

The necessity for the programmes to have concrete results and long-term impacts that can be measured was stressed when the EEA and Norway Grants scheme was drawn up. An overall objective is determined for each programme area, together with the expected outcomes and outputs of the programme, which serve as performance indicators. The beneficiary state uses this framework when planning how the funds are to be used.

The programmes proposed by the beneficiary states are based on this framework. The programme proposal must define the target groups, the eligible applicants and the selection criteria for the projects. The FMO maintains contact with the programme operator during the planning phase, and assesses the programme’s relevance, feasibility, risk and sustainability. The donors make the final decision on the allocation of funds, and conclude an agreement on each programme.

The donor states meet with the various government agencies responsible for the programmes in each country (the National Focal Points) at least once a year to discuss performance and implementation. Before the meeting the beneficiary state reports on the progress towards the outcomes in the form of the results achieved so far, and on the probability that the overall objective will be met for each programme area.

The beneficiary states evaluate the programmes according to a plan approved by the donor states. The purpose of the evaluation is to verify whether the objectives have been achieved, assess whether the resources have been used effectively, and systematically coordinate lessons learned. As was done in 2004–09, the donor states will also evaluate programmes as necessary. A mid-term report and a final evaluation for the period 2009–14 will be conducted.

6.3 Transparency

The allocations under the EEA and Norway Grants scheme represent significant financial support for the beneficiary states. Allocating funds to individual projects is therefore a great responsibility, and it is important that the criteria are verifiable and that the process is transparent. The National Focal Point is required to make information on the EEA and Norway Grants easily available on a specific website, including the application procedures and a list of projects that have received funding. The FMO is also required to publish information on all the programmes and their results on its website.

Projects must be selected on an impartial basis, and the beneficiary state is responsible for ensuring that no actor with interests affecting the project is involved in the decisions. The donor states are entitled to have access to all information throughout the process, and to intervene in the event of irregularities. The Norwegian embassies in the beneficiary states are well informed on local conditions and are an important source of information. In programmes with a Norwegian partner, the Norwegian partner is also required to advise on the selection process. The rules of the grant scheme specify clear procedures for the allocation process.

6.4 Risk assessments, control and audit

Photo: Kaunas Juvenile Interrogation and Correction Facility

Management of the EEA and Norway Grants is based on a division of responsibility between the donor and the beneficiary states. The latter are responsible for implementing the agreed programmes in the MoU and for achieving the objectives. They are also responsible for preventing, detecting and investigating irregularities. Any suspected violation such as corruption, fraud or bribery, irrespective of the size of the amount, must be immediately reported via the FMO to the Financial Mechanism Committee and the Norwegian Ministry of Foreign Affairs. Other forms of misuse and other factors that could negatively affect use of the funds must also be reported immediately to the FMO. The beneficiary states must report on the steps they have taken to investigate suspected irregularities and on the action taken. The FMO publishes a list of resolved cases of irregularity on its website every quarter. All the beneficiary states are required to set up a whistleblowing channel for complaints from the public, and to conduct an audit for all programmes.

The FMO disburses funds for the programmes on the basis of progress reports. In the event of suspected or actual irregularities, the donors may suspend payment immediately. Donors may also demand that disbursed funds are reimbursed in the event of breach of a grant agreement.

In order to ensure sound management of the funds by the beneficiary states, the donor states evaluate the management system in each country before disbursing the funds. This includes approving the body that will undertake the audit and evaluating the management arrangement for each programme.

The beneficiary states are responsible for monitoring and control of all programmes and projects. However, the donor states also conduct their own audit and take other monitoring measures that may be necessary. Risk assessments for each country and programme are performed using tools specially designed for the EEA and Norway Grants by TI. These form the basis for the donors' decisions on control and audit measures and ensure that monitoring and control measures are directed at high-risk programmes and countries.

The European Commission closely follows the member states’ use of the EU Structural Funds. The FMO is in regular contact with the relevant directorates under the European Commission, and provides information on implementation of the programmes in the beneficiary states. In most of the beneficiary states the institutions that manage the EU Structural Funds and the EEA and Norway Grants are the same. In 2008, Norway, Iceland and Liechtenstein suspended payments to Bulgaria after the Commission had detected irregularities in the management of the Structural Funds. The suspension was repealed when Bulgaria transferred responsibility for the funds to a different body whose procedures had been approved. The European Anti-Fraud Office (OLAF) may share information with both the donor and the beneficiary states. Contact has also been established with the UN Convention against Corruption (UNODC) and with GRECO, the Council of Europe’s anti-corruption body.