Preparation for the receipt of the Structural Funds – Preparation for the receipt of the Structural Funds and the Cohesion Fund is one of the priority areas of our accession to the European Union. Having closed negotiations on Chapter 21 - regional policy, Cohesion Fund and coordination of structural instruments - in July 2002, preparation for the use of future funding became a theme discussed on a day-to-day basis.

The elaboration of the National Development Plan (NDP) and the Operational Programmes (OPs) connecting to this has recently become an on-going task for professionals working in this area. The European Commission has already accepted the NDP and the OPs. Acceptance of OP complement documents, which documents set out the detailed description of measures, is anticipated in autumn. In practical terms, measures are the application components of the priorities of OPs, which define what can be applied for, who is eligible to apply and how the procedure is performed, as well as which organisation is responsible for the measure. This is why building the implementation institutional system is the other key task concurrently to developing the NDP. 

It is necessary to set up and operate institutions that comply with Community legislation in order to be able to implement programmes funded by the European Union. Council and Commission regulations stipulate the institutional system in which the approved programmes and projects must be implemented, and monitoring and control of implementation is performed. 

Council Regulation (EC) 1260/1999, as well as connecting regulations (Commission Regulation (EC) 438/2001 and 448/2001, etc.), defines the components of the institutional system – managing authorities, intermediate bodies and the Paying Authority - and its scope of tasks required for implementing the Structural Funds. 

Designating the institutional system

In order to close Chapter 21, Hungary agreed to set up an institutional system required for the regular, efficient and effective use of funding granted from the Structural Funds and the Cohesion Fund by 1 January 2004.

The structure of the Structural Funds and Cohesion Fund institutional system in Hungary was finalised in June 2002. The institutions within the framework of which the future National Development Plan (and the Community Support Framework ensuring a framework for the plan), the connecting operational programmes and the managing authorities implementing Cohesion Fund projects will operate were designated in Government Resolution No. 2199/2002 (VI. 26). Moreover, the Paying Authority of the Structural Funds and Cohesion Fund was also designated within the framework of Government Resolution No. 2187/2002 (VI. 14).

In accordance with Government Resolution No. 2199/2002 (VI. 26), competent ministers shall designate the explicit place of operation of the above-mentioned authorities within the organisational structure of their respective departments by 30 June 2002.  

Intermediate bodies primarily undertaking application processing tasks also play a key role in the implementation of the operational programmes, which bodies were designated up to 31 December 2002 within the framework of Government Resolution No. 1218/2002 (XII.29.); however, these bodies only function on an indicative - depending on the results of the accreditation procedure to be presented in the following - basis for the time being.   

The tasks detailed below relate to implementation management, implementation monitoring and financial management and control.


Community Support Framework Managing Authority

The Community Support Framework Managing Authority is responsible for the implementation of the Community Support Framework (CSF), which consequently constitutes the central component of the Structural Funds institutional system. The CSF Managing Authority assumes general and comprehensive responsibility for CSF implementation and reconciling tasks in connection with Structural Funds use.

The Authority is responsible for the preparation of the CSF implementation system and coordinating implementation, which covers the following:

Setting up and operating the CSF Monitoring Committee; on-going monitoring – in close cooperation with the CSF Monitoring Committee – of CSF implementation; 
Operating the CSF Management Committee, undertaking secretariat tasks;
Operations in connection with the establishment and development of the institutional system (e.g.: accreditation, training, background documents, professional support, etc.);
Monitoring the validation, application and elaboration of regulations, rules of procedure and guidelines required for CSF implementation; 
Setting up and operating the Standardised Monitoring Information System (SMIS) equally providing statistical and financial data; developing and implementing the Structural Funds evaluation concepts and compiling and annual and final reports on CSF implementation;  
Ensuring compliance with information and publicity requirements; therefore, compiling and implementing the communication action plan and elaborating the standard profile manual;
On-going liaison with the European Commission in connection with the Community Support Framework. 
Dr Peter Heil, Vice President, is the head of the CSF Managing Authority within the National Development Office.  

CSF Management Committee

Although the CSF Monitoring Committee ensures strategic-level reconciliation of the use of funding, the Committee also explicitly prioritises matters requiring coordination arising in the course of day-to-day implementation operations. It is necessary to ensure that implementation procedures are compatible – up to the level this is justified and executable – and standardised in the case of all operational programmes throughout the entire duration of implementation. This facilitates the validation of cost-efficiency and increases the transparency of the implementation system.  

The Management Committee operated by the CSF Managing Authority is used as an instrument for handling the above-specified horizontal issue arising in the course of the implementation of all operational programmes. The task of the Management Committee relates to regularly discussing these matters, come up with solution recommendations in the case of problems, in addition to ensuring a forum for presenting practices working elsewhere and exchanging experiences. If deemed necessary by the Committee as regards implementation, the Committee is authorised to initiate that the concerned horizontal issue is regulated at a relevant level within the framework of national regulations. The operations of the CSF Managing Committee do not in any way violate or limit the decision-making competency of the Monitoring Committee, nor the scope of responsibility of the Managing Authority, as set out under Council Regulation (EC) No. 1260/1999.

The CSF Managing Authority, the OP managing authorities and the Paying Authority take part in the work of the Management Committee at CSF level. Organisations responsible for the implementation of the Cohesion Fund also take part in the work of the CSF Management Committee in order to ensure coordination.  
Operational Programme Managing Authorities

The managing authorities are responsible for ensuring the efficient and appropriate management and implementation of the operational programmes. While undertaking this task, they are required to ensure that implementation complies with relevant national policies, and that it - economically - benefits the given development area as best possible. The managing authorities, in cooperation with the competent ministries and other partners, are responsible for ensuring the following:    

Developing operational programmes and programme complement documents; 
Operation of the Operational Programme Monitoring Committee, including the assurance of necessary logistics and professional operations;
Implementation of programmes tailored to sectoral needs on the basis of guidelines issued by the Monitoring Committee, its opinion, OP provisions, as well as relevant EU regulations, and in compliance with national policies;  
Performing indicators – output, result and impact - defined in the Operational Programme, or exceeding these wherever possible; regular provision of data on implementation within the framework of the standardised monitoring information system;
Compiling the annual implementation report and submitting the report to the EU Commission following Monitoring Committee approval;
Developing OP-level regulations, rules of procedure, guidelines and audit trails, and monitoring the application of these; 
Preparing intermediate bodies involved in the implementation of the Operational Programme; monitoring the performance and operations of these bodies;
OP-level information and publicity promotion activities; implementing evaluation tasks.

Managing Authorities of the Operational Programmes:

Operational Programme Managing Authority
Agricultural and Rural Development Operational Programme – Ministry of Agriculture and Rural Development
Economic Competitiveness Operational Programme – Ministry of Economy and Transport
Human Resource Development Operational Programme – Ministry of Employment and Labour
Environmental Protection an Infrastructure Operational Programme - Ministry of Economy and Transport
Regional Development Operational Programme – National Territorial Development Office
Paying Authority – Ministry of Finance

Managing authorities are authorised to set up and operate coordination bodies – with a structure and scope of operations similar to the CSF Management Committee – in order to ensure a regular forum and structured framework for dealing with matters arising in connection with the implementation of the Operational Programme, or regarding the improvement of the quality and efficiency of implementation.  

Intermediate Bodies

While managing authorities remain competent for strategic-type functions (such as: monitoring, financial management and evaluation) in connection with the operation of the operational programmes, a series of duties relating to tasks arising in the course of day-to-day operations are delegated to intermediate bodies. Accordingly, the role of specific intermediate bodies can primarily be characterised by the tasks delegated by the Managing Authority, which scope of tasks may vary according to operational programme. In general terms, it is plausible to state that the intermediate bodies undertake the type of operations – primarily in connection with application processing - listed below: 

Receipt of applications, formal and content control and evaluation;
Operation of the evaluation committee;
Concluding assistance contract, and the amendment of these, if necessary; monitoring the terms and conditions of the contract (project implementation);
Verifying reports received and connecting invoices; authorisation of payment;
Providing updated and authentic statistical and financial information with the assistance of the Standardised Monitoring Information System; compiling regular and ad hoc reports for the Managing Authority.

List of Intermediate Bodies [74KB,PDF]

List of Regional Development Agencies


Community Support Framework Monitoring Committee

The CSF Monitoring Committee must be designated within three days following the approval of the Community Support Framework. The CSF Monitoring Committee is responsible for the following:

Monitoring technical assistance and examining how operational programme managing authorities manage funding;
Implementation of programmes in connection with Objective 1,
Professional supervision of the efficient and effective implementation of the Community Support Framework;
Approval of annual and final reports in connection with CSF implementation.

Operational Programme Monitoring Committee

All operational programmes implementing the Structural Funds operate a separate Monitoring Committee, which is the highest-level coordination and strategic decision-making body. The scope of tasks and competency of the Monitoring Committee can be summarised according to the following: 

Approval of programme complement documents, and the amendment of these, if necessary, including physical and financial indicators used for monitoring assistance;
Defining the selection criteria for operations eligible for support within the framework of specific measures within a period of 6 months following the approval of the operational programme;
Regular assessment of progress made in the course of the implementation of assistance targets; review of implementation results, with special regard to reaching the objectives set in connection with specific measures;
Analysis and approval of annual and final implementation reports compiled by the Managing Authority prior to the submission of these documents to the European Commission;
Putting forth proposals relating to changes to, or review of the use of funding to the Managing Authority, which proposals promote reaching Structural Funds objectives, or improve the management of funding, including the provision of financial management related tasks.

Internal Audit

All institutions or bodies involved in the implementation of assistance granted by the Structural Funds are required to operate an internal audit unit within the framework of respective organisational structure, which organisational unit undertakes conventional internal auditing tasks. In accordance with legislation in effect, every budgetary organisation is required to operate an internal audit unit within its organisational structure, which unit reports directly to the top management (Government Decree No 15/1999 (II. 5.) on the Internal Control and Audit of Public Corporations, Central Government and Social Security Organisations). The internal audit units of the ministries (reporting directly to the minister or the state-secretary) and the internal audit units of the Managing Authority and the Paying Authority (reporting directly to the head of the MA/PA) are functionally and structurally independent.

Financial Management and Control

Paying Authority

The Ministry of Finance has been designated as Paying Agency as regards the Structural Funds; accordingly, the ministry is responsible for compiling and submitting requests for funding, as well as receipt of payment from the Commission. The following tasks have also been delegated to the scope of competency of the Paying Authority:  

Submission of expenditure appropriations to the Commission each year up to 30 April;
Administration of payments transferred to the account of the Funds;
Compiling certified request for funding, and the submission of these to the Commission, on the basis of effective expenditures of beneficiaries; 
Ensuring that the final beneficiary receives EU funding as quickly as possible;
Repayment to the Funds of financial corrections applied due to irregularity or events arising in the course of programme management, or the detection of administrative errors; compiling a statement on repayments - on an annual basis - and submitting this document to the Commission.

Preparing the institutional system

A series of preparatory tasks has already been undertaken in order for the above-described institutional system to launch operations by 1 January 2004. Organisations involved in implementation must be structurally and methodologically prepared for undertaking an increasing volume of tasks, as well as in terms of internal regulations, infrastructure and system of instruments supporting implementation and - last but not least – human resources.


Managing authorities and paying authorities, as well as intermediate bodies prepare for Structural Funds receipt and report on the performance of necessary conditions within the framework of an accreditation procedure. The essential characteristics and specific steps of the accreditation procedure can be summarised according to the following:

Assessing deficiencies

The Annex to Government Resolution No. 1218/2002 (XII.29) defines the sphere of intermediate bodies concerned by accreditation. The Government Control Office (GCO) – in accordance with same Resolution – carried out the screening of the managing and paying authorities, as well as the intermediate bodies in February-March 2003, which concentrated on the assessment of verifying conditions required for operating the Structural Funds. The Government Control Office compiled a report on every examined organisation following the assessment of deficiencies.

Preparation, call for completion

As a part of the second phase of the accreditation procedure, managing authorities compiled an organisational development work plan up to 15 March 2003, whilst intermediate bodies compiled the work plan up to 15 April 2003 by using the GCO evaluation report as a guideline. Managing authorities undertake the on-going monitoring of the preparation of the specific intermediate bodies; the CSF Managing Authority provides assistance in the preparation process by compiling professional guidelines, providing central training and drafting background documents in the case of demands relating to completion and concerning either several or all operational programmes.  

Final audit

The final audit was carried out during the period 1 September-31 October 2003; intermediate bodies successfully completing accreditation were designated in the following. 

On-going quality control

Ensuring appropriate-level performance of the institutional system is anticipated to remain a priority task throughout the entire duration of implementation; the annual review of the performance and operation of the intermediate bodies undertaken by the Managing Authority - within which framework potentially needed development operations are also defined - is used for ensuring this. The annual review may constitute the basis for changing the status of any given Intermediate Body. The validation of the core principle relating to how intermediate body changes depend on performance evaluation is an essential precondition for establishing professional specialisation required for the long-term stability of the institutional system and the implementation of strategic objectives set out in the operational programme. 

Systems and regulations to be set up

In view of the preparation of the institutional system, in order to ensure control of, as well as the regular, efficient and effective use of funding available within the framework of the Structural Funds and the Cohesion Fund, it is necessary to set up systems and develop regulators that ensure this, or which are otherwise obligatory according to regulations.  

We can group a part of the regulations and systems under "external regulators", in view how central administration undertakes the task relating to the preparation, or compiling of these. Preparation of the second group of regulators will be the task of organisations involved in implementation, i.e., each individual organisation is required to draft documents that we have listed under "internal regulators".

External regulators

Government Decree on the regulation of the scope of tasks and competency of the Community Support Framework Managing Authority and operational programme managing authorities, the Cohesion Fund Managing Authority and intermediate bodies, as well as the Paying Authority. Moreover, the Decree regulates the division of scope of tasks and competency of the players of the Structural Funds and Cohesion Fund institutional system, as well as cooperation and coordination mechanisms;
Government Decree on the financial implementation of funding granted by the Structural Funds and the Cohesion Fund;
Structural Funds and Cohesion Fund Standardised Operational Manual;
Functioning monitoring information system;
Public procurement legislation in compliance with EU requirements in effect.

Internal regulations

Legal documents on scopes of tasks that have been changed (OOM, Statues, rules of procedure, etc.);
Cooperation agreements concluded between the Authorities and intermediate bodies undertaking delegated tasks, which regulate procedures in connection with information flow, liaison, coordination and reconciliation; 
Job descriptions adjusted to the changed scopes of tasks; 
Compiling a General Operational Manual (OM), which covers all operations in connection with the implementation of all programmes and projects supported by funding granted from the Structural Funds/Cohesion Fund, and complies with national and EU legislation (including, amongst others, setting up the internal audit system, as well as the audit trail and application processing, programme implementation, monitoring and evaluation rules of procedure, and the financial management and control system); 
The human resource strategy of the organisation, which covers the training plan.