LIFE project Number

LIFE 2003 NAT / RO / 000027 / REV

FINANCIAL FINAL REPORT

Covering the project activities from 01.01.2004 to 01.06.2007

Reporting Date

30.08.2007

Life project name

Restoration Forest habitats from Pietrosul rodnei biosphere reserve

Project Author and Manager

Dr. Ioan BLADA

Bucharest 2007

Data Project

A. CONTENT

? Agreement life-nature, granting financial support

? The standard statement of expenditure

Aici formele standard

COMMENTS ON FINANCIAL REPORT

A comment on budget items will be made at beginning and then a general overview is presented.

Specific comments to the financial report

Personnel

? In the Provisional information on personnel (Form 2003-31) the project manager was overestimated (7140 hours) while the technicians vice-versa (1360 hours), but finally compensation between the two categories re took place.

? In the revised project budget, 37720 € out of 107655 € were moved from personnel to the external assistance.

? In case of the personnel item, discordance between ways of salary calculation was noticed such as (Annex 8, Table 4 , last two columns).

(a) using a direct calculation based on time sheets, the ICAS has obtained a total of 69041 € for personnel ;

(b) According to the EC standard programme calculation based on the same time sheets, a total of 71410 € Euros for personnel item was obtained, i.e. a difference of 2369 Euros. As the beneficiary has used this latter variant, is up to the European Commission to decide which one should be taken into account.

? Finally the personnel was exceeded by 1475 € but compensation from external assistance took place.

Travel

? In the revised project budget, 300 € out of 8300 € were moved from travel to external assistance

? Mr. Stetca Ioan, a past member of the project, attended to the seedling beds preparation (C1). Because he really has attended that action, his travel was charge to the project but not his salary. This is because it was paid from another project where the project manager was responsible. To save the LIFE project currency was the reason why he was paid from other project. After 2004 year, because of its weak work efficiency he was removed from the project team.

? At the end of September 2004, the project manager has attend the Workshop on mountain forests that protect against rock fall and avalanches held in Vaujany / Grenoble where the following presentation took place: Pinus cembra provenance test and its connection with avalanche preventing. This participation was approved by Mr. Philip Owen (letter from 12.07. 2005). According to the recommendation, a copy of the paper and in Power Point presentation was sent to the Commission and uploaded on the project website..

External assistance

? Initially, no currency was foreseen to the external assistance but according to the approved revised project budget (No. 16882/31.08.2005) an amount of 52297 € from personnel and from consumable was moved to this item.

? the currency to be paid for the independent audit was foreseen in the approved revised project budget but finally the audit payment was done from the other costs.

Consumable

? According to the approved revised project budget (No.16882/31.08.2005) out of 58800 € from consumable, an amount of 5500 € was reduced in favor of external assistance. The remained amount was as much as 53300 € but this limit was exceeded with 10001 € which was taken from external assistance. This surpass consisted in charging materials necessary for seedlings, brochures, leaflets, Layman's Report and some other consumable of small value.

?A specific mention has to be made in connection with the price of the seedlings that were produced by ICAS and used for plantation in the project area. The price calculation was based on very detailed costs estimation according to the Romsilva National Company normative guidelines. The external auditor has found that the ICAS has correctly used the cost price which did not include the benefit. It is stressed that the benefit was included in the sale price and such price is practiced only when the seedlings are sold for commercial reasons, but not in this co-financing case. A listing with the basically calculation of the price will be enclosed to our audit report. It is regrettable that during the project visit in Borsa (30 of May – 1 June, 2007 ) by the EC delegation I have not noted that the benefit was included in the sale price but not in the cost price . Mr. Halada who recently visited the project documents was informed about this situation. In conclusion the ICAS has charged the seedlings cost with the cost price which do not include the benefit. The year to year analytical calculation of the seedlings cost is presented in the Annex 9.

? Action E.2 Design, print and disseminate informative materials

According to the Revised Project Budget approved on August 31, 2005 / 16882, the 4000 brochures and 2000 leaflets and 1000 Laymen's Report, the printing was foreseen to be made by a printing company by paying an amount of 5000 Euros. But, it was not possible to find a company to print these materials only with that amount. For that reason, it was decided to produce them in our Institute at a much lower price because the manpower was charged to other ICAS project while the LIFE project was charged only with paper (197.3 €) and toner for printing (703.5 €). Details concerning cost estimation are giving, as follows:

•Necessary colored toner for printing: 703.5 € (549.47+154.05 € taken from Consumable Standard Form)

•Necessary paper and its cost

Brochures: 4000 x 6 sheets = 24000 sheets;

Leaflets: 2000 x 1 sheets = ……2000 sheets;

Layman's Report: 1000 x 6 =…6000 sheets

Total paper……………32000 sheets = 68 reams of paper

Total paper cost = 197.73 €

(See 95.80+59.35+29.68+12.90 € taken from Consumable Standard Form, years 2006 and 2007).

•Total cost 703.5 + 197.73 = 901.26 €

Please approve to charge to consumable the entire cost of the paper and the toner for printing . The standard form of the consumable contains the above mentioned toner for printing and paper.

Other costs

? A total of 1000 € was initially allocated but there was spent an amount of 3060 € , i.e. 2060 € more. This item has mainly supported the interim and the final independent audit report of 1500 € and 1560 €, respectively. Because they were erroneously foreseen with the External Assistance, both of them were supported from other costs .

Overheads

? According to the revised project budget, the allocated amount was as much as 9548 € and the item was charged with 9893 €.

? The ICAS did not charged the overheads for the delivered seedling to the project. This is normal because the overheads have included in the cost price and it is not correct to charge them once again to the project.

?The ROMPETROL and LUKOIL are the ICAS suppliers with gas oil for heating and they require the payment before delivering their product.

? 6% of overheads were foreseen in the Application forms , but finally 7% were charged.

Interest accrued on the amounts received from EC

An amount of 371.22 € was received as interest from the BCR Bank, the Voluntary Branch f

Tab. The interest accrued between January 1, 2004 and May 31, 2007

*According to the interest sheet issued on 24.08.2007

by the BCR Bank, the Voluntari Branch

General comments to the financial report

? The project start was foreseen on June 1, 2003 but the approval was issued on October 13, 2003 . Action C2 refugee chalet and toilet construction were the major works to be fulfilled in Pietrosul in that year. At that time when the approval arrived, in Pietrosul was snowing so that, the Action C2 could not be fulfilled, and the decision to start the project on January 1, 2004 was taken. Please accept January 1, 2004 as date of project starting and for calculating the depreciation.

? A request of revision project budget was approved by the EC on August 31, 2005 under the No. 16882. A summary of the initially allocated budget on items and approved in the Revised Project Budget is given in Annex 8, Table 2. The main request was to approve part of the currency from the personnel and from some other item, to be moved to the external assistance

for the reasons explained in detail in the respective request. The initial project amount remained the same, i.e. 213470 €.

? All project costs were converted to Euro using the exchange rate applied by the European Central Bank on the first day of month in which the payments took place. This is because each financial document immediately after payment was introduced to bookkeeping. The project manager is responsible (for this mistake) for not asking for approval to the EC as SAP recommends. Honestly, I did not read attentively the whole sentence of the art. 25.4. On August 17, 2007 it was Mr. Halada who attracted me attention about that mistake. Please approve to use the monthly exchange rate which was operated in our whole accountancy. It should be stressed that at start (January 2004) the rate was 4.1122 and at the last project day ( June 1, 2007 ), it was 3.2646, i. e. a difference of 20.6%. The financial final report was prepared using monthly exchange rate.

?The total allocated amount to the project was as much as 213.470 € and the funding and the budget breakdown are presented in the Annex 8, Table 1 which shows the contribution of each participant to the project.

?The budget allocated and spent currency by items and credit balance are presented in the Annex 8, Table 3 , with the following details:

- the entire project allocation (231470 €) was spent;

- In some items the foreseen amount was exceeded while in some others the spent amount was lower than the foreseen one;

- Exceeding the foreseen amount in personnel, consumable and overheads is in line with the SAP.

- The other costs item was exceeded by 2060 € and because the approval was not requested in advance, this payment is not in line with the SAP.

The effective financial contributions to the project of each partner are listed in the Annex 8, Table 4 , with the following remarks:

- out of 213.470 Euros, an amount of 213.467 Euro was spent for project implementation that took place between 01.01.2004 - 01.06.2007;

- the EC, ICAS and FSAM contributed with 35%, 45% and 20%, respectively; in other words, the ICAS spent more than foreseen while the others, less;

- it should be remembered that out of 32020.50 € (our second payment), an amount of 21289.59 € was taken by the EC to cover the failure of the LIFE02/RO/8571 project; this loss was covered by the ICAS.

The Annex 8, Table 5 (last two columns) presents in details the s tructure of expenses on budget items, years and participants to the project;

- In case of the personnel item, there is discordance between ways of salary calculation, such as:

(a) using direct calculation based on time sheets, the ICAS has obtained a total 69041 € for personnel ;

(b) According to the EC standard programme calculation based on the same time sheets a total of 71410 € f or personnel item was obtained, i.e. a difference of 2369 € . As the beneficiary has used this latter variant, is up to the European Commission to decide which one should be followed.

10. Conclusions

? All actions foreseen for project period were solved.

? The effective re-introduction by planting of P. cembra species and restoration of P. cembra / P. mugo / p. abies habitat on 50 hectares was successfully accomplished. With regard to this Action C.1, the following details are given:

•• initially, 10 000 seedlings (2 500 Pinus cembra , 2 500 Picea abies and

5 000 Pinus mugo were planned to be planted on 50 ha ;

•• finally, 15 550 seedlings were planted on the same area, so that an amount of 5 550 in addition; the in addition seedlings were, such as: 2 350 Pinus cembra and

3 200 Sorbus aucuparia ; though this latter species was not included in the Application Forms, it was planted for three reasons because (i) it has been a natural component of the Pietrosul habitats, (ii) it is a very fast growing at its young age, and due to its fast growing, within three to four years after planting it starts to play a significant role in preventing avalanche initiation.

? The long-term conservation management plan by integrating the best measures for protection and conservation of all flora and fauna habitats from the Rodnei Mountains National Park ( 46399 ha ), including the LIFE Pietrosul area was successfully implemented.

? By making inventories of trees, herbaceous, birds, mammals, fishes, amphibians and reptiles species, the project contributes significantly to the science.

? Based on satellite imagery, the habitats map of the Pietrosul Rodnei Biosphere Reserve was obtained, and this represents a premiere for the northern Carpathians.

? The acquired results via this LIFE project, were and still will be largely disseminated in the frame of the public awareness, such as: a lot of Power Point presentations, TV, brochures, leaflets, video documentary films, panels, project website.

During the project meetings, workshops or video presentation, the local authorities, stakeholders, scientists, foresters, teachers, students greatly appreciated restoration of the Pietrosul habitat.

? The cooperation with the county and with the REGFOR Company that executed the field works was remarkable; otherwise the planting could not take place.

Finally , the project author and manager express his gratitude:

• to the REGFOR company and its hard working workers that fulfilled all physical works for the Pietrosul habitat restoration in very good conditions;

• to the Forest Administration of the Maramures County and to the Borsa Forest District for their co-financial support; their currency was used in operations connected to the seedlings transport, field marking, seedling beds preparation, seedlings distribution on the field, plantation and for the nice and useful chalet construction;

• to the Forest Research and Management Institute for its co-financial contribution; it contributed high quality and expensive seedlings (including those supplied free of charge), technical personnel involved in the project implementation, offices for technical personnel, manpower for printing and disseminating the informative materials, supporting 21289 € that represent failure of the other LIFE project implemented in Romania;

• to the External Monitoring Team for its helpful guidance and advice both in the field and in the office on how to solve some actions;

•to the European Commission for its 50% financial contribution to project implementation ; its currency was mainly used for the personnel salaries and for the durable goods; the entire this help was offered in a moment when the ICAS is passing a difficult economical situation.

B. Auditor DATA

? I nterim Report

AUDIT INTERIM REPORT REPORT

to the

EUROPEAN COMMISSION

made by the

S.C. IRAMTAS SERV S.R.L.

on the

FINANCIAL INTERIM REPORT

of the

LIFE-NATURE PROJECT

„LIFE2003NAT/RO/000027REV”

entitled

Restoration Forest habitats from

Pietrosul rodnei biosphere RESERVE

implemented by the

FOREST RESEARCH AND MANAGEMENT INSTITUTE

(icas) OF BUCHAREST

Project Manager

Dr. Ioan Blada

Bucharest 2005

Official data of the audit company

Name of the company: S.C. IRAMTAS SERV S.R.L.

address: Str. Almasu Mare, Nr.14, Sector 4, Bucuresti

TEL / FAX : +4021 450 57 30 / 4021 460 37 71

E- mail: :iramtas@rdslink.ro

REGISTRATION UNIQUE CODE: R393244

LICENCE No.: 056 / 31.05.2001

the REGISTRATION NUMBER IN THE TRADE REGISTER:

J40 / 16609 / 25.06.1992

DatE OF ISSUE OF THE LICENCE: 07.01.2002

AUDIT INTERIM REPORT

No.

366 / 16.12.2005

made by the ABOVE MENTIONED FINANCIAL AUDITOR

ON THE

FINANCIAL INTERIM REPORT

OF THE PROJECT

„LIFE2003NAT/RO/000027REV”

Restoration Forest habitats from

Pietrosul rodnei biosphere RESERVE

MADE BY THE

FOREST RESEARCH AND MANAGEMENT INSTITUTE

(icas) OF BUCHAREST

FOR THE 01.01.2004-30.11.2005 IMPLEMENTATION PERIOD

Based on the audit financial contract No. 356/2005, the audit team proceeded to the verification of the Financial Interim Report of the Project LIFE2003NAT/RO/000027REV” entitled R estoration F orest h abitats from P ietrosul r odnei b iosphere R eserve ( the Maramures County) of the Forest Research and Management Institute. The audit period was extended on the project implementation period between 01.01.2004 - 30.11.2005 (Stage I) and took into consideration the bookkeeping regulations stipulated in the financing Contract and its execution clauses

The responsibilities of the Forest Research and Management Institute and of the financial auditor

As foreseen in the Financing Contract and its execution clauses the Forest Research and Management Institute located at Sos. Stefanesti 128, Sector 2, Bucharest, Mr. Romica Tomescu, general director, Mr. Anghel Anghel, economic director, and Mr. Ioan Blada, project manager take their responsibility in keeping in a proper manner of the project Accountancy. Also, they are responsible with the Financial Interim Report preparation for the first stage of the project implementation.

Our obligation is to have an independent opinion based on our audit with regard to the legality and to let you know our opinion.

On what is our opinion based

We have done the audit taking into consideration the following regulations:

? the Order of the minister of the public finances no. 94/2001 for approving the accountancy Regulations harmonized with the Directive IV of the European Economical Communities and the International Accountancy Standards, as well;

? the re-published Government Ordinance of Urgency no. 75 / 1999 with regard to the activity of the financial audit;

? the re-published Accountancy Low no. 82 / 1991;

? the International Standards of the Accountancy;

? the financial Audit Standards;

? the LIFE Standard Administrative Provisions of the European Commission.

We have planned and made the audit in accordance with provisions of the financial Audit Standard no. 920 entitled „ Commitments of accomplishment of the agreed procedures concerning financial information”, in order to obtain all necessary information and explanations. By this way, we can have a reasonable ensuring that the LIFE2003NAT/RO/000027REV project of the Forest Research and Management Institute implemented between 01.01.2004 - 30.11.2005(Stage I) has not any erroneous document caused by fraudulence or other irregularities or mistakes.

Also, in order to have a correct opinion we have evaluated the global correctitude of the financial presentation in the project.

The accountancy organizing and keeping was done in accordance with the provisions of the re-published Accountancy Low no. 82 / 1991, taking into consideration the Order of the minister of the public finances no. 94/2001 for approving the accountancy Regulations harmonized with the Directive IV of the European Economical Communities and the International Accountancy Standards, as well and including the subsequent modifications and completing.

The accountancy was kept so that to ensure the requirements with regard to a correct presentation, on budget items, of the project allocated funds and the expenses, as well.

There was not found cases of alienation of the durable goods or other goods, lost or deteriorated to be reported to the project expenses.

With regard to the reported way of the project expenses, the auditor established that

? the report was based on existing data in the bookkeeping register;

? the Project bookkeeping register comprises basically documents of the expenses distributed on budget items;

? all reported expenses are based on justifying legally documents;

? all financial payments were made in conformity with the national legally provisions and regulations, based on justifying documents, like fiscal invoices, banking orders of paying, etc.

The Order no. 1850 / 14.12.2004 of the Minister of the Public Finances with regard to the financial registers and forms, was abided by the Project beneficiary

The total allocated amount to the „LIFE2003NAT/RO/000027REV” Project was as much as 213.470 EUR or 910.000 RON.

The Project financier and co-financiers are presented in the next table.

The expenses of the first Project stage, i. e. between 01.01.2004-30.11.2005, were financially covered by European Commission, Forest Research and Management Institute and Forest State Administration of the Maramures County located in the Baia Mare town (See the below table)

But according to the Annex 2, the total expenses were as much as 117.776 Euro. The difference between 117.776 and 11 335, i. e. of 6 441 Euro was supported by the Forest Research and Management Institute

The structure of the expenses for the years 2004 and 2005, distributed on budget items, are presented in the Annex 1

According to the financial auditor opinion, the expenses in amount of

117.776 Euro reflects a correct and real image about the actions solved during the audited period

Again, according to the same auditor opinion, the spent amount of

42 694 Euro supported by the European Commission is correctly reflected in the Financial Interim Report for the operational period (01.01.2004-30.11.2005) of the LIFE2003NAT/RO/000027REV Project, that was managed by the Forest Research and Management Institute.

Finally, the auditor came to the following conclusions:

? between the 01.01.2004 and 30.11.2005, out of 213 470 Euro total Project cost, an amount of 117 776 Euro were spent;

? out of the 117 776 Euro, the three financial contributors to the Project have supported 111 335 Euro;

? the difference between 117.776 and 111 335 Euro, i. e. 6 441 Euro

was supported by the Forest Research and Management Institute;

? all expenses were correctly justified through legally valid documents;

? based on the financial audit results, the Project beneficiary may ask for the interim payment.

Director of the Audit Company,

Mr. RADU BANU

Table 2. Summary of co financing

Annex 1. Structure of category of expenditure and their distribution on participants to the Project

(taken from the beneficiary and partners Consolidated statement of Expenditures)

AUDIT REPORT

TO THE

EUROPEAN COMMISSION

DIRECTORATE-GENERAL / ENVIRONMENT

ON THE

FINANCIAL final REPORT

OF THE

LIFE-NATURE PROJECT

„LIFE2003NAT/RO/000027REV”

Restoration Forest habitats from

Pietrosul rodnei biosphere RESERVE

CONCEIVED BY THE

FOREST RESEARCH AND MANAGEMENT INSTITUTE (icas) OF BUCHAREST

Project Author and Manager

Dr. Ioan Blada

Bucharest

August 27 2007

Official data of the audit company

Name of the company: S.C. IRAMTAS SERV S.R.L.

address: Str. Almasu Mare, Nr.14, Sector 4, Bucuresti

TEL / FAX : +4021 450 57 30 / 4021 460 37 71

E- mail: :iramtas@rdslink.ro

REGISTRATION UNIQUE CODE: R0393244

LICENCE No.: 056 / 31.05.2001

the REGISTRATION NUMBER IN THE TRADE REGISTER:

J40 / 16609 / 25.06.1992

DatE OF ISSUE OF THE LICENCE: 07.01.2002

AUDIT REPORT

No. 277 / 27.08.2007

made by the ABOVE MENTIONED FINANCIAL AUDITOR

ON THE

FINANCIAL FINAL REPORT

OF THE PROJECT

„LIFE2003NAT/RO/000027REV”

Restoration Forest habitats from

Pietrosul rodnei biosphere RESERVE

CONCEIVED BY THE

FOREST RESEARCH AND MANAGEMENT INSTITUTE

(icas) OF BUCHAREST

IMPLEMENTATION PERIOD: 01.01.2004-01.06.2007

Base d on the audit financial contract No. 356 and 357/ 12.12 2005, the audit team proceeded to the verification of the Financial Final Report of the Project LIFE2003NAT/RO/000027REV” entitled R estoration F orest h abitats from P ietrosul r odnei b iosphere R eserve ( the Maramures County) of the Forest Research and Management Institute. The audit period was extended on the whole project implementation period between 01.01.2004 – 01.06.2007 and took into consideration the following documents:

- The Romanian legislation concerning bookkeeping financial regulations;

- The agreement between the European Commission, Environment DG and the Forest Research and Management Institute of Bucharest that was issued on 13.10.2003;

- The European Commission regulations, i. e. the LIFE Standard Administrative Provisions issued on 14 / 05 / 2002.

The responsibilities of the Forest Research and Management Institute

and of the Independent Financial Audit Company

As foreseen in the Financing Contract and its execution clauses, the Forest Research and Management Institute located in Bucharest, Sos. Stefanesti 128, Sector 2, represented by Mr. Romica Tomescu, general director, Mr. Anghel Anghel, economic director, and Mr. Ioan Blada, project manager take their responsibility in keeping in a proper manner the project accountancy. Also, they are responsible for the Financial Final Report preparation for the whole period (01.01.2004-01.01.2007) of the project implementation.

The obligation of the Independent Financial Audit Team is to check the LIFE project financial documents and to have its personal independent opinion based on our independent financial audit with regard to the legality of the project accountancy and to let you know our findings.

On what is our opinion based?

The following legislation and regulations were taken into consideration by the auditor:

- the Order of the Minister of the Public Finances no. 1752/2005 for approving the accountancy regulations harmonized according to the European directives including the updated modifications and completions;

- the re-published Government Ordinance of Urgency no. 75 / 1999, including the latest modifications and completions with regard to the activity of the financial audit;

- the re-published Accountancy Low no. 82 / 1991 including its latest modifications and completions;

- the Financial Audit Standard no. 4400 concerning connected services adopted by the Romanian Financial Auditors House; the name of this Standard is: Mission for implementation of the adopted financial information.

- the LIFE Standard Administrative Provisions of the European Commission.

I n order to obtain the necessary valid information and explanations, this audit was planned and made in accordance with the provisions of the Financial Audit Standard no. 4400, previously mentioned. By this way, we have acquired reasonable information which demonstrates that the IFE2003NAT/RO/000027REV project of the Forest Research and Management Institute implemented between 01.01.2004 – 01.06.2007 has not any erroneous documents caused by fraudulence or other irregularities or mistakes.

Also, in order to have a correct opinion we have evaluated the global correctitude of the project financial documents presented by the beneficiary.

The accountancy documents were organized and kept in accordance with the provisions of the re-published Accountancy Low no. 82 / 1991, and taking into account the Order no. 1752 / 2005 of the Minister of the Public Finances; this Order has approved the accountancy regulations including the latest modifications and completions.

The accountancy was kept clearly on budget items, so that to fulfill the requirements of a correct presentation, of the project allocated funds and their spending, as well.

There were not found cases of alienation of the durable goods or other goods, lost or deteriorated to be reported to the project expenses.

With regard to the reported way of the project expenses, the auditor established that

- the financial report was based on the existing data in the bookkeeping;

- the financial Project bookkeeping register comprises basically documents of the expenses distributed on budget items; such as personnel, travel, external assistance, durable goods, consumable, other costs and overheads; each budget item has its folder in which the financial documents that represent the bookkeeping of the project are perfectly arranged;

- all reported expenses are based on justificatory and legally documents;

- all financial payments were made in conformity with the national legislation and regulations, based on justificatory documents, like fiscal invoices, banking orders of paying; on each financial document there is a certified reference to the LIFE Pietrosul;

- also, all expenses are in conformity with the Standard Administrative Provisions elaborated by the European Commission.

A specific mention has to be made in connection with the price of the seedlings that were produced by ICAS and used for plantation in the project area. The price calculation was based on very detailed costs estimation according to the Romsilva National Company normative guidelines. Our audit company found that the ICAS has correctly used the cost price which does not include the benefit which, according to the Standard Administrative Provision is not eligible. But, the benefit is included in the sale price and such price is practiced only when the seedlings are sold for commercial reasons, but not in this co-financing case. Also, it was noticed that ICAS did not charged the overheads for the delivered seedling. This is correct because the overheads are included in the cost price and it is not correct to charge them once again to the project. A listing with the basically calculation of the price will be enclosed to our audit report.

The Order no. 1850 / 14.12.2004 of the Minister of the Public Finances with regard to the financial registers and forms, was abided by the Project beneficiary

The total allocated amount to the „LIFE2003NAT/RO/000027REV” Project was as much as 213.470 Euros and the funding and the budget breakdown are presented in Table 1 that shows that European Commission, Forest Research

Institute and Maramures Forest State Administration have to support 50%, 27% and 23%, respectively.

Table 1. Approved project funding at start

NOTE: All financial operation were made in Romanian currency (lei) which were converted in Euros using the exchange rate applied by the European Central Bank on the first day of the month in which the payment was made.

The b udget summary of allocated and spent currency by items and credit balance are presented i n the Table 2 , with the following details:

- In some items the foreseen amount was exceeded while in some others the spent amount was lower than the foreseen one;

- Exceeding the foreseen amount in personnel, consumable materials and overheads is in line with the European Commission regulations, i. e. Standard Administrative Provisions / En. Issued on 15 / 05 / 2002 which applies to the project in question;

- The other costs item was exceeded by 2060 Euros; however, the total amount of project allocation was not exceeded; surprisingly, part of this amount was paid for our audit reports so that it is up to the European Commission to decide upon the eligibility of this difference; according to the Romanian regulations, in such instances, this amount could be eligible;

- In case of the personnel item, our audit team noticed discordance between ways of salary calculation, such as ( Table 4 , last two columns).

(a) using a direct calculation based on time sheets, the ICAS has obtained a total 69041 Euros for personnel ;

(b) According to the EC standard programme calculation based on the same time sheets a total of 71410 Euros or personnel item was obtained, i.e. a difference of 2369 Euros. As the beneficiary has used this latter variant, is up to the European Commission to decide which one should be followed.

Table 2. Allocated budget and spent currency by items

* According to the EC program of time sheets calculation (See table 1)

The effective financial contributions to the project of each partner are listed in the Table 3 , with the following remarks:

- out of 213.470 Euros, an amount of 213.467 Euro was spent for project implementation that took place between 01.01.2004 - 01.06.2007;

- based on legally documents, all expenses were correctly justified;

- the EC, ICAS and FSAM contributed with 35%, 45% and 20%, respectively; in other words, the ICAS spent more than foreseen while the others, less;

- in the financial auditor opinion, expenses in a quantum of 213467 Euro let us learn that according to the Romanian legislation the work was real and project expenses were made correctly;

The auditor stress that the expenses in amount of 106.735 Euros supported by the European Commission are correctly reflected in the financial report of the LIFE2003NAT/RO/000027REV project that was managed by the Forest Research and Management Institute during the operationa period: 01.01.2004- 01.06.2007.

Table 3. Project funding, budget breakdown on partners and

balance after project termination

The Table 4 presents in details the s tructure of expenses on budget items, years and participants to the Project; these expenditures were taken from the beneficiary and partners Consolidated Statement of Expenditures that were delivered by the beneficiary.

The independent auditor conclusions

- Based on legally documents, an amount of 231467 Euros was spent for the project implementation that took place between the 01.01.2004 and 01.06.2007;

The EC, ICAS and FSAM have contributed with 74715 (35%), 97021 (45%), and 41731 (20%) Euro , respectively;

- The auditor has verified all financial documents including the statement of expenditure and income provided to the European Commission and found that according to the Romanian legislation and accounting rules, all expenses were correctly justified through valid documents. Also, the spent currency was in line to the European Commission regulation, i.e. the LIFE Standard Administrative Provision issued on 14.05.2002;

- The audit team highly appreciate the way in which the project accountancy was kept; the financial documents were arranged on budget items, chronologically inserted in folders; the European Union logo is placed in front of each big folder;

- The auditor recommends to the Forest Research and Management Institute to keep all documents in its archive, so that anybody may check them anytime;

- Based on the positive financial audit results, the audit team recommends to the Forest Research and Management Institute as project beneficiary to ask to the E.C for the final payment.

Director of the Audit Company

Mr. Radu BANU

(Signature and Stamp)

Table 4. Structure of category of expenditure and their distribution on participants to the Project (taken from the beneficiary and partners consolidated statement of Expenditures)

*Difference in personnel cost between the EC standard programme of calculation of time sheet and the ICAS time sheets calculation based on direct data.