Brussels, 11 May FP7 Audit. DG RTD Unit M2

Transcription

1 Brussels, 11 May 2011 FP7 Audit DG RTD Unit M2 1

2 Contents 1. Purpose of the audits 2. When, by whom and how selected 3. Phases of the audit 4. Common Mistakes 5. Systemic errors 6. Questions 2

3 Purpose of the audit Verify compliance with the Grant Agreement For the Commission to obtain assurance that it is not overcharged Form C is backed up by genuine expenditure All claimed expenditure is recorded in the accounts 3

4 Types of audits First Level audits article II.4 Certificate on Financial Statements (CFS) where the accumulated level of EU funding exceeds Second level audits article II.22 So-called Commission audits which can lead to the recovery order for over-claimed amounts and the application of liquidated damages 4

5 How are audits selected DG RTD aims to perform on average 375 to 400 audits in any given year. Beneficiaries are selected in one of the following ways: MUS sample Risk analysis Audits on request 5

6 When can the audit be performed? When? Article II.22(1) At any time up to 5 years after the final payment is made. 6

7 Who carries out the audits? Article II.22(1) Commission staff or External auditors - outsourced audits KPMG Ernst & Young Lubbock Fine 7

8 How we decide who audits what? Conflict of Interest and capacity check If clean then outsource Left-over's Following conflict of interest and capacity check: In-house (Commission s) auditors Specific requests or fraud investigations in-house (Commission s) auditors 8

9 Phases of the audit Letter of announcement Direct contact from the auditor Fieldwork Reporting Letter of Conclusion Critical that you ensure the timely collaboration with auditors and provide them with ALL requested information when requested Possibility of extrapolation of results 9

10 Common mistakes Recall the purpose of the audit: To verify compliance with the Grant Agreement 10

11 Eligible costs Article II.14(1) of the Grant Agreement, costs need to be: Actual Incurred by the beneficiary During the duration of the project Usual accounting, management principles and practices Used for sole purpose of achieving the objectives of the project, in a manner consistent with principles of economy, efficiency and effectiveness Recorded into accounts of beneficiary Indicated in the estimated overall budget in Annex 1 11

12 Non-eligible costs Identifiable taxes including VAT Duties Interest owed Provisions for future losses or charges Exchange losses Costs reimbursed in the frame of another Community project Debt and debt service charges Excessive or reckless expenditure 12

13 Common mistakes (1) Personnel costs Bonus payments Use of specific rates for EU funded projects Productive hours / Billable hours Unsubstantiated claim of research time spent on the project (time-recording) Estimated rates Third party costs not foreseen in Annex I 13

14 Common mistakes (2) Other Direct Costs Depreciation of durable equipment VAT Travel expenditure not justified or including foreign VAT consumables 14

15 Common mistakes (3) Indirect costs Calculation not justified Indirect rates based on costs of e.g.2001 (sometimes adjusted for inflation) Incorrect cost driver applied or unfair apportionment of costs Ineligible items 15

16 Systemic errors - definition Grant Agreement Article II.22.1 states refers to systemic aspects related to the proper execution of the grant agreement. Guide to Financial Issues (page 97) will indicate in the final report whether the possible errors detected during the audit are of a systematic nature, i.e. if they are such that it is reasonable to assume that they affect not only the Grant Agreement actually audited, but also other GA where the audited entity participates. 16

17 Systemic errors Will be communicated in the Letter of Conclusion. Following Communication of December 2009, extrapolation may be implemented through one of three methods: 1. Revised financial statements taking into account the conclusions of the audit 2. Flat rate corrections per individual cost category 3. One overall flat rate 17

18 Further information Guidance on FP7 Guide to Financial Issues relating to FP7 Indirect Actions ftp://ftp.cordis.europa.eu/pub/fp7/docs/financialguide_en.pdf And in case of doubts, contact also: RESEARCH HELPDESK 18

19 Thank you very much for your attention! Questions? 19