Transcript No Slide Title

FINANCIAL AUDIT PROCEDURES
LEGAL AND CONTRACTUAL BASIS
Robert Wilms
DG INFSO
Unit R3
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FINANCIAL AUDIT PROCEDURES
LEGAL AND CONTRACTUAL BASIS
• Legal obligation on the Commission to carry out
the necessary checks which provide adequate
protection for the Communities’ financial
interests.
• Contractual basis for financial audits: Art. 26 of
Annex II.
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FINANCIAL AUDIT PROCEDURES
INITIATION - AUDITORS - CONFIDENTIALITY
• Initiation of the audit by registered letter
specifying dates, name(s) of auditor(s), contracts
and periods to be audited, documentation to be
made available.
• Auditors are Commission officials or external
audit firms authorized by the Commission.
• Information obtained during an audit is being
treated confidential.
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FINANCIAL AUDIT PROCEDURES
AIM AND SCOPE OF THE AUDIT
• Verification of the costs claimed on the basis of
accounting
records
and
supporting
documentation.
• Where costs claimed are found to be not eligible,
or where the contractor cannot show that costs
claimed are eligible, the costs will be rejected and
the EU-contribution will be adjusted accordingly.
The burden of proof is on the contractor (see Art.
25 - Justification of costs)
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FINANCIAL AUDIT PROCEDURES
Procedure:
• Initiation letter
• On-spot audit
• Provisional report
• Observations by contractor (deadline: 1 month)
• Final report
• Observations by contractor (deadline: 1 month)
• Final conclusions by Commission
• Follow-up: Recovery of amounts overpaid or additional
payments; application of the audit findings on nonaudited projects, where applicable.
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FINANCIAL AUDIT - FREQUENT
ERRORS DETECTED DURING AUDITS
• Estimated costs indicated in Annex I of the
contract are charged instead of actual costs
• Costs reimbursed by third parties (e.g. local
authorities) are not deducted
• Personnel costs: Average rates charged differ
significantly from the actual costs of the
persons working on the project
... continued
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FINANCIAL AUDIT - FREQUENT
ERRORS DETECTED DURING AUDITS
• Indirect costs (overheads):
– non-eligible costs are included such as
financial interest, sales and marketing, costs for
the preparation of other projects
– costs directly related to commercial activities
are included
– the contractor uses special calculation methods
for EU-projects which are not in line with the
contractor’s normal practices
–
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