1. AUDIT CERTIFICATES Jacques Van Oost 12 April 2002 Jacques Van Oost 12 April 2002

2. 2 AUDIT CERTIFICATE Objective of the Pilot Action: “to give the Commission greater assurance that costs charged under RTD contracts are calculated and claimed by the contractors in accordance with the legal and financial provisions of FP5 contracts”

3. 3 AUDIT CERTIFICATE Who has to submit an audit certificate: IST- RTD contracts as from the 6th call (There is a separate clause in the contract to which the certificates apply) IST- RTD contracts as from the 6th call (There is a separate clause in the contract to which the certificates apply) In principle it applies to all contractors submitting cost statements which exceed the threshold In principle it applies to all contractors submitting cost statements which exceed the threshold Only exception:  Public entities which are normally audited by public bodies, may have valid reasons for non-compliance  to be demonstrated

4. 4 AUDIT CERTIFICATE Who has to submit an audit certificate: The thresholds are the following: It is notedthat: -the contractors who have to submit a certificate in respect to the 1st CS, will also have to submit one along with the final CS -there will be no certificate required for the intermediate periods -however, the certificate to be submitted with the final CS, must cover all preceding reporting periods, except for the first It is noted that: -the contractors who have to submit a certificate in respect to the 1st CS, will also have to submit one along with the final CS -there will be no certificate required for the intermediate periods -however, the certificate to be submitted with the final CS, must cover all preceding reporting periods, except for the first

5. 5 AUDIT CERTIFICATE How to submit the certificate: The Certificates are to be submitted along with the cost statement Problem: thresholds are based on cost statement(s) amount = actual cost basis (not on budgeted costs)  cost statement amount should be assessed by contractor in order to know whether a certificate is required

6. 6 AUDIT CERTIFICATE Who can deliver an audit certificate ? An auditor of the contractor’s choice, this will generally be its statutory auditor An auditor of the contractor’s choice, this will generally be its statutory auditor independent and qualified member of the national professional organisation independent and qualified member of the national professional organisation

7. 7 AUDIT CERTIFICATE If yes, he will contact his (or an) auditor in order to arrange the contract and plan the audit fieldwork If yes, he will contact his (or an) auditor in order to arrange the contract and plan the audit fieldwork Priorto the preparation of the first cost statement, the contractor must asses whether the actual costs reported will exceed the threshold Prior to the preparation of the first cost statement, the contractor must asses whether the actual costs reported will exceed the threshold Preliminary Conclusion

8. 8 AUDIT CERTIFICATE Scope of the Audit Certificate: “establish whether the costs claimed are eligible, necessary for the project, actually incurred during the project and recorded in the account books of the contractor”

9. 9 AUDIT CERTIFICATE The Commission seeks a certification, not a detailed audit report The Commission seeks a certification, not a detailed audit report The contractor should aim for obtaining an unqualified opinion The contractor should aim for obtaining an unqualified opinion It can however not be excluded that some certificates will show a qualified opinion It can however not be excluded that some certificates will show a qualified opinion

10. 10 AUDIT CERTIFICATE Future handling of cost statements Below threshold for submitting certificate Unqualified Certificate Qualified Certificate Reduced Risk  minimization controls  should contribute to speeding up payments Analysis qualification

11. 11 AUDIT CERTIFICATE Finally please note that.. As it is a DG INFSO pilot action, an ad hoc task force will be set up in order to handle the qualified certificates and to gain experience thereof As it is a DG INFSO pilot action, an ad hoc task force will be set up in order to handle the qualified certificates and to gain experience thereof If a cost claim, which ought to be accompanied by a certificate, is presented without, the costs will be deemed ineligible until the certificate is presented (i.e. next cost reporting period) If a cost claim, which ought to be accompanied by a certificate, is presented without, the costs will be deemed ineligible until the certificate is presented (i.e. next cost reporting period)