1. Belarus Denmark Estonia Finland Germany Latvia Lithuania Norway Poland Russia Sweden First level controls - Certification of Expenditure INTERREG IIIC North Zone Joint Technical Secretariat Elise Oukka Seminar on Financial Management and Auditing Rostock, 12 November 2004

2. The auditors role and tasks Certifying the financial expenditure by checking the validity and the correctness of the invoices Declaring the proper us of funds (eligibility etc) Confirming the disbursement of the national pro-rata co- financingHOW? - on-the-spot checks - verify that the activities have actually taken place - goods and services have been delivered to project

3. Certification of expenditure Confirmation by an independent auditor Independant from the projects activities and finances (independant organisational unit) Qualified, meaning familiar with accounting and ERDF rules, especially the rules concerning eligible expenditure It is recommended to use external certified auditors, who are experienced in (transnational) auditing of EU-funded projects AUDIT GUIDELINES!

4. Procedure internal audit report The internal audit report states e.g.: - the work done - the results of the verification - the measures taken in respect of discrepancies (e.g. expenses not eligible, expenses not covered and/or not documented, etc.) - when not checking 100% of the expenditure, but performed on a sample, the used sampling method must be clearly described and documented Recorded verifications of individual operations on the spot (including a complete breakdown of expenditure and invoices)

5. Confirmation by an independant auditor 1. The reality of "deliverables" (services, works, supplies, etc.) against plans, invoices, acceptance documents, experts' reports, etc., and, where appropriate, on the spot; What to be done: - Crosscheck the reported expenditure vs. project activities - Are products and services necessary for the implementation of the approved actions? - Is the delivery clearly documented? - Are products/goods purchased physically available?

6. 2. The observance of conditions of grant approval (Approval Letter and Subsidy Contract) What to be done: - Check the Approval Letter and Subsidy Contract (incl. Annexes)

7. What to be done: 3. The eligibility of amounts claimed (Commission Regulation (EC) No 448/2004) and the correctness of this financial report; - Commission Regulation (EC) 448/2004 - Eligibility of Expenditure - Only costs based on real expenditure can be reported - Detailed documentation on the reported staff costs must be available - Overhead costs must be based on real costs - Exchange rates

8. - Is the expenditure reported under budget line 6 Others costs and equipment mentioned in the respective annex of the approved application? - Is the expenditure reported under budget line 7 Small scale investments mentioned in the respective annex of the approved application? - All the reported expenditure has been paid out!

9. What to be done: - Clarify all the open questions, unclear matters before signing the confirmation 4. The adequate follow-up of all outstanding questions before acceptance of claim;

10. What to be done: 5. The maintenance of an adequate and reliable accounting system and the maintenance of the audit trail (Commission Regulation (EC) 438/2001, Annex I) at all levels within the project. - To check the set up and maintenance of an adequate and reliable accounting system and audit trail for the operation - See (EC) 438/2001

11. 6. During the reporting period covered by this report the first costs have been paid on ___________ (date) and the last costs have been paid on ___________ (date). In the case of the first progress report, the first costs incurred on ___________ (date). What to be done: - Check the dates; have invoices been paid out during the current reporting period and are the payments documented?

12. 7. For this financial report the total paid expenditure amounts to. What to be done: 8. The project management set up has been established as described in the project application (Point 10). - Check the documentation, e.g. the approved application – point 10 What to be done: - Fill in Total I of the Financial Report II Finances

13. FIRST LEVEL CONTROLS Country specific requirements

14. Centralised first level controls = auditing done by the national authorities New Member States: Latvia, Lithuania, Poland Implications for the practice!

15. Experience gained...lessons learned Contacting the auditor well in advance & providing the auditor with all the relevant documents ! Reserving enough time for auditing – ensuring the quality! Independancy of the auditor should be absolutely clear! No changes or additional remarks are allowed in the confirmation! No signing of the confirmation if there are mistakes, information is missing or not consistent!

16. Thank you for your attention!