Marie Curie Monitoring Action and Information Days
Barcelona, June 9th-11th 2010
Rita, BULTYNCK-LEPOUDRE
Unit A.2 - Finance
Presentation of the REA ex-post
Audit processes
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Today’s agenda
1.
Presentation REA Audit processes and procedures

Preparation

Execution

Follow up
2.
3.
Presentation about Marie Curie Actions financial rules

General financial rules for Marie Curie Actions

Details on actions
Questions & Answers
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Ex-post Audit of grants beneficiaries
•
The REA may, at any time, during the contract,
and up to five years after the end of the project,
arrange for audits to be carried out.
– Technical review
– Technical scientific audit
– Financial audit
•
•
•
Audits may be carried out either by REA staff or
by private audit firms mandated by the REA.
An Annual Audit Plan has been established in
line with the FP7 general audit strategy.
Technical Audits can be performed at the same
time as financial audits
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3
Aims
•
The aim of the ex-post financial audits is
1. verifying contractor’s compliance with the financial
contractual provisions,
2. assessing the legality and regularity of the
transaction, underlying the implementation of the
Community budget.
3. reviewing of some relevant systems of internal
controls of the Contractor in order to assess
whether it is adequate and sufficient to ensure that
costs incurred by the Contractor on EC-research
funded projects are correctly allocated to those
specific projects and recorded as such in the
accounting records.
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Audits: In-house / Outsourced
Ex post Audits by REA
auditors
• Approx. 20% of audits
• Mostly used for risk based
audits, for which a specific
audit programme tailored
to the identified risks is
required
• Specific audits (follow-up,
requests, …)
• Consistency with Research
family audits
Ex post Audits by
Contracted audit firms
• Approx. 80% of audits
• i.e. representative selection
and audits of top
beneficiaries
• Supervision of the audit
process by REA services
• Consistency with Research
family audits
AUDIT ON REQUEST:
 Performed by auditors on Operational units requests
 Could be triggered by irregularities during project implementation
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Audit Cycle
Audit Strategy
& Selection
Implementation
of Audit Results+EXTRAPOLATION
Planning &
Preparation
Reporting &
Audit Closure
Examination
on site
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Preparation: audit of selected beneficiary
• Selection of Grant agreements
Based on various criteria
• Creation of audit file
Gathering of info from:
- REA operational services
- external sources; e.g. internet
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7
Preparation: Audit on-the-spot
• Initial contact by the responsible auditor
approx. 1-2 month before examination on
site to agree on dates and logistics
• Formal letter to announce the audit
including detailed annex on information
and documentation to be provided
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Planning & Preparation: Information requested
• Detailed annex to announcement letter includes precise
list of information to be provided either
– Prior to the audit examination on site (by mail)
– At the time of the audit examination
• Most relevant information in the early preparation are
the detailed project accounts matching the total as
claimed in the financial statements (Form C)
• Exact information requests to be provided in advance
also depending on the individual project (s) and audit
scope
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Examination on site
Analysis of
Systems
in place
Opening
meeting
Test of systems
and substantive
evidence
Closure
meeting
Assessment
after on site
visit
(…)
Usually within 4-5 working days (one week)
General info on:
• organisation
• projects
• financial
administration
• internal control
system
Analysis of documents and
explanation received and collection
of audit evidence
Interviews
Discussion of
preliminary
findings and
observations
Indication of
further audit
procedure
Clarification on
audit agenda for
further days
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Reporting and Closure of the Audit
• Transmission of Draft audit report (after internal
consultations and quality control) for comments by the
audited organisation
– Usually based on the preliminary conclusions
– Delay (30 days) to provide comments to the draft
• Consideration of comments and finalisation of the audit
report
• Closure of the audit by formal letter indicating – where
appropriate - the further procedures on the
implementation of audit results
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Implementation of Results: Cases
No findings
(Only) qualified
recommendation
Financial Adjustment
Non-systematic
finding identified
Systematic
finding identified
Extrapolation
of audit results
Correction of future payments or recovery
by the responsible financial services
Implementation finalised
Follow-up Audit
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Follow-up: liquidated damages
• Financial penalty due for overstatement of
expenses, unjustified financial contribution
received from the Commission/REA
• Only due for the reporting period under
question
• When due, has to be paid together with
the unjustified financial contribution
• Will be claimed by the mean of Recovery
orders issued by REA
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The extrapolation
A long process (up to 2 years)
Initiation Decision
Launch
Management
Implementation
Follow-up Monitoring
45 days / 3 months
Final Audit report
The auditor submits the
extrapolation request
+ additional deadline
ESC meeting
Extrapolation decision
Eventual
follow-up audit
Audit closing phase
Contract selection
Audit closure
Letter of conclusions sent
Extrapolation start
Reception of revised cost
statements &
supporting documents
Adjustments
Recoveries
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Main findings leading to extrapolation (FP6)
1
VAT included in the cost charged
VAT
2
Other taxes included on a systematic basis
Taxes
3
Incorrect calculation of overheads
Overhead
4
Other Ineligible items included (like sales/marketing costs/bonuses)
Ineligible
5
Average vs. actual costs
Average vs Actuals
6
Budgeted, standard, estimated or fixed rates used instead of actual costs
Budgeted/standard/estimated
7
Adjustment in productive hours calculation
Prod. Hours
8
Unreliable/missing timesheets/ alternative evidence used
Timesheets
10
Wrong depreciation method used/no depreciation applied
Depr. Method
11
Wrong calculation method used
Calc. Method
12
Unjustified change in direct costs model
Change Ind. Costs
13
Other reasons (i.e. double charging, no supporting docs, not for project, outside
project period)
Other
14
Wrong exchange rate
Exch. Rate
15
Owner manager costs estimated/not substantiated
Owner Mgr.
16
Marie Curie flat rates vs. actual cost issue
MC flat rates
17
Lack of reconciliation of costs claimed/weaknesses internal control
No reconciliation
18
Non declaration of interest on pre-financing
Interest Pre. Financ.
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Muchas Gracias !
Rita Lepoudre - Bultynck
Head of Unit Finance
Research Executive Agency
COV2 15/132, 1049 Brussels
( +32-2-29613407)
[email protected]
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REA Audit Presentation