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					AUDIT CERTIFICATES


     Jacques Van Oost
      12 April 2002
    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”



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          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)
•   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
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            AUDIT CERTIFICATE

Who has to submit an audit certificate:
  The thresholds are the following:


                                               250.000 €
       st
      1 Cost claim        12 months period
      1st Cost claim      6 months period      125.000 €
      Final Cost claim                         250.000 €
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


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      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

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        AUDIT CERTIFICATE


Who can deliver an
  audit certificate ?

• An auditor of the contractor’s choice, this will
  generally be its statutory auditor

• independent and qualified member of the
  national professional organisation



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    AUDIT CERTIFICATE

Preliminary Conclusion
•   Prior to the preparation of the first cost
    statement, the contractor must asses
    whether the actual costs reported will
    exceed the threshold


•   If yes, he will contact his (or an)
    auditor in order to arrange the contract
    and plan the audit fieldwork



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     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”




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            AUDIT CERTIFICATE

• The Commission                                        AUDIT CERTIFICATE

                                 I/We….[name(s)of auditor(s)]…..of …..[name of audit firm] hereby certify that:

    seeks a certification,       I/We have conducted a financial audit of the cost statement(s) presented to
                                 the Commission, and summarized in Annex I to this audit certificate, under
                                 contract [contract reference] by….[name of company/organization audited]….in

    not a detailed audit         respect of the project…. [reference number and acronym of project]….for the
                                 following period(s)….[insert period(s) of cost statement(s) audited].


    report
                                 The audit was carried out in accordance with generally accepted auditing
                                 standards respecting ethical rules and on the basis of the relevant provisions


•
                                 of the above-referenced contract and its Annexes. The above-mentioned cost

    The contractor should
                                 statement(s) was(were) examined and such tests of the supporting
                                 documentation and accounting records deemed necessary were carried out in
                                 order to obtain reasonable assurance 1 that:

    aim for obtaining an         - only eligible costs are claimed in accordance with the financial provisions
                                 of the contract,
                                 - the costs claimed are related to the project,

    unqualified opinion          - the costs claimed are actual costs recorded in the official accounts of
                                 …[name of contractor],


•   It can however not be
                                 - the costs claimed have been incurred during the duration of the project or
                                 as otherwise specified in the contract,
                                 - the actual hours worked by the persons directly undertaking the scientific

    excluded that some
                                 and technical work for the project and charged to the contract are
                                 supported by time records maintained in accordance with the relevant
                                 article of Annex II to the contract,

    certificates will show       - any necessary adjustments to costs previously reported have been made.

                                                                         Signature & date

    a qualified opinion                                                  Audit Company’s Stamp




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          AUDIT CERTIFICATE

Future handling
 of cost statements

Below threshold for                Reduced Risk
submitting certificate         minimization controls
                               should contribute to
  Unqualified                  speeding up payments
   Certificate

   Qualified                            Analysis
   Certificate                         qualification

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        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
• 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)


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