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First Class Support for Excellence in Research Marie Curie Monitoring Action and Information Days Barcelona, June 9th-11th 2010 Rita, BULTYNCK-LEPOUDRE.

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Presentation on theme: "First Class Support for Excellence in Research Marie Curie Monitoring Action and Information Days Barcelona, June 9th-11th 2010 Rita, BULTYNCK-LEPOUDRE."— Presentation transcript:

1 First Class Support for Excellence in Research 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

2 First Class Support for Excellence in Research Todays agenda 1.Presentation REA Audit processes and procedures Preparation Execution Follow up 2.Presentation about Marie Curie Actions financial rules General financial rules for Marie Curie Actions Details on actions 3.Questions & Answers

3 First Class Support for Excellence in Research 3 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 Ex-post Audit of grants beneficiaries

4 First Class Support for Excellence in Research Aims The aim of the ex-post financial audits is 1.verifying contractors 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.

5 First Class Support for Excellence in Research 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 Audits: In-house / Outsourced 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

6 First Class Support for Excellence in Research Audit Cycle Audit Strategy & Selection Planning & Preparation Examination on site Reporting & Audit Closure Implementation of Audit Results+EXTRAPOLATION

7 First Class Support for Excellence in Research 7 Preparation: audit of selected beneficiary Selection of Grant agreementsSelection of Grant agreements Based on various criteria Creation of audit fileCreation of audit file Gathering of info from: -REA operational services -external sources; e.g. internet

8 First Class Support for Excellence in Research 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

9 First Class Support for Excellence in Research 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 Planning & Preparation: Information requested

10 First Class Support for Excellence in Research Examination on site Opening meeting Analysis of Systems in place 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 Clarification on audit agenda for further days Analysis of documents and explanation received and collection of audit evidence Discussion of preliminary findings and observations Indication of further audit procedure Interviews

11 First Class Support for Excellence in Research 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

12 First Class Support for Excellence in Research Implementation of Results: Cases No findings Financial Adjustment (Only) qualified recommendation Non-systematic finding identified Systematic finding identified Implementation finalised Correction of future payments or recovery by the responsible financial services Extrapolation of audit results Follow-up Audit

13 First Class Support for Excellence in Research 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

14 First Class Support for Excellence in Research The extrapolation Initiation Implementation Decision Follow-up Monitoring Management Launch Final Audit report The auditor submits the extrapolation request ESC meeting Extrapolation decision Audit closing phase Contract selection Audit closure Letter of conclusions sent Extrapolation start Reception of revised cost statements & supporting documents 45 days / 3 months + additional deadline Adjustments Recoveries Eventual follow-up audit A long process (up to 2 years)

15 First Class Support for Excellence in Research 1VAT included in the cost chargedVAT 2Other taxes included on a systematic basisTaxes 3Incorrect calculation of overheadsOverhead 4Other Ineligible items included (like sales/marketing costs/bonuses)Ineligible 5Average vs. actual costsAverage vs Actuals 6Budgeted, standard, estimated or fixed rates used instead of actual costsBudgeted/standard/estimated 7Adjustment in productive hours calculationProd. Hours 8Unreliable/missing timesheets/ alternative evidence usedTimesheets 10Wrong depreciation method used/no depreciation appliedDepr. Method 11Wrong calculation method usedCalc. Method 12Unjustified change in direct costs modelChange Ind. Costs 13Other reasons (i.e. double charging, no supporting docs, not for project, outside project period) Other 14Wrong exchange rateExch. Rate 15Owner manager costs estimated/not substantiatedOwner Mgr. 16Marie Curie flat rates vs. actual cost issueMC flat rates 17Lack of reconciliation of costs claimed/weaknesses internal controlNo reconciliation 18Non declaration of interest on pre-financingInterest Pre. Financ. Main findings leading to extrapolation (FP6)

16 First Class Support for Excellence in Research Muchas Gracias ! Rita Lepoudre - Bultynck Head of Unit Finance Research Executive Agency COV2 15/132, 1049 Brussels ( +32-2-29613407) Rita.bultynck@ec.europa.eu


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