1. Abdellah I. Serghini Engagement Manager Page 1 Audit Approach Content Chapter I: Statutory audit mission Chapter II: Audit of the representations

2. Abdellah I. Serghini Engagement Manager Page 2 Audit Approach Statutory audit mission Appointed by the General Assembly Period: 6 years The Board of auditors is composed of: 2 certified public auditors and 2 members of the court of audit

3. Abdellah I. Serghini Engagement Manager Page 3 Audit Approach Statutory auditor’s report  Introduction Responsibilities ○ Board of directors : the preparation and the fair presentation of the financial statements, implementing internal control measures relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. ○ Statutory auditor: audit of the financial statements and opinion

4. Abdellah I. Serghini Engagement Manager Page 4 Audit Approach Statutory auditor’s report  2 parts Part 1: the audit opinion ○ Unqualified ○ Qualified ○ Emphasis of matter paragraph ○ Disclaimer of opinion ○ Negative opinion Part 2: additional information ○ Respect of the laws and bylaws ○ Other matters

5. Abdellah I. Serghini Engagement Manager Page 5 Audit Approach Objectives Obtain reasonable assurance that the financial statements are not affected by major inaccuracies in conformity with Belgian legal requirements and administrative regulations related to the annual accounts.  Perform a coherent and sufficient audit work — Identify risk areas — Assess the audit risk (risk that errors are not identified) — Update of the audit work program — Plan the audit activities

6. Abdellah I. Serghini Engagement Manager Page 6 Audit Approach Audit steps Step 1: audit strategy Understanding the entity and its administrative and accounting organisation Risk analysis —Identify the risks that may have an influence on the quality of the financial information Risk related to the economic situation and to the sector of activities

7. Abdellah I. Serghini Engagement Manager Page 7 Audit Approach Audit steps Step 1: audit strategy Inherent risk —Management —Internal culture —Personnel : training – assessment – pay - turnover —Risk management —Internal control measures —Budget & reporting —IT systems — Specific risk areas Internal control risk

8. Abdellah I. Serghini Engagement Manager Page 8 Audit Approach Audit steps Step 1: audit strategy Errors and frauds Tax risks Environmental risks Budget review and analytical review

9. Abdellah I. Serghini Engagement Manager Page 9 Audit Approach Audit steps Step 2: internal control measures Cycle approach Test of controls  Control design  Control effectiveness Design of substantive procedures

10. Abdellah I. Serghini Engagement Manager Page 10 Audit Approach Audit steps Step 3: substantive procedures Materiality Design specific audit procedures —Nature of procedures used: Post balance sheet events - inventory taking tests – agreeing and reconciling controls – analytical reviews – external confirmations -... —Significant points: Existence – Completeness – Accuracy – Cut-off – Valuation – Accounting records, etc.

11. Abdellah I. Serghini Engagement Manager Page 11 Audit Approach Audit steps Step 4: conclusions Highlight memorandum Control of the financial statements (official layout and design)  OPINION

12. Abdellah I. Serghini Engagement Manager Page 12 Audit Approach OBJECTIVES AUDIT APPROACH DOCUMENTS USED SPECIFIC AUDIT AREAS & MAIN REMARKS AUDIT OF THE REPRESENTATIONS

13. Abdellah I. Serghini Engagement Manager Page 13 Audit Approach Objectives  The audit of the projects is an important procedure

14. Abdellah I. Serghini Engagement Manager Page 14 Audit Approach Objectives

15. Abdellah I. Serghini Engagement Manager Page 15 Audit Approach Audit approach Obtain an assurance regarding the financial statements of the projects  Risk analysis  Internal procedures  Local requirements and procedures  Verification using a sampling methodology

16. Abdellah I. Serghini Engagement Manager Page 16 Audit Approach Audit approach Kick-off meeting Identify the documents used Procedures Stage of completion  Identify the risk areas

17. Abdellah I. Serghini Engagement Manager Page 17 Audit Approach Audit approach Substantive tests Review of specific (permanent) files permanents —Personnel —Public tender —Contracts and agreements —Etc. Acoounting records —Organisation —Tests based on sampling techniques

18. Abdellah I. Serghini Engagement Manager Page 18 Audit Approach Audit approach Closing meeting Draft report Final report Audit committee Used for final audit purposes

19. Abdellah I. Serghini Engagement Manager Page 19 Audit Approach Documents used On field: —Accounting: FIT —Work files Vouchers Personnel Public tender Agreements Etc. —Inventory taking file —Audit reports

20. Abdellah I. Serghini Engagement Manager Page 20 Audit Approach Documents used Documents from the head office —Agreements: CS – CMO – DTF —Reports: audits – mid terme review etc. —PIC —Accounting: Navision —Inventory sheet

21. Abdellah I. Serghini Engagement Manager Page 21 Audit Approach Specific audit areas & main remarks Index file CTB —Use of different methods —Significant specific points Change of Resrep Staff changes Closing of projects Archives —Dispersion of original documents —Significant specific points General organisation Régie / cogestion  original documents held by the partner Closing of projects Staff changes

22. Abdellah I. Serghini Engagement Manager Page 22 Audit Approach Personnel file —Incomplete —Significant points Checklist Complete file: —Recruitment procedure (selection) file —Identification of the staff members ( exhaustive list) —Contract + amendments —Slips —Overtime and holiday procedures & rules Salary charts Use of standard documents Out of pocket expenses Specific audit areas & main remarks

23. Abdellah I. Serghini Engagement Manager Page 23 Audit Approach Tests of salary calculation and accounting records Verification of compliance with social and tax regulations —Mostly an audit point —Significant point Identification of the rules and regulations Specific audit areas & main remarks

24. Abdellah I. Serghini Engagement Manager Page 24 Audit Approach Infrastructure expenditures, Service contracts & subcontracting —Most identified points: Administrative follow-up —Significant points Inventory taking Follow-up schedules Advances recovery Identification of claims Compliance with contractual clauses Compliance with specific rules (withholding tax) Specific audit areas & main remarks

25. Abdellah I. Serghini Engagement Manager Page 25 Audit Approach Premiums paid to officers —Most identified point: Not confirmed within the commissions/boards/financial planning documents —Significant points Identification of the beneficiaries Compliance with social & tax rules Confirmation of receipt Specific audit areas & main remarks

26. Abdellah I. Serghini Engagement Manager Page 26 Audit Approach Advance payments —Deadlines regarding submitting the vouchers justifying the expenses incurred Specific audit areas & main remarks

27. Abdellah I. Serghini Engagement Manager Page 27 Audit Approach Procurement procedure —Most identified points: File incomplete Compliance with legislation Documentation of the different steps Opinion of no objection Specific audit areas & main remarks

28. Abdellah I. Serghini Engagement Manager Page 28 Audit Approach Procurement procedure —Significant points Justification of method of procurement Use of checklists Terms of references Legal opinion & opinion of no objection Bid evaluation minutes Notification of award Agreements Organisation of the files Specific audit areas & main remarks

29. Abdellah I. Serghini Engagement Manager Page 29 Audit Approach Procurement procedure —Significant points The method of procurement is determined using the total amount instead of the annual costs (insurance contracts, renting agreements,...) Specific audit areas & main remarks

30. Abdellah I. Serghini Engagement Manager Page 30 Audit Approach Other costs & expenditures —Most identified points: Quality of underlying documents (use of copies,...) Some expenses should refer to procedures /rules / policies put in place (out of pocket expenses, reimbursements,...) Use of SLA’s Specific audit areas & main remarks

31. Abdellah I. Serghini Engagement Manager Page 31 Audit Approach Administrative organisation: —Most identified points: Files organisation Signatures & approval procedures Accounting records (accounts used) Cash controls Mission requests Transfer accounts Advance payments Specific audit areas & main remarks

32. Abdellah I. Serghini Engagement Manager Page 32 Audit Approach Budget monitoring: —Most identified points: Justification of differences budget/real Financial planning Budget update in FIT Communication field – head quarter Control and support activities of the representation for the projects Specific audit areas & main remarks

33. Abdellah I. Serghini Engagement Manager Page 33 Audit Approach Inventory taking: —Use of standard template documents: References (n° - description) Location Amount Invoice date & number Supplier Specific audit areas & main remarks

34. Abdellah I. Serghini Engagement Manager Page 34 Audit Approach Back-up: —Procedure to put in place: Frequency Place Responsible All files Specific audit areas & main remarks

35. Abdellah I. Serghini Engagement Manager Page 35 Audit Approach Standardisation: —To use for Contracts Checklists Follow-up sheets Approval procedures Order Time tables Out of pocket expenses Specific audit areas & main remarks