1. Audit certificates NCP meeting Brussels Brussels24.01.2006

2. 2 Audit certificates  Reminder – audit certificates  Audit Certificate Survey Report  Competent public officer

3. 3 Reminder – audit certificates  Guidance notes for contractors and certifying entities published June 2005: ftp://ftp.cordis.lu/pub/documents_r5/natdir000000 1/s_6918005_20050727_150035_2521en.pdf including practical hints for contractors  frequent asked questions  proposed model of the audit certificate  list of frequent errors  indicative model of an audit programme

4. 4 Reminder – audit certificates  ‘The purpose of an audit certificate is to give to the Commission reasonable assurance that eligible costs charged under the project are claimed by the contractors in accordance with the relevant legal and financial provisions of the FP6 model contract  An audit certificate is issued by the external auditors on the competent public offices to the attention of the contractor (not to the attention of the Commission)’

5. 5 Reminder – audit certificates Frequently asked questions:  Competent public officer  Audit certificate template  Qualifications for auditors  Unqualified audit certificates  Scope of Audit certificates  Cost  Reporting period  AC cost model and competent public officer  Audit costs and subcontracting costs  Overhead costs  Selection of audit firms  Language of audit certificates  Overstated costs  Subcontracting  Third parties  …

6. 6 Audit Certificate Survey Report Based on an analytical assessment on a sample of Audit Certificates that were received and approved ….. The subgroup devised questionnaires …. for completion by the identified research contractors, external auditors and competent public officers. The surveys aimed to assess how effective the process regarding audit certificates was received by contractors of the research DG’s and the respective certifiers that they hired to produce the certificates ….. An assessment of the reliability can only be properly evaluated by re-auditing the processed audit certificates which is also foreseen and planned in the context of the Common Audit Policy of the Research DG’s’

7. 7 Audit Certificate Survey Report  Several problems reported with regard to the audit certificate template  Compliance with International Standards on Auditing (ISA)  Model template was generally used with less then 10 % deviating significantly from it  The usual delay for a contractor to receive the audit certificate from the certifier was almost 8 weeks Average days between reporting end and audit certificate date External Auditors 57,2 Competent public officers 48,7 54,9

8. 8 Audit Certificate Survey Report  The average cost to contractors for an audit certificate was approximately EUR 1000 External Auditors Competent Public Officers Average Contractors with eligible costs < €150,000€945€321€753 Contractors with eligible costs > €150,000€1,872€1,034€1,716 Eligible costs not specified €3,425€0€2,283 Average €1,203€416€981

9. 9 Audit Certificate Survey Report  The survey revealed a number of problems concerning the understanding of the requirements regarding the qualification and independence of the certifier Legal capacity of the CPO established by the relevant national authority

10. 10 Audit Certificate Survey Report  The majority of financial statements initially set up by the contractors were amended as a consequence of the certification process.  Approximately one in three contractors said they adapted their statements after examination Adjustment to the original financial statement 1 - necessity External AuditorsCPOs Yes66 %70 % No34 %30 %

11. 11 Competent Public Officer  Input received from some 20 countries  Varying approaches in appointing competent public officers