Manual On The Spot Checks

Ex post on-the-spot checks of grants
ADMIN A3 training Unit
Training developed for the European Commission by DEMOS.

www.demos.fr
"this training manual complies with EMAS rules"
ADMIN A.3. Ex post on-the-spot checks of grants
2
Developed for the European Commission by Demos
TABLE OF CONTENTS
1.
INTRODUCTION....................................................................................3
1.1 Aims and Framework....................................................................................... 3
1.2 Definitions....................................................................................................... 3
2.
SUCCINCT DIAGRAM.............................................................................3
2.1 Agreement and annexes................................................................................. 3
2.2 Deliverables................................................................................................. 3
2.3 Documentary Check........................................................................................ 3
2.4 Selection of the OSCs...................................................................................... 3
2.5 Preparation for the OSC mission.....................................................................3
2.6 Execution of the OSC mission.........................................................................3
2.7 OSC Mission Reports....................................................................................... 3
2.8 Follow-up to the OSC mission..........................................................................3
3.
CONTROL BASIS..................................................................................3
3.1 Legal bases..................................................................................................... 3
3.2 Why conduct controls?.................................................................................... 3
3.3 What is being controlled?................................................................................ 3
3.4 The auditable character of a project............................................................3
3.5 The various aspects of the control:.................................................................3
3.6 What qualities are expected from an auditor?................................................3
4.
TYPES OF CONTROL.............................................................................3
4.1 The types of control:....................................................................................... 3
5.
SUCCINCT DIAGRAM.............................................................................3
5.1 Synthetic diagram of the various preparatory operations:..............................3
6.
SELECTION AND RISKS..........................................................................3
6.1 The selection of the projects that must be subject to an OSC........................3
6.2 Registration of agreements/missions..............................................................3
6.3 Types of Financing........................................................................................... 3
7.
OSC FILE..........................................................................................3
7.1 Composition of the OSC file............................................................................3
7.2 Content of the OSC file................................................................................... 3
8.
CONTACTS.........................................................................................3
8.1 Internal contacts............................................................................................. 3
8.2 Questionnaire to the beneficiary.....................................................................3
9.
ANALYSIS OF INFORMATION....................................................................3
10. PLAN...............................................................................................3
10.1 OSC plan...................................................................................................... 3
10.2 Why a list and an OSC plan?........................................................................3
11. PRELIMINARY OPERATIONS.....................................................................3
11.1 Contact with the beneficiary........................................................................3
11.2 Mission Plan................................................................................................. 3
11.3 Confirmation to the beneficiary....................................................................3
11.4 Starting date for the OSC............................................................................. 3
11.5 Update of the database................................................................................3
12. TRANSMISSIBILITY...............................................................................3
Principle of transmissibility...................................................................................... 3
13. RELATIONAL ASPECTS...........................................................................3
13.1 Introduction.................................................................................................. 3
14. RULES OF CONDUCT.............................................................................3
14.1 Reminder of the rules of conduct.................................................................3
3
14.2 Reminder of the importance of non-verbal language...................................3

15. THE INTERVIEWS.................................................................................3
15.1 Conducting an interview.............................................................................. 3
16. EVIDENCE..........................................................................................3
16.1 Evidence during the OSC............................................................................. 3
17. DOCUMENTARY CONTROL.......................................................................3
17.1 The documentary control.............................................................................3
18. ITEMS TO BE AUDITED...........................................................................3
18.1 Recurring points during the OSC..................................................................3
18.2 Staff costs.................................................................................................... 3
18.3 Overheads.................................................................................................... 3
18.4 Travel and living expenses...........................................................................3
18.5 Consumer and equipment goods.................................................................3
18.6 VAT............................................................................................................... 3
18.7 Interest on pre-financing..............................................................................3
18.8 Sub-Contracting........................................................................................... 3
18.9 Ineligible costs............................................................................................. 3
19. MISSION REPORTS...............................................................................3
19.1 Introduction.................................................................................................. 3
19.2 Structure of the mission reports...................................................................3
19.3 Notification to the beneficiary......................................................................3
20. FOLLOW-UP AND OPERATION...................................................................3
20.1 The need for a follow-up..............................................................................3
20.2 The stages.................................................................................................... 3
21. ANNEXE 1. EXTRACTS OF CONVENTION MODEL AND ANNEXES...........................3
Objectives of the audit............................................................................................ 3
Reference Grant Agreement and budget line..........................................................3
The beneficiary XXXXXXXXX/XXXX of XXXXXX........................................................3
The partners............................................................................................................ 3
The grant agreement............................................................................................... 3
22. FINDINGS.......................................................................................3
The XXXXX co-ordinator XXX XXXXX.......................................................................3
The XXXX partner/Assisting project co-ordinator XXXX...........................................3
The XXXX XXXXXXXXX............................................................................................ 3
XXXXXXXXXX........................................................................................................... 3
The XXXXXXXXXX.................................................................................................... 3
LIMITATION OF COSTS TO 110% OF THE BUDGET....................................................3
INCOME.................................................................................................................... 3
23. ANNEXE 2. OTHER CONDITIONS OF ELIGIBILITY COSTS....................................3
24. ANNEXE 3. PRELIMINARY QUESTIONNAIRE..................................................3
25. ANNEXE 4. EXAMPLE OF A DETAILED CONTROL PLAN.....................................3
26. ANNEXE 5. EXAMPLE OF AN ANNOUNCEMENT LETTER.....................................3
27. ANNEXE 6. EXAMPLE OF A MISSION REPORT................................................3
28. ANNEXE 7. EXAMPLE OF INFORMATION ON BENEFICIARY.................................3
29. ANNEXE 8. 2 EXAMPLES OF AN EXECUTIVE SUMMARY.....................................3
Example 1................................................................................................................ 3
Example 2................................................................................................................ 3
30. ANNEXE 9. EXAMPLE 1 OF A DETAILED REPORT............................................3
31. ANNEXE 10. EXAMPLE 2 OF A DETAILED REPORT..........................................3
32. ANNEXE 11. EXEMPLE DE RAPPORT DINLIGIBILIT......................................3
33. ANNEXE 12. EXAMPLE OF CONCLUSIONS ADDRESSED TO THE BENEFICIARY...........3
4
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1. INTRODUCTION
1.1 AIMS AND FRAMEWORK
AIM OF THE TRAINING COURSE

This manual serves as a training reference for Ex Post On-the-Spot Check of
Grants organised by the European Commission.
The aim of the training is to teach participants to conduct an on-the-spot
check, to outline best practice and to establish a common reference basis
that can be used by the various people in the European Commission who
must carry out these missions with the beneficiaries of grants given by the
Commission for the execution of projects. This course is designed for
beginners who have little experience of conducting controls.
The material covered by this course is primarily aimed at ex post controllers
but could also be useful at an ex ante level for verifiers.
The on-the-spot check mission acts as a complement assurance to the
documentary checks carried out in the Commission offices (ex ante controls;
see point 1.2 Definition).
AIM OF THE OSC MISSION

To check the validity of Community financing, in other words:
To check the adherence by the beneficiary to their agreements with the

Commission and in relation to Community legislation.
To check the reliability and validity of the documentary evidence received at

the Commission.
OSC TRAINING FRAMEWORK

The training framework is limited to direct expenditure control missions only.
The following are not included in this training:
- the control of shared management (with member states), for which specific
procedures exist.
- the selection of the projects that must undergo an on-the-spot check.
- system auditing.
This training is therefore limited to the control of direct Community financing,
namely:
The control of the projects or subsidy extensions.

The control of a current action (sometimes) or of a completed action.
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INFORMATION SOURCES
Most of the information and documents come from different DGs (EAC, RTD,
Mare), DG Budget, the Website and official publications of the EC.
The author thanks the EC officials responsible for the OSC who gave him
access to this information.
1.2 DEFINITIONS
GRANTS
In accordance with Article 108 of Council Regulation 1995/2006 of 13 Dec
2006, grants are direct financial contributions covered by the EC budget,
granted freely with a view to financing:
a) either an action to promote the achievement of an objective that falls
within the framework of a European Union policy;
b) or the functioning of a body which pursues an aim of general European
interest or an objective that falls within the framework of a European Union
policy.
Grants are subject to written agreement.
Note that according Art. 109.2 of the Financial Regulation (FR) " Grants may
not have the purpose or effect of producing a profit for the beneficiary". The
question of the real costs is the corner stone in the control of grants.
AGREEMENT
Council Regulation 1995/2006 stipulates that to ensure that the rights and
obligations of the institution and of the beneficiary are clear and are
observed, the grant award should be the subject of a written agreement.
EX ANTI VERSUS EX POST

The Distinction between "ex ante" and "ex post" is attached to payment.
Verifications realised before payment are ex ante and are under

responsibility of the authorising officer by subdelegation (AOSD)
These checks will follow the Commissions standard procedures,
as defined by the financial regulations, for operational &
financial initiation, independent verification followed by
authorisation by the AOSD
Once payment is made, on the spot controls are ex post; the

selection of controls is based on a strategy determined by the
unit or department (AOD) and not decided by AOSD who
authorised the payment.
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Both are part of the control chain of the Commission. Note that
the ex post control are not part of the financial circuit.
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2. SUCCINCT DIAGRAM
Before going into the detail of the method and the practice of the OSC, here is a
brief presentation that makes it possible to situate the various administrative and
financial stages in the life of a project:
Signing of the
agreement
Production of
deliverables
Selection of
projects for the
OSC
Technical
implementation
reports
Financial
implementation
reports (cost statement)
Random
Past experience
Following a request
Indices
OSC documentary
control
Preparation of the
OSC mission
OSC implementation
Mission reports
Letter of conclusion to the
beneficiary
Establishing a
correlation between the
O.S.C. and the
documents/evidence of
the beneficiary
Opening, closing
and other
meetings.
Follow-up
procedures
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2.1 AGREEMENT AND ANNEXES

The agreement (still referred to as a contract) and its annexes are the basic
reference documents. These are the documents that will be used to analyse the
financial reports and conduct the OSC missions.
The agreement refers to an initial budget that was introduced at the time of the
call for proposals. Extracts of typical agreement articles can be found under
Annexe , and clauses included in the application forms can be found under ,
with the indication of the points to be taken into account during an on-the-spot
check.
N.B.:
The agreement between a beneficiary and the authorising officer is part of a
wider group of documents that are ranked in hierarchical order and that should
be read and taken into account in order to legitimately control the
implementation of the agreement.
-
the Treaty establishing the EC

the financial regulation of 13 Dec 2006
the basic instrument
the framework agreement
the internal regulations
as a reminder, the provisions in the Special Conditions of an agreement
prevail over those elsewhere in the agreement, and the provisions of the
General Conditions prevail over those in the Annexes.
2.2 DELIVERABLES
The financial progress reports, the Cost Statements (CS), are the main concerns
here. Over the duration of the project, several of them are produced by the
beneficiary and controlled by the EC. Their frequency is mentioned in the
agreement and it can for example be punctuated by an interim CS once every 6
months, followed by a final CS.
2.3 DOCUMENTARY CHECK
Upon receipt of the CS, a control is conducted by the financial manager of the
project. It is mainly a comparative analysis between the CS and:
- the contractual conditions. E.g.: have the costs been incurred during the
eligibility period, do they comply with specifications in the agreement, etc.?
- the provisional budget for the project. E.g.: to what extent are the costs
presented in line with the budget, etc.?
- Has authorisation for certain costs been requested in compliance with the
agreement, etc.?
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2.4 SELECTION OF THE OSCS

The financial units of the DGs establish lists of projects that will be subject to an
OSC. These controls are more thorough than the documentary controls carried
out in the offices of the EC. Various selection methods are possible.
2.5 PREPARATION FOR THE OSC MISSION
Once the projects have been selected, preparation for the mission, in the
countries and premises of the beneficiaries takes place. This involves various
stages such as the establishment of a file, the analysis of information, the
control plan, etc.
2.6 EXECUTION OF THE OSC MISSION
This is mainly a matter of gaining from the beneficiary all of the information and
documents that might support or refute the information on costs that was
transmitted to the EC through the CS. Actually going to the premises of the
beneficiary may make it possible to obtain more information through meeting
with the people responsible for the project and the various parties involved and
by examining the beneficiarys organisation. Physical material controls are of
course also possible.
2.7 OSC MISSION REPORTS
This is a key element in any OSC mission.
The mission reports are for the beneficiary and the EC. They summarise the
controls conducted, laying emphasis on any observed dysfunctions on the part
of the beneficiary and may suggest ways to improve the monitoring of the
project.
Ideally, the reports must be produced quickly upon the return of the OSC
mission. Without a mission report, however succinct, there is the risk that
monitoring and corrective action may not take place.
Keep in mind that the report must be "usable" by the AOSD. In case of findings
proving ineligible expenditures, the facts must be clearly stated in order to help
the AOSD to act in conformity with Art 71 of FR "1. Establishment of an amount
receivable is the act by which the authorising officer by delegation or subdelegation:
(a) verifies that the debt exists;
(b) determines or verifies the reality and the amount of the debt;
(c) verifies the conditions in which the debt is due.
2.8 FOLLOW-UP TO THE OSC MISSION
Following the OSC mission, various types of action are possible, such as the
conditional acceptance of supporting evidence (pending additional documents),
the payment by the EC of additional sums, recovery of sums paid in excess by
the EC, etc.
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3. CONTROL BASIS
3.1 LEGAL BASES
Legal basis: Financial regulation : COUNCIL REGULATION (EC,
Euratom) N 1995/2006 of 13 December 2006 amending
Regulation N 1605/2002 on the Financial regulation applicable to
the general budget of the European Communities (OJ L 390/2006 of
30 December 2006
"Ex post": Art 60, point 4. The authorising officer by delegation

(AOD) shall put in place, in compliance with the minimum
standards adopted by each institution and having due regard to
the risks associated with the management environment and the
nature of the actions financed, the organisational structure and
the internal management and control procedures suited to the
performance of his/her duties, including where appropriate ex
post verifications. Before an operation is authorised, the
operational and financial aspects shall be verified by members
of staff other than the one who initiated the operation. The
initiation and the ex ante and ex post verification of an
operation shall be separate functions.
"Ex ante": Art 71, point 1. Note that if an AOSD has a doubt in
verifying a transaction he can not visa it. He must clarify in
asking some complementary information or implementing an
"on-the-spot control"; the OSC can be externalised to a private
company.
3.2 WHY CONDUCT CONTROLS?

In order to obtain reasonable assurance that the objectives are being
achieved in an efficient manner. These objectives can be:
to preserve the security of assets (in the broad sense, including intangible
assets such as the preservation of the Commissions image);
to ensure the quality of operational and financial information (available,
reliable, exhaustive and relevant);
to comply with regulations and procedures;
to optimise technical and financial human resources;
and also to give the beneficiary the opportunity to improve their system of
management or registration for the projects that they conduct with the
support of the Commission.
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3.3 WHAT IS BEING CONTROLLED?

The expenditure linked to direct Community financing, i.e.:
the control of grants;

the control of the use of the operating contributions.
The control is conducted on:

current actions (sometimes);
completed actions (this is the most frequent case).
Level of ex post controls: depending from the culture of the DG, professional
background of the person in charge and possible economy of scale, ex post can
be realised on beneficiaries (several projects), projects or transactions (payment
intermediate or final ; clearance of pre-financing).
Every controller should keep in mind some points part of a legal advice
(JUR(2006)72731EM/GW1) from DG SJ:
In grants, only eligible costs can be financed by EU funds. If, after an
ex post control, some costs declared do not fulfil all conditions to
be eligible, they become therefore ineligible.
The Commission and the European Court of Auditors can checked a
project up to five years after the finalisation of the project.
Every Authorising officer can renounce 2, due to specific
circumstances, to the recovery. The procedure should follow Art 73
of FR.
If some costs had not been declared, no complementary payment
should be done. The beneficiary must bear all consequences of its
bad administrative management.
3.4 THE AUDITABLE CHARACTER OF A PROJECT
Not all projects can be audited as such. For, unless in the case of a system
control, in order to provide the substance for an OSC and form the basis for a
comparison between real expenditure and budgeted expenditure or between
expenditure and income, it is absolutely essential to have at least one interim
payment or at the very least one record of expenditure incurred by the
beneficiary.
In the particular case in which the operational unit of a DG deems it wise to
conduct an audit during the implementation of the project, it would be
necessary to first of all check with the beneficiary that a minimum threshold of
xx% of the expenditure has been passed. This auditable critical mass is
attested by the corresponding interim payment. The % in question must be set
by the DGs, but a threshold of 25% appears to represent a minimum.
1
Attached to the following minutes from an EPCnet meeting:

http://www.cc.cec/budg/dgb/interdg/_doc/epc/meetings/2006/_pdf/minutes_060714_fr.pdf :
2
To be able to renounce, a recovery order had to be issued previously by the Authorising Officer.
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Furthermore, account must be taken of the fact that the execution of an OSC
incurs a certain cost, whether this OSC is applied to an interim payment or a
final report. The cost of the OSC must be set against the results that we can
reasonably expect from it.
As a corollary, projects which involve major risks, or for which Community
support is the highest, must be given priority consideration.
Projects of lesser financial importance must not, however, be automatically
removed from the batch of projects to be controlled, because these may
present intrinsic risks (recurring beneficiary, geographical location, more
precarious management risk, etc.).
The OSC procedure on the basis of interim payments must therefore only be
retained in cases of suspected poor management or doubt as to the
achievement of the purpose of subsidisation.
Files for which the activity reports and financial payments prescribed in the
terms of the subsidy grant agreement are not produced constitue high-risk files.
They could be subject to an OSC before the planned conclusion of the project.
3.5 THE VARIOUS ASPECTS OF THE CONTROL:
The control concerns the following aspects of the financed project:
CONTRACTUAL ASPECTS
Have the points provided for in the agreement (and its annexes, which form
an integral part) really been properly observed?
Example: Article X.x.x The action and the eligibility period of the costs
commence on ../../.... and end on ../../.... .
REGULATORY ASPECTS
Have the points provided for in the various EC regulations and which are
referred to in the agreement been properly observed?
Example for the expenses transferred from one category to another:
Where the amounts transferred between contractors are less than 20% of the
transferors budgets or there is a change between categories of one partner
(which does not affect the nature of the work to be carried out i.e. they will
achieve the tasks identified in the technical annex) and does not exceed 20%
of that contractors total budget, no prior approval is necessary but the
Commission is to be informed.
Therefore if the amounts exceed 20%, prior EC authorisation will be
necessary.
Another example: Travel and subsistence costs may be charged, but prior
written approval is required outside Europe [the EU] or an Associated
State.
FINANCIAL ASPECTS
Have the points provided for in the agreement concerning the financing
methods been properly observed?
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Example: Plausibility of the justified costs, appropriate forms of supporting

evidence, etc.
3.6 WHAT QUALITIES ARE EXPECTED FROM AN AUDITOR?
They should be honest - in other words, search for the facts and assess them
fairly.
They should show loyalty by confining themselves to the subject of the
control without showing favouritism.
They should be tactful and vigilant, so as monitor the effects of the
observations on people.
They should show cultural sensitivity by respecting local practices.
They should be convinced - in other words, keep the aim in mind and believe
in its usefulness.
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4. TYPES
OF
CONTROL
4.1 THE TYPES OF CONTROL:

Different types of control exist (see below). Nevertheless the eligibility control is
the one to realise.
THE ELIGIBILITY CONTROL:

Checking that the expenditure complies with the stipulations of the
Agreement. The latter may include Special Conditions, General Conditions
and Annexes.
THE REGULARITY AUDIT:

Checking that the various operations or items of expenditure have been run
in conformity with the regulations and procedures.
Example: Observance of the deadlines for the issue of documents,
implementation or objectives.
Example: Issues of certain reports, records, etc.
Example: Cost Statements signed by authorised persons.
Example: Depreciation period in relation to the type of material: generally, a
period of 36 months is applied to computers and 60 months for
other types of material.
THE MATERIALITY AUDIT:

Checking the existence of concrete supporting evidence for financing by the
EC. Example: invoices, timesheets, staff, goods, stocks, etc.
Checking the validity of the documents presented.
THE SYSTEMS CONTROL:

Transaction Controls versus Systems Audit
The OSC covered by this training course is a control of the operations and
supporting documents concerning the costs incurred within the framework of
a project financed by the EC.
Essentially it is a check of individual
transactions has this cost actually been incurred or not?
It is not a detailed control of the accounting or organisational systems used
by the beneficiary. This is known as a system audit. Such a control is not
covered by this training course. However it would be useful for a person
conducting an on-the-spot control to understand the difference.
To a greater or lesser degree every organisation has a system of internal
control. In larger organisations this will tend to be far more sophisticated
then in smaller organisations. Examples of typical internal controls would be
segregation of duties (4 eyes principle), clearly documented policies and
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procedures covering the processing of costs, proper review and authorisation

of transactions. During a systems audit, the auditor rather then checking the
individual transactions instead checks the internal control system. If they feel
that the internal control system functions correctly then they feel that they
will be able to place reasonable reliance on the numbers produced by the
system. In a control we review only the transactions of the beneficiary not
their control system. However if during the course of an OSC you become
aware that there may be systemic weaknesses within their IC system (for
example no segregation of duties) this might influence the extent of the
transactions we select for review.
Note that generally, the only obligations of the beneficiaries are to realise the
action and to provide financial statement and supportive documents; usually
no requirements exist about the way they have to organise themselves.
The objective of the control of the Accounting System is to verify the formal
status of the accounting system, including the existence and effectiveness of
The Internal Control System
The ACCOUNTING SYSTEM
The INTERNAL CONTROL SYSTEM
The control
environment
The control
procedures
an internal control system.

The internal control system is defined as all the policies and procedures adopted
by the management, to assist in achieving managements objectives of ensuring
the orderly and efficient conduct of its business, including adherence to
management policies, the safeguarding of assets, the prevention and detection
of fraud and error, the accuracy and completeness of the accounting records,
and the timely preparation of reliable financial information (IFAC, International
Standards on Auditing and Related Services no. 6). Such a system must of
course be capable of supplying the information required by the contract or the
agreement.
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This definition given to the Internal Control System includes not only those
matters which are directly related to the accounting system, but also the control
environment, being the managements awareness and concern about the control
system, and the actual control procedures in place.
The Internal Control System
The ACCOUNTING SYSTEM
The INTERNAL CONTROL SYSTEM
The control
environment
The control
procedures
A system audit of the accounting system will provide the controller with
evidence to assess whether it is suitably designed to prevent material
misstatements. The control of the system is aiming at assessing the systems
effectiveness, in terms of its capacity to detect and correct misstatements.
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5. SUCCINCT DIAGRAM
5.1 SYNTHETIC DIAGRAM OF THE VARIOUS PREPARATORY OPERATIONS:
The preparation phases for the OSC
Activities
Selection of the
contracts
Income/Results
List of contracts
Registration of the
contracts
Establishment of the
OSC dossier
Internal contacts
Analysis of the
available information
OSC plan
Contact with the

Beneficiary
Mission Plan
Mission approval
Confirmation to the
Beneficiary + Planning
Announcement letter
Update of the OSC

database
Analyse des
informations
disponibles
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6. SELECTION
AND
RISKS
6.1 THE SELECTION OF THE PROJECTS THAT MUST BE SUBJECT TO AN OSC
NOTION OF RISK
The requirement for the selection of the projects to be subject to an OSC is
firmly linked to the notion of risk.
Beyond the general risks presented by a project, each DG can identify

the internal risk factors that are specific to it, and which it will have to
take into account in order to develop its project selection policy and
therefore its planning for projects which must undergo an OSC.
The identification of the main risk factors is essential to the planning for the
control programme. This is a matter of:
-
the inherent risk in the field (the risk of irregularity or a material error for
example, when an action is governed by very complex rules, there can be
a high risk of error) and
the control risk (possibility that the controls make it possible neither to
prevent nor to detect such errors or irregularities, particularly in the case
of poor quality or recent reorganisation).
The aim of the control programmes must be both to focus on the fields in
which the risks are considered to be highest and to cover, in a balanced
manner over time, the audit field.
The following factors must be considered as indicators during the assessment
of the inherent risk levels:
Regulations:
The more complex the regulations governing the action, the higher the
risk error. These errors may occur either due to the poor understanding or
interpretation of the regulations, or owing to the erroneous application of
the rules;
Management methods:
Divergences in management methods, for example: actions conducted by

third parties or agents may present a higher inherent risk than that caused
by actions directly carried out by one single management authority. The
greater the number of stages in the management process, the higher the
risk. This is typically the case for projects involving a coordinator, cobeneficiaries and possibly subcontractors.
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Declarations:
Payments or revenue based on declarations (for example, a declaration by

the end beneficiary concerning contributions in kind), and not on invoiced
exchanges of goods or services, are generally more difficult to check and,
consequently, cause in increase in the inherent risk;
Absolute amount
The greater the absolute amount of the subsidy and the proportion of the
total cost financed by the EC, the higher the inherent risks will become;
Type of action and financing

The type of action and financing for example, certain types of action
present a higher inherent risk than others;
Sources of financing
The existence of multiple sources of financing that succeed each other
over time (the beneficiaries have already obtained a financial contribution
from the Commission budget in the past) or occur concomitantly
(beneficiaries who receive financial interventions from other DGs or any
other public authorities);
Project administrator
The type of project administrator for example public or private,
experienced or beginner;
Staff experience
The high level of staff rotation, the allocation of temporary staff for the
realisation of key tasks or the use of untrained or inexperienced staff in
management bodies or as the administrators of a project is likely to
increase the inherent risks. In fact, inexperience on the part of staff can
undermine the smooth functioning of the controls.
Administrative management
- Events and unknown factors specific to the file in terms of
implementation of the subsidised project (significant delays in the
implementation of the project, the production of the activity reports
provided for in the agreement, lack of evidence of effective project
implementation, etc.);
-
The inability to finalise financial statements in the correct form and

within the required deadlines;
Unsatisfactory responses to letters, the production of copies of

supporting documents rather than the originals, internal invoicing,
simple, non-probative cash vouchers, unreconciled expenditure
voucher and proof of bank payment.
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The controlled entities may take measures to combat these inherent risks
through the implementation of controls. The auditor must proceed to an
assessment of the control risk before being able to identify the residual risk
(risk of non-detection of errors during the controls). When the inherent risk
level is high, controls must be set in place in order to reduce the real risk of
incorrect payments. For example, for projects with very complex rules, the
body responsible for the verification and approval of requests is supposed to
attach very special importance to the verification of these requests. A field
with a high inherent risk may, in fact, present a low control risk if the systems
are particularly efficient in terms of error identification.
A risk analysis will put together several criteria; the diversity of the data
available in the information system will be a constraint for the
implementation of a risk analysis.
THE TYPES OF SELECTION

Although the selection rules are up to the DGs, some selection principles can
nevertheless be stated here:
The strategy dedicated to the ex post control orients the selection mode. If
you are focused on the detection and correction, the selection should help
you to put your strengths on the riskier projects; you will therefore put in
place a risk analysis.
Due to the cost of an ex post control, it is not possible to check 100% of
projects. A balance between costs and benefits of controls should be found
and should take into account the deterrent effect.
A periodic mission plan can be established. It specifies how, and how many
OSC missions must be selected.
The list of projects to be controlled can comprise both projects retained on a
directed basis and projects retained on a random basis. The proportion could,
for instance, be approximately 70% and 30% respectively, or be of any other
proportion deemed necessary according to the projects managed by the DGs.
Selection of projects purely on a random basis is not felt to give an optimum
application of resources.
Important remark:
Regardless of the selection methods used, it is important to keep traces (files,
documents, etc.) of the way in which the selection was made.
Directed selection
The determination of the batch is based on the analysis of the risk factors,
as described earlier. However, complex files or files undermined by a
presumption of serious risk are obviously also included in the OSC
programme.
22
The batch must be chosen while making sure to:

guarantee a fair distribution of the projects to be controlled in
terms of geographical location. Care should be taken to ensure
that at the end of an OSC cycle spread over a certain lapse of
time (2 or 3 years), all of the countries participating in the
programme concerned have been covered by the sampling of the
projects to be controlled;
include projects situated at the extremes of the scale of EC
financing intervention, both large and small scale;
Random selection
The aim of this type of selection is to ensure that the batch composition is
not biased by subjective considerations.
Each entity may, to do this, have recourse to the method of their choice,
on the condition that each one of the files is equally likely to be selected
for the batch, regardless of its characteristics (for example: blind sorting,
monetary unit sampling the result of this method is that each project
over a certain amount is selected and that all the other projects have the
same probability of being selected -, random number function on Excel
software, determination of intervals per division of the total number of files
planned to make up the batch and selection of a random number lower
than the batch size to determine the starting point in the series).
It is important for the various services to keep the working papers that
record the choice of batch taken on a directed and random basis. These
papers actually make it possible to justify, if necessary, the choice of batch
vis--vis both third parties and internal and external control authorities.
Monetary selection: this selection called MUS (Monetary Unit Sampling)

refers to the maximisation of the percentage of cover in relation to the
financial implications.
Another example or pure random selection
The scope of a batch control is defined in the Working Practice as: 1 control =
1 auditable organisation = 1 to 3 auditable contracts = 1 to 3 audited cost
statement per contract. Therefore, the audit scope may range from a
minimum of 1 to a maximum of 9 audited cost statements.
The list of controls to be performed within a Batch is determined by the
control selection strategy. The selection procedure of the Batch takes into
account the following variables:
- the Activity by EU Member State, which covers the proportional financial
contribution per Member State, for a given period ;
- the Auditable organisations, which covers organisations engaged in EC
contracts, from the date of signature of the contract until 2 years after its
completion, excluding organisations which have been subject to a control
within the previous 24 months of the selection date.
the Risk analysis, which refers to risk identified on the basis of closed controls
(Audit Summary Sheet, see Audit Handbook Part I).
23
The three above-mentioned variables determine, for a given batch size, the
number of auditable organisations per EU Member State.
On the basis of the number of auditable organisations per EU Member State,
a first random selection of the organisations to be audited is run, taking into
account each Member States configuration by type of contractors (Big
Enterprises, Higher Educational Institutions and Universities, International
Organisations, Others, Research Organisations, Small and Medium sized
Enterprises).
A second random selection is performed in order to define the contracts to be
audited, taking into account that:
no more than 3 contracts per contractor can be audited;
contracts for which no Cost statement is available, due to the
commencement date of the contract, are excluded from the selection.
The above described procedure results in a list of contracts per organisation
to be audited (the Batch list).
Selection based on past experience:

This method reflects the importance of keeping a record of the projects
controlled and the incidents detected (per type of project, beneficiary, etc.).
OSC on request:
Different DGs can request the execution of an OSC for a particular beneficiary.
Regardless of the selection method used (and it is of course possible to use a
combination of methods), the result of the selection is one or several lists of
beneficiaries that will be subject to an OSC.
6.2 REGISTRATION OF AGREEMENTS/MISSIONS

Based on this list, it is useful to register the agreements on a database and to
allocate a unique number to each one. The data recorded can be:
No. of OSC (unique)
Reference no. of the beneficiary
Name of the beneficiary
Type of financing: FC/AC/FF
% of the intervention
Amount of the agreement in
EC contribution in
Contribution from the beneficiary in
Or any other information deemed relevant by the DG.
A decision may also be made to work on the basis of the missions (which involve
the control of several agreements) and to register the missions on a database.
However, the methodology essentially remains the same.
6.3 TYPES OF FINANCING
24
As well as reimbursing actual costs, the Commission may pay either a Flat
Rate or a Lump Sum.
A Flat rate payment is to cover a specific category of costs (i.e. per diems).
Alternatively a lump sum can be used to finance a specific activity up to
25,000.
In either case the amount must be established by objective means and be
reviewed by the RAO at least every 2 years.
Non profit & co-financing principle are verified ex ante while fixing the rates.
The beneficiary need not submit subsequent proof.
25
7. OSC
FILE
7.1 COMPOSITION OF THE OSC FILE

When the OSC file is being composed, care should be taken to gain information on
the content of the various documents that have an obvious effect on the grant
agreement:
The financial regulation

The basic instrument governing the agreement
The framework agreement
The financial regulation

This is Council Regulation (EC, EURATOM) No. 1995/2006 of 13 Dec 2006 on the
Financial Regulation applicable to the general budget of the European
Communities and published in the Official Journal of the European Communities
on 16.9.2002 under reference L 248/1.
It is accompanied by Commission Regulation (EC, EURATOM) No. 478/20007 of
23 April 2007 establishing the implementing rules for Council Regulation (EC,
Euratom) no. 1995/2006 on the Financial Regulation applicable to the general
budget of the European Communities and published in the Official Journal of the
European Communities on 30.12.2006 under reference OJL 390/2006.
The basic instrument
According to Article 31 of Commission Regulation 478/2007, a basic instrument
can take the form of a regulation, a directive, a decision in the sense of Article
249 of the EC Treaty or a decision sui generis.
The framework agreement
According to Article 163 of Commission Regulation 478/2007, specific grant
agreements can be framed by framework partnership agreements.
A framework partnership agreement may be concluded with beneficiaries with a
view to establishing long-term cooperation with the Commission. The framework
agreement shall specify the common objectives, the nature of actions planned
on a one-off basis or as part of an approved annual work programme, the
procedure for awarding specific grants, in compliance with the principles and
procedural rules under this Title, and the general rights and obligations of each
party under the specific agreements.
Partnership framework agreements shall be treated as grants for the purposes
of the award procedure; they shall be subject to the ex ante advertising
procedures referred to in Article 167. Specific grants based on the framework
partnership agreements shall be awarded in accordance with the procedures laid
down in those agreements, in compliance with the principles of this Title.
26
7.2 CONTENT OF THE OSC FILE

The documentation pertaining to the agreements will comprise copies of the
following documents (if available):
The call for proposals and the proposal that was at the source of the grant
agreement;
All other documents specific to your DG.
i.e. C.N.F. Contract Negotiation Form (DG RTD)
Information sheet Contract Management Information Form - on the project.

27
Example:
CONTRACT no.:
1 General information on the contract
Contact person
Address
Contractor's
REF. ID.:
internal
N.B.: It is the reference attributed by the beneficiary to the project in their

accounting system.
Cost base:
If FC: % Help:
Coordinator:
Starting date:
Extension
of
the
contract:
If yes: Number
of
months:
Total cost:
EU
contribution:
EU
contribution
for
contractor:
Total audited costs:
EU
audited
costs :
CS
1
no.
CS
2
no.
CS
3
no.
CS
4
no.
Special
conditions:
If yes: Specify:
FC
FF
AC
Ye
No
s
Duration
:
Ye
No
s
End
date:
1,00
1,00
10 %
0
0,00
0%
0,00
Perio
d:
from / / to / /
from / / to / /
from / / to / /
Ye
s
from / / to / /
No
Comments
(if necessary):
28
An OSC file shall be established for each contract. This file consists of copies of
several documents that can be held by different Officers who took part in the
contract negotiation or are taking part in its management and follow-up.
The Contract: The signed contract copy with annexes and the framework
agreement, if applicable
Any supplementary agreement; The signed agreement copy
Received notifications:
According to some standard contracts, the Contractor is obliged to notify the
Commission in writing concerning certain matters.
Payment documentation :
For the period(s) under examination, including:
- Cost Statements
- Associated Bank Statements
- Progress report approval
- Travel approvals (if any)
- Financial Summary sheets and
- any Recovery Orders
Contractor Reports
Depending on the contract, the Contractor may be obliged to send to the
Commission reports, such as Periodic Progress Reports, mid-term Assessments
Reports and Final Reports.
Summary of Payment
A summary of payments by the Commission, concerning time and amount, to be
able to control that the distribution has been done within the time limits.
In case the contractor is a Co-ordinator, include also a summary of payments
made by him to its associate contractors.
Correspondence with the Contractor of importance to the control
Any previous control reports

Contact may also be taken with other Directorate Generals that perform controls
of contracts. Account must also be taken of reports established by the Court of
Auditors, national control bodies or the contractors internal or external auditors.
Approvals
Costs unforeseen during the negotiation, and hence not mentioned in the
Contract Negotiation Form, may be have been approved at a later stage after a
written request to the Responsible Scientist.
Company Reports
29
Various Agreements
Special agreements may be concluded with a Contractor, concerning e.g. fixed
overhead rate, calculation methodology for labour rates, etc. Any contract of
this kind is of major importance to the controller.
8. CONTACTS
8.1 INTERNAL CONTACTS
A discussion with the Project Officer (the official contact person nominated by
the EU) as well as other officers such as the Scientific Officer, Negotiator and
Financial Officer is recommended. These officers can provide the most recent
information as well as informal information concerning the overall impression
about the project, the participants, the results, risk factors and potential
problem areas. They can also present copies of correspondence with the
Contractor concerning for example amendments to the Cost Statements, etc.
Discussions with these officers will assist the controller in making preliminary
decisions on more specific areas that need to be controlled. At this stage of the
control process, it may be appropriate to discuss the need for the presence of
an Officer during the control.
Audit Tracking on ABAC
In 2006 an audit tracking module was established in ABAC linked to the Legal
Entity File. Since 1 January 2008 it is compulsory that basic details of controls
are input. It also allows DGs to access details of previous controls conducted by
other DGs in providing a contact point able to give all complementary
information. Aims of this system are to promote the single audit approach and
to avoid multiple controls of the same entities. Another aim is to facilitate the
sharing of audit findings between services and to improve risk assessment and
financial management at the beneficiary level.
8.2 QUESTIONNAIRE TO THE BENEFICIARY
Sometimes, it is feasible and useful to send a prior questionnaire to the
beneficiary. It must make it possible to gather together the maximum elements
and documents on the organisation of the beneficiary in order to direct
verification, thus making it more efficient while also gaining time.
If the questionnaire is not sent beforehand, the questions that it contains will be
put to the beneficiary in the course of the first interview.
An example questionnaire is attached under Annexe .
It can of course be adapted to the mission and the type of control being carried
out.
30
9. ANALYSIS
OF INFORMATION
After the Audit file has been completed, an analysis is made on the available
documents. The analysis concerns documents and information available within the
DG and, in some cases documents submitted to the DG by the contractor after a
written request. The purpose is to collect as much information about the contractor
as possible in preparation for the control, and to assemble information that will
enable the controller to assess the control areas and make decisions concerning the
extent of the detailed control work.
Below is a list of control procedures that may assist as a guide in analysing the
information available in the Control File.
Contract
Verify that the contract copy is that of the signed Contract
Verify that the Supplementary Agreement copy is that of the signed
agreement
Verify that the Contract and any Supplementary Agreements are signed by
an authorised representative
Verify if any Significant Specific Project Costs are specified in additional
documents of the contracts (Annexes, etc.)
Verify if any Special Conditions or Specific Annexes of the Project are
specified in the Contract
Budget versus Cost Statements
Compare charges costs in Cost Statement with estimated costs in the Budget.
For this analysis, a spreadsheet can be used.
Compare planned equipment purchases according to Budget, with actual
purchases according to Cost Statements
Periodic Progress Reports
If this point applies to the project, verify from the periodic progress report(s)
who has published (or contributed to) articles arising from the project
Note planned meetings (place and date), to be compared with supporting
documents of travel and subsistence costs
Cost Statements
Verify that the Cost Statements are signed by authorised representatives
Reconcile the calculations (depreciation, fixed contributions etc)
Verify that equipment has not been purchased earlier that 6 months before
the start of the audit
Verify that no account has been taken of exchange gains or losses between
the issues of the Cost Statement and the receipt of any payment
Verify the VAT and taxes status of the contractor, keeping in mind that if a
tax is not borne by the organisation (this normally applies only to VAT and to
those organisation registered for VAT).
Subsequently verify that the
organisation recovers input VAT correctly and in particular verify that there
is no double recovery both from the nation state and from the Commission.
31
If a tax is borne by the organisation, then (as per the above definition) it is a
cost and therefore eligible. This applies to all indirect taxes including excise
duties, stamp duties and to VAT. As regards VAT this normally refers to
organisations who are not registered and who cannot recover input VAT
elsewhere
Verify that major subcontracts have been subject to prior approval of the
Commission if required
Verify that the Commission has given prior approval for travel and
subsistence cost outside Member States and Associated States (not required
for work with participant in these States)
Ensure that account has been taken of any Recovery Orders issued in the
past concerning the contract in question.
32
10.
PLAN
10.1 OSC PLAN

Using the information compiled internally from the analysis of available
information and the initial questionnaire sent to the beneficiary, it is possible to
develop a preliminary OSC plan. This preliminary plan is formed from the list
presented in the annexe of the questions to be asked and/or the controls to be
carried out on site. The most significant points must then be extracted from this
general list. These are the points that will serve as both a preliminary plan to
the OSC and an OSC programme. The plan attached under Annexe
is very
detailed and comes from the plan proposed by DG RTD of the EC.
It can of course be adapted according to:
a) the requirements and scope of the controls wished by the DGs or units of
the EC;
b) the responses given by the beneficiary and the observations made by the
auditors.
This plan, or its adaptation, can serve as a main theme for an OSC, but it must
be kept in mind that the OSC is always a matter of good sense and experience.
Systematically following the plan and nothing more is not necessarily the best
way to carry out an OSC mission. A certain amount of listening skills, intuition
and flexibility remain necessary for the correct completion of an OSC mission.
10.2 WHY A LIST AND AN OSC PLAN?
The Control Checklists on which is built the Control Plan are designed to assist
the controller in the planning and in the implementation of the control
procedure. They thus allow for the correct use of resources.
The Control Checklists consist of lists of questions relating to the examination of
the accounting system and the supporting documents.
The use of the Checklists may facilitate the control in several ways:
From the planning point of view, it will facilitate the preparation for the
meeting with the Contractor and the execution of the control, as the main
part of the questions is applicable to each control.
From a completeness point of view, the method ensures that no important
questions or control areas are overlooked.
From a standardisation point of view, the method gives a possibility to
consider certain questions as standard and therefore, to some extent, to
streamline the information collecting procedure and the controlling
methodology.
From a documentation point of view, the control documentation will be
systematically organised, uniform and sufficiently detailed to provide
evidence to support the control conclusion.
From an evaluation point of view, systematic documentation is a precondition for evaluation. An independent evaluation of the control result, to
conclude whether the control resulted in the correct and relevant
conclusions, can be done either by redoing the control, or by evaluating if
33
sufficient corroborating evidence was accumulated to justify the

conclusions.
From a quality assurance point of view, it is possible to vary these
questions and influence the depth of the investigation, to ensure that a
pre-decided minimum level of quality concerning the information collecting
procedure is achieved, independent of the experience of the controller.
However, the quality of the evaluation of the information collected, and
hence the control as a whole, is still very much dependent on the
individual controllers knowledge, experience and good judgement.
34
11.
PRELIMINARY
OPERATIONS
11.1 CONTACT WITH THE BENEFICIARY

The Contract Management Information Form mentions the name of the person
responsible for preparing the Cost Statements. This is normally the person
who must be contacted to make an appointment. This preliminary contact can
be by telephone.
Decide on a first place and date for the initial meeting. Inform the beneficiary of
the aims, the scope and the preparation necessary for the mission. Also specify
that the officer responsible for project management should be present during
the control. The provisions made by telephone shall be confirmed in writing,
subject to official approval of the mission in the DG.
11.2 MISSION PLAN
The Mission Plan has to be attached to the application for mission approval. The
plan should include information about
- Contractor(s)
- Contract(s) to be audited
- Date for the mission
- Date and time of departures/arrivals and flight numbers
- Day-by -day schedule with references to contract(s) to be audited and
Person(s) to meet,
- Contact details
11.3 CONFIRMATION TO THE BENEFICIARY
The arrangements are to be confirmed to the Contractor in writing. A standard
letter could contain the following:
- Regulatory framework and general aims of the mission.
- Envisaged dates.
- Contacts desired.
- Name of the Commission officials involved and contact person at the
Commission.
- Global timing schedule and main work planned (outline).
- Documents to be held available for the control (e.g. staff register, holiday
sheets, furniture inventory, etc.).
The letter is approved and signed according to the procedures specific to the
DGs.
An example of an announcement letter is attached under Annexe 5
11.4 STARTING DATE FOR THE OSC
Barring any rules specific to the DGs, we can consider that as of the moment
when the beneficiary has been advised of the control, the status of the
controlled subsidy changes from that of Project to that of Under way. We
35
can also consider the date of confirmation to the beneficiary as the starting
date for the OSC.
11.5 UPDATE OF THE DATABASE
The database recording the trace of the controls can be updated by indicating
for each audited agreement, according to the registration no. allocated to it:
that the control has moved from project status to under way status
the starting date for the OSC
persons responsible for the OSC
reason for the OSC (random, on request, etc.)
which mission the audited subsidy is part of
etc.
36
12.
TRANSMISSIBILITY
PRINCIPLE OF TRANSMISSIBILITY
Principle: The OSC file, the OSC plan and more generally all of the
documentation must be organised in such a way that it must be possible for the
entire file to be easily used by another person. Hence the importance of noting
down any relevant information in writing and of including it in the file.
37
13.
RELATIONAL ASPECTS
13.1 INTRODUCTION
The aim of the OSC mission is to collect, in a positive climate, the information
needed to draft a complete and indisputable audit report.
In general, the approach is as follows:
OPENING MEETING
The opening meeting is essential to easing the inevitable tension that occurs
during controls of beneficiaries.
During this meeting, you must introduce yourselves to the others and situate
the framework of the OSC mission. The control must also be explained. A
reminder is given of the functions of the auditor, the aims and the audit
planning. This is a time for becoming familiar with the basic information.
It presents an important opportunity to gather information on the varrious
aspects of the relationship maintained by the beneficiary with the
Commission, in other words the accounting system, internal controls,
agreements, cost categories, how the project took place, the difficulties with
which the beneficiary was confronted, the positive points of the project, etc.
The presence of people such as the project leader, the financial manager and
the internal auditor, who possess valuable information, is therefore essential.
It is necessary for the auditor to prepare carefully for this meeting, with the
help of a list of questions or points to check in order to ensure the best
possible meeting.
VISIT
The visit on the one hand involves questioning the appropriate people and
the assessment of the documents presented in the light of the agreement,
the standards and, on the other hand, the practical verification that actions
which are actually implemented correspond to that which is written in the
procedures and documents presented.
DELIBERATION
This refers to deliberation on the part of the audit team, which compiles and
discusses the information gathered during the visit, the anomalies observed if
there were any, and the summary that will be subject to control during the
closing meeting.
CLOSING MEETING
This is a meeting that allows you to take leave of the visited beneficiary. It is
advisable to be very cautious during this meeting, and reserve ones
conclusions. It can serve to resituate the conditions in which the control is
carried out and to prepare the conclusions, which will be sent officially in
writing by the EC.
38
This meeting can serve to underline the positive points that were noted in the
course of the OSC.
14.
RULES
OF
CONDUCT
14.1 REMINDER OF THE RULES OF CONDUCT
GENERAL PRINCIPLE:
Respect for the external representation of the institution
CODE OF CONDUCT
This code should be developed by the DGs and could cover the following
points:
- Description of the duties of the policy officers
- Respect for the operating procedures and the hierarchy of the audited
entity
- Respect for the work customs of the audited entity
- No original documents kept
GENERAL RELATIONAL PRINCIPLES:

- As far as possible, establish a relationship based on trust (through ones
relational qualities, by demonstrating ones skills, etc.)
- Stay calm and in control under all circumstances
- Also keep control over the execution of the mission
- Know how to show adaptability according to the course of events
IN THE CASE OF A PROBLEM

In the case of a relational or operational problem or a legitimate suspicion:
- Avoid any open conflict
- Refer the matter to the Commission hierarchy in the case of:
- suspicion or discovery of new problems implying an adjustment or
revision of the objectives
- suspicion of fraud
- major relational problems
- hindrances to the mission, preventing its smooth functioning and the
achievement of its aims
14.2 REMINDER OF THE IMPORTANCE OF NON-VERBAL LANGUAGE

Non-verbal language is important during the meetings or interviews with the
various people representing the beneficiary. Pay careful attention to it.
39
15.
THE INTERVIEWS
15.1 CONDUCTING AN INTERVIEW

During the mission, it will be necessary to conduct various interviews with the
people representing the beneficiaries. The aim of these interviews is to answer
the questions in the OSC plan that was drawn up prior to the visit. In general,
the interview could follow the following scheme:
Recap on the aim,

Ask closed questions in order to target the objective to be achieved;
Ask open-ended questions using prepositions (what, when, why, which, etc.),
in order to establish dialogue on the control;
Check that the observed facts tie in well with the aim to be achieved,
otherwise note down the points observed and later:
- Draw the attention of the person responsible for the controlled persons to
the nonconformities observed
- And take them into account in the audit report, basing your argument on
tangible facts, without rushing;
Make sure not to drift away from the aim to be achieved, and if this occurs,
refocus on the subject;
Ask open-ended and comprehensible questions, otherwise reformulate;
Detect the following terms to check the rules of exception (generally
speaking, it need be, if necessary, where appropriate, etc.).
40
16.
EVIDENCE
16.1 EVIDENCE DURING THE OSC

At this stage in the OSC mission, a word should be said on the documentary
factors that will support the observations made during the OSC or during the
analysis of the information that the auditor will have collected. This
documentation will be included in the final OSC file.
Documentation factors may include:
INQUIRIES
These can be in writing or oral and involve the contractors personnel as well as
officers within the Commission. The reliability of evidence from inquiries
depends on, inter alia, the informants competence, experience, independence
and integrity.
DOCUMENTATION
In this sense, documentation means the auditors examination of the
Contractors documents and records. Each transaction in the accounts should
be supported by at least one document.
PHYSICAL EXAMINATION
is an inspection or count of a tangible asset. This type of evidence can be used
to verify the existence of equipment charged to the contract.
OBSERVATIONS
Compared to physical examination, an observation test does not require
detailed physical inspection or examination of documentation, and hence a
person other than the auditor may perform the observation test. However, this
doesnt mean that the auditor should not make observations. Au contraire,
observations are a natural element in any audit.
INSPECTION
is a review, without or with a very brief analysis. E.g. an inspection of the
internal control system would result in a description, but without an analysis of
its proper operation or effectiveness. An inspection of a supporting document
would be a control of its existence, but without an analysis of its reliability in
terms of the existence of the underlying action, completeness, occurrence etc.
ANALYTICAL PROCEDURES
are evaluations of the relationship (ratio) between financial data, or financial
versus non-financial data, to identify areas requiring additional audit attention.
The reasons for using analytical procedures are generally to understand the
41
Contractors business, his ability to finance his part of the project, and to
identify possible misstatements in the financial data
42
17.
DOCUMENTARY CONTROL
17.1 THE DOCUMENTARY CONTROL

If a documentary control proves necessary, and taking account of the nature of
the on-the-spot missions covered within the framework of this training course,
the following guidelines may be applied:
-
This control is carried out prior to the materiality audits, which will be
detailed later;
Depending on the results of this analysis, determine the scope of the
materiality audits according to the degree of reliability presented by the
described procedures
Main phases in an systemic-type approach:
- Presentation by the control of the procedures used, with the help of
diagrams, sketches, circuits, etc.
The preliminary questionnaire, if sent to the beneficiary, may make it
possible to gain time here.
- Appraisal of the observance of the internal control principles
- Conformity testing
- Risk assessment
- Adaptation/adjustment of the subsequent materiality audits
43
18.
ITEMS
TO BE
AUDITED
18.1 RECURRING POINTS DURING THE OSC
INTRODUCTION
During an OSC, it is often the same main cost categories that are remarked
upon. Each category shall be examined in greater detail and the characteristic
remarks shall be mentioned.
Apart from the normal documents that will be mentioned later, any document
can be used to help the auditor in their mission. Example: records of
experience, minutes of meetings, reports, etc.
For the study of documents, interviews with staff, visits to the premises and the
inspection of machines, there is always a margin of interpretation that calls
upon the good sense and experience of the auditor.
Likewise, there are general rules or practices which are pointed out in this text,
but in order to conduct an OSC mission correctly, reference must by all means
be made to the agreement (and its annexes) signed with the beneficiaries. It is
the only reference framework for the relationship between the EC and the
beneficiary.
Right to access to private data during control:
Legal basis: Directives 95/46 et 2002/58 and Rglement 45/2001
"Droits des Personnes concernes: possibilit d'invoquer l'exception de l'art
20 .1 (b): intrt financier des communauts; consquence : information
(ventuellement diffre) sur cette limitation et la possibilit de saisir l'
EDPS".
The EUs general principle is to attempt to protect data but there are certain
limitations to this : for example fighting crime and detecting fraud.
GENERAL METHODOLOGY
In order to control the various costs detailed here during an OSC mission, a
general method can be applied:
Check that the real, current costs are appropriately categorised under the
correct columns of the Cost Statement;
Check whether the costs are presented inclusive or exclusive of VAT;

Check that the costs have indeed been covered throughout the eligibility
period, basing your examination on the details of the invoices or on other

supporting documents;
44
For costs expressed in a currency other than the Euro, recalculate the
conversion to the Euro, basing the calculation on the exchange rate as

defined in the agreement.
Check that the costs linked to the participants or the beneficiaries of the
project are eligible (e.g.: are they definitely all citizens of the EU or associate
countries?);
Check that the costs have not been incurred in a country that is not in the
application zone of the agreement with the beneficiary.
18.2 STAFF COSTS
This is doubtlessly the most important point to control during an OSC mission.
The documentary checks carried out in the offices of the EC by the finance
manager of the project do not always allow you to check the exact scope of the
costs referred to.
The audit of staff costs is certainly the point at which the OSC fully
demonstrates its importance.
In the following case, only the OSC has made it possible to detect that:
Hours worked by a group of researchers from universities B and N have been
declared although they have not been paid for by beneficiary O. The
corresponding amount of 77,278 must be recovered (i.e. 4,225 H for a total of
154,556 overheads included x 50%, representing the share of the EC in the
financing of the project).
It was in questioning the project administrators that it appeared that this staff
had already been paid a wage by a different entity and that its cost had, in spite
of this, been claimed by the beneficiary for the project on which these people
were working.
Again through discussions between the auditors and the project administrators,
it became apparent that there was no intention of fraud, but rather a lack of
knowledge as to the way in which these costs should or should not be included
in the financial progress reports.
NOTIONS OF WORKING TIME

Based on discussions with the staff and on the timesheets, it is possible to find
out about the number of hours worked per year. An indication is given per
number of working days per year. It is calculated as follows:
Number of days in the year
Weekends
Annual holidays
Legal holidays
Illness/other
Working days in the year
365
-104
-21
-15
-15
210
45
This is an indication. Account must be taken of the countrys legislation, the

industrial sector, the labour agreements in force, etc.
Likewise, the beneficiary must be asked how many hours are worked daily by
the various categories of staff.
In their time calculations, some beneficiaries make a distinction between the
time worked and productive time. Productive time excludes activities such
as training hours, conferences, seminars, internal meetings, studies on general
information, etc. However, these activities are included in the time worked.
During the OSC, it is necessary to gain information on the prevailing practice
used by the beneficiary: do they normally use the notion of worked or
productive hours? It is this practice that will justify the choice of one or the
other method in the Cost Statements.
As a rule, however, the majority of beneficiaries use the notion of worked
hours.
The hours counted as having been spent on the project cannot exceed the total
number of workable hours for each person. Otherwise, the beneficiary would
be recovering more than their real staff costs assignable to the project.
It is clear that the beneficiary may only count hours as spent on the project
(with the exception of overtime) if indeed they really have been spent working
on the project.
This point is often awkward to check, and it is one of the most important points
when conducting an OSC. The auditor must in this case call upon their
professional judgement to decide whether the time used for the calculation is
reasonable.
METHODOLOGY
This is a matter of checking the accuracy of the amounts included in the Cost
Statements with the documents available on the spot, on the premises of the
beneficiary, in other words:
1)
2)
3)
4)
5)
6)
7)
The attendance sheets (or timesheets)

(it is generally requested that these be kept on a monthly basis and
certified by an authorised person)
The staff register with the calculation of the monthly wages
The clocking-in system, if it exists
If possible, the wage rate per staff category
The details of calculations by the social secretariat or by equivalent bodies
In certain cases, the individual pay slips and bank account statements
proving that the amounts have really been paid by the beneficiary
In certain cases, the employment contracts for the staff involved in the
project.
46
A detailed control method could be as follows:

Obtain a table (timesheet) for each person participating in the project which
indicates all of the hours spent on the project and the applicable hourly wage
rate (on a periodic payment basis and on a cumulative basis: generally annual).
Check the mathematical accuracy of the table, and compare the totals with the
Cost Statements.
Obtain a copy of the pay register (sometimes the calculations are made by a
body external to the beneficiary) showing for each employee concerned the
wage entitlement, the wage deductions, the net wage, the cost for the
employer during a given reference period (a given month, for example).
For a given sample of persons, reconcile the pay register with the accounts of
the financial accounting system.
Obtain a copy of the taxes and charges retained on wages (source: social
secretariat for instance) and bring them into line with the accounts of the
financial accounting system.
For one of two wage periods, bring the net wage to be paid to some employees
into line with the bank statements that mention the names of these employees.
Calculation of the hourly wage rate
Recalculation of the hourly rate (per person or per staff category) on the basis
of the gross wage entitlement and the taxes and social security amounts to be
paid by the employer for the eligibility period. This gross wage must be divided
by the hours paid for the eligibility period.
Compare with the hourly rate given in the timesheets or the Cost Statements.
Look for and request an explanation for how the difference has occurred.
Assess whether the wages paid comply with the hierarchical level of the
employees participating in the project, or with the rules or ceilings set by the
EC, where applicable.
One method also consists in comparing the hourly rates used in one project
with the hourly rates used in another, using the equivalent staff category.
In Euros
Senior
Junior
Technicia
engineer
Engineer
n
70,000.00
56,000.00 49,000.0
0
Gross yearly wage

Calculation
wage?
method
for
this
Employers social charges
24,500.00
i.e.
Taxes and charges on wages

i.e.
Annual wage charged
35%
4,200.00
6%
98,700.00
19,000.00 17,000.0
0
34%
35%
3,360.00 2,940.00
6%
6%
78,360.00 68,940.0
0
Number of hours worked:
47
216 days x 7h 26 min = 1,608

h/year
Hourly wage worked
Number of productive hours:
155 days x 7h 26 min = 1,154
h/year
189 days x 7h 26 min = 1,407
h/year
Productive hourly wage/project
1,608.00
1,608.00 1,608.00
61.38
48.73
1,154.00
1,154.00
42.87
1,407.00
85.53
67.90
49.00
48
Time spent
For a given sample, research the hours indicated on the timesheets. Do this by
referring to other documents (contracts, clocking-in sheets, etc.) or by asking
different persons.
Check the mathematical accuracy of the timesheets.
In order to assess the reasonable character of the hours on the timesheets,
make the comparison with documents indicating work volume such as the work
plan of the project, a scientific report or project activities report, the
programmes of conferences, minutes of meetings, other publications, agendas,
travel and accommodation tickets, correspondence, mail, etc. By setting the
timesheets against other documents, it is possible to uncover incoherencies or
errors.
The timesheets are generally required to be kept on a monthly basis and
certified by the project manager or by an authorised person.
The number of hours mentioned cannot of course exceed the normal hours
worked for the beneficiary.
Remarks:
1)
2)
3)
Unless otherwise stipulated in the agreement or the general conditions,

the monthly wage is always a real wage, and therefore not necessarily that
which was used in the budget of the project. This point must be checked
during the OSC.
The hourly cost placed on the projects account may not include a profit
margin.
Attention should be drawn to the fact that it is always preferable for hourly
rates to be used, rather than average rates. If, however, the latter is used,
a detailed explanation must be required as to how this average rate was
obtained. The risk here is that the average rate might differ too greatly
from the real rate and therefore generate an additional cost that will be
paid by the EC.
This risk may be minimised by taking account of the following points:
a) The number of staff categories (the less categories there are, the lesser
the error risk)
b) The frequency (monthly, annually) with which the average is calculated.
c) The mathematical accuracy of the calculation of the averages
d) Each staff member has been assigned to their correct category, in view
of their
competence level.
EXAMPLE OF COMMENTS
The hours supplied were managed by a time management software
programme which was replaced in 2001. The files are still available. The
hours worked by the senior engineer (research director) were only entered in
49
the accounts at the end of the project. They were distributed on a set basis at
a rate of 10 hours per month, which seems reasonable to us.
Overall hourly statements were presented to us. We received the specific
data for the project.
The hourly rates are averages calculated by staff category. The calculation of
hourly rates is based on the A.... system, which only takes account of
productive hours: out of 216 days/year (1608 h/year), the engineers supply
155 days of productive work (1154 h/year) and the technicians supply 189
days of productive work (1407 h/year).
In view of the diversity of the staff categories, the hourly rates do not
correspond to collective agreements. The calculation of the hourly rates has
been made for the various staff categories on the basis of pay sheets.
The results obtained were close to the declared hourly rates.
EXAMPLE OF COMMENTS
The 5 staff members do not have personal time-sheets, but an overall
monthly statement records the cost of the hours worked for each project. In a
company with 2 people working on R.... and 3 others on B...., the executive
staff definitely implement a systematic check with their colleagues of actual
attendance and the work carried out.
The auditors therefore consider that the hours charged to the projects are
real and can be paid for the employees.
This comment indicates that any type of evidence may be used, and that you
do not absolutely have to search for a very specific document, unless there is
suspicion of fraud.
It is a question of appraisal on the part of the auditor. Likewise, if all of the
documents expected are produced, this does not mean that everything in
them must be accepted. Here again, it is a matter of good sense and
reference to standards that are either in writing or taken from practice and
observation.
FREQUENT ERRORS
The errors detected on the cost statements during an OSC generally stem
from:
A poor understanding of the contractual clauses
Financial and administrative management of the project by unsuitable
staff
Encoding errors. E.g.: 24 hours instead of 240 hours
Currency conversion errors, e.g.: GBP/EUR
Use of incorrect averages rather than real costs
Hourly rates that are too high and do not correspond to the internal
documents.
Use of an hourly rate or a number of hours taken from the budget that
does not correspond to reality.
50
Excessive number of hours that does not correspond to the internal

documents.
Number of hours declared in the project higher than the worked number
of hours.
Staff employed on a short-time basis and recorded as full time on the
project
Staff mentioned who do not work for the project
Staff mentioned who are working on other projects at the same time
(subsidised or not)
18.3 OVERHEADS
DEFINITION
Also called indirect costs, these overheads are costs that comprise all of
the general administrative costs directly linked to the project management
such as:
communication costs (telephone, faxes, postal items, mail, etc.);
infrastructure costs (rental, electricity, etc.) relative to the premises
being used to implement the project, in proportion to the use of these
same premises;
costs incurred for office equipment;
reproduction costs (photocopies).
The reproduction costs for documents and publications are, depending on the
case in question, included under the "Subcontracting costs" or "Other costs"
columns.
The Overheads column may under no circumstances cover staff costs or
other costs already declared under other entries.
The overheads will generally be calculated on the basis of a % of the total of
eligible costs. This percentage is generally 7%, although it and the method
may vary according to the type of agreement. Refer to the agreement and its
annexes to be certain.
DOCUMENTATION AND EVIDENCE

The amount of overheads is a flat-rate sum. A financial audit or the
submission of corroborative documentation will not be required.
Remark:
If in the Cost Statements there are errors in the other columns, the correction
of these errors must automatically lead to the correction of the amounts
recorded under overheads.
18.4 TRAVEL AND LIVING EXPENSES
DEFINITION AND LIMITS

Only travel and living expenses that are directly linked to the project,
concerning precise activities, clearly identifiable and pertaining to the
51
implementation of the project shall be considered as eligible. They may cover

the expenses incurred by the persons or speakers participating in
conferences or seminars.
Travel and insurance costs are based on the real costs incurred. The most
economical tariffs must be used.
Travel insurance expenses, up to a reasonable amount, are eligible.
N.B.: Expenses incurred by travel outside the countries of the European Union
or associate countries are ineligible without prior express authorisation (in
writing) from the Commission. In general, if the EC does not reply within one
month, the request is considered to be approved.
Accommodation and living expenses are eligible provided that:
they are necessary and reasonable, taking account of the location of the
stay;
they are calculated in accordance with the internal regulations of the
partner in question;
for certain types of agreement, they do not exceed the authorised ceilings
for each person.
CONTROL METHOD
A detailed control method could be as follows for an expenditure sample:
-
make sure that the travel details (origin, destination, dates, aim of the
trip) concur with the supporting documents (reports, files, minutes of
meetings, correspondence, etc.) relating to the conferences, meetings or
workshops (type, place, time) organised for the project.
compare the dates with the timesheets for the employees concerned, to
check that they agree
link the expenditure to the suppliers invoices
compare the invoiced rates to the rates agreed upon with the EC
link the invoice payment to the bank statements
check that the prices are reasonable. Excessive amounts should be
rejected as being extravagant.
FOCAL POINTS
The travel costs for administrative or secretariat staff are not normally
considered to be necessary for the project, and are thus ineligible.
The beneficiaries often assume that as the Swiss Confederation is situated
in Europe, it is part of the European Union. They wrongfully neglect to ask
for authorisation for their travel.
Leisure in the form of dinners and evening functions (unlike the meals
and sandwiches at a meeting that lasts the entire day) are not normally
considered to be necessary for the project.
First class travel may be accepted if it forms part of the customary
practices of the beneficiary for certain categories of its staff.
52
It must be proven that the travel is necessary to the project (rather than
being vaguely related to the sector concerned by the project).
Travel dates must clearly coincide with the dates and duration of the
meetings of conferences (there can be no additional hotel bills).
Recoverable VAT is entered in the accounts
18.5 CONSUMER AND EQUIPMENT GOODS

Costs pertaining to the acquisition (purchase, leasing or rental) of equipment
and of other material are only eligible if they are essential to the realisation of
the project.
Generally speaking:
The choice between leasing, rental or purchase must be based on the

least expensive option. The notion of best value for money applies.
Equipment ordered or, better still, delivered during the project eligibility
period is included. It is important for the final price to be fixed in an
indisputable manner.
The installation, maintenance and insurance costs linked to eligible
material and equipment may also be included, in proportion to the
allocation of the equipment to the project.
The depreciation period and rules are calculated according to the customary
practice of the beneficiary and the country in which they are based.
The complete calculation to enter the equipment expenses in the
accounts is as follows:
(A / B) x C x D
A = duration in months during which the equipment has been used within
the framework of the project
B = depreciation period
C = real cost of the material excluding VAT
D = percentage of use of the equipment on the project
Example:
During the first year (12 months), the admissible costs for computer
equipment of a value of 10,000 EUR, used 50% of the time within the
framework of the project, amounts to 10,000 x 33.33% (12 months/36
months) x 50% = 1,666 EUR.
During the second year, the admissible costs likewise amount to 1,666 EUR if
the percentage of use of the material or equipment remains the same. If,
during this second year, the material or equipment is not used within the
framework of the project, no costs are eligible (depreciation or other).
N.B.: always refer to the conditions of the agreement and its annexes. The
rules in force may vary according to the type of project, agreement, etc.
53
DETAILED CONTROL METHOD

Request a list of all of the purchases made during the eligibility period
indicating:
- the beneficiary or partner concerned;
- the description of the object and the purpose of its acquisition;
- the period of use on the project;
- the price and date of purchase, order and delivery;
- the depreciation methods and amounts;
- the percentage (%) of use in the project;
- the total cost.
Check the accuracy of the list and bring the totals into line with the Cost
Statements.
Bring the totals into line with the accounts of the financial accounts
department.
On the basis of a sample of costs, undertake the following actions:
- link the expenses entered in the accounts to the suppliers invoices;
- link the invoice payment to the bank statements;
- compare the nature and the importance of this expenditure with the scope
of the project in order to ascertain the plausibility of the expenditure.
FREQUENT ERRORS
a)
b)
Incorrect depreciation periods are used;

On the first Cost Statement, the reimbursement of the equipment over
the entire period of the agreement is requested, although only the cost
pertaining to the period covered by the Cost Statement may be
reclaimed;
c)
Depreciation is calculated from a date other than that of the order or
delivery;
d)
The recoverable VAT is included in the acquisitional value;
e)
Some equipment is not used on the project, yet its cost is charged to the
project.
18.6 VAT

a)
VAT is a tax on purchases made by consumers for their personal use

(car, clothing, food, etc.) and on the services that are provided for them
(plumbing, architecture, building work, etc.). It is a percentage (%) that
varies according to the nature of the good or service supplied.
This tax is included in the price paid by the consumer: the seller (or the
service provider) is therefore obliged to collect the VAT amount, charged
to the end consumer, and to then pay this amount to the collector of the
tax, which in this case is the State.
The organisations, companies or persons who make deliveries of goods
or who engage in the provision of services within the framework of their
professional activity are considered as subject to VAT.
54
They must subsequently request a VAT number and then, in order to

ensure the actual recovery of the tax by the State, draft invoices, make
regular VAT declaration submissions, pay the amounts collected in this
way and draw up a list of their clients each year.
The main characteristic of the system is therefore the obligation for
each organisation, tax-paying company or person to increase the price
of the product or service by the VAT amount.
The seller or service provider is then obliged to pay the sums thus
collected to the VAT receiver, with deduction of the sums that they
themselves had to pay on purchases for professional purposes (they
therefore only pay the difference between these amounts).
b)
VAT is not an eligible cost.

There is sometimes an exception in the case when the beneficiary
justifies that they cannot be subject to the tax or that they cannot
recover it. See the various documents.
FREQUENT ERRORS
The expenditure invoices are entered in the Cost Statement by including
VAT (recoverable).
On the basis of a sample of invoices, check that the Cost Statement
does not include this VAT.
18.7 INTEREST ON PRE-FINANCING

If a beneficiary receives pre-financing then they have the opportunity to earn
interest on this advance. How this is treated depends on the value of the
prefinancing:
-
Below 50,000 no action taken to recover any interest that may have
been generated.
For pre-financing above 50,000 the beneficiary should either hold the
balance of the pre-financing is a separate account or have an accounting
system capable of tracking specific receipts and disbursements so as to
be able to demonstrate the balance on hand.
- On pre-financing up to 750,000 the interest earned is deducted from
the actual cost claim. i.e. stays on the budget line
- Above 750,000 it should be treated as non-assigned revenue and a
recovery order should be raised.
18.8 SUB-CONTRACTING
Below 60,000 requirements placed upon the beneficiary is to ensure:
- Best value for money.
- No conflict of interest.
Above 60,000 procedures in line with the Financial Regulations may be
imposed.
18.9 INELIGIBLE COSTS
55

The following are considered to be ineligible costs:
- return on capital;
- debts and servicing of debt;
- provisions for losses or possible future debts;
- borrowing rates;
- doubtful debts;
- conversion losses;
- costs declared and covered within the framework of another action or
working programme triggering Community subsidisation;
- immoderate or ill-considered expenditure.
56
19. MISSION REPORTS

19.1 INTRODUCTION
According to the DGs or units, the OSC reports may be organised per mission
(one mission comprising several projects, in the same geographical region),
per project or per beneficiary.
All systems are valid on the condition, of course, that it is possible to quickly
retrace which project or beneficiary has been visited, when and what the
results of the OSC were.
It is important to remember that the mission reports must be drafted as quickly

as possible upon returning from the OSC mission, failing which certain details
and nuances observed may be forgotten, even if notes were taken. Furthermore,
a rapid reaction is necessary when the poor use of funds has been observed and
it is necessary to recover unduly received amounts, or even to cease allocating
new projects to the beneficiary.
19.2 STRUCTURE OF THE MISSION REPORTS
SUMMARIES
A mission report could be composed of a summary of the mission with the
name of the beneficiaries visited. By way of example, see a mission report
under Annexe
A presentation report from the beneficiary makes it possible to situate the
context of the projects that were audited. See an example of this report under
EXECUTIVE SUMMARY
This is a concise summary including the major points of the agreement and
the main remarks, particularly if too much has been received by the
beneficiary. Its structure must be specified according to the internal
procedures of the DGs.
By way of example, see two Executive Summaries under Annexe
DETAILED REPORT
The detailed report could contain the following points:
- subject and presentation
- motivation
- reference to possible significant problems that may have hindered the
smooth functioning of the mission
Account of the controls:
Systems approach:
- weaknesses and scope
57
specific conclusions and recommendations
Operational controls (eligibility/regularity/materiality):

- detail on errors and/or problems encountered
- systemic character or otherwise of these problems
- specific conclusions on the eligibility and receivability aspects
- financial effects: corrections or not (with possible extrapolation)
/recovery/cut in support/amendment of the financial data
In cases where errors have been encountered, they may be classified, as
already mentioned earlier, as:
-
irregularities, which are intentional distortions in the CS;

errors, which are unintentional mistakes or omissions in the CS;
remarks, which are harmless observations that do not lead to financial
adjustments.
Each irregularity or error may be given a weighting: 10 for irregularities, 1 for

errors, 0.1 for a remark. This makes is possible to qualify the control that
has been carried out. And to give the project and the beneficiary a grade
that will be kept in the database and used to select future OSC missions. On
this subject, see point The types of selection .
General Conclusions
- General assessment:
- Approval/rejection/reservation with justification
- Additional information to be received
- Summation of commercial papers and terms of collection
- Summary of specific/general recommendations
- Actions to take by control with provisional timing
- Announcement of a possible additional control envisaged
- Warning of a possible referral to the Court of Auditors (for information or
other)
- Warning of a possible referral to OLAF (suspicion of fraud)
A standard report proposal is attached under Annexe It includes a summary of
the observations, and can be used to generate a database of OSC missions.
Another more literary report example can be found under Annexe 10
A table summing up the ineligible costs can also be produced, such as Annexe
19.3 NOTIFICATION TO THE BENEFICIARY
By the time of the OSC conclusion, the beneficiary has been orally informed of
the conclusions that were drawn by the auditors. Certain corrections have
perhaps already been made in the meantime.
In any case, the beneficiary must be officially notified, especially if amendments
or corrections are necessary, or if financial adjustments are to be made.
An example of a letter of conclusion can be found under Annexe
58
20. FOLLOW-UP
20.1 THE NEED FOR A
AND OPERATION
FOLLOW-UP
All on-the-spot check missions and reports that result from them would be
useless if a follow-up organisation or procedure were not established and
rigorously respected.
20.2 THE STAGES
The follow-up comprises the following stages:
FOLLOW-UP OF FINANCIAL IMPLICATIONS

-
These are taken from the report conclusions and include:

the launch of recovery procedures
the notification of the various people involved, the Commission, possible
future adjustments to provide for
RECEIPT OF ADDITIONAL INFORMATION
If this has been requested, make sure that the desired additional information
is received in due time.
It may be that the final results of the OSC depend on the receipt of
documents, and that without these documents, adjustments could take place
or sanctions be taken.
- Re-evaluation of the conclusions, subsequent to the receipt or not of
additional information.
- Preparation and distribution of an additional report (note) for the attention of
the audited entity. This will constitute the final conclusions.
-
SPECIFIC RECOMMENDATIONS
After the OSC, specific recommendations on the audited projects may be

made. In this case, the following should be provided for:
A follow-up schedule, according to the main character of the
recommendations.
Any information on the different people involved in the Commission
The assessment of developments in the implementation of any subsequent
actions to be undertaken
The extrapolation of the conclusions to other similar agreements or other
similar entities/bodies
Special follow-up in the case of referral to OLAF
GENERAL RECOMMENDATIONS
These may consist in the extrapolation of the conclusions to the very nature
of the types of intervention and financing concerned, namely the
continuation, renewal or discontinuation of similar actions. Based on the
findings, a research for potential systemic problem will be regularly done. The
potential problems will be transmitted to the AOSD concerned for a
complementary expertise.
Regularly, an activity report should be sent to AOD detailing the the control
carried out beneficiaries selected / controlled; global results; specific cases
59
and potentiel systemic problems. This should be fed back in to the selection
process so as to enhance the criteria for selection.
FOLLOW-UP TOOL
It is necessary to systematise the follow-up actions that stem from the onthe-spot check, and to list them on a database that can be accessed by all
those involved in the financial and administrative control of the project: the
project manager, finance manager, on-the-spot auditor, etc.
Likewise, it should be possible for those DGs who are likely to be interested
by the beneficiaries audited by other DGs to have access to this information.
Ex Post Control Network (EPCnet):

http://www.cc.cec/budg/dgb/interdg/dgb-080-080_epc_en.html
Network open to ex post controllers; possibility to be registered

and to receive meeting request. Every DG having an ex post
function has designated a representative.
Currently, discussions to arrive to a common definition (in French) applicable

in all management modes: "Le contrle ex post, qui est optionnel et spar
la fois de la vrification ex ante et de l'initiation d'une opration, a pour but
d'accrotre l'assurance de lordonnateur dlgu quant au bon usage des
fonds communautaires dont la Commission la responsabilit en vrifiant la
bonne excution des oprations dj finances (postrieurement au
paiement intermdiaire ou final) au regard de la rgularit et de la conformit
ainsi que la bonne gestion financire. Ces vrifications, qui sont menes sur
pices et/ou sur place, peuvent tre organises par sondage sur la base
d'une analyse de risques (Art. 47.4 des ME) ou par chantillonnage alatoire.
Sur la base des constatations opres, l'efficacit des composantes de la
chane de contrle (Gap assessment ; communication du 13/01/2006 SEC(2006) 49/2) sera apprcie."
60
On-the-spot Check Manual
ANNEXES
61
21. ANNEXE EXTRACTS
OF CONVENTION MODEL AND ANNEXES
EUROPEAN COMMISSION
XXXXXXXXXXX DG
Management of resources
System audits & ex-post controls
COMMENTED AUDIT REPORT

XXXXXXXX
XXXX XXXXXXXX
Unit: XXX/X/0
XXXXXXXXXX
Participating officials:
XXXXXXXXX
XXXXXX
DG/00/00
DG/00/00
Subject:
Audit of the grant agreement XX/000/0000 between the
European Communities and XXXXXXXXXXXXXX, to cover the operation entitled
"XXX XXXXXXX"
Place and dates:
XXX, 00-00 /0000/ 2009
Representatives of the beneficiary met:
Mr XXXXX Director,
Mr XXXXX Project Manager
Mr XXXXX Project Manager
Mr XXXXX Director,
Mr XXXXX Financial Manager
Mr XXXXX Director of Administration
Report written by: M. XXXXX
Date of issue of the report:
00 /00/2009
Visa by the Head of
Sector
Signatures
XXXXX
XXXXXXX
62
Audit Report:
XXXXXXXXXXXX/ XXXXXXXXXX
XXXX XXXXXXXXXXXX
EXECUTIVE SUMMARY:
Object:
This audit covered expenditure under Grant Agreement XX/00000/00000
(SI2.000000) of 00/00/2000, signed with XXXXXXXXXX of XXXXXX. The subject of
the agreement is a financial contribution from the European Commission to the
operation entitled "XXXX XXXXXXXX", namely 50,39%.
The budget line concerned is B0-0000.
The estimated total eligible cost of the operation was 000,-.
Amount committed by the Commission : 0000,-.
Total amount paid by the Commission: .
Main findings:
The presentation of the documents did not easily allow to make the link between
the declaration sent to the Commission, the accounts and the justifying
documents. A considerable effort was needed to link the declared amounts with
the accounts and the auditors believe that the beneficiary has attempted to
reconstruct the declaration at the time of the audit on the basis of the project
costs indicated in the ledger, in such a way to cover at least the amounts
declared. This was not always possible. From the XXXX part of the declaration,
the auditors have to reject 000000.
On the basis of the initially presented documents by the XXXX partner and
Assisting project co-ordinator XX Ltd, the auditors were not in a position to
accept the expenses as declared. They requested the submission of a correct,
complete and transparent declaration substantiated with justifying documents
and additional information. The additional information and documents received
at the occasion of the contradictory procedure allowed the auditors to accept
000000. This means a rejection of 0000.
The XXX partner has submitted an overview of expenses and a number of
photocopies of supporting documents. There is no indication on how the
contribution in kind has been determined or valued. The 'statements' for travel
and accommodation costs cannot be accepted. On the basis of the presented
documents, the auditors can accept 00000. This means a rejection of 00000.
At the occasion of the contradictory procedure, no additional information was
submitted. Apparently, the organization does not exist anymore.
On the basis of the initially presented documents by the XXX partner XXX, the
auditors were not in a position to accept the expenses as declared. They
requested the submission of a correct, complete and transparent declaration
substantiated with justifying documents and additional information.
The
additional information and documents received at the occasion of the
contradictory procedure allowed the auditors to accept 0000. This means a
rejection of 0000.
The XXXX partner XXXX has only sent a number of photocopies of supporting
documents without an overview nor indication of how the expenses were booked
or calculated. The auditors made a considerable effort to try to reconstruct from
these documents the declared amounts. On the basis of this, they can accept
63
0000 for the XXXX partner. This means a rejection of 0000. On the date of
issue of this commented report, no additional information has been received by
the auditors.
The total income, after deduction of the amount covering the costs declared as
non-eligible by the Commission, is not higher than the agreed minimum %
specified in the Grant agreement.
Conclusions and Recommendations:

1) If the beneficiary would wish to be eligible for future grants from the European
Commission, he has to considerably improve its financial management in order
to be able to present a transparent, complete and correct declaration of
expenses, i.a. by using consequently the correct booking codes per type of
expense. The reconciliation of the amounts declared with the accountancy and
the underlying supporting documents should be easily possible.
2) The beneficiary should also be aware that as the co-ordinator he is responsible
for the financial reporting as a whole. The co-ordinator must request from all the
partners detailed and specified reporting supported by justifying documents.
3) The auditors recommend for the future to introduce signed presence lists for all
meetings of which the costs are declared.
4) On the basis of the available data and documents, a number of declared
expenses has to be rejected, namely from the partners: see under Findings and
the tables in Annexes 1 and 4. The total of rejected expenses amounts to
00000.
5) On the basis of these findings and corrections, the final amount of admissible
grant is 50,39% of the total accepted cost: 50,39% of 00000 = 000000.
As the European Commission already paid 0000000, the auditors recommend
to recover 0000000.
64
Audit Report:
XXXXX /XXXXX
XXXX XXXXXXXXX
INTRODUCTION:
OBJECTIVES OF THE AUDIT
The audit was conducted to check the reality of the subsidized activities, the
conformity with the conditions laid down in the grant agreement, and the reality,
accurateness and correct charging of the declared expenditure. It was also verified
whether the declaration by the beneficiary includes all the revenue generated
during the period covered by the agreement or income deriving from other sources.
REFERENCE GRANT AGREEMENT AND BUDGET LINE
This audit covered expenditure under Grant Agreement XX/00000/0000
(SI2.000000) of 00/00/2000, signed with XXXXXXofXXXXX. The subject of the
agreement is a financial contribution from the European Commission to the
operation entitled "XXXX XXXXXX", namely 50,39%.
The budget line used is B0-0000: "XXXXXXXXXXX"
THE BENEFICIARY XXXXXXXXX/XXXX OF XXXXXX
XXXXXXis maintained by the XXXXX Joint Authority for Vocational Training (= XXXX)
and the highest authority is exercised by the General Assembly of the Joint
Authority, with the Executive Board operating under its authority. The administration
of XXXXX is arranged as a public service belonging to the XXXXX having XXXXXX,
selected by the General Assembly of theXXXXXXX.
The XXXXXXXX is an XXXXX of higher education originally founded in 1894. In 1960,
the XXXXX began to educate engineers and in 1996 it has been incorporated in
XXXXXX. The XXXXX of XXXXX accounts for 40% of XXXXXX total annual new
students and has more than 2000 full time students. It has foreign partners in 22
different countries around the globe. Its aim is to internationalize and develop its
education methods by co-ordinating and acting as a partner in several projects
funded by the European Union.
The XXXXX of XXXXXX co-operates closely with companies, XXXXXXXX
The general sources of income are:
about 85% from the government of which 50% derives from the municipalities;
about 15% from the sales of publications and services;
occasionally grants from industry or organizations for specific projects;
occasionally grants from the European Commission.
XXXXXX now shares the accounting system with XXXXX (part encoded as XXXXX),
but at the time of the project the accountancy was in a transition phase. The
financial year runs from 0 January to 00 December. The computer-accounting
system used since more than 10 years is XXXX. The members of the internal
Auditing Department are delegates from the owner municipalities. The external
auditor Oy Audiator Ab audits the financial statement as presented by the Board.
Paid VAT can be recovered so all declared expenses are (to be) VAT-excluded.
Internal rules exist for travelling, use of mobile telephone, planning and
management of projects (technically and financially).
65
THE PARTNERS
InternationalXXXXXXX Belgium is Assisting project co-ordinator as well as cofinancing partner.
4 transnational partners, who also co-financed the project:
XXXXXX
XXXXXX
XXXXXX
XXXXXX
13 national/regional/local partners, as participants to the activities:

- XXXXX
-XXXXX
-XXXXX
-XXXXX
THE GRANT AGREEMENT
SUBJECT OF THE AGREEMENT
The application was based on the Call for proposals XX/000/00 published on
00/00/1998 in the Official Journal C000 p. 00-00.
This project focuses on increasing female participation in information and computer
technology education and professions in selected regions of 4 participating EU
countries. These countries have a common denominator of a significant shortage of
XXXX. The approach in XXX is to design, develop and pilot a program by which is
attempted to influence pupils/teenagers/young adults in their education and career
selection through their teachers, tutors and parents. The developed material and
methodology used is disseminated nationally and Europeanwide through
organizations involved in the project as 'Best practices of equal opportunities
enlightening actions among XXXX in Europe'.
DURATION
The period covered by the agreement is 12 calendar months starting 00/00/2002.

Only expenditure incurred during this period is eligible. The actual work started in
September 2030. The beneficiary received the grant agreement for signature in the
beginning of October 2030.
BUDGET
The estimated cost of the work programme was 0000,-.

Amount committed by the Commission : 0000,- (co-financing rate of 50,39%); this
is the maximum financial contribution from the Commission.
No contingencies are accepted as part of the forward budget (Art. 3.1 of the Grant
Agreement). According to the Call for Proposals (XXXXXX) " a minimum of 15% of
the total acceptable project costs must be cofinancing in cash. Contributions in kind
66
can be taken into account up to a maximum of 25% of the total acceptable project
costs."
FINANCIAL FLOW
Amounts paid by the Commission:

advance payment of 30%:
0000
advance payment of 40%:
00000
final payment of
00000
-----------------------------------------------------------in total:
0000000
FINAL DECLARATION OF EXPENDITURE
The breakdown, per heading, of the expenditure is provided

HEADINGS
Provisional budget Expenditure
as
as annexed to the declared by the
agreement in
beneficiary in
1. Contributions in
kind
2. Staff
3. Travel
4. Services
5. Administration
6. Contingencies
7. Overheads
TOTAL COST
below:
Expenditure
as
accepted by the
operational
unit
before the audit
000,-
000000
00000
000,000,000
000000,000
00000
000000
00000
0000
0000
0000,00000
000000
00000
00000
00000
0000
00000,00000
0000000
* The rejection of 000000 staff costs is because of the exceedence with more than
10% of the budgeted amount. The rejection of 00000 overheads is because the
overheads are limited to 7% of the total amount of eligible direct costs.
67
22. FINDINGS
THE XXXXX CO-ORDINATOR XXX XXXXX
The auditors performed an in-depth check of a sample of the supporting
documentation relating to the activities foreseen under the work programme. The
following observations arise:
Preliminary remark
1) The presentation of the documents did not easily allow to make the link between
the declaration sent to the Commission, the accounts and the justifying
documents. The beneficiary could often not indicate how the amounts declared
to the Commission had been calculated. A considerable effort was needed to link
the declared amounts with the accounts and the auditors believe that the
beneficiary has attempted to reconstruct the declaration at the time of the audit
on the basis of the project costs indicated in the ledger, in such a way to cover
at least the amounts declared. This was not always possible. It must be clear
that this practice is not good financial management and unacceptable in future.
Where the costs declared were less than indicated in the ledger, the auditors
have accepted the costs.
Heading 1 Contributions in kind
2) As contributions in kind, the beneficiary declared staff costs for work devoted to
the project but not paid by the European Commission. The calculation of the
value of this in kind was done on the basis of the working hours of 4 persons on
the payroll of XXXXX and 4 persons (teachers) employed by the XXXXX. The
working hours of the XXXXXX XXXX are included in the Working time record
(see Heading Staff costs). The exact value could not be checked in the
bookkeeping as these staff costs were not booked on the XXXX-project, but are
part of the overall staff costs of the beneficiary or of the City of XXXX.
Heading 2 - Staff costs
3) For the duration of the project, a Working time record was presented enlisting
the persons who had worked on the project, their tasks and the time devoted to
these tasks. As required by XXXX law, independent external service providers
have to be put on the payroll for the duration of the service. The salary cost
found in the ledger booked on the XXX-project is 00000 while 0000,- has
been declared.
Heading 3 Travel
4) A sample of supporting documents for travel and accommodation was checked
and found to be correct. Flight tickets are booked through a travel agency called
XXXX and directly paid to it. Often, boarding passes are replaced by the use of a
reservation number and passport. The split between travel costs and
accommodation costs was not always precisely applied (codes 4424 and 4425).
The ledger enlists 00000 travel and accommodation costs for the conference in
June 2001; 0000,- has been declared. The ledger enlists in total 0000 travel
and accommodation costs; in total 0000,- has been declared.
68
Heading 4 Services
5) For this heading, it was extremely difficult to reconcile the amounts declared
with the ledger. Part of this work had to be continued after the on-the-spot
check. Therefore, the number of samples taken from the supporting documents
was more limited than the usual sample drawn by the auditors. The auditors in
priority paid attention to the risk of double claiming of the same expenses. The
auditors had requested the beneficiary to send explanatory information on how
the amounts declared on this heading have been composed. The beneficiary has
sent shortly after the audit an Excel-sheet concerning the items 8a, 8b, 8c, 8d
and 10d.
6) Item 8 Information dissemination costs was subdivided in 4 parts.
For publications and printed matter other than for the conference (item 8a), the
auditors find in the ledger 000000 (under code 4403 except the amounts
booked on the conference) while 0000 has been declared. In the Excel-sheet,
the beneficiary enlists bills (all retrievable in the ledger) for a total of 0000.
Consequently, the auditors can accept the declared amount of 00000,-.
For Audio-visual material other than for the conference (item 8b), the Excelsheet enlists 2 invoices, appearing in the ledger, which make up 0000, while
000,- has been declared. To reject: 00000.
For publications and printed matter for the conference of June 2001 (item 8c),
the auditors find in the ledger (part conference) 00000 under code 4403 which
corresponds with the declared amount. The beneficiary indicated in the Excelsheet a different list of receipts corresponding with 00000. All the receipts
enlisted can be retrieved in the ledger. The auditors can accept the declared
amount of 0000,-.
The 0000 of item 8d, covering the costs of the audio-visual material for the
conference, can be found by combining the amounts booked under codes 4600
and 4650 ( 000 + 0000). The Excel-sheet enlists partly different amounts
leading to 00000. The auditors can accept the declared amount of 0000,7) The declared translation costs for the conference (item 9b) appear to be staff
costs for 2 interpreters for the months of May and June 2001. The auditors have
received copies of their salary sheets of these months. Their working hours are
included in the 'Working time record' (see Heading Staff costs). However, the
auditors cannot accept more staff costs than indicated in the ledger.
Consequently, they can only accept the amount making up the difference
between the total staff costs in the ledger and the amount declared as staff
costs
under
Heading
2:
000
minus
0000,=
0000. To reject: 0000,- (declared) minus 000 = 0000.
8) For item 10d 'Other subcontracting/conference', the Excel-sheet enlists 2
amounts ( 000 and 000) which appear in the ledger but are dated outside the
eligible period. Unless the beneficiary can proof that these expenses were
incurred within the eligible period, these amounts have to be rejected. The
amount 000 cannot be found in the ledger. To accept: 000; to reject: 000,(declared)
minus
000 = 0000.
9) For other services/local transport for the conference (idem 12b - code 4840)
0000 can be substantiated with 2 invoices. The auditors could accept that some
of these costs have been erroneously booked under code 4424 or 4425 but can
only accept the difference not yet claimed (see Heading 3 Travel conference:
69
000 minus 7 849,-) = 000. This leads to 000 which can be accepted by the
auditors.
To reject: 000 minus 000 = 00000.
Heading 5 Administration
10)
Although it is plausible that the beneficiary incurred expenses for financial
services such as bank charges, without any indication where to find them in the
ledger nor supporting documents, the auditors cannot accept this cost. To reject:
000
Heading 7 Overheads
11)
The Overheads are limited to maximum 7% of the total of the accepted direct
costs as stipulated in the Grant Agreement. The accepted total direct costs are
0000; the accepted overheads are therefore 0000. They do not need to be
backed up with supporting documents.
THE XXXX PARTNER/ASSISTING PROJECT CO-ORDINATOR XXXX
12)
XXXXXX is registered in XXXX as a commercial companyXXXX has presented
3 listings of expenses (2000, 2001 and overview) and a number of photocopies
from bills or payments. The listing providing the overview for the whole project
does not correspond with the listing detailing the activities in 2001. Amounts are
put in different columns; e.g. an amount under evaluation (E) is also included
under heading 2: staff costs. The totals in the listing of 2001 are not correct.
At the occasion of the contradictory procedure, the XXXXX partner has sent a
corrected listing in Excel-format. The totals do not fit the declaration as
submitted by the co-ordinator XXXXX. The budgeted amount for overheads
differs. A number of photocopies of supporting documents are annexed, most of
them the auditors already received on-the-spot. The listing is not further
explained. A detailed list of meetings is not included.
13)
The number of hours spent on the project are not substantiated with time
sheets or other. The auditors did not receive the requested detailed description
of the tasks performed including the hours devoted to those tasks. However,
considering the additional information received from XXX (although the auditors
would have wished more precise details), the reasonable hourly rate used, and
the corrected amount for staff costs ( 000,- while 0000,- budgeted), the
auditors are prepared to accept the corrected staff costs ( 0000,-), as this is a
plausible and reasonable amount. However, under item 11a, more working hours
are claimed as 'evaluation costs'. In the absence of information and evidence of
the opposite, the auditors can only presume that all working hours, including the
ones devoted to evaluation tasks, are included under staff costs. The auditors
have to maintain their rejection of the costs claimed as evaluation costs. The
auditors understand from the supplementary information from XXX that the
dissemination activities were covered as contribution in kind, not to be declared
as staff costs. In the corrected listing, staff costs and dissemination costs do not
overlap. Several costs, declared earlier as travel or accommodation costs, have
now been included under contribution in kind. The auditors are prepared to
accept the contribution in kind but limited to the amount as declared in the
70
official declaration of expenses by the co-ordinator, namely 00000. The

amounts declared in the official declaration are the maximum amounts that can
be accepted. The auditors cannot accept additional declaration of expenses
afterwards.
14)
For transport costs, the auditors can only accept costs clearly linked to an
activity that is part of the project. As a detailed list of activities and events (with
dates, places, participants) is still missing, these links are not always clear.
Moreover, with reference to the Grant Agreement, car journeys are reimbursed
within the limit equivalent of corresponding first-class train tickets. This priceinformation has not been provided by the beneficiary. The auditors made the
effort to retrieve this information for the journey from XXXXX airport and back,
and are prepared to accept this cost whenever obvious that this journey has
taken place. Consequently, costs for parking are not accepted.
On the basis of the information received on-the-spot and at the occasion of the
contradictory procedure, the auditors can accept the following expenses:
- the travel costs to the kick-off meeting in Austria in Sept. 2000
(car travel reimbursed within the limit equivalent of corresponding first-class
train ticket see Grant agreement Annex III par. 4.2): 90,- transport Blijham to
Schiphol and back; 279,91 flight ticket (both item 7b);
- the travel costs to and accommodation costs in XXXX in Nov. 2000: 90,transport airport; 360,87 flight ticket; 201,42 hotel; 18,08 meal (all item
7b);
- the hotel costs and meals for 1 person in Luxemburg: 422,41 hotel; 20,2
meal; 51,19 (half of restaurant bill for 2 persons) (all item 7a);
- meal in XXXXX: 30,68; meal in Graz: 15,19 (both item 7a);
- the rent of equipment for the meetings in Jan. (Luxemburg and Hamburg), May
and June 2006: 3 000,- (heading 4);
- the flight ticket from Amsterdam to/from XXX 5-10 June 2001: 0000 (item 7d);
transport to airport and back: 00,- (item 7b);
- the hotel costs in XXXXpaid on 10 June 2001: 514,99 (item 7c);
- the flight ticket to Austria of April 2001: 378,32; transport to airport and back:
90,- (both item 7b).
The total accepted costs for the Belgian partner including 7% overheads
calculated on the direct eligible costs, amount to 20 168,94. XXXX Ltd declared
38 945,076, this means a rejection of 18 776,14.
(See overview table of accepted costs in Annex 1)
THE XXXX XXXXXXXXX
15)
The XXXX partner has submitted an overview of expenses and a number of
photocopies of supporting documents. Nothing is mentioned on the 0000,declared as contribution in kind. Without any indication on how the contribution
in kind has been determined and valued, the auditors cannot accept this.
To reject: 00000,-
71
16)
For staff costs, the overview does not correspond with the declared amount
nor with the statements per person. The auditors have recalculated on the basis
of the declared day rate (divided by 7,5 gives the hourly rate) and the number of
hours declared as worked for the project. It is remarkable that the Dutch partner
declares to have started working on 1 July 2000, while the co-ordinator only
started in September 2000. But the auditors are prepared to accept as the Grant
Agreement stipulates 01/07/2000 as starting date of the project.
The result of the recalculation is 00000 as acceptable costs (see Annex 2).
Consequently, the amount to reject is the declared 0000,- minus 0000 =
0000
17)
For travel and accommodation costs, a listing (mentioning name, date, from
where to where, kind of transport, costs) and a number of hand-written
statements are presented in photocopy. The auditors cannot accept these
statements: they are unspecified, incomplete, not signed and supporting
documents (e.g. tickets) are missing. The listing on its own constitutes no
evidence. A number of lines are not backed up with a statement. A number of
statements cannot be linked with the listing.
The auditors can only accept 1 590,- for 2 flights to Linate in November 2000
supported by an invoice from XXXX reisbureau. Costs on invoice 703/0228906
from XXXX reisbureau could eventually be accepted if it can be clarified when
the flights took place, by whom, why one to Vienna and one to XXX (almost triple
the price to Vienna). The accommodation cost on the same invoice could
eventually be accepted provided clarification and justification are given. For the
future, the auditors request that flight tickets and boarding passes (whichever
available) are presented as well. To reject: 9 263,- minus 1 590,- = 7 673,18)
The amounts declared for services (including subcontracting) and the
overview of expenses do not fit. On the basis of the overview and the presented
supporting documents, the auditors could find justification for 791,45 (see
Annex 3). The invoice for a brochure "delivered to XXXX" could eventually be
accepted if it can be demonstrated that this brochure was produced in the
framework of the project XXXX and a copy presented. No subcontracting for the
conference was foreseen, but 3 invoices (the one from 7/05/2009 is only half
photocopied) were presented for organizational work for the conference by
Business support. However, they have not been declared. Consequently, the
auditors
have
to
reject
2
786
minus
791,45
=
1 994,55.
The total accepted costs for the Dutch partner amount to 17 546,04 plus 7%
overhead gives 18 774,26. As XXX declared 43 690,2, this means a rejection of
24 915,94. At the occasion of the contradictory procedure, no additional
information was submitted. Apparently, the organization does not exist anymore.
72
XXXXXXXXXX
19)
Also the XXXX declaration of expenses is far from clear. Several listings were
given with different distribution of the expenses over the headings and
subheadings. With considerable effort, the auditors can retrieve some declared
amounts from the listings, but the few provided supporting documents cannot be
linked with the listings nor with the headings in the declaration.
Consequently, the auditors were not in a position on the basis of the presented
documents to accept the expenses as declared by XXXXX. Therefore, they
requested the submission of a correct, complete and transparent declaration of
expenses (and income) respecting the headings, substantiated with (readable
photocopies of) justifying documents, a detailed list of meetings, and a detailed
description of the tasks performed including the hours devoted to those tasks. At
the occasion of the contradictory procedure, the auditors received from XXXXX
an overview (balance) of expenses for the XXXX project and a number of (copies
of) justifying documents arranged per heading. The totals (per heading) do not
fit the overall declaration as submitted by the co-ordinator, except for the total
for staff costs. In the overall declaration, no expenses are declared for services
(heading 4), while XXXX now indicates a total of 12 622,91. The budgeted
amount for overheads differs. The declared income generated by the project fits
the overall declaration.
20)
On the basis of the additional information, the auditors are prepared to
accept the declared staff costs ( 0000,-).
21)
Overall, the travel and accommodation costs can be backed up with
documents. However, the costs of car travels are acceptable only up to the limit
of first class train tickets. In the absence of any precise information (from where
to where, distance, price of equivalent train ticket 1 st class), the auditors have to
reject the costs of car travels, including parking and toll. They also cannot accept
under travel costs the purchase in the Fotocorner, nor the entrances to the
Thermalquelle. This results in 9 210,79 that can be accepted under heading 3
(for details see Annex 1).
22)
Under heading 4 Services, nothing has been declared in the official
declaration submitted by the co-ordinator. Consequently, the auditors cannot
accept additional declaration of expenses afterwards.
23)
Overheads are accepted at a flat rate of no more than 7% of the total amount
of eligible direct costs. They do not need to be backed up with supporting
documents.
24)
As contribution in kind, XXXXX declares a number of personnel costs of
employees who have been working for the project. The auditors can accept
73
these costs as contribution in kind, limited to the amount indicated in the official
declaration, namely 0000,-.
25)
XXXX includes evidence that they received from the province of XXXXX a
financial contribution of 2 475,89 for XXXXX-project.
Summarized, the auditors can accept in total 00000 of the costs declared by
the co-ordinator for the Italian partner. As 23 967,4 has been declared, this
means a rejection of 00000.
THE XXXXXXXXXX
26)
The XXXXX partner has only sent a number of photocopies of supporting
documents without an overview nor indication of how the expenses were booked
or calculated. The auditors made a considerable effort to try to reconstruct from
these documents the declared amounts, although this is not their task! Their
findings are the following:
27)
No mentioning or indication of how the contribution in kind was determined
or valued. To reject: 00000.
28)
For the total of the staff costs, on the basis of the time sheets and salary
sheets of 3 persons, the auditors could accept 5 964,56.
XXXX
00 hours at an hourly rate of 19,14 =
00000
XXX
00000
XXXXXXX
00000
To reject: 000000
29)
For heading 3, in the absence of justification that Ms XXXX and Ms XXXX were
actively involved in the XXXX-project and not just accompanying their husbands,
the auditors could accept the following amounts:
item 7a) ATS 32 997,13 = 2 397,99
item 7b) ATS 13 458,- = 978,03
item 7c) ATS 21 588,6 = 1 568,90
item 7d) ATS21 207,24 = 1 541,19
To reject: 3 633,49
30)
For heading 4 the auditors could accept:
item 8b) 3 270,27 as declared
item 10b)
ATS 5 800,- = 421,50
To reject: 5 559,04
On the date of issue of this commented report, no additional information has
been received by the auditors. The total accepted costs for the XXXXX partner
amount to 16 142,44 plus 7% overheads gives 17 272,41. As XXXXX declared
43 911,7, this means a rejection of 26 639,29.
74
LIMITATION OF COSTS TO 110% OF THE BUDGET

31)
As stipulated in the Grant Agreement, the accepted costs for a specific
heading may not exceed with more than 10% the amount indicated in the
budget. The total staff costs have therefore to be limited to 110% of 49 180,- =
54 098,-.
INCOME
32)
The beneficiary has committed himself to co-finance in cash at least 49,61%
of the eligible cost. The total (including all partners) declared contribution in kind
is 61 070,25. However, on the basis of the findings above, the auditors can
only accept 41 756,38,- as contribution in kind, so on the income side the same
amount is to be retained. The declared own contribution in cash is 000000,-.
33)
The declared contribution in cash from fund providers other than the
European Commission is 16 572,-. The auditors found a clerical error checking
this amount in the ledger: the contribution in cash received from the Provincial
State Office of XXXX is 17 306,54. Two other commitments of co-financing
were made by The XXXXX and XXXXXXX, but no money has been received as to
date. The possible money to receive will cover the follow-up of XXXX-project.
At the occasion of the contradictory procedure, XXXX included evidence that
they received from the province of XXXX a financial contribution of 0000 for the
XXXX-project. This brings the total of contribution in cash from external fund
providers other than the European Commission at 00000.
34)
The beneficiary declared that the project generated income amounting to
0000. The 4 382,82 generated by XXXX co-ordinator was confirmed in the
ledger. The income generated with the partners could not be verified but it is
highly unlikely that it is so important that it would lead to a profit. The auditors
requested the beneficiary to ask a declaration from the Dutch partner indicating
the amount of income generated by the project. The auditors have not received
this declaration.
Consequently, the total income to take into consideration amounts to 0000,-. After
deduction of the amount covering the costs declared as non-eligible by the
Commission, this income is not higher than the agreed minimum % specified in Art.
3.2 of the Agreement, namely 49,61%. Consequently, 49,61% of the total accepted
cost will be taken into account as total income.
75
23. ANNEXE OTHER

1.
CONDITIONS OF ELIGIBILITY COSTS
Staff costs
Staff costs refer to any payment made to a person attached to a member

organisation of the partnership or working on a regular or recurrent basis for the
project (regardless of his or her status). Staff costs must be broken down into
categories 1 to 4 of the International Standard Classification of Occupations (ISCO).
A list of the occupations included in each of these ISCO categories is given in
Appendix A.
Staff costs will be calculated on the basis of the actual daily salary/fees of the
employee/service provider, multiplied by the number of days to be spent on the
project. This calculation may include, if necessary, all the normal charges paid by
the employer, such as social security contributions and related costs, but must
exclude any bonus, incentive and profit-sharing arrangements or running costs.
Staff costs may not exceed the normal costs for each staff category in the country
concerned. In any case, the following maximum amounts apply:
Staff category 1 (maximum amount 450 euros/day)
If it is planned to employ or hire the services of persons, whose costs exceed these
maximum amounts, the necessary explanations should be provided when
submitting the application.
2.
Travel and subsistence costs
Only travel and subsistence directly related to the project and concerning precise
and clearly identifiable activities related to the operation of the project will be
considered eligible. Travel and subsistence costs for conference or seminar
participants or speakers must be recorded in Table 1.5, not in Table 1.2.
Travel and insurance costs are based on the actual costs incurred. The most
economical fares must be used. Several travel agencies should be contacted in
order to obtain the best possible prices.
Rail travel (first class if the participant prefers and if this is allowed by the institution
concerned) must be used for journeys of up to 400 kilometres, except in an
emergency or where a sea crossing is involved.
For journeys of more than 400 kilometres (or less where a sea crossing is involved
or in an emergency), air travel may be used. Apex tickets or special fares must be
used as far as possible. Air travel costs higher than an economy class fare are not
allowed.
76
The cost of travel by car will be eligible, provided it is calculated according to the
following conditions:
a)
private car or taxi: the amount to be considered eligible is limited to the cost
of one equivalent first class rail fare (regardless of how many people are
travelling in the car)
b)
hired car (class A except where more than two persons are travelling, in
which case maximum class B may be used): the actual costs will be eligible.
However, a hired car may only be used if no other suitable transport is
available.
Normal travel insurance costs will be eligible.
Travel costs incurred outside the countries participating in the Socrates programme
are not eligible, unless explicit prior authorisation is granted by the Commission.
Accommodation and subsistence costs are eligible provided:
they are indispensable and reasonable, taking into consideration the place of the
stay;
they are calculated in accordance with the internal regulations of the partner
concerned;
they do not exceed the maximum amounts per person detailed in the table
below:
Country
BE
DK
DE
GR
ES
Belgium
Denmark
Germany
Greece
Spain
FR France
IE Ireland
IT Italy
LU Luxembourg
NL The
Netherlands
AT Austria
PT Portugal
FI Finland
SE Sweden
UK United
Kingdom
Maximum in Country
EUR
150
IS
Iceland
179
LI
Liechtenstein
127
NO Norway
113
BG Bulgaria
141
CZ Czech
Republic
130
EE Estonia
165
CY Cyprus
130
LV Latvia
143
LT
Lithuania
148
HU Hungary
Maximum
EUR
183
174
171
157
214
122
143
156
157
199
86
227
185
148
164
MT
PL
RO
SI
SK
Malta
Poland
Romania
Slovenia
Slovakia
in
129
100
174
126
136
The amounts specified in this table include all costs associated with the stay in the
country concerned. If there is no overnight stay, the amounts are reduced by 50%.
77
Within these limits, accommodation and subsistence expenses may be reimbursed

on an actual or lump sum basis. However, if the internal regulations of the
institution of the person making the journey impose a lower limit than the amounts
in the above table, these lower amounts must be used.
3.
Costs related to the purchase, leasing or rental of hardware and
equipment
The costs relating to the acquisition of hardware and other equipment, whether by
purchase, leasing or rental, is eligible only if it is strictly necessary for carrying out
the project.
The decision to lease, rent or purchase must be based on the least expensive
method. At least two suppliers must be contacted in order to obtain the most
economic terms.
In the case of rental or leasing, the cost of any buy-out option at the end of the
lease or rental period is ineligible.
The installation, maintenance and insurance costs of eligible hardware and
equipment are also eligible, but are limited to the proportional use of the equipment
for the project.
Where the purchase of hardware and equipment is allowed, the whole of the costs
for the reference period will be considered as eligible, but adapted according to the
percentage of use within the scope of the project.
Where the purchase of hardware or equipment is allowed, eligible expenditure is
calculated as follows:
a)
for the purpose of calculating depreciation, hardware and equipment
will be considered as having a life expectancy of three years where the
purchase price exceeds 1,000 EUR;
b)
costs per annum will be calculated on the basis of a depreciation factor
of 33.33%, adjusted to the percentage use in the project concerned.
For example, the allowable cost in year one for a piece of equipment
worth 10,000 EUR, which is used 50 % for the project, amounts to
10,000 x 33.33% x 50% = 1,666 EUR.
In the second year of the project, eligible costs will also be 1,666 EUR if
the percentage use of the hardware or equipment remains the same. If
the hardware or equipment is not planned to be used for the project in
the second year, then no cost (depreciation or otherwise) will be
considered eligible in that second year;
c)
where the total value of the hardware or equipment does not exceed
1,000 EUR, the full purchase value will be allowed as eligible
expenditure for the relevant year, adjusted to the percentage use in
the project;
d)
depreciation or purchase costs will not be eligible if the hardware or
equipment was purchased prior to the start of the period of eligible
expenditure indicated in the contract, except in the cases of renewed
78
projects where the depreciation costs were allowed as eligible

expenditure for the previous contractual year.
79
4.
Cost of subcontracting, consultancy and commissioning other outside
experts
If the beneficiary has to conclude procurement contracts in order to carry out the
project and the corresponding costs are included in one of the headings of eligible
costs according to the estimated budget, he/she shall seek competitive tenders
from potential contractors and award the contract to the most economically
advantageous bid, in other words the bid offering the best price/quality ratio; in
doing so he/she shall observe the principles of transparency and equal treatment of
potential contractors and shall take care to avoid any conflict of interests.
Any amount paid to an outside body, which is not part of a member organisation of
the partnership and which carries out specific and limited work for the project, must
be charged to the heading Subcontracting costs. This includes work such as
translation, interpretation and printing, carried out by bodies outside the
partnership organisations.
Such expenditure may only be allowed if the staff of the member organisations of
the partnership do not have the skills required for the performance of the work
concerned. In order to be eligible, the subcontracting must have been fully
described in the application. If no subcontracting was foreseen in the application,
prior written approval from the Commission needs to be obtained if the proposed
costs of the subcontracting will exceed EUR 10,000 (VAT or equivalent sales tax
excluded).
The only subcontracting expenditure allowed concerns costs in accordance with the
provisions of the Agreement. Subcontracting Agreements must contain at least the
following information:
subject of the subcontracting

dates of start and end of subcontracting
amount to be paid
detailed description of costs
work schedule or phases
payment procedures (one or more instalments)
penalty clause(s) in the event of non-fulfilment of the agreement or delays in the
performance of work (if this is feasible or possible).
None of the basic activities of the project may be subcontracted, in order

not to distort the partnership concept. Thus the beneficiary may not subcontract the
entire management and general administration of the project and no member
organisation of the partnership may subcontract the whole or the greater part of the
activities, which were assigned to it.
If the beneficiary calls on the services of an outside expert (i.e. a person not on the
payroll of the organisations involved in the project) as a consultant, the costs are
eligible subject to the conditions mentioned above, provided that they are strictly
necessary for the performance of the project and are reasonable in amount. The
consultants fees should not normally exceed EUR 400 per day (VAT excluded). All
80
the costs directly connected with sub-contracting must be declared under this
budget heading, whatever their nature (for example, travel costs). The costs of an
independent consultant working full-time or frequently for the project should
normally be registered under Staff costs and not under subcontracting.
For translations, only expenditure directly related to translations from and into the
official languages of the countries formally participating in the Socrates Programme
is eligible, unless explicit prior written authorisation is granted by the Commission.
Translation costs may not be
higher than the market prices in the country where the translation is done.
The costs of subcontracting may not exceed an amount of 30% of the total eligible
costs of the project. Any amount declared in excess of this limit will not be eligible.
5.
Conferences and Seminars
Table 1.5 must include all expenditure relating to conferences and seminars covered
by the grant or part of the project for which a grant is being requested. If several
events are planned, table 1.5 must be completed for each event.
Table 1.5 B:
the terms of chapter 2 also apply to the item "Travel and
subsistence costs of participants and speakers".
Table 1.5 C: the maximum eligible rate is 550 euros/day/interpreter. Two
interpreters maximum per day, per language are eligible (or maximum
three interpreters if more than six languages are to be used).
Table 1.5 D: the number of days should include preparation time where applicable.
6.
Other direct costs
Other direct costs, not covered by those indicated above, may be allowed, provided
they are:
necessary for the performance of the project
reasonable in amount
fully documented and clearly itemised in the application
not indicated under another category or item of expenditure.
Specific items of expenditure eligible under this heading include:
bank charges relating to the opening or maintaining of an account established
especially for the project, as well as bank transfer and exchange costs relating to
receipts and payments for eligible expenditure under the project. However,
charges relating to establishing or maintaining lines of credit, overdraft or
guarantee facilities are not eligible;
the hiring of conference halls or training premises, provided that it is strictly
necessary for achieving the objectives of the project;
costs incurred in producing, translating and publishing documents, when those
activities are performed by one of the member organisations of the partnership;
communication costs (e.g. connection to the Internet) in duly justified cases for
projects where activities require very intensive use of communications.
81
7.
General (indirect) costs
This heading refers to general costs related to project management, such as:
communication costs (postage, fax, telephone, mailing, etc.)

infrastructure costs (rent, electricity, etc.) of the premises where the project is
being carried out, in proportion to the use of these premises by the project
office supplies
photocopies.
The costs involved in reproducing documents and publishing are included under the
budget item Subcontracting costs or Other costs, as the case may be.
The item General costs may not cover staff costs or any other costs already
declared for another item.
General administrative costs must be calculated on the basis of an estimate of the
actual costs borne by the beneficiary (all the member organisations of the
partnership) for the activities concerned. General costs may not exceed a maximum
of 7% of the total of the direct costs of the project (ie of the total of headings 1
to 6 of Table 1).
APPENDIX A
STAFF CATEGORIES
According to the International Standard Classification of Occupations
(ISCO-88 (COM))
STAFF CATEGORY 1
100
110
111
114
120
121
122
123
130
131
Legislators, senior officials and managers

Legislators and senior officials
Legislators and senior government officials
Senior officials of special-interest organisations
Corporate managers
Directors and chief executives
Production and operation managers
Other specialist managers
Managers of small enterprises
Managers of small enterprises
82
STAFF CATEGORY 2
200
210
211
212
213
214
220
221
222
223
230
231
232
233
234
235
Professionals
Physical, mathematical and engineering science professionals
Physicists, chemists and related professionals
Mathematicians, statisticians and related professionals
Computing professionals
Architects, engineers and related professionals
Life science and health professionals
Life science professionals
Health professionals (except nursing)
Nursing and midwifery professionals
Teaching professionals
College, university and higher education teaching professionals
Secondary education teaching professionals
Primary and pre-primary education teaching professionals
Special education teaching professionals
Other teaching professionals
240
241
242
243
244
245
246
247
Other professionals
Business professionals
Legal professionals
Archivists, librarians and related information professionals
Social science and related professionals
Writers and creative or performing artists
Religious professionals
Public service administrative professionals
STAFF CATEGORY 3
300
310
311
312
313
314
315
320
321
322
323
330
331
332
333
334
Technicians and associate professionals

Physical and engineering science associate professionals
Physical and engineering science technicians
Computer associate professionals
Optical and electronic equipment operators
Ship and aircraft controllers and technicians
Safety and quality inspectors
Life science and health associate professionals
Life science technicians and related associate professionals
Health associate professionals (except nursing)
Nursing and midwifery associate professionals
Teaching associate professionals
Primary education teaching associate professionals
Pre-primary education teaching associate professionals
Special education teaching associate professionals
Other teaching associate professionals
83
340
341
342
343
344
345
346
347
Other associate professionals

Finance and sales associate professionals
Business services agents and trade brokers
Administrative associate professionals
Customs, tax and related government associate professionals
Police inspectors and detectives
Social work associate professionals
Artistic, entertainment and sports associate professionals
STAFF CATEGORY 4
400
410
411
412
413
414
419
420
421
422
Clerks
Office clerks
Secretaries and keyboard-operating clerks
Numerical clerks
Material-recording and transport clerks
Library, mail and related clerks
Other office clerks
Customer services clerks
Cashiers, tellers and related clerks
Client information clerks
24. ANNEXE PRELIMINARY QUESTIONNAIRE
This questionnaire may be sent beforehand to the beneficiary or be used during

the on-the-spot interview with them.
General principles:
Status of the entity: public, private, mixed, profit-making or nonprofit-making, etc.
Financial year
Rules for the storage of documents
Separate costs account or not for the follow-up to the action
(existence of a management accounting department per
entity/project)
Labour:
Assessment rules (real costs, average costs, etc.)
Time base used (hours, days, months)
Existence and use principle for the timesheets
Principle for taking account of overtime
Principle for taking account of wage increases
Overheads:
Principle and % of assessment
Monitoring method
Travel and accommodation expenses
Prior approval rule
Certification rules
Reimbursement rules
84
Consumption goods
Who is authorised to purchase
Procedural channels
Approval of payment
Durable equipment
Procedural channels
Approval of payment
Amortisation rules and tables
Computer material
Procedural channels
Approval of payment
Amortisation rules and tables
VAT
Type of tax liability
EC loading rules
Recovery procedures
85
25. ANNEXE
EXAMPLE
OF A DETAILED CONTROL PLAN

To be adapted as necessary
A THE FORMAL STATUS OF THE ACCOUNTS

A.1.
Project Accounting
1.
Verify availability of all documents required to be kept in accordance with

the contractual obligations
2. Verify that the quality of the supporting documents is sufficient for
planned controls.
3. Verify that all specific grants and costs have been deducted from costs
submitted (e.g., grants from the European Union or other third parties for
the purchase of project assets, rent relief, etc.).
4. If possible identify and indicate the source, amount and purpose of such
grants and costs.
5. Verify, by checking a sample of the available supporting documents, that
there is an allocation code in accordance with the contractors description.
6. Match supporting documents with general ledger. Verify amount and
allocation number.
7. Check by sampling that the identification as to type of cost on the
supporting documents is in accordance with cost classification in the
general ledger.
8. Verify that supporting documents are certified in accordance with the
internal rules.
A.2.
9.
Contracts of Association
Verify that the Association Contracts are drawn up in format specified in
main contract or format notified and agreed by the Commission.
10. Verify that contracts are in accordance with main contract
11. Verify that Participants comply with terms and condition in main
contract.
A.3.
Subcontracts
12. Verify that the Commission has given prior approval in accordance with
the contract.
13. Verify the correspondence between supporting documents and costs
charged.
14. Verify the costs can be clearly connected to the project; enquire into any
further relationship between the controled organisation and its
subcontractors.
15. Check the costs charged are relating to the period of the corresponding
controled cost statement.
A.4.
Payments and Transfer of Payment
16. Verify, by comparing the summary of payments from the Commission to
the Contractor with transfers made to Partners or Associated Contractors,
that payments of the appropriate amounts have been made within
reasonable time delays.
86
17. Verify that all payments have been treated as advances until acceptance
of the appropriate project deliverables, or, if none are specified, until
acceptance
of
the
final
report.
A.5.
Time Recording
18. Verify that there are time records for all personnel charged to the project.
19. Verify that the time records are certified at least monthly by the
designated project manager, or an authorised senior employee of the
Contractor.
20. Agree the number of hours charged to the number of hours recorded.
21. Match the hours charged to EC projects with the overall activities of the
Contractor.
22. Verify that the periods during which time has being charged to the
project for a specific employee, corresponds to time employed according to
employment contracts.
B DIRECT COSTS
B.1.
Personnel
ELIGIBILITY OF THE COSTS
18. Supporting documents correspond with expenses according to statement
of cost
19. Verify that costs charged have been incurred after the controlled contract
became effective.
CORRECT EVALUATION OF THE COSTS
20. Check that the level of salaries is reasonable.
21. Ensure that hours charged to contract are in accordance with supporting
documents (time sheets, sickness records, holiday records, etc)
22. Hours charged to the project are recorded and certified at least monthly
by designated manager or authorised senior employee.
CUT-OFF
REALITY OF THE COSTS
24. Check that salaries charged to the project are in accordance with the
employment contracts and payroll records.
25. Check on the basis of the bank account the controled costs have been
paid.
B.2.
Equipment
29. Verify the link between the equipment charged and the project.
30. Check that expenses claimed in the Cost Statement are matched by
supporting documents.
31. Check the accounting nature of the purchase : equipment, consumables,
computing.
32. Check that purchase orders have been certified by authorised persons.
33. Verify that the equipment is necessary for the project.
34. Verify if there is a link to the project expressed in the invoice.
35. Check that fixed assets are included in fixed assets register.
87
36. Match the costs charged with the invoices on basis of the amount, and
the description of the equipment in the invoices.
37. Check that the invoices are charged in conformity with the contracts VAT
rules.
38. Verify the depreciation calculations.
39. Check the reasonability of time allocation for equipment used in several
projects.
LEASING
40. Verify that contracts classified as Leasing are not hire-purchase.
41. Verify that the costs for leased equipment do not exceed any allowable
costs for its purchase.
42. Verify the cost charged under leasing do not include interest costs.
CUT-OFF
43. Costs are charged in respect of actual time. Check the costs charged are
relating to the period of the corresponding controled cost statement.
44. Check that costs charged to the project are in accordance with the
relevant documents.
paid.
46. List the assets to be physically inspected, also for leased equipment.
47. Perform physical inspection
Control if any label is showing a possible link to the contract.
B.3.
Travel and Subsistence
61. Check that the internal rules for travel claims are reasonable.
62. Check that the travel claims are in accordance with internal rules.
63. Check that travel claims have been properly certified.
64. Verify that the costs are related to the contract.
65. In case of missions outside Europe, ensure prior agreement by the
Commission.
66. Verify that costs charged have been incurred after the controled contract
became effective.
67. If
the
expenses
are
calculated
on
a
flat-rate
base
:
- check
conformity
- compare with the per-country allowance table.
68. If the claims are based on actual costs, check the supporting documents.
69. Check that the invoices are charged in conformity with the contractors
VAT rules.
CUT-OFF
88
relating to the period of the corresponding controled cost statement.
relevant documents, as invoices.
paid.
89
B.5.
Consumables
75. Verify that the costs are related to the project.
76. Verify that expenses charged as Consumables are not to be classified as
equipment.
became effective.
78. Check that the received invoices correspond to the charged costs.
79. Check that the invoices are charged in conformity with the VAT rules.
became effective.
CUT-OFF
relating to the period of the corresponding controled Cost Statement.
relevant documents, such as invoices, travel tickets
paid.
B.6.
Computing
86. Check that charged computing expenses are not to be considered as
equipment or consumable.
87. Check the reasonability of time allocation for computing equipment used
in several projects.
became effective.
89. Check the time allocation for computing based on computer usage.
relating to the period of the corresponding controled Cost Statement.
relevant documents, such as invoices, travel tickets
paid.
90
B.7.
Other Direct Costs
95. Check that expenses claimed in the Cost statement are matched by
became effective.
97. Verify that costs are related to the implementation of the project and are
in
respect
of
on
the
following
categories
:
- external
technical
services
and
facilities
- centralised data handling, computing, statistical analysis and software
- supply,
conditioning
and
sampling
- organising
meeting
for
some
or
all
participants
- publications aimed at disseminating information on the work under the
project.
98. Verify that costs for external technical services and facilities are
previously agreed with the Commission.
99. Verify that costs for organising meetings do not include personnel, travel
and subsistence and overheads already charged.
100. Verify that costs incurred after the end of the contract period are
limited to those relating to the reporting, review or evaluation
requirements of this contract.
101. Verify that no cost for research is included.
102. Verify that costs charged have been incurred after the controled
contract became effective.
105. Verify that no profit is included in the costs.
CUT-OFF
relevant documents.
paid.
C V.A.T.
109. Check that any amount charged to the Commission corresponds with
D SPECIAL CONDITIONS
Verify and reconcile any special condition agreed in contract.
E COORDINATION
129. Verify the time delays between the receiving of EU funds and
distribution of the funds between the participants.
91
26. ANNEXE EXAMPLE
OF AN ANNOUNCEMENT LETTER
To be adapted according to need

Purpose:On-the-spot check mission
Dear Madame, Dear Sir,
On the basis of the project monitoring programme of DG...., we would like to
inform you that your organisation has been selected for inspection. The
representatives of DG... shall be as follows:
Mrs, Mr...
telephone: +32.2.29, Fax: +32.2.29,
Email:
Mrs, Mr...
telephone: +32.2.29, Fax: +32.2.29,
Email:
We suggest that the control take place on ../../.... at 9am.
The project to be controlled is: XXXXXXXX.
In order to prepare for this visit, we would appreciate it if the following
documents were sent to the office at the address mentioned above by ../../.... at
the latest:
Flow chart of the company or organisation.

A short description of the administrative procedure used for the purposes of
project management.
A concise overview of the general accounts of the project.
A list of all of the projects for which you receive or have received subsidisation
from the European Commission over the last five years.
You are requested to provide the following documents and information at the
time of the control:
Staff costs: Summary list of the people who have worked on the project, their
original employment contracts, all of the certified timesheets, the salary
register, the official salary scale, the current rules governing working hours and
the explanation of the calculations;
Durable equipment (if there is any): original invoices
Travel and subsistence expenses: summary list per Cost Statement of the
invoices, all of the original invoices, supporting documents, internal rules and
procedures that apply for travel and trips;
92
Consumables and computers/machines time (if there are any): summary list per
Cost Statement of the invoices, all of the original invoices, the internal rules
and procedures that apply for purchases;
Other costs: original invoices, contracts, supporting documents;
Overheads: explanation and justification of the calculation
Bank account statements
Partners: contracts, subcontracting contracts and original documents on the
subject of the partners involved in the project.
We will also require information on your working procedures (sources of
finance, which people are responsible for the declaration of costs, purchases,
travel authorisation, etc.) and also on the dates of payment to partners in the
projects. The presence of those responsible for the project would be
appreciated.
I would like to remind you that in the event of missing documents, we may be
obliged to recover unjustified amounts.
Please confirm whether the visit is possible on this date and inform me of the
exact place at which the visit should take place.
Thank you for your cooperation.
Yours sincerely,
c.c.:
Mrs
Messrs.
93
27. ANNEXE EXAMPLE
OF A MISSION REPORT
EUROPEAN COMMISSION
Directorate General
Resources - "ex-post control" sector
Mission Report to
Objective: Follow-up financier des projets

Place(s):
Date(s):
EU Participant(s):
DG/Unit:
Contractor(s) visited:
07/04/2003
08/04/2003
09/04/2003
(1)
(2)
(3)
Signature: (1)
Sign
(2)
94
28. ANNEXE EXAMPLE
OF INFORMATION ON BENEFICIARY
Contractor (1):
1. General information on the contractor:
Projects audited:
(1)
Name of person(s) met:

Number of employees:
Last balance sheet available:
Sources of funding:
Public + priv (prdominant)
Previous audits(s) performed:
If yes: Date:
Institution / DG:
Yes x
No
Yes
No
Year:
2001
Comments (if necessary):
2. General information on the financial management of the contractor:

Name of the financial officer:
Internal audit:
If yes : Made by:
External audit :
If yes: Made by:
Centralised financial department:
If no EUROLAND country bank account in :
Separate account for each project:
Normal payment delay EU-COOR:
Normal payment delay COOR-CON:
Yes
No
Yes
No
Yes x
Yes
Yes
Yes
Yes x
No
No
No
No
No
Every:
Place:
N months:
N months:
Every:
Comments (if necessary):

3. Conclusions
General
Projet
4. Recommendations
95
29. ANNEXE 2
EXAMPLES OF AN EXECUTIVE SUMMARY
EXAMPLE 1
Our work was carried out at the administrative offices of the xxxx located xxx, Ixxx, xxx. The specific procedures were performed on the field by : Ms /
Mr............................................
The contract (the Contract) between the Contractor and the EC was signed on
December 7, 2000. The contract was subsequently amended on July 5, 2001.
The Eligibility Period was initially from September 23, 2000 to May 31, 2001.
The Eligibility Period was subsequently extended to September 15, 2001.
The financial contribution of the EC is limited to a maximum amount of xxx.
The contribution is also expressed as a percentage of the estimated total
eligible expenditure. As such, the ECs financial assistance should not exceed x
% of the eligible expenses reported by the Contractor.
The expenditure reported in the Cost Statement is x. Based on the work
performed, the expenses to be considered ineligible amount to x.
We tested (100) % of the total expenditure.
Accordingly, the grant to be funded by the EC is x, which corresponds to x%
of the eligible expenses.
As of June 4, 2003, the amount paid by the EC to the Contractor amounts to
x.
Based on our findings, the amount to be returned to the EC should be x.
96
EXAMPLE 2
CONCLUSIONS AND RECOMMENDATIONS
1) If the beneficiary would wish to be eligible for future grants from the European
Commission, he has to considerably improve its financial management in order
to be able to present a transparent, complete and correct declaration of
expenses, i.a. by using consequently the correct booking codes per type of
expense. The reconciliation of the amounts declared with the accountancy and
the underlying supporting documents should be easily possible.
2) The beneficiary should also be aware that as the co-ordinator he is responsible
for the financial reporting as a whole. The co-ordinator must request from all the
partners detailed and specified reporting supported by justifying documents.
This reporting and the calculations should be thoroughly checked and added to
the declaration submitted to the European Commission.
3) The auditors recommend for the future to introduce signed presence lists for all
meetings of which the costs are declared.
4) On the basis of the available data and documents, a number of declared
expenses has to be rejected, namely from the partners: see under Findings and
the tables in Annexes 1 and 4. The total of rejected expenses amounts to
00000
5) On the basis of these findings and corrections, the final amount of admissible
grant is 50,39% of the total accepted cost: 50,39% of 0000= 0000000.
As the European Commission already paid 00000, the auditors recommend to
recover 00000000
97
30. ANNEXE EXAMPLE 1
OF A DETAILED REPORT
Contract number :
en
1 General information on
the contract
Contractor's internal REF.
ID.:
Cost
base:
FC
AC
FF
If FC:
% Help:
Coordin
ator:
Starting date:
Yes
Extension
of
the
contract:
If yes: Number of months:
Total
cost:
EU contribution:
EU
contribution
contractor:
Total audited costs :
EU audited costs :
CS n
1
for
Duratio
n:
Yes
No
End
date:
1,00
1,00
0,00
0,00
CS n
CS n
CS n
Special conditions:
If yes:
Specify:
Comments
necessary):
No
10 %
0
0%
Perio
d:
Yes
du /
/
du /
/
du /
/
du /
/
/
/
/
/
/
/
/
/
au
au
au
au
No
(if
98
2
Cost
verification:
categories
2.1 Personnel:
Total estimated costs
():
Declared costs CS 1()
:
:
:
:
Suggested corrections
() :
List of personnel
contract available:
Contracts available:
Time sheets kept:
of
Accepted costs
CS1() :
Accepted costs
CS2() :
Accepted costs
CS3() :
Accepted costs
CS4() :
the
If yes:
Yes
No
Yes
Yes
No
No
Yes
No
Yes
Yes
Yes
No
No
No
Month:
Yes
%
working Yes
time:
Yes
No
No
Yes
No
Unit of time
used:
Certified by:
Overtime
included:
Actual:
Average:
Hour:
Cost basis used :

Time
basis:
In accordance with internal

rules:
Social
charges
included:
Comments
necessary):
(if
2.2
equipment:
Durable
Voir
remarque
Every:
No
99

():
:
:
:
:
() :
Accepted costs
CS1() :
Accepted costs
CS2() :
Accepted costs
CS3() :
Accepted costs
CS4() :
Equipment purchased:
Yes
Invoice(s) available:
Yes
N/Name of the contract mentioned on the Yes
invoice:
Delivery
date
Yes
specified:
Depreciation
made
Yes
correctly:
VAT excluded:
Yes
Equipment rented:
Yes
If yes:
Total
cost
< Yes
depreciation:
Comments
necessary :
No
No
No
No
No
No
No
No
if
2.3 Subcontracting:
():
:
:
:
:
() :
0,00
0,00
Associate contract
Affiliat
Accepted costs
CS1() :
Accepted costs
CS2() :
Accepted costs
CS3() :
Accepted costs
CS4() :
Yes
Yes
No
No
100
es
Subcontractor
If yes: Contract available:
Written approval by the
necessary)
Invoices available:
VAT excluded:
Comments
necessary :
2.4
Travel
subsistence:
Commission
Yes
Yes
(if Yes
No
No
No
Yes
Yes
No
No
if
and

():
:
:
:
:
() :
Accepted costs
CS1() :
Accepted costs
CS2() :
Accepted costs
CS3() :
Accepted costs
CS4() :
Travel inside EU
If no:
Prior approval of the Commission:
Specific
rules
for
reimbursement:
Forms for reimbursement
certified:
Comments
necessary):
Yes
Yes
Yes
No
No
No
Yes
No
(if
2.5 Consumables:
():
:
:
0,00
Accepted costs
CS1() :
Accepted costs
CS2() :
0,00
101

:
:
() :
Consumables
purchased:
If yes:
Accepted costs
CS3() :
Accepted costs
CS4() :
Yes
No
Consumables from central

stocks:
If yes: Basis used to charge in the project:
Yes
No
VAT excluded:
Yes
No
Comments
necessary):
Authorised
person to buy:
(if
2.6 Computing:
():
:
:
:
:
() :
0,00
Accepted costs
CS1() :
Accepted costs
CS2() :
Accepted costs
CS3() :
Accepted costs
CS4() :
Computing costs:
If yes: Basis of recorded computer usage:
Authorised person to
buy:
Yes
No
VAT excluded:
Yes
No
Comments
necessary):
(if
102
2.7
Protection
knowledge
of

():
:
:
:
:
() :
Comments
necessary):
0,00
Accepted costs
CS1() :
Accepted costs
CS2() :
Accepted costs
CS3() :
Accepted costs
CS4() :
0,00
Accepted costs
CS1() :
Accepted costs
CS2() :
Accepted costs
CS3() :
Accepted costs
CS4() :
(if
2.8 Other significant specific

project costs:
Total estimated costs:
:
:
:
:
() :
Costs
specified
in
Annex I
If no:
Prior approval of the Commission:
Invoices available:
VAT excluded:
Comments
necessary):
Yes
No
Yes
Yes
Yes
No
No
No
(if
2.9 Overheads:
103

():
:
:
:
:
() :
Accepted costs
CS1() :
Accepted costs
CS2() :
Accepted costs
CS3() :
Accepted costs
CS4() :
Full
cost
FF
Additional cost
If FC
If FC
If FC
Normal practices of the institute Yes

applied:
Supporting documents available:
Yes
% applied:
Comments
necessary):
No
No
(if
2.10 Adjustments
:
:
:
() :
Comments
necessary):
Accepted costs
CS2() :
Accepted costs
CS3() :
Accepted costs
CS4() :
(if
3. Summary of the audit findings of the

contract :
104
105
31. ANNEXE EXAMPLE 2
OF A DETAILED REPORT
EUROEPAN COMMISSION
DIRECTORATE-GENERAL
05/02/2003
Mission Report
Project
Commitment
Beneficiary
.
Company C.
F-75008 PARIS
Present
the OSC
during Mr
Chief Executive Officer
Auditors
Date of the OSC
DG F2 Mr...... DG F2 Mme........
31 January 2003
Total costs according to the provisional

budget
Community contribution
(50% of the eligible costs)
Signature of the contract
Starting date
Completion date
300,000.00
150,000.00
18/07/2000 (by the DG ) and

27/07/2000 (by the C)
01/07/2000
30/06/2001
Extension(s)
None requested
Record of payments
1st payment (08/08/2000)
Final payment (05/09/2001)
Total payments to date
Commitment balance 23,670.39
90,000.00
36,329.61
126,329.61
1-Preamble
Within the framework of the Pxxxxxxxxx programme, the present project was
presented by the beneficiary by the name of . The beneficiary is a public
limited company with private legal status under state supervision xxxxxxxxx.
106
The aim of the project and the associated seminar was to test the different
operational chains in the event of a large-scale accident ................. . Within the
framework of the financial year, the different national operational centres for
civil defence of the Member States and also of the western Mediterranean were
called upon to work together on searching for families and identifying victims.
2-Introduction:
In March 2002, Directorate B sent a balance clearance list for certain projects.
However, on analysis of the file mentioned in the reference, it came to light
that the expenditure had been incorrectly interpreted due to confusion in the
final report. The audit programme for 2002 did not allow for the immediate
inclusion of this file in the monitoring visits and it was therefore decided to keep
the file open and to include it in the 2003 programme.
3-Financial audit:
Upon in-depth analysis of the file, it appeared that the beneficiary had, whether
deliberately or otherwise, inflated the costs by not including all of the
expenditure incurred by the Company C.. under the column entitled
'contribution in kind to the action. On the contrary, the beneficiary had
spread all of these different costs over the various columns, thus implying that
all of this expenditure was necessary for the action and that it would indeed be
incurred and registered in its accounts.
The final financial report was not very clear and gave rise to confusion.
Furthermore, neither the technical unit nor the financial unit had detected that
a large proportion of the expenditure had not actually been paid by the
beneficiary but had been covered by the Company C..... . It was only upon the
analysis of each of the documents that the auditors were able to observe this
state of affairs.
During the inspection visit, the auditors underlined that the initial proposal had
been undermined by the fundamental error of not indicating the amounts in
kind in the budget. The beneficiary finally admitted the mistake but hastened to
add that according to the agreement binding it to
, this project should not
actually cost the beneficiary anything at all. The auditors pointed out that the
matter did not fall within the scope of their responsibility and that they could
only base their opinion on the real expenses incurred by the beneficiary within
the framework of the project. Consequently, all of the expenditure covered by
the Company C....... ought to be excluded from the declared total. Moreover,
one expenditure item had been entered twice in the accounts: as a cost directly
covered by the beneficiary and also as a cost covered by the Company C........ .
Furthermore, certain items of expenditure appeared in the wrong cost
categories. The auditors then presented the beneficiary with a new table of
eligible costs (see annexe 1). This expenditure has been checked and does not
pose any particular problems. It can therefore be accepted within the
framework of the project.
The financial situation of the project can thus be summarised as follows:
107
Total declared costs
375,031.09
Eligible costs (after deduction of all

of the expenditure in kind covered
by
)
125,539.23
Community contribution (50% of

eligible costs
Total paid
payment)
(advance
and
final
Overpayment to the beneficiary
62,769.61
126,329.61
63,560.00
4-Conclusions
(1)
After informing the beneficiary of the results of the auditors visit (which is in
fact only a confirmation of their conversation with Mr ), the technical unit
was to set up a recovery order of an amount of 63,560.00. It is likely that
the beneficiary will try to limit or even avoid reimbursement by referring to its
agreement with the . The auditors, however, underline that this agreement
by no means concerns the Commission. As they indicated, the subsidisation
agreement was signed between the Commission and the beneficiary and not
between the Commission and the
or any type of ministry. It therefore
follows that only the expenses actually incurred by the beneficiary should be
taken into account, excluding all other expenses.
(2)
The procedure can be continued without waiting for the release of the
balance for this project.
(3)
It is recommended that, in future, greater attention be paid to the eligibility of

costs during the evaluation of proposals, if necessary by directly checking
with the potential beneficiaries that no contribution or item of expenditure in
kind has been included in the costs taken to be actually covered by the said
beneficiaries. However, in the present case, the detection of items of
expenditure and contributions in kind would have been difficult without any
actual prior negotiation with the beneficiary, given the extent to which the
presentation caused confusion.
ANNEXE 1
Title
A. STAFF
1.
2.
Invoice
Date
Description
30/10/2000 Staff
30/11/2000 Staff
Amount in
978.57
2,995.00
108
3.
4.
15/12/2000 Staff + material??

15/12/2000 Staff + material??
B.
Travel
accommodation
1.
2.
6,509.57
14,653.06
25,136.20
and
3.
4.
28/09/2000 Meals and refreshments

27/10/2000 Non-eligible
26/09/2000 Travel
27/07/2000 Reception and staff
C. Printing, public, etc.

1.
2.
3.
4.
5.
1,975.74
0.00
10,043.13
62,749.18
74,768.05
6.
27/07/2000 Interpretation
30/09/2000 Photocopies
30/04/2001 Photocopies
30/08/2000 Invitations
28/09/2000 Betacam
apparatus
30/09/2000 Press releases
D. Consumables
1.
2.
3.
4.
5.
6.
7.
19/09/2000 cables, etc

7/09/2000 sky portal???
28/09/2000 Badges
30/09/2000 Supplies
30/09/2000 Stock???
29/09/2000 Rental
20/10/2000 Temporary lines
820.48
361.01
83.87
67.80
229.51
624.47
808.27
2,995.41
G. Other costs
1. Overheads
20/05/2001
6,015.69
6,015.69
editing
11,264.80
310.39
1,068.45
191.45
1,309.12
2,479.67
16,623.88
Grand total
125,539.23
109
32. ANNEXE EXEMPLE

Budget
Total
Total actual
Non
line
budgeted expenses eligible
description expenses presented expenses
DE RAPPORT DINLIGIBILIT
Eligible
expenses
before
budget
overrun
Budget
overrun
1 Staff
2 General
expenditure
3 Travel and
subsistence
4 Conference
s and
seminars
5 Production
Eligible
Reasons for Comments of Position after
expenses
ineligibility
the
comments of
after budget
Contractor
the
overrun
Contractor
-
Total considered
Budget
Eligible
as non eligible overrun after expenses
after comments comments of
after
of the Contractor
the
comments of
Contractor
Contractor
-
6 Other costs
TOTAL
Maximum percentage of the

grant:
Maximum grant:
Grant actually paid:
To be reimbursed:
110
33. ANNEXE
EXAMPLE
OF CONCLUSIONS ADDRESSED TO THE
BENEFICIARY
EUROPEAN COMMISSION
DIRECTORATE-GENERAL
Ex-post control
Brussels, ../../....
ABC
For the attention of Mr .........
Subsidy no. ...........
Dear Mr D.
Thank you for receiving Mrs C and M for their control of the aforementioned subsidy
on ../../.... .
Please find below the main results of this control and the list of actions to be taken.
As a general remark, the accounting system of ABC appears to be entirely
appropriate and well maintained. The original invoices requested were easily
recovered, as were their payment details.
I feel it necessary to remind you of the obligation to keep all of the original
documents for 5 years after the definitive closure of the project by the Commission,
even if the project has been subject to a control.
Staff costs:
The hours declared in the Cost Statement and the report were not calculated
correctly.
For the secretaries C. M.: the correct number of hours is 96 hours (2 months) and
not 233 hours and for O. L., the correct number is 336 hours (7 months) and not 327
hours.
For R. H., the number of hours was correct, but the hourly rate should be 5.62/hour
and not 6.73/hour, as the annual salary was reviewed and should be 9,434 rather
than 11,040.56.
Durable equipment:
In the Cost Statement, the purchase date for all of the goods is January 2002. The
invoice date for the DS equipment is 26/02/02 and the calculation should be 2,060
* 34/60 = 1,167 (and not based on 36/60), giving a correction of -68.67. For the
PCR machine, the invoice date is 22/01/02 and the correct calculation is 7,872 *
35/60 = 4,592, giving a correction of -131.
Travel and subsistence:
111
The amount of travel expenses in the list exceeds the amount indicated in the Cost
Statement.
Consumable goods:
Using the list that we obtained from you, it was not possible to determine which
costs have been included in the Cost Statement. As some of the audited invoices
included VAT, the DG asked for a list of costs, corresponding to the costs in the Cost
Statement, to be submitted as soon as possible. This list should comprise a column
entitled "costs exclusive of VAT and these costs should correspond to those of the
Cost Statement.
According to article 22.3 of annexe II of the contract, VAT is not eligible.
Overheads:
In the calculation of the overheads, the subcontracting expenses have been
included incorrectly. Please recalculate the overheads taking account of both the
corrected staff costs and the other corrections.
ABC is invited to submit a new, corrected Cost Statement to the DG as soon as
possible together with the list of consumable goods in order to allow the DG to
transfer the due amounts to ABC and its partners for the first cost report.
112
APPENDIX
113

Manual On The Spot Checks

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Ex post on-the-spot checks of grants

ADMIN A3 training Unit

Ex post on-the-spot checks of grants

Training developed for the European Commission by DEMOS.

"this training manual complies with EMAS rules"

ADMIN A.3. Ex post on-the-spot checks of grants

Ex post on-the-spot checks of grants

Ex post on-the-spot checks of grants

14.2 Reminder of the importance of non-verbal language...................................3

Ex post on-the-spot checks of grants

ADMIN A.3. Ex post on-the-spot checks of grants

Ex post on-the-spot checks of grants

AIM OF THE TRAINING COURSE

AIM OF THE OSC MISSION

To check the adherence by the beneficiary to their agreements with the

To check the reliability and validity of the documentary evidence received at

OSC TRAINING FRAMEWORK

The control of the projects or subsidy extensions.

ADMIN A.3. Ex post on-the-spot checks of grants

Ex post on-the-spot checks of grants

EX ANTI VERSUS EX POST

Verifications realised before payment are ex ante and are under

Once payment is made, on the spot controls are ex post; the

ADMIN A.3. Ex post on-the-spot checks of grants

Ex post on-the-spot checks of grants

ADMIN A.3. Ex post on-the-spot checks of grants

Ex post on-the-spot checks of grants

ADMIN A.3. Ex post on-the-spot checks of grants

Ex post on-the-spot checks of grants

2.1 AGREEMENT AND ANNEXES

the Treaty establishing the EC

ADMIN A.3. Ex post on-the-spot checks of grants

Ex post on-the-spot checks of grants

2.4 SELECTION OF THE OSCS

ADMIN A.3. Ex post on-the-spot checks of grants

Ex post on-the-spot checks of grants

"Ex post": Art 60, point 4. The authorising officer by delegation

3.2 WHY CONDUCT CONTROLS?

ADMIN A.3. Ex post on-the-spot checks of grants

Ex post on-the-spot checks of grants

3.3 WHAT IS BEING CONTROLLED?

the control of grants;

The control is conducted on:

Attached to the following minutes from an EPCnet meeting:

Ex post on-the-spot checks of grants

Ex post on-the-spot checks of grants

Example: Plausibility of the justified costs, appropriate forms of supporting

ADMIN A.3. Ex post on-the-spot checks of grants

Ex post on-the-spot checks of grants

4.1 THE TYPES OF CONTROL:

THE ELIGIBILITY CONTROL:

THE REGULARITY AUDIT:

THE MATERIALITY AUDIT:

THE SYSTEMS CONTROL:

Ex post on-the-spot checks of grants

procedures covering the processing of costs, proper review and authorisation

The ACCOUNTING SYSTEM

The INTERNAL CONTROL SYSTEM

an internal control system.

ADMIN A.3. Ex post on-the-spot checks of grants

Ex post on-the-spot checks of grants

The ACCOUNTING SYSTEM