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IST Audit Certificates - Frequently asked questions

(Version 3.0 - 01/02/2003)

Are Audit certificates required with every annual cost claim?

No. This pilot scheme only covers a project's first set of cost claims, and the last (total) cost claims. No cost claims between the first and the final ones ever require a certificate

My organisation is involved in IST Projects in the Fifth Framework programme which are Accompanying Measures and Concerted Actions/Thematic Networks. Must we produce Audit certificates for our cost claims?

No. The requirement to produce Audit certificates involves only some of our Research, Demonstration or Combined research and demonstration contracts.

My project is a Research project which began work at the beginning of the Programme. Must we produce Audit certificates for our final cost claim which is coming up now?

No. This pilot action involves projects arising from the IST 6th and subsequent calls. Projects included in this pilot scheme know they are involved because they have a special clause in their contracts about Audit certificates.

At the end of the first project year, at least one of the participants in our research project will have a cost claim exceeding €250,000. Must all the participants therefore provide Audit certificates for their cost claims?

No. Only the participant whose cost claim exceeded the threshold must produce a certificate, for his own cost claim. The other participants' cost claims are submitted at the same time, but without need of a certificate.

In our project, cost claims don't go in annually, they go in each 6 months. What is the effect of this?

It halves the threshold. You will need to produce an Audit certificate with your first cost claim if it exceeds €125,000 (And any other claim periods pro-rata).

I wish to use for the preparation of Audit certificates an auditor other than the one who carries out my company's regular annual audit. May I do so?
Yes. You may choose any properly qualified auditor you wish, only provided they are independent of your organisation. "Properly qualified" means that their qualifications are recognised by the authorities in your country. "Independent" means he/she is not an employ of your organisation. Of course you may use your regular auditor if you prefer.
Does the Commission provide a list of suitably qualified auditors who can carry out this work?

No. The task is within the competence of any audit professional, who should follow the guidelines supplied by the Commission at /ist/manage.htm. The Commission would not wish to show favour to any particular auditing firms as opposed to others.

Who pays for the preparation of the Audit certificate?

The participant pays. They then submit it as an eligible cost in the cost claim, or in a later cost claim, and it will be funded at the same rate as their other eligible costs in the project (but with a ceiling of €4,000 of Commission funding per certificate)

Can the Commission provide additional project funding, to cover the cost of the certificates?

No. The Commission cannot retrospectively increase your budget to cover this. The cost of certificates has to be planned into your project budget during the negotiation phase, just like any other cost.

What if I have paid for the preparation of an Audit certificate, and it turns out in the end that the costs fall just below the €250,000 limit which made the certificate necessary. Can I still claim for the cost of preparing the certificate?

Yes

In fact our costs will fall below the limit, but we would like to submit a certificate anyway. Can we, and will the Commission contribute to the cost of this certificate?

Yes and yes.

My first cost claim will exceed €250,000 and I will provide an Audit certificate. My next cost claim will also exceed this amount. Must I do it again for that claim?

No, unless this next cost claim is also going to be your last one. The Audit certificate pilot action only applies to the first and last (total) cost claim, not to any others in between.

My first cost claim will exceed €250,000, and I will provide a certificate. Obviously my final (total) cost claim for the project must also exceed €250,000. Will I have to provide another certificate then?

Yes. The first certificate only covered the first year cost, the second certificate will cover your costs in the whole project

Which types of companies or organisation are exempt from providing Audit certificates?

Normally a certificate is always required from any organisation, of any type, which reaches the threshold. There are only two exceptions:

· There are a small number of government or quasi-governmental organisations which are legally forbidden to allow an external audit. If you are in this case, and will reach the threshold, notify your Project Officer at least two months before your cost claim is due. He/she will require written proof that an external audit is not permitted (e.g. an extract from the constitution of your organisation), then an alternative auditing arrangement will be made using an appropriate internal audit facility.

· Participants who are not funded by the Commission (e.g. participants from "third countries") nevertheless often prepare cost claims in order to help the coordinator control the work and expenditure of the project, or to use for getting funding from their own national sources. As the Commission does not in fact pay these costs, no certificate is needed.

My organisation, a university, is audited annually by the appropriate government agency. Do I still need to submit certificates?

Yes. The government audit is making a general overview of your finances, to ensure that you conform to the rules governing academic institutions. The audit certificate is based on a detailed examination of your cost claim for the IST project, to ensure that it conforms to the terms of the contract you have with the Commission. This is not at all the same thing.

If I provide an Audit certificate, does that mean those particular costs will never be audited again?

No. The Commission re-audits a certain proportion of all cost claims, and this may include some with a certificate, and it will always re-audit in cases where suspicion is aroused. The Court of Auditors, a European body separate from the Commission which monitors Commission expenditure, also has its own programme of checks on Commission projects.

How will the presentation of Audit certificates speed up payment of my cost claim?

In two main ways. Firstly, many of the checks and controls on the cost claim which hitherto Commission services have done will now be done by your auditor when he prepares the certificate. Secondly, in the past many delays in processing cost claims have been caused by incomplete or unclear submissions, which means the Commission has to go back to the coordinator, who has to go back to the partner concerned, to get the missing data or paperwork. The participation of a professional auditor in the preparation of the cost claim should eliminate much of this delay.

Apart from the Audit certificate, what can I do to speed up the payment of my cost claim?

The most important thing you can do it to submit your claim in time. In your contract you are required to submit it within two months of the completion of the work concerned, but many projects submit late. Your PO will give you a reminder when each cost claim is due. The more late you are, the further down the processing queue your claim is going to be!

Is there anything else I can do to speed payment of my claims?

Yes. Commission services, as well as making the "financial" checks on your cost claim, checks with your PO that he/she agrees that the work you are claiming for has indeed been properly completed. If your deliverables are late, or your periodic progress reports are inadequate, your PO will not give the green light to your cost claim until you have satisfied him/her of your achievement of the work.

What if my auditor won't give me a "clean" Audit certificate, but wishes to add some qualifications or remarks of doubt about some parts of my claim. Can I still submit this certificate?

Yes, you can submit a "qualified" certificate. This would normally happen because there is some uncertainty as to whether one of your costs is indeed an eligible cost according to the Commission's rules. Commission services will promptly look into the issue which your auditor has highlighted, and will make a decision on it.

It's up to me to arrange my contract with my auditor for the production of a certificate. Are there any special conditions I should put in his contract?

Yes! The Commission document "Working notes for contractors and external auditors" (/ist/manage.htm). lists several important items you must put in, such as the possibility for the Commission to verify the working papers of the auditor, and the definition of minimal requirements on the auditor in respect of the execution of the audit, among others. Please check this carefully before preparing your contract with your auditor!


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Last updated: 07 | 02 | 2003


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