Ndependent audit report

Audit results

6.1 Verification of the implementation of the project

The products delivered as compared to the products planned and approved by the Commission in the grant agreement and supplementary agreements have been verified.
It was found that: ………. (describe in brief whether the products of the project are identical to the products provided for in the grant agreement and supplementary agreements, or if there are other products which have not been authorised under the approved programme).
Documentation:

• 
  Grant agreement………….(ref…….)
  

• 
  Supplementary agreements (ref….)
  

• 
  The final report
  
• 
  The CP
  
• 
  Declarations by the beneficiary
  

6.2 Verification of the beneficiaries' accounting systems

The audit has examined:

• 
  whether the internal accounting (analytical or other suitable internal system) and auditing procedures permits direct reconciliation of the costs and revenues declared under the project,
  
• 
  whether the actual expenditure/income under the project has been recorded systematically using a numbering system specific to each project
  
• 
  whether when costs are shared between several projects, the appropriate allocation keys have been established that reflect the true burden for each project
  
• 
  whether such allocation keys have been applied systematically and correctly
  

It was found that: ………. (describe the accounting system, auditing procedures and specific provisions in brief as well as any omissions and their consequences for the declared costs).

6.3 Verification of the eligibility of the declared costs

6.3.1 General

The arithmetic coherence within and between the tables in the final report and the correct allocation of costs have been verified.
The audit has also examined, on the basis of a representative study and by interviewing the co-ordinating beneficiary:

• 
  whether the expenses were directly linked to the project and necessary for carrying it out,
  
• 
  whether the expenses were provided for in the initial budget and were incurred by the beneficiaries,
  
• 
  whether the costs have been correctly allocated,
  
• 
  whether the expenses are supported by accounting documents in accordance with current national accounting law,
  
• 
  whether the expenses have been recorded in the beneficiaries’s accounts or tax documents,
  
• 
  whether the expenses were incurred during the lifetime of the project,
  
• 
  whether the payments were made by the beneficiaries,
  
• 
  whether the correct exchange rates were used (CP art. 29.5).
  

It was found that: ………. (describe the expenses incurred outside the contractual period or incurred by bodies which were not partners and which are therefore ineligible. Invoices between beneficiaries are not eligible (CP art. 6.5). Incurred costs must be recorded in the accounts of the beneficiary concerned. In the event of arithmetical differences and/or the reallocation of expenses, describe the corrections made).

Documentation:

• 
  Grant agreement ………….(ref…….)
  

• 
  Supplementary agreements (ref….)
  

• 
  The final report
  
• 
  The CP
  
• 
  Declarations by the beneficiary
  

• 
  Other documents (……)
  

6.3.2 Personnel costs

Personnel costs (⁷) were examined to verify:

• 
  whether they were paid and charged in respect of the actual time devoted to the project and if they were calculated on the basis of the annual gross salary or wages (plus obligatory social charges, but excluding any other costs) and the annual time worked in total,
  
• 
  whether contracts of individuals working as service providers in the beneficiary’s premises comply with the relevant national legislation (CP art. 25.2) and whether the costs declared are in compliance with the contract and the time devoted to the project.
  
• 
  whether the work was carried out during the contractual period,
  
• 
  whether the time sheets required have been properly filled in and approved by the person authorised to do so under the project
  

Only for public organisations:

• 
  whether the own contribution of the public organisation exceeds by 2 % the total declared costs referred to the salaries of civil servants or permanent/long term staff already working for the beneficiary (CP art. 25.2) before the start date of the project.
  

Organisation:	Declared expenditure (D)	Audited expenditure (A)	% A/D
Co-odinating Beneficiary
Associated Beneficiary 1
Associated Beneficiary 2
Associated Beneficiary …
TOTAL

It was found that: ……..(Describe whether the expenditure was calculated in accordance with CP art. 25.2 or whether other costs were included. All costs other than gross salaries and obligatory social charges are to be considered as ineligible, as are all costs outside the contractual period or relating to persons who are not part of the personnel of the beneficiaries. Any subsidies received for personnel must be deducted in order to calculate the personnel costs incurred. Costs which are unpaid at the time of sending the final report are to be considered as ineligible. State whether the costs for personnel employed by subcontractors were correctly charged to the heading “External Assistance”. Give an assessment of the quality of the management and accounting system and the time sheets for ensuring the proper allocation of the personnel costs of the project).

For public organisations only: state whether the costs declared for civil servants and/or permanent/long term staff increased by 2 % are covered by the own contribution of the public body and whether the declared personnel costs are related to activities normally not undertaken without the project
Documentation:

• 
  Grant agreement………….(ref…….)
  

• 
  Supplementary agreements (ref….)
  

• 
  The final report
  

• 
  Salary slips
  
• 
  Time sheets
  
• 
  Contracts of employment
  
• 
  The CP
  
• 
  Declarations by the beneficiary
  
• 
  Other documents (e.g. personnel accounts, social security legislation, documentation for total time actually worked, etc…)
  

6.3.3 Travel costs

The travel costs (⁸) were examined to verify:

• 
  whether the travel was necessary under the project and took place according to the plan in the project proposal
  

• 
  whether they were paid and charged in accordance with the internal rules of the beneficiaries,
  
• 
  whether the amount of recoverable VAT has not been declared (CP art. 30).
  

Organisation:	Declared expenditure (D)	Audited expenditure (A)	% A/D
Co-ordinating Beneficiary
Associated Beneficiary 1
Associated Beneficiary 2
Associated Beneficiary …
TOTAL

It was found that: (Describe the methodology/rates/etc used to calculate travel costs. Any travel costs in excess of the limits specified in the internal rules are ineligible. Recoverable VAT is also to be considered as ineligible. Bills which are unpaid at the time of sending the final report are to be considered as ineligible. Indicate the travel costs of external consultants which should be transferred to the heading “External assistance”.)

Documentation:

• 
  Grant agreement ………….(ref…….)
  

• 
  Supplementary agreements (ref….)
  

• 
  The final report
  

• 
  Internal rules on travel
  
• 
  Transport invoices and tickets
  
• 
  Declaration by the national VAT authority
  
• 
  The CP
  
• 
  Declarations by the beneficiary
  
• 
  Other documents (……)
  

6.3.4 External assistance costs

All the external assistance costs were examined to verify:

• 
  whether they were supported by accounting documents in accordance with national accounting law,
  
• 
  whether they have been paid (except the cost of the independent audit) (⁹),
  
• 
  whether the accounting documents include a clear reference to the LIFE project number and are sufficiently detailed to allow each part of the service rendered to be identified (CP art. 8.5),
  
• 
  that the sub-contractors were neither beneficiaries nor partners (CP art. 6.5 and 8.1),
  
• 
  whether public beneficiaries have respected the applicable national rules on public tendering (CP art. 8.4),
  
• 
  whether private beneficiaries concerned awarded the contract to the bid offering best value for money, observed principles of transparency and equal treatment and avoided conflict of interest (CP art. 8.4)
  
• 
  that the costs do not relate to durable equipment, infrastructure or consumables (CP art. 25.4-5),
  
• 
  whether the amount of recoverable VAT has not been declared (CP art. 30)
  

• 
  whether subcontracting of project tasks does not represent more than 35% of the total eligible cost.
  

Organisation:	Declared expenditure (D)	Audited expenditure (A)	% A/D
Co-odinating Beneficiary
Associated Beneficiary 1
Associated Beneficiary 2
Associated Beneficiary …
TOTAL

It was found that: ………(Describe the procedures followed by the beneficiaries to comply with art. 8.4 when selecting subcontractors. If the relevant national rules on public tendering have not been applied by the public organisations, the costs have to be considered as ineligible. Describe all the costs unsupported by accounting documents in accordance with the legislation, all costs which are insufficiently detailed and consequently to be considered as ineligible, and all costs connected with sub-contracted work undertaken by the beneficiaries. The cost of works undertaken by the beneficiaries must be charged to the appropriate headings (personnel, travel, etc.) without profit (i.e. at cost price). All recoverable VAT is ineligible. In the absence of a declaration from the national VAT authority or a recent VAT statement, VAT is to be considered as ineligible. The cost of works, durable equipment, infrastructure or consumable materials must be charged to the appropriate budget headings. All costs which are unpaid at the time of sending the final report are to be considered as ineligible.)

Documentation:

• 
  Grant Agreement ………….(ref…….)
  

• 
  Supplementary agreements (ref….)
  

• 
  The final report
  
• 
  The public call for tender
  
• 
  Tenders
  
• 
  Justification for the choice of sub-contractor
  

• 
  Contracts with sub-contractors
  
• 
  Invoices and proofs of payments
  
• 
  Declaration by the national VAT authority
  
• 
  The CP
  
• 
  Declarations by the beneficiary
  
• 
  Other documents: e.g. national rules on public tendering, Community Directives, etc……
  

6.3.5 Durable goods

The depreciation of expenditure on durable goods (¹⁰) corresponds to the purchase/manufacture or lease of equipment or infrastructure during the project period.
The durable goods were examined to verify:

• 
  that they were acquired during the contractual period (CP art. 25.5),
  
• 
  whether they were included in the inventory of the beneficiaries’ durable goods (¹¹) with the (possible) exception of leased durable goods (CP art. 25.5),
  
• 
  whether they are treated as capital expenditure in accordance with the tax and accounting rules applicable to the beneficiaries of the project (CP art. 25.5),
  
• 
  whether they are purchased or leased at normal market prices (CP art. 25.5),
  
• 
  whether the internal accounting depreciation rules of the beneficiaries have been applied (CP art. 25.6)
  
• 
  whether the ceilings have been respected (CP art. 25.6)
  
• 
  whether the public authorities in the partnership (if applicable) have respected the national rules on public tendering (CP art. 8.4)
  
• 
  whether the amount of recoverable VAT has not been declared (CP art. 30),
  
• 
  whether the costs have been paid (CP art. 25.1)
  

The depreciation costs of durable goods acquired before the start-date of the project are ineligible. Maintenance costs for those goods are taken into account in overhead costs (flat rate funding).
If applicable, and for LIFE+ Environment Policy and Governance and LIFE+ Biodiversity projects only:

A physical check of prototypes was carried out and a financial audit of the costs to verify whether the goods declared to be prototypes corresponded to the definition in art. 25.7 of the CP.

If applicable, and for LIFE+ Nature projects only:

Costs incurred for land/rights purchase were examined to verify that they are intrinsically connected with the implementation of the project, and explicitly provided for in the project, the cost corresponds to market value and whether the sale contract and/or its entry in the land register includes a guarantee of the definitive assignment of the land to nature conservation (CP art. 35).

Organisation	Declared Total Purchase cost (D)	Depreciation	Audited expenditure (A)
Co-ordinating Beneficiary
Infrastructure
Equipment
Prototypes (Env. and Biodiv.)		N/A
Land/rights purchase (Nature)		N/A
Associated Beneficiary 1
Infrastructure
Equipment
Protoypes (Env. and Biodiv.)		N/A
Land/rights purchase (Nature)
Associated Beneficiary …
Infrastructure
Equipment
Protoypes (Env. and Biodiv.)		N/A N/A
Land/rights purchase (Nature)		N/A
TOTAL

It was found that: (Describe the procedures followed by the beneficiaries to comply with art. 8.4 when selecting subcontractors. If the relevant national rules on public tendering have not been applied by the public organisations, the costs have to be considered as ineligible. Describe the beneficiaries' depreciation rules and rates. Depreciation costs for durable goods purchased before the contract period are ineligible. Durable goods not included in the inventory of the beneficiaries' durable goods and not considered as capital expenses are ineligible. Describe what goods have been purchased or leased at a price above the normal market price, and consider the surplus to be ineligible. If the depreciation is greater than those specified in the CP art. 25.6 and 25.7, the depreciation should be adjusted accordingly and the surplus considered as ineligible costs. If the prototypes do not correspond to the CP definition, their cost should be depreciated. If the tendering procedures were not followed, the eligible amount is the maximum amount for which no call for tenders is required. Recoverable VAT is ineligible, as are costs which have not been paid at the time of sending the final report.)

Documentation:

• 
  Grant agreement …(ref…….)
  

• 
  Supplementary agreements (ref….)
  

• 
  The final report
  
• 
  If applicable: the public call for tender
  
• 
  Tenders
  
• 
  Reports justifying the choice of supplier
  

• 
  Invoices and proofs of payment
  
• 
  The control accounts and trial balances
  
• 
  Declaration by the national VAT authority
  
• 
  The CP
  
• 
  Declarations by the beneficiary
  
• 
  Other: …………….
  

6.3.6 Consumable materials

The expenditure on consumable materials was examined (¹²) to verify:

• 
  that it has not been included in the inventory of the beneficiaries' durable goods,
  
• 
  that it has not been considered as capital expenses,
  
• 
  that it specifically relates to the project implementation,
  
• 
  that it does not qualify as overheads (CP art. 25.13),
  
• 
  whether the amount of recoverable VAT has not been declared (CP art. 30),
  
• 
  whether all the costs have been paid.
  

Organisation	Declared expenditure (D)	Audited expenditure (A)	% A/D
Co-ordinating Beneficiary
Associated Beneficiary1
Associated Beneficiary2
Associated Beneficiary
TOTAL

It was found that: …….(material already included in an inventory of durable goods or considered as capital expenses or not specifically related to the project is to be considered as ineligible. General consumables / supplies are to be considered as overheads and included in the heading “Overheads”. All recoverable VAT is ineligible, as are costs which have not been paid at the time of sending the final report).

Documentation:

• 
  Grant agreement .(ref…….)
  

• 
  Supplementary agreements (ref….)
  

• 
  The final report
  

• 
  Invoices and proofs of payment
  
• 
  The control accounts and trial balances
  
• 
  Declaration by the national VAT authority
  
• 
  The CP
  
• 
  Declarations by the beneficiary
  
• 
  Other: ……………….
  

6.3.7 Other costs

The other costs were examined (¹³) to verify:

• 
  whether they do not fall into another defined category,
  
• 
  whether they are real and eligible listed expenses (CP art. 26),
  
• 
  whether the amount of recoverable VAT has not been declared (CP art. 30),
  
• 
  if all the costs have been paid.
  

Organisation	Declared expenditure (D)	Audited expenditure (A)	% A/D
Co-ordinating Beneficiary
Associated Beneficiary1
Associated Beneficiary2
Associated Beneficiary
TOTAL

It was found that: ………..(describe expenses which were unnecessary for the project, were not registered or lump sum amounts, and consider them as ineligible. Expenses falling into another budget category should be transferred. All recoverable VAT is ineligible, as are costs which have not been paid at the time of sending the final report).

Documentation:

• 
  Grant agreement….(ref…….)
  

• 
  Supplementary agreements (ref….)
  

• 
  The final report
  

• 
  Invoices and proofs of payment
  
• 
  Declaration by the national VAT authority
  
• 
  Declarations by the beneficiary
  
• 
  The CP
  
• 
  Other: …………….
  

6.3.8 Overheads

The overheads were examined to verify:

• 
  whether they do not exceed a flat-rate of 7% calculated of the total amount of eligible direct costs, excluding land purchase costs.
  

It was found that: (overhead costs exceeding the 7% flat-rate calculated of the total amount of eligible direct costs, excluding land purchase costs, should be considered as ineligible).

Documentation:

• 
  The final report
  

6.3.9 Ineligible costs

The audit examined whether there were any ineligible costs in accordance with the definition in CP art. 26.
It was found that: (all costs described in art. 26 of the CP are to be considered as ineligible.)