I have always asserted that Certificates on the Financial Statements (CFS) are extremely advantageous for the Beneficiarias of EU funded programmes. Conducting the CFS with a knowledgeable auditor who is proficient in the procedures can provide multiple advantages, particularly in building confidence in your Horizon Europe project administration and financial reporting. The CFS report serves more as a corrective exercise than a traditional audit.
During the EC event, beneficiaries demonstrated their involvement in the administration of the action by posing questions. Due to time constraints, the EC could not address all of them.
We selected some of these questions and strived to provide answers to clarify them.
Q: We need to provide a CFS as we are above the threshold. Do we have to provide the CFS with the final report only, or also with the periodic report at 12 months?;
Q: If a project will require a CFS, can we do a CFS at each RP and combine the CFSs into a single document at the end? Goal: saving time (just 60 days is tight).
A: The Certificate on the Financial Statements (CFS) should be submitted alongside the Final Reporting. The CFS may only be submitted at the conclusion of interim reporting periods upon the European Commission’s (EC) request, typically applicable to EIT KIC actions.
The testing sample selection is based on the full cost reported by the beneficiary, encompassing all periods of the action. Conducting a CFS at each reporting period may result in over-testing by repeatedly selecting 10 items or 10% of the items, or in selecting an inaccurate sample if a lower percentage is chosen, even if covering 10 items or 10% by the end of the action. Random sampling in this manner may not provide an accurate representation.
Performing a CFS audit after an interim reporting period, even if the threshold has been exceeded, will not be considered an eligible cost and is not required by the EC.
Q: The threshold for an audit is € 430 thousand. Does this also include own resources? Or are only funds paid out by the EU to be audited?
A: Only the EC contribution should be considered when determining the threshold.
Q: For travel costs: If the monthly declaration only shows the total number of days in the month, what check must be done concerning the dates of travelling?
A: This is an excellent question. Although the Annotated Grant Agreement (AGA) recommends declaring monthly days, in the event of an audit, you will be required to demonstrate how you calculated these conversions. Therefore, I strongly advise all beneficiaries to maintain timesheets with daily granularity of hours, signed monthly. This approach will help you avoid challenging questions from auditors regarding time recorded during trips and ensuring no time is recorded during holidays.
Q: For the monthly declaration (with number of day-equivalents per month), is it allowed to sign and authorize this declaration yearly or per reporting period?
A: It has to be signed monthly. Reliable time records must be dated and signed at least monthly by the person working for the action and their supervisor.
Q: 1 item in personnel cost=1 person. Does it mean that have to select the same 10 people for all the years of the project or can be modified?
A: For personnel costs, the selection is made at the individual personnel level, considering all periods of the action. For instance, if employee ABC has been involved in both Period 1 and Period 2 of the action, the cost tested will be the total cost declared for employee ABC across both periods. This aggregate amount constitutes one sample selection (out of 10 or a minimum of 10%).
Q: Can a person declare day-equivalent worked in a monthly declaration during summer holidays?
A: No, you should not declare hours or days worked on the action during any type of holiday (vacation, statutory leave, illness, etc.). This is verified through audit procedures conducted by auditors for the CFS as well as during the second level of audit. The holiday list will be reviewed and reconciled with the time recordings.
Q: Is there a different approach when the auditor reviews a Lead Partner? Which additional documentation needs to be checked?
A: The Coordinator is not subject of testing for the CFS. However, for the second level of audit, conducted by the EC or a subcontracted firm, payments made to beneficiaries are subject to testing.
For further assistance or inquiries, please feel free to contact us.
