CFS understanding the scope
Navigating the financial aspects of Horizon Europe, the European Commission’s primary program for research and innovation, involves a critical component known as the Certificate on the Financial Statements (CFS). This certificate stands as evidence of the accountability and transparency expected from participants in the project.
Fundamentally, the Certificate on Financial Statements functions as a safeguard, verifying the accuracy and dependability of the financial information submitted by Beneficiaries and acting as the first level of the audit. It is an official document issued by an external auditor, confirming that the financial statements accurately depict the financial position, performance, and cash flows of the project.
Within the Horizon Europe framework, this certificate assumes a pivotal role in ensuring the responsible and effective utilization of funds allocated for groundbreaking research and innovation initiatives. Project participants are obliged to comply with rigorous financial regulations and reporting standards, and the certificate serves as tangible proof of adherence to these standards.
When is a CFS required?
The Certificate on the Financial Statements (CFS) is a component of the coordinator’s Termination Report, which is to be submitted within 60 days following the conclusion of the last reporting period.
The Termination Report containing an overview of the progress of the work, the financial statement, the explanation on the use of resources, and, if applicable, the certificate on the financial statement according to Articles 21 and 24.2 and Data Sheet, Point 4.3, the Certificate on the Financial Statements must be drawn up using the template published on the Portal, cover the costs declared on the basis of actual costs and costs according to usual cost accounting practices. This requirement applies to each Beneficiary involved in an action, as well as to each linked third party. It becomes mandatory if the Beneficiary receive a total contribution of EUR 430,000 or more, as reimbursement of actual costs and unit costs calculated based on its usual cost accounting practices (see Article 4.3).
Is the cost for CFS considered eligible?
The costs associated with a mandated Certificate on the Financial Statements (CFS), applicable solely when attaining the specified threshold, are considered eligible within the cost category C.3, denoted as ” other goods, works or services”.
Who and what will be audit?
A Certificate on the Financial Statements (CFS) can be issued by any qualified external auditor within the European region: “qualified to carry out statutory audits of accounting documents in accordance with Directive 2006/43/EC of the European Parliament and is independent from the participant.
In Romania, you can secure this information by checking the ASPAAS official website.
Our partner is registered as a licensed auditor holding license AF4881 while the company is registered as an audit company.
What is the process for issuing a CFS?
Using the Project reporting templates, ” Certificate on the Financial Statements” from the EC Portal the auditor issue “Terms of Reference” (a model delineating the agreement between the participant and the auditing firm) and the certificate. The auditor is tasked with identifying and reporting any irregularities or errors detected during the examination. The European Commission assumes responsibility for determining the implications of errors as highlighted by the auditor.
How does the process help the Beneficiary?
From our experience, Beneficiaries who do not receive guidance from a consultant after signing the Grant Agreement encounter challenges in accurately declaring costs. Various issues arise mostly during the calculation of personnel, subcontracting, and even travel costs. The ultimate benefit derived from conducting a Certificate on the Financial Statements (CFS) is that it enlightens Beneficiaries about these errors and provide the opportunity to correct them.
Our company not only performs the CFS but also identifies deficiencies in existing processes. We compile a comprehensive report of recommendations for rectifying these deficiencies, providing assistance in their implementation. Furthermore, we offer support in the audit process, whether conducted by a third party or necessitated as a second level of audit by the European Commission. The objective is to optimize current resources from an operational standpoint, enabling Beneficiaries to redirect their focus toward strategic endeavors.
Formal Reference
Guidance from the “Horizon Europe Online Manual” and Grant agreement of the programme and the AGA.
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