Audit
Audit of Grants
Audit of EU-Funded Grants
An audit of project accounts relating to state-funded or EU-funded grants may be required where the call for proposals or the grant agreement makes this a condition for submitting the financial report. In such cases, the beneficiary and the auditor must conclude a separate engagement contract for the audit of the grant.
The certification of the grant may be performed by any registered auditor; it does not have to be the company’s statutory (permanent) auditor.
It is important to emphasise that the verification of EU grants does not qualify as a statutory audit, but as a specific assurance / verification engagement. The beneficiary is obliged to have this engagement carried out and to submit both the related documentation and the financial report on the use of the grant. In line with generally accepted professional standards, the verification of the use of funds is performed in accordance with the guidelines and methodology specified by the granting authority.
During the engagement, the auditor must obtain reasonable assurance that the financial statement is free from material misstatement – in other words, that the costs reported are in fact eligible and comply with the terms and conditions set out in the grant agreement. In relation to the eligibility of expenditure, the auditor will typically verify the following general requirements:
- Whether the costs were incurred and paid within the eligibility period specified in the grant agreement.
- Whether the costs were necessary for the implementation of the Project that is the subject of the grant.
- Whether the costs are identifiable and verifiable in the financial report, and whether they appear in the Beneficiary’s accounting records (at the latest by the reporting date) and have been recognised in accordance with the applicable accounting rules of the Beneficiary’s country of establishment and its usual accounting practice.
- Whether the financial report complies with all applicable tax and social security legislation.
- Whether the costs reported for the project are reasonable, justified and comply with principles of economy and efficiency.
- Whether the financial report does not include any ineligible costs as defined in the grant agreement.
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