3. Tors Audit - Eu Iurfsh

7/25/2019 3. Tors Audit - Eu Iurfsh

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TERMS OF REFERENCE FOR AN EXPENDITURE VERIFICATION OFA GRANT CONTRACT

- EXTERNAL ACTIONS OF THE EUROPEAN UNION -

HOW TO USE THIS TERMS OF REFERENCE MODEL? All text highlighted in yellow in this ToR odel !nd

its !nnex " !nd # is $o% inst%&'tion only !nd (ene$i'i!%ies o$ g%!nt 'ont%!'ts sho&ld %eo)e it !$te% &se*

The +!%ts o$ the ToR +%esented in ,--**. /e*g* ,n!e o$ the (ene$i'i!%y. &st (e 'o+leted (y the (ene$i'i!%y*

The following are the terms of reference (ToR) on which


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The Auditor and,or the firm is registered as a statutory auditor in the pu&lic register of a pu&lic

oversight &ody in a third country and this register is su&ect to principles of pu&lic oversight asset out in the legislation of the country concerned (this applies to auditors and audit firms &asedin a third country)$

'. SUB&ECTOFTHEENGAGEMENT

The su&ect of this engagement is the 'inancialReport in connection with the "rant #ontract for the period covering and the action entitled * the ?Action?$ Annex 6 to these ToR containsinformation a&out the "rant #ontract$

). REASONFORTHEENGAGEMENT

The Beneficiary is reuired to su&mit to the #ontracting Authority an expenditure verificationreport produced &y an external auditor in support of the payment reuested &y the Beneficiaryunder Article 6; of the "eneral #onditions of the "rant #ontract$ The Authorising @fficer of the

#ommission reuires this report as he maes the payment of expenditure reuested &y theBeneficiary conditional on the factual findings of this report$

*. ENGAGEMENTT+PEANDOB&ECTIVE

This expenditure verification is an engagement to perform certain agreed+upon procedures withregard to the 'inancial Report for the "rant #ontract$ The o&ective of this expenditureverification is for the Auditor to carry out the specific procedures listed in Annex 0A to these ToRand to su&mit to the Beneficiary a report of factual findings with regard to the specific verification

procedures performed$ erification means that the Auditor examines the factual information in the'inancial Report of the Beneficiary and compares it with the terms and conditions of the "rant

#ontract$ As this engagement is not an assurance engagement the Auditor does not provide an auditopinion and expresses no assurance$ The #ontracting Authority assesses for itself the factualfindings reported &y the Auditor and draws its own conclusions from these factual findings$

,. STANDARDSANDETHICS

The Auditor shall undertae this engagement in accordance with-

the .nternational Ctandard on Related Cervices (.CRC) 3311 ngagements to perform Agreed+upon 5rocedures regarding 'inancial .nformation as promulgated &y the .'A#=

the .'A# #ode of thics for 5rofessional Accountants (developed and issued &y .'A#?s.nternational thics Ctandards Board for Accountants (.CBA)* which esta&lishes fundamentalethical principles for Auditors with regard to integrity* o&ectivity* independence* professionalcompetence and due care* confidentiality* professional &ehaviour and technical standards$Although .CRC 3311 provides that independence is not a reuirement for agreed+upon

procedures engagements* the #ontracting Authority reuires that the Auditor is independentfrom the Beneficiary and complies with the independence reuirements of the .'A# #ode ofthics for 5rofessional Accountants$

. PROCEDURES EVIDENCEANDDOCUMENTATION

The Auditor plans the wor so that an effective expenditure verification can &e performed$ TheAuditor performs the procedures listed in Annex 0A of these ToR (Disting of specific proceduresto &e performed) and applies the guidelines in Annex 0B ("uidelines for specific procedures to &e

performed)$ The evidence to &e used for performing the procedures in Annex 0A is all financial and

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non+financial information which maes it possi&le to examine the expenditure claimed &y theBeneficiary in the 'inancial Report$ The Auditor uses the evidence o&tained from these proceduresas the &asis for the report of factual findings$ The Auditor documents matters which are importantin providing evidence to support the report of factual findings* and evidence that the wor wascarried out in accordance with .CRC 3311 and these ToR$

/. REPORTING

The report on this expenditure verification should descri&e the purpose* the agreed+uponprocedures and the factual findings of the engagement in sufficient detail in order to ena&le theBeneficiary and the #ontracting Authority to understand the nature and extent of the procedures

performed &y the Auditor and the factual findings reported &y the Auditor$

The use of the 8odel Report for an xpenditure erification of an ! "rant #ontract in Annex 4of these ToR is compulsory$ This report should &e provided &y the Auditor to within woringdays after the day of signature of these ToR$

0. OTHERTERMS

The fee for this engagement shall &e

FThe Beneficiary and the Auditor can use this section to agree any other specific termsG

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Anne 1 .nformation a&out the "rant #ontract

Anne 'A Disting of specific procedures to &e performed

Anne 'B "uidelines for specific procedures to &e performed

Anne ) 8odel report for an expenditure verification of an ! grant contract

F%r $2e Beneficiar3 F%r $2e A"#i$%r3

Cignature Cignature

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Anne 1 Inf%r4a$i%n a5%"$ $2e Gran$ C%n$rac$

[Annex to be completed by the Beneficiary]

Inf%r4a$i%n a5%"$ $2e Gran$ C%n$rac$

Reference num&er and date of the "rant#ontract

< #ontracting Authoritys reference of the"rant #ontract>

"rant contract title#ountry

Beneficiary < full name and address of the Beneficiaryas per the "rant #ontract>

Budget line #ontract < #ontracting Authority reference of the&udget line and #ommission referencewhere the #ontracting Authority is not the#ommission >

Degal &asis for the #ontract

Ctart date of the Action

nd date of the Action

Total cost of the Action


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Anne 'A Li6$in7 %f S8ecific Pr%ce#"re6 $% 5e 8erf%r4e#

[This Annex is a standard listing of specific procedures to be performed and it shall not be modified]

1. GENERALPROCEDURES

1.1. Ter46 an# C%n#i$i%n6 %f $2e Gran$ C%n$rac$

The Auditor o&tains an understanding of the terms and conditions of the "rant #ontract &yreviewing the "rant #ontract and its annexes and other relevant information* and &y inuiry of theBeneficiary$ The Auditor o&tains a copy of the original "rant #ontract (signed &y the Beneficiaryand the #ontracting Authority) with its annexes$ The Auditor o&tains and reviews the Report

(which includes a narrative and a financial section) as per Article 0$6 of the "eneral#onditions$

1.'. Financia9 Re8%r$ f%r $2e Gran$ C%n$rac$

The Auditor verifies that the 'inancial Report complies with the following conditions of Article

0 of the "eneral #onditions the "rant #ontract-

The 'inancial Report must conform to the model in Annex . of the "rant #ontract=

The 'inancial Report should cover the Action as a whole* regardless of which part of it isfinanced &y the #ontracting Authority=

The 'inancial Report should &e drawn up in the language of the "rant #ontract=

The proof of the transfers of ownership of euipment* vehicles and supplies (Article 7$4 of the"eneral #onditions of the "rant #ontract) should &e annexed to the final 'inancial Report$

1.). R"9e6 f%r Acc%"n$in7 an# Rec%r# :ee8in7

The Auditor examines when performing the procedures listed in this Annex + whether theBeneficiary has complied with the following rules for accounting and record eeping of Article62 of the "eneral #onditions the "rant #ontract-

The accounts ept &y the Beneficiary for the implementation of the Action must &e accurate andup+to+date=

The Beneficiary must have a dou&le+entry &oo+eeping system=

The accounts and expenditure relating to the Action must &e easily identifia&le and verifia&le=

The accounts must provide details of interest accrued on funds paid &y the #ontractingAuthority$

1.*. Rec%nci9in7 $2e Financia9 Re8%r$ $% $2e Beneficiar;6 Acc%"n$in7 S6$e4an# Rec%r#6

The Auditor reconciles the information in the 'inancial Report to the Beneficiarys accountingsystem and records (e$g$ trial &alance* general ledger accounts* su& ledgers etc$) (Cee Article 62$6)$

1.,. Ec2an7e Ra$e6

The Auditor verifies that amounts of expenditure incurred in a currency other than the uro have&een converted at the exchange rate which is made up of the average of the rates pu&lished in

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.nforuro for the months covered &y the 'inancial Report* unless otherwise provided in the Cpecial#onditions of the "rant #ontract (Article 6;$9 of the "eneral #onditions)

'. PROCEDURES TO VERIF+ CONFORMIT+ OF EXPENDITURE


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( )ecords (Article 1!"1d

The Auditor verifies that expenditure for a selected item is recorded in the Beneficiary?s accountingsystem and was recorded in accordance with the applica&le accounting standards of the countrywhere the Beneficiary is esta&lished and the Beneficiary?s usual cost accounting practices$

(* +ustified (Article 1!"1e

The Auditor verifies that expenditure for a selected item is su&stantiated &y evidence (see section 6of Annex 0B* "uidelines for Cpecific 5rocedures to &e performed) and nota&ly the supportingdocuments as specified in Article 62$0 and 62$4 of the "eneral #onditions of the "rant #ontract$

(, -aluation

The Auditor verifies that the monetary value of a selected expenditure item agrees with underlyingdocuments (e$g$ invoices* salary statements) and that correct exchange rates are used whereapplica&le$

(. Classification

The Auditor examines the nature of the expenditure for a selected item and verifies that theexpenditure item has &een classified under the correct (su&)heading of the 'inancial Report$

(/ Compliance 0ith rocurement2 'ationality and 3rigin )ules

%here applica&le the Auditor examines which procurement* nationality and origin rules apply for acertain expenditure (su&)heading* a class of expenditure items or an expenditure item$ The Auditorverifies whether the expenditure was incurred in accordance with such rules &y examining theunderlying documents of the procurement and purchase process$ %here the Auditor finds issues ofnon+compliance with procurement rules* he,she reports the nature of such events as well as theirfinancial impact in terms of ineligi&le expenditure$ %hen examining procurement documentationthe Auditor taes into account the ris indicators listed in Annex 0B and he,she reports* if

applica&le* which of these indicators were found$

).'. E9i7i5i9i$ %f Direc$ C%6$6 =Ar$ic9e 1*.'>

.f the expenditure for a selected item is recorded under one of the direct costs headings 6 to 2 of the'inancial Report* the Auditor verifies that this type of expenditure is covered &y the direct costs asdefined in Article 63$0 &y examining the nature of the expenditure items concerned$

).). Pr%?i6i%n f%r C%n$in7enc Re6er?e =Ar$ic9e 1*.)>

The Auditor verifies that the provision for contingency reserve (heading 9 'inancial Report) doesnot exceed ;E of the direct eligi&le costs of the Action and that the Beneficiary has o&tained prior

written authorisation of the #ontracting Authority for the use of this contingency reserve$

).*. A#4ini6$ra$i?e c%6$6 =Ar$ic9e 1*.*>

The Auditor verifies that the indirect costs to cover the administrative overheads (heading 61'inancial Report) do not exceed 7E of the total amount of eligi&le direct costs of the Action$

).,. C%n$ri5"$i%n6 in :in# =Ar$ic9e 1*.,>

The Auditor verifies that costs in the 'inancial Report do not include contri&utions in ind$#ontri&utions in ind are not eligi&le costs$

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).. Ine9i7i59e c%6$6 =Ar$ic9e 1*.>

The Auditor verifies that the expenditure for a selected item does not concern an ineligi&le cost asdescri&ed in Article 63$2 of the "eneral #onditions$ The Auditor verifies whether expenditureincludes certain taxes* including AT$ .f this is the case the Auditor verifies that the Beneficiary(or* where applica&le the partners) cannot reclaim these taxes through an exemption system and,ora refund a posteriori$ .f this is the case* taxes can &e considered as eligi&le costs* provided that the

&asic act which finances the !+contri&ution does not exclude payment of taxes$

)./. Acce8$e# c%6$6

%here the &asic act which finances the !+contri&ution excludes taxes as eligi&le costs* thesetaxes may nevertheless &e taen into consideration as co+financing &y the grant &eneficiary$ TheAuditor verifies that the &eneficiary (or* where applica&le* the partners) cannot reclaim these taxesthrough an exemption system and,or a refund a posteriori$

).0. Re?en"e6 %f $2e Ac$i%n

The Auditor examines whether revenues which should &e attri&uted to the Action (including inter

alia grants and funding received from other donors and other revenue generated &y the Beneficiaryin the context of the Action such as for example interest earned) have &een allocated to the Actionand disclosed in the 'inancial Report$ 'or this purpose the Auditor inuires with the Beneficiaryand examines documentation o&tained from the Beneficiary$ The Auditor is not expected toexamine the completeness of the revenues reported$

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Anne 'B G"i#e9ine6 f%r S8ecific Pr%ce#"re6 $% 5e 8erf%r4e#

[This Annex pro4ides standard guidelines for the specific procedures to be performed and theseguidelines shall not be modified]

1. VERIFICATIONEVIDENCE

%hen performing the specific procedures listed in Annex 0A the Auditor may apply techniuessuch as inuiry and analysis* (re)computation* comparison* other clerical accuracy checs*o&servation* inspection of records and documents* inspection of assets and o&tainingconfirmations$

The Auditor o&tains verification evidence from these procedures to draw up his report of factualfindings$ erification evidence is all information used &y the Auditor in arriving at the factualfindings and it includes the information contained in the accounting records underlying the'inancial Report and other information (financial and non+financial)$

The contractual reuirements that relate to verification evidence are-

xpenditure should &e identifia&le* verifia&le and recorded in the accounting records of the

Beneficiary (Article 63$6$d) of the "eneral #onditions of the "rant #ontract)=

xpenditure must &e easily identifia&le and verifia&le and traced to and within the Beneficiarys

accounting and &ooeeping systems (Article 62$6 of the "eneral #onditions)=

The Beneficiary will allow any external auditor to carry out verifications on the &asis of

supporting documents for the accounts* accounting documents and any other document relevantto the financing of the Action$ The Beneficiary gives access to all documents and data&asesconcerning the technical and financial management of the Action (Article 62$0 of the "eneral#onditions)=

Article 62$4 of the "eneral #onditions of the "rant #ontract provides a list of the types and

nature of evidence that the Auditor will often find in expenditure verifications$

8oreover* for the purpose of the procedures listed in Annex 0A* evidence-

8ust &e availa&le in documentary form* whether paper* electronic or other medium (e$g$ a

written record of a meeting is more relia&le than an oral presentation of the matters discussed)=

8ust &e availa&le in the form of original documents rather than photocopies or facsimiles=

Chould prefera&ly &e o&tained from independent sources outside the entity (an original suppliers

invoice or contract is more relia&le than an internally approved receipt note)=

%hich is generated internally is more relia&le if it has &een su&ect to control and approval=

@&tained directly &y the Auditor (e$g$ inspection of assets) is more relia&le than evidence

o&tained indirectly (e$g$ inuiry a&out the asset)$

.f the Auditor finds that the a&ove criteria for evidence are not sufficiently met* he,she should detailthis in the factual findings$

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'. OBTAINING AN UNDERSTANDING OF THE TERMS AND CONDITIONS OF THEGRANTCONTRACT=ANNEX'A - PROCEDURE1.1>

The Auditor o&tains an understanding of the terms and conditions of the "rant #ontract and he,sheshould pay particular attention to Annex . of the "rant #ontract* which contains the /escription ofthe Action* Annex .. ("eneral #onditions) and Annex .* which provides rules for procurement(including nationality and origin rules) &y grant &eneficiaries in the context of ! external actions$

'ailure to comply with these rules maes expenditure ineligi&le for ! financing$ Theseprocurement rules apply to all grant contracts &ut depending on the legal &asis for the "rant#ontract (e$g$ TA#.C* ADA* 'ood Aid and /evelopment #o+operation .nstrument) nationality andorigin rules may vary$ The Auditor ensures with the Beneficiary that the applica&le nationality andorigin rules are identified and understood$ Applica&le rules of nationality and origin are set out* foreach legal &asis* in Annex A0 to the 5ractical "uide0to contract procedures for external actions ofthe uropean #ommunities$

.f the Auditor finds that the terms and conditions to &e verified are not sufficiently clear he shouldreuest clarification from the Beneficiary$

). SELECTINGEXPENDITUREFORVERIFICATION =ANNEX'A - PROCEDURES).1 @)./>

The expenditure claimed &y the Beneficiary in the 'inancial Report is presented under thefollowing expenditure headings- 6 Human Resources* 0 Travel* 4 uipment and Cupplies* 3 Docaloffice* ; @ther costs* services* 2 @ther* 95rovision for contingency reserve and 61 Administrativecosts$ xpenditure headings 6 to 2 represent direct costs of the Action$ xpenditure headings can

&e &roen down into expenditure su&headings such as for example 6$6 Calaries$

xpenditure su&headings can &e &roen down into individual expenditure items or classes ofexpenditure items with the same or similar characteristics$ The form and nature of the supportingevidence (e$g$ a payment* a contract* an invoice etc) and the way expenditure is recorded (i$e$

ournal entries) vary with the type and nature of the expenditure and the underlying actions ortransactions$ However* in all cases expenditure items should reflect the accounting (or financial)value of underlying actions or transactions no matter the type and nature of the action ortransaction concerned$

alue should &e the principal factor used &y the Auditor to select expenditure items or classes ofexpenditure items for verification$ The Auditor selects high value expenditure items to ensure anappropriate coverage of expenditure$

*. VERIFICATION COVERAGE OF EXPENDITURE =ANNEX'A - PROCEDURES ).1 @)./>

The Auditor applies the principles and criteria set out &elow when planning and performing thespecific verification procedures for selected expenditure in Annex 0A (procedures 4$6 4$7)$

erification &y the Auditor and verification coverage of expenditure items does not necessarilymean a complete and exhaustive verification of all the expenditure items that are included in aspecific expenditure heading or su&heading$ The Auditor should ensure a systematic andrepresentative verification$ /epending on certain conditions (see further &elow) the Auditor mayo&tain sufficient verification results for an expenditure heading or su&heading &y looing at alimited num&er of selected expenditure items$

0 5ractical "uide (applica&le for Budget and df) and annexes for Budget and /' see-http-,,ec$europa$eu,europeaid,wor,procedures,implementation,practicalJguide,indexJen$htm

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The Auditor may apply statistical sampling techniues for the verification of one or moreexpenditure headings or su&headings of the 'inancial Report$ The Auditor examines whetherpopulations (i$e$ expenditure su&headings or classes of expenditure items within expendituresu&headings) are suita&le and sufficiently large (i$e$ are made up of large num&ers of items) foreffective statistical sampling$

.f applica&le the Auditor should explain in the report of factual findings for which headings or

su&headings of the 'inancial Report sampling has &een applied* the method used* the resultso&tained and whether the sample is representative$

The xpenditure #overage Ratio (#R) represents the total amount of expenditure verified &ythe Auditor expressed as a percentage of the total amount of expenditure reported &y theBeneficiary in the 'inancial Report and claimed &y the Beneficiary for deduction from the totalsum of pre+financing under the "rant #ontract$ This amount is reported in Annex of the "rant#ontract$

The Auditor ensures that the overall #R is at least ,$ .f he finds an exception rate of less than61E of the total amount of expenditure verified (i$e$ 2*; E) the Auditor finalises the verification

procedures and continues with reporting$

.f the exception rate found is higher than 61E the Auditor extends verification procedures until the#R is at least 0,. The Auditor then finalises verification procedures and continues withreporting regardless of the total exception rate found$ The Auditor ensures that the ECR f%r eac2e8en#i$"re 2ea#in7 an# 6"52ea#in7in the 'inancial Report is at least 1($

,. PROCEDURES TO VERIF+ SELECTED EXPENDITURE =ANNEX 'A - PROCEDURES).1 @ )./>

The Auditor verifies the selected expenditure items &y carrying out procedures 4$6 + 4$7 listed inAnnex 0A and reports all the factual findings and exceptions resulting from these procedures$erification exceptions are all verification deviations found when performing the procedures set outin Annex 0A$

The Auditor uantifies the amount of the verification exception found and the potential impact onthe ! contri&ution* should the #ommission declare the expenditure item(s) concerned ineligi&le(where applica&le taing into account the percentage of funding of the #ommission and the impacton indirect expenditure (e$g$ administrative costs))$ The Auditor reports all exceptions foundincluding the ones of which he cannot uantify the amount of the verification exception found andthe potential impact on the ! contri&ution$

'or example- if the Auditor finds an exception of 6$111K with regard to procurement rules for agrant contract where the ! finances 21E of the expenditure and where administrative costs of7E of total direct eligi&le expenses are foreseen* the Auditor reports an exception of 6$111K and a

financial impact of 230K (6$111K x 21E x 6$17)$

5pecific guidance for procedure &"1"/ Compliance 0ith rocurement2 'ationality and 3rigin)ules

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The Auditor should verify whether the expenditure for a selected item was incurred in accordancewith the applica&le procurement* nationality and origin rules &y examining the underlyingdocuments of the procurement and purchase process$ Cuch documents relate to the opening oftenders* the assessment of the eligi&ility of tenderers and conformity of tenders* the evaluation ofthe offers and the decisions with regard to the awarding of the contract$ %hen examining these

procurement documents the Auditor taes into account the ris indicators listed at the end of thisAnnex and he reports* if applica&le* which of these indicators were identified$

5pecific guidance for procedure &" Contributions in 6ind

The Auditor should verify that expenditure in the 'inancial Report does not include anycontri&utions in ind$ .f contri&utions in ind are foreseen they must &e indicated and valued in theAction &udget$ .f this is not the case contri&utions in ind are not eligi&le$ xamples- salaries ofstaff detached &y a 8inistry which is not part of the action or euipment and material receivedfrom organisations which do not participate in the Action$

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RIS INDICATORS PROCUREMENT

.nconsistencies in the dates of the documents or illogical seuence of dates$ xamples-

@ffer dated after the award of contract or &efore the sending of the invitations to tender

@ffer of the winning tenderer dated &efore the pu&lication date of the tender or dated

significantly later than offers of other tenderers

@ffers of different candidates participating in the same tenders all having the same date

/ates on documents not plausi&le,consistent with dates on accompanying documentation (e$g$date on the offer not plausi&le,consistent with the postal date on the envelope= date of a fax not

plausi&le,consistent with the printed date of the fax machine)

!nusual similarities in offers of candidates participating in the same tender$ xamples-

Came wording* sentences and terminology in offers of different tenderers

Came layout and format (e$g$ font type* font siLe* margin siLes* indents* paragraph wrapping*etc) in offers of different tenderers

Cimilar letterhead paper or logos

Came prices used in offers of different tenderers for a num&er of su&components or line items

.dentical grammatical* orthographical or typing errors in offers of different tenderers

!se of similar stamps and similarities in signatures

'inancial statement or other information indicating that two tenderers participating in the same

tender are related or part of a same group (e$g$ where financial statements are provided* thenotes to the financial statements may disclose ultimate ownership of the group$ @wnershipinformation may also &e found in pu&lic registers for accounts)

.nconsistencies in the selection and award decision process$ xamples-

Award decisions not plausi&le , consistent with selection and award criteria

rrors in the application of the selection and award criteria

A regular supplier of the &eneficiary participates as a mem&er of a tender evaluation committee

@ther elements and examples indicating a ris of privileged relationship with tenderers-

A same tenderer (or small group of tenderers) is invited to different tenders with unusualfreuency

A same tenderer (or small group of tenderers) wins an unusually high proportion of the &ids

A tenderer is freuently awarded contracts for different types of goods or services

The winning tenderer invoices additional goods not foreseen in the offer (e$g$ additional spareparts invoiced without clear ustification* installation costs invoiced while not foreseen in theoffer)$

@ther documentation* issues and examples indicating a ris of irregularities-

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!se of photocopies instead of original documents

!se of pro+forma invoices as supporting documents instead of official invoices

8anual changes on original documents (e$g$ figures manually changed* figures MtippexedM* etc)

!se of non+official documents (e$g$ letterhead paper not showing certain official and,orcompulsory information such as commercial registry num&er* company tax num&er* etc$)

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Anne ) 3 M%#e9 Re8%r$ f%r an E8en#i$"re Verifica$i%n %f an EU Gran$ C%n$rac$

H@% T@ !C TH.C 8@/D R5@RTN All text highlighted in yellow in this model report is forinstruction only and auditors should remove it after use$ .nformation reuested in the following

form (e$g$ must &e completed &y the auditor$

Re8%r$ f%r an E8en#i$"re Verifica$i%n %f a Gran$ C%n$rac$

E$erna9 Ac$i%n6 %f $2e E"r%8ean Uni%n

Ti$9e %f an# n"45er %f $2e 7ran$ c%n$rac$

TABD @' #@ITITC

REPORT OF FACTUAL FINDINGS1)

1. INFORMATION ABOUT THE GRANT CONTRACT .1

'. PROCEDURES PERFORMED AND FACTUAL FINDINGS ..'(

). PROCEDURES TO VERIF+ SELECTED EXPENDITURE.. .'(

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Re8%r$ %f Fac$"a9 Fin#in76

7'ame of contact person(s>2 7 osition>, 0ene$i'i!%y1s n!e.7Address>

/ear 7'ame of contact person(s>

.n accordance with the terms of reference dated 7dd 8onth yyyy> that you agreed with us* weprovide our Report of 'actual 'indings (Pthe ReportQ)* with respect to the accompanying 'inancialReport for the period covering 7dd 8onth yyyy $ dd 8onth yyyy> (Annex 6 of this Report)$ oureuested certain procedures to &e carried out in connection with your 'inancial Report and theuropean !nion financed "rant #ontract concerning 7title and number of the contract>* the"rant #ontract$

O5ec$i?e

@ur engagement was an expenditure verification which is an engagement to perform certainagreed+upon procedures with regard to the 'inancial Report for the "rant #ontract &etween youand 7the European Commission or the name of another contracting authority>the #ontractingAuthority$ The o&ective of this expenditure verification is for us to carry out certain proceduresto which we have agreed and to su&mit to you a report of factual findings with regard to the

procedures performed$

S$an#ar#6 an# E$2ic6

@ur engagement was undertaen in accordance with-

.nternational Ctandard on Related Cervices (.CRC) 3311 Engagements to perform Agreed$upon rocedures regarding 9inancial %nformation as promulgated &y the .nternational'ederation of Accountants (.'A#)=

the Code of Ethics for rofessional Accountants issued &y the .'A#$ Although .CRC 3311provides that independence is not a reuirement for agreed+upon procedures engagements* the#ontracting Authority reuires that the auditor also complies with the independencereuirements of the Code of Ethics for rofessional Accountants=

Pr%ce#"re6 8erf%r4e#

As reuested* we have only performed the procedures listed in Annex 0A of the terms of reference

for this engagement (see Annex 0 of this Report)$

These procedures have &een determined solely &y the #ontracting Authority and the procedureswere performed solely to assist the #ontracting Authority in evaluating whether the expenditureclaimed &y you in the accompanying 'inancial Report is eligi&le in accordance with the terms andconditions of the "rant #ontract$

Because the procedures performed &y us did not constitute either an audit or a review made inaccordance with .nternational Ctandards on Auditing or .nternational Ctandards on Reviewngagements* we do not express any assurance on the accompanying 'inancial Report$

Had we performed additional procedures or had we performed an audit or review of the financialstatements of the Beneficiary in accordance with .nternational Ctandards on Auditing* othermatters might have come to our attention that would have &een reported to you$

&an"ar '(1' 5age 67 of 004069;99:0$doc


18/22

S%"rce6 %f Inf%r4a$i%n

The Report sets out information provided to us &y you in response to specific uestions or aso&tained and extracted from your accounts and records

Fac$"a9 Fin#in76

The total expenditure which is the su&ect of this expenditure verification amounts to K$

The xpenditure #overage Ratio is $ This ratio represents the total amount of expenditureverified &y us expressed as a percentage of the total expenditure which has &een su&ect of thisexpenditure verification$ The latter amount is eual to the total amount of expenditure reported &yyou in the 'inancial Report and claimed &y you for deduction from the total sum of pre+financingunder the "rant #ontract as per your Reuest for 5ayment of $

%e report the details of our factual findings which result from the procedures that we performed in#hapter 0 of this Report$

U6e %f $2i6 Re8%r$

This Report is solely for the purpose set forth a&ove under o&ective$

This report is prepared solely for your own confidential use and solely for the purpose ofsu&mission &y you to the #ontracting Authority in connection with the reuirements as set out inArticle 6; of the "eneral #onditions of the "rant #ontract$ This report may not &e relied upon &yyou for any other purpose* nor may it &e distri&uted to any other parties$

The #ontracting Authority is not a party to the agreement (the terms of reference) &etween you andus and therefore we do not owe or assume a duty of care to the #ontracting Authority who mayrely upon this expenditure verification report at its own ris and discretion$ The #ontractingAuthority can assess for itself the procedures and findings reported &y us and draw its ownconclusions from the factual findings reported &y us$

The #ontracting Authority may only disclose this Report to others who have regulatory rights ofaccess to it in particular the uropean #ommission [:elete if the Commission is the Contracting

Authority]2the uropean Anti 'raud @ffice and the uropean #ourt of Auditors$

This Report relates only to the 'inancial Report specified a&ove and does not extend to any of yourfinancial statements$

%e loo forward to discussing our Report with you and would &e pleased to provide any furtherinformation or assistance which may &e reuired$

ours sincerely*

A"#i$%r6! 6i7na$"re [person or firm or both2 as appropriate and in accordance 0ith firmpolicies]

Na4e %f A"#i$%r 6i7nin7[person or firm or both2 as appropriate]

A"#i$%r6! a##re66[office ha4ing responsibility for the engagement]

Da$e %f 6i7na$"re dd Month yyyyFdate of when the final report is effectively signedG

&an"ar '(1' 5age 69 of 004069;99:0$doc


19/22

&an"ar '(1' 5age 6: of 004069;99:0$doc


20/22

Inf%r4a$i%n a5%"$ $2e Gran$ C%n$rac$

[Chapter 1 should include a brief description of the ;rant Contract and the Action2 theBeneficiary< implementing structure and 6ey financial


21/22

1.'. Financia9 Re8%r$ f%r $2e Gran$ C%n$rac$

1.). R"9e6 f%r Acc%"n$in7 an# Rec%r# :ee8in7

1.*. Rec%nci9in7 $2e Financia9 Re8%r$ $% $2e Beneficiar;6 Acc%"n$in7 S6$e4an# Rec%r#6

1.,. Ec2an7e Ra$e6

'. PROCEDURES TO VERIF+ CONFORMIT+ OF EXPENDITURE


22/22

).'. E9i7i5i9i$ %f Direc$ C%6$6 =Ar$ic9e 1*.'>

).). Pr%?i6i%n f%r C%n$in7enc Re6er?e =Ar$ic9e 1*.)>

).*. A#4ini6$ra$i?e c%6$6 =Ar$ic9e 1*.*>

).,. C%n$ri5"$i%n6 in :in# =Ar$ic9e 1*.,>

).. N%n-e9i7i59e c%6$6 =Ar$ic9e 1*.>

)./. Acce8$e# c%6$6

).0. Re?en"e6 %f $2e Ac$i%n

[:escribe factual findings and specify errors and exceptions* 2%o'ed&%es 7*# 3 7*8 in Annex #A]

Anne 1 Financia9 Re8%r$ f%r $2e Gran$ C%n$rac$

[Annex 1 should include the Beneficiary=s financial report for the ;rant Contract 0hich has

been the subect of the 4erification" The financial report should be d!tedand indicate the+e%iod'o)e%ed"]

Anne ' Ter46 %f Reference E8en#i$"re Verifica$i%n

[Annex # should include a signedand d!tedcopy of the terms of reference for the expenditure4erification of this ;rant Contract including Annex " (information about the ;rant ContractandAnnex #A(Fisting of the specific procedures to be performed"]

&an"ar '(1' 5age 00 of 004069;99:0$doc

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