the european research council toni amanda skeen

The European Research Council

Toni Amanda Skeen ERC Executive Agency Audit & Ex-post Controls

Unit C4

AUDIT

ERCEA Grant Management Workshop, Lyon, 7 May 2014

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Audit Management & Implementation Overview

Objective/Background The Audit Process Common Errors Best Practice How to get Things Right - Personnel Costs What's New (incl. H2020) Key Messages

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Objective

Help You…

•Avoid errors and subsequent

reimbursement of ERC funds •Make improvements to your internal

control systems

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Background Why Audit?

Tax payers' money

Grant Agreement =

justification of means not outputs: Check eligibility of costs

claimed (legality & regularity)

Advice function Safeguard

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Background Audit Strategy and Co-ordination

Common audit strategy (2009-2016) used by 5 Research DG’s and 2 Executive Agencies

Co-ordinated and harmonised approach

Strands: Representative (MUS) or Corrective (risk-based)

TYPE OF AUDIT: • FINANCIAL: ERC, Joint Audits or external audit firms • TECHNICAL: Audit and Review

Systematic & non-systematic errors

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The Audit Process

Sampling Selection

Planning & Organisation

Pre-Audit Information & Preparation

• Errors detected whilst preparing the audit = error in report

On-site Visit

• Opening Meeting, Field Work & Closing Meeting

Audit Report Writing

• Draft Report -> Contradictory Procedure -> Final Report

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Common Errors

All Cost Categories Lack of Supporting Documents Non-compliance to EU Financial Rules Non-compliance to HI's Own Internal

Procedures/Normal Practices

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Common Errors Time-sheets/Personnel Costs

Time-Sheets: Absent, incomplete, not global, not signed, cut-off at

contractual hours and/or do not reconcile with HR/travel records

Productive time includes non-productive days

Personnel Costs: Incorrect method of calculating hourly rate Based on Budgeted rather than Actual Costs People not directly employed nor paid by the

beneficiary

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Common Errors

• If you use estimates,

because actuals are not available at the moment of submission, declare so in the reporting

• Correct in a separate Form C in the following period

Do not forget

Art II 14.1a (actual)

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Best Practice

Accounting Do not book entries on Pro-forma invoices only Double-check VAT excluded from invoices charged Have a clear conversion policy for non-Euro invoices Have a clear system for apportioning common

expenses between projects

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Best Practice

Accounting

Have a clear methodology for charging internal invoices and costs of shared facilities

Remember 3 Essential Elements: Follow usual accounting practice All costs are accounted/booked Relevant supporting documents are archived

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Best Practice

Personnel costs

Team members = employment contract with HI Global Time-Recording system is used Researcher salaries comply with HR salary grids Bonus Payments respect criteria defined in Guide Clear guidelines for Teleworking Administrative support staff Proportionally charged as a Direct cost if it is the normal HI

procedure and mentioned in DoW

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Best Practice

Travel costs

Team Members only Ensure PI's avoid excessive/long-duration trips Introduce travel pre-authorisation procedure Maintain boarding cards and conference agendas Encourage production of small mission report Keep emails to support set-up of any visits

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Best Practice Equipment & Consumables Follow HI Depreciation procedures Follow HI Asset Registration procedures Follow HI procedures for accounting classification as

equipment or consumable (e.g. large piece of equipment with small component parts)

Exclude overhead elements from methodology used to charge back shared equipment

Exclude overhead elements from consumables purchased via internal warehouse

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Best Practice

Equipment Procurement

Respect internal procurement procedures Respect EU Public Procurement Principles Do not directly award additional contracts to the same contractor Clearly document reasons for using Single Source Providers Do not artificially split tenders into smaller contracts to avoid public tendering calls.

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Best Practice All Other Cost Categories Ensure costs charged under the correct budget

heading Ensure costs eligible under your own procedures Avoid excessive and uneconomic costs Clearly justify all Visiting Expert costs Avoid unnecessary expenses made in the last few

months/weeks of the project

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Best Practice Choice of CFS Auditor Clearly justify the selection of the CFS Auditor Insist on an on-site visit

Ensure: a reasonable amount of time is spent on-site an audit trail of the work done is maintained Auditors are proficient in local legislation & FP rules

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How to Get Things Right Personnel Costs

TIME-SHEETS Highly recommend using a Global Time-Recording System recording total productive hours spent on ALL activities (reconciliation of total hours for personnel working on several projects during the same period) together with the recording of all non-productive time (holidays, illness, etc…). Report Actual hours and not contractual hours Try to avoid percentage applicators Ensure time-sheets reconcile with HR absence records and

Travel Department mission requests

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Time-sheets may not be necessary if:

a person is working 100% on a project and has a specific contract/job description to this effect,

AND there is appropriate/alternative evidence to support the

declared working arrangements and this is compliant with the usual accounting practices of the beneficiary

Experience to date has shown that time-sheets are the easiest/simplest way of providing evidence of a person's time.

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total annual personnel costs for the employer

total annual productive hours for the employee or

Standard annual productive hours for the organisation

HOURLY Personnel

Rate

ERC HOURS

PERSONNEL COSTS

declared X

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What's New

European Court of Auditors Sampling: 10 cost items selected from each declaration audited Extrapolation of the findings to the whole project

Audits in H2020: Common Audit Service will take over H2020 audits Will serve all the bodies of the Research family Audit Strategy focussed on risk & fraud prevention Audits limited to 2 years after final payment

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What's New H2020 - Standard Productive Time

1720 Fixed Hours

• for full-time employees/pro-rata for part-time

Individual Annual Productive Hours

• Annual workable hours based on employment contract plus overtime

minus absences

Standard Annual Productive Hours

• calculated per entity, category of personnel or cost centre

• Must be at least 90% of the standard annual workable hours

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What's New H2020 Personnel Costs

Basic Salary

"Mandatory extras"

• Fixed by law or by contract to remunerate the main activity of the employee

• Payment not subject to discretion by the employer

• Not linked to a specific project

Examples: 13th month, hazardous work allowance, etc.

Other bonuses

• Only eligible for non-profit legal entities

• Subject to specific eligibility criteria

• Maybe triggered by the participation in a specific project

Additional remuneration Standard remuneration

Total Remuneration

Hourly rate

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Key Messages

Sound financial planning & follow-up from the start

PI’s be fully informed of the legal/financial guidelines

Avoid reckless/unnecessary expenditure in final project stages

Be pro-active & seek advice as soon as issue arises

Audit = opportunity for constructive dialogue/advice

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Questions or Suggestions?

Mail box: [email protected]

Please do not forget to complete/leave behind the evaluation forms!