A report on the verification of the Action’s expenditure, produced by an approved auditor who meets the specific conditions of the Terms of Reference for the expenditure verification, shall be attached to any request for pre-financing payments per financial year in case of grants of 750,000 EURO or more; any request for payment of over 100,000 EURO for the financial year in the case of an operating grant; any final report/request for the balance.
The expenditure verification is a sound proof that the expenses reported on the financial report correspond to the partner accounting and bookkeeping system and to underlying accounts and records.
The auditor verifies that the funds provided by the grant were spent in accordance with the terms and conditions of the Grant Contract and that the different procedures were respected. He examines whether the costs declared by the partner are real, accurately recorded and eligible in accordance with the Grant Contract, as well as the revenue of the Action and issues an expenditure verification report.
The Grant Beneficiary must draft the Terms of Reference (ToR) and select an auditor/auditing firm with the task of verifying that all information reported in the financial report is accurate and eligible. The Grant Beneficiary should annex to the ToR of the expenditure verification a fiche containing key project information.
The scope of work and procedures to be adopted by the auditor are:
- obtaining a sufficient understanding of the Action and of the terms and conditions of the Grant Contract.
- verifying that the eligibility of expenditure claimed by the Grant Beneficiary in the financial report complies with the the rules for accounting and record keeping of the Grant Contract, notably with article 16 of the General Conditions. By the same token, the auditor shall reconcile the information provided in the financial report to the Grant Beneficiary's accounting system and records, and verify that the correct exchange rates have been used (as per article 15.9 of the General Conditions).
- verifying that the budget expressed in the financial report corresponds to the one authorised by the Contracting Authority in phase of signature of the Grant Contract, and that any eventual amendment to the budget - both unilateral and my means of an addendum - comply with the conditions set out in article 9 of the General Conditions.
- substantiating that expenses incurred are eligible and that indirect (administrative) costs do not exceed the allowed threshold of 7% of the total direct eligible costs;
- verifying that the Grant Beneficiary complied with the rules of procurement, nationality and origin for given expenses and, in case of non-compliance, assessing the effect on the eligibility of expenditure.
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