Status of the Audit Authority
1. In accordance with the second subparagraph of Article 59(5) of Regulation (EU, Euratom) No 966/2012 and with Article 25(1)(b) of Regulation (EU) No 514/2014, the Audit Authority shall function independently from the Responsible Authority. Functional independence shall be deemed to exist when there is no direct hierarchical relation between the Audit Authority and the Responsible Authority, and the Audit Authority has full autonomy in its opinions and declarations.
2. All audit work shall be carried out in accordance with internationally accepted audit standards.
Outsourcing audit work
The Audit Authority may outsource part of its audit work to another audit body, provided that this body is functionally independent from the Responsible Authority. The Audit Authority shall remain responsible for the work it outsources.
Outsourced audits shall be carried out in accordance with internationally accepted audit standards and under the close monitoring and supervision of the Audit Authority.
Audits
1. To deliver the opinion referred to in the second subparagraph of Article 59(5) of Regulation (EU, Euratom) No 966/2012 the Audit Authority shall conduct system and financial audits.
2. System audits shall verify whether the Responsible Authority's management and control systems have functioned effectively so as to give reasonable assurance that the expenditure included in the annual accounts is legal and regular. Based on these audits, the Audit Authority shall determine whether the Responsible Authority continues to comply with the designation criteria set out in the Annex.
3. Financial audits shall be performed to provide reasonable assurance that the annual accounts give a true and fair view of the expenditure declared by the Responsible Authority.
In order to conclude whether the accounts give a true and fair view, the Audit Authority shall verify that all elements of expenditure paid and public contributions received and entered into the accounts of the Responsible Authority in the financial year are correctly recorded in the accounting system and correspond to the supporting accounting records maintained by the Responsible Authority. The Audit Authority shall in particular, on the basis of these accounts:
(a)
verify that the total amount of eligible expenditure declared in the request for payment of the annual balance submitted to the Commission agrees with the expenditure in the accounts of the Responsible Authority and, if there are differences, that adequate explanations have been provided in the accounts for the reconciling amounts;
(b)
verify that the amounts withdrawn and recovered, the amounts to be recovered, and the irrecoverable amounts as at the end of the financial year, correspond to the amounts entered in the accounting system of the Responsible Authority and are supported by documented decisions of the Responsible Authority;
(c)
ascertain that the Responsible Authority has performed the administrative and on-the-spot controls in compliance with Article 27 of Regulation (EU) No 514/2014.
Verifications referred to in points (a), (b) and (c) may be carried out on a sample basis.
4. As part of its system and financial audits, the Audit Authority shall re-perform some of the administrative or on-the-spot controls that were carried out by the Responsible Authority. The Audit Authority shall determine the extent of re-performance audit work based on its risk assessment.
5. If the Audit Authority's system or financial audits identify material weaknesses in the effective functioning of the Responsible Authority's management and control systems, the Audit Authority shall:
(a)
assess the financial and operational impact of these weaknesses;
(b)
make appropriate recommendations to the Responsible Authority for corrective and preventive measures;
(c)
monitor the Responsible Authority's implementation of these measures and assess whether an action plan to restore the effective functioning of the management and control systems is in place.
6. Upon completing its audit activities referred to in paragraphs 1, 2 and 3, the Audit Authority shall report its findings to the designating authority, including whether, in its opinion, the Responsible Authority continues to comply with the designation criteria.
7. The Audit Authority shall ensure that all information related to its audit activities referred to in paragraphs 1, 2 and 3 is adequately reported by the Responsible Authority to the European Commission.
