ANNEX IXSupplementary provisions
ANNEX IX Model for the annual control report 1. INTRODUCTION This section shall include the following information: 1.1 Identification of the responsible audit authority and other bodies that have been involved in preparing the report. 1.2 Reference period (i.e. the accounting year ( 1 ) ). 1.3 Audit period (during which the audit work took place). 1.4 Identification of the operational programme(s) covered by the report and of its/their managing and certifying authorities. [Where the annual control report covers more than one programme or Fund, the information shall be broken down by programme and by Fund, identifying in each section the information that is specific for the programme and/or the Fund, except for section 10.2 where such information shall be provided under section 5.] 1.5 Description of the steps taken to prepare the report and to draw the audit opinion. 2. SIGNIFICANT CHANGES IN MANAGEMENT AND CONTROL SYSTEM(S) This section shall include the following information: 2.1 Details of any significant changes in the management and control systems related with managing and certifying authorities' responsibilities, in particular with respect to the delegation of functions to new intermediate bodies, and confirmation of its compliance with Articles 72 and 73 of Regulation (EU) No 1303/2013 based on the audit work carried out by the audit authority under Article 127 of the same Regulation. 2.2 Information relating to the monitoring of the designated bodies according to Article 124(5) and (6) of Regulation (EU) No 1303/2013. 2.3 The dates from which these changes apply, the dates of notification of the changes to the audit authority, as well as the impact of these changes on the audit work are to be indicated. 3. CHANGES TO THE AUDIT STRATEGY This section shall include the following information: 3.1 Details of any changes that have been made to the audit strategy, and explanation of the reasons. In particular, indicate any change to the sampling method used for the audit of operations (see section 5 below). 3.2 Differentiation between the changes made or proposed at a late stage, which do not affect the work done during the reference period and the changes made during the reference period, that affect the audit work and results. Only the changes compared to the previous version of the audit strategy are included. 4. SYSTEM AUDITS This section shall include the following information: 4.1 Details of the bodies (including the audit authority) that have carried out audits on the proper functioning of the management and control system of the programme (as foreseen in Article 127(1) of Regulation (EU) No 1303/2013) — hereafter ‘system audits’. 4.2 Description of the basis for the audits carried out, including a reference to the audit strategy applicable, more particularly to the risk assessment methodology and the results that led to establishing the audit plan for system audits. In case the risk assessment has been updated, this is described in section 3 above covering the changes of the audit strategy. 4.3 In relation to the table in section 10.1 below, description of the main findings and conclusions drawn from system audits, including the audits targeted to specific thematic areas, as defined in section 3.2 of Annex VII of this Regulation. 4.4 Indication of whether any problems identified were considered to be of a systemic character, and of the measures taken, including a quantification of the irregular expenditure and any related financial corrections, in line with Article 27(5) of Regulation (EU) No 480/2014. 4.5 Information on the follow-up of audit recommendations from system audits from previous accounting years. 4.6 Description (where applicable) of specific deficiencies related to the management of financial instruments or other type of expenditure covered by particular rules (e.g. State aid, revenue-generating projects, simplified cost options), detected during system audits and of the follow-up given by the managing authority to remedy these shortcomings. 4.7 Level of assurance obtained following the system audits (low/average/high) and justification. 5. AUDITS OF OPERATIONS This section shall include the following information: 5.1 Indication of the bodies (including the audit authority) that carried out the audits of operations (as foreseen in Article 127(1) of the Regulation (EU) No 1303/2013 and Article 27 of Regulation (EU) No 480/2014). 5.2 Description of the sampling methodology applied and information whether the methodology is in accordance with the audit strategy. 5.3 Indication of the parameters used for statistical sampling and explanation of the underlying calculations and professional judgement applied. The sampling parameters include: materiality level, confidence level, sampling unit, expected error rate, sampling interval, population value, population size, sample size, information on stratification (if applicable). The underlying calculations for sample selection and the total error rate (as defined in Article 28(14) of Regulation (EU) No 480/2014) shall be disclosed in section 10.3 below, in a format allowing an understanding of the basic steps taken, in accordance with the specific sampling method used. 5.4 Reconciliation between the total expenditure declared in euro to the Commission in respect of the accounting year and the population from which the random sample was drawn (column ‘A’ of table in section 10.2 below). Reconciling items include negative sampling units where financial corrections have been made in respect of the accounting year. 5.5 Where there are negative sampling units, confirmation that they have been treated as a separate population according to Article 28(7) of Commission Delegated Regulation (EU) No 480/2014. Analysis of the principal results of the audits of these units, namely focusing on verifying whether the decisions to apply financial corrections (taken by the Member State or by the Commission) have been registered in the accounts as withdrawals or recoveries. 5.6 In case of the use of non-statistical sampling, indicate the reasons for using the method in line with Article 127(1) of Regulation (EU) No 1303/2013, the percentage of operations/expenditure covered through audits, the steps taken to ensure randomness of the sample (and thus its representativity) and to ensure a sufficient size of the sample enabling the audit authority to draw up a valid audit opinion. A projected error rate is calculated also in case of non-statistical sampling. 5.7 Analysis of the principal results of the audits of operations, describing the number of sample items audited, the respective amount and types ( 2 ) of error by operation, the nature ( 3 ) of errors found, the stratum error rate and corresponding main deficiencies or irregularities ( 4 ) , the upper limit of the error rate (where applicable), root causes, corrective measures proposed (including those intending to avoid these errors in subsequent payment applications) and the impact on the audit opinion. Where necessary, provide further explanations on the data presented in sections 10.2 and 10.3 below, in particular concerning the total error rate. 5.8 Explanations concerning the financial corrections relating to the accounting year and implemented by the certifying authority/managing authority before submitting the accounts to the Commission, and resulting from the audits of operations, including flat rate or extrapolated corrections, as detailed in section 10.2 below. 5.9 Comparison of the total error rate and the residual total error rate ( 5 ) (as shown in section 10.2 below) with the set materiality level, in order to ascertain if the population is materially misstated and the impact on the audit opinion. 5.10 Information on the results of the audit of the complementary sample (as established in Article 28(12) of Regulation (EU) No 480/2014), if any. 5.11 Details of whether any problems identified were considered to be systemic in nature, and the measures taken, including a quantification of the irregular expenditure and any related financial corrections. 5.12 Information on the follow-up of audits of operations carried out in previous years, in particular on deficiencies of systemic nature. 5.13 Conclusions drawn from the overall results of the audits of operations with regard to the effectiveness of the management and control system. 6. AUDITS OF ACCOUNTS This section shall include the following information: 6.1 Indication of the authorities/bodies that have carried out audits of accounts. 6.2 Description of audit approach used to verify the elements of the accounts defined in Article 137 of Regulation (EU) No 1303/2013. This shall include a reference to the audit work carried out in the context of system audits (detailed in section 4 above) and the audits of operations (detailed in section 5 above) with relevancy for the assurance required on the accounts. 6.3 Indication of the conclusions drawn from the audit in regard to the completeness, accuracy and veracity of the accounts, including an indication on the financial corrections made and reflected in the accounts as a follow-up to the results of the system audits and/or audit on operations. 6.4 Indication of whether any problems identified were considered to be systemic in nature, and the measures taken. 7. COORDINATION BETWEEN AUDIT BODIES AND SUPERVISORY WORK BY THE AUDIT AUTHORITY (where applicable) This section shall include the following information: 7.1 Description of the procedure for coordination between the audit authority and any audit body that carries out audits as foreseen in Article 127(2) of the Regulation (EU) No 1303/2013, where appropriate. 7.2 Description of the procedure for supervision and quality review applied by the audit authority to such audit body(ies). 8. OTHER INFORMATION This section shall include the following information: 8.1 Where applicable, information on reported fraud and suspicions of fraud detected in the context of the audits performed by the audit authority (including the cases reported by other national or EU bodies and related to operations audited by the audit authority), together with the measures taken. 8.2 Where applicable, subsequent events occurred after the submission of the accounts to the audit authority and before the transmission of the annual control report under Article 127(5)(b) of Regulation (EU) No 1303/2013 to the Commission and considered when establishing the level of assurance and opinion by the audit authority. 9. OVERALL LEVEL OF ASSURANCE This section shall include the following information: 9.1 Indication of the overall level of assurance on the proper functioning of the management and control system ( 6 ) , and explanation of how such level was obtained from the combination of the results of the system audits (as reflected in section 10.2 below) and audits of operations (as reflected in section 10.3 below). Where relevant, the audit authority shall take also account of the results of other national or Union audit work carried out in relation to the accounting year. 9.2 Assessment of any mitigating actions implemented, such as financial corrections and assessment of the need for any additional corrective measures necessary, both from a system and financial perspective. 10. ANNEXES TO THE ANNUAL CONTROL REPORT 10.1 Results of system audits (template defined below) 10.2 Results of audits of operations (template defined below) 10.3 Calculations underlying the random sample selection and the total error rate 10.1. Results of systems audits Audited Entity Fund (Multi-funds OP) Title of the audit Date of the final audit report Operational Programme: [CCI and Name of the OP] Overall assessment (category 1, 2, 3, 4) [as defined in Table 2- Annex IV of Regulation (EU) No 480/2014] Comments Key requirements (as applicable) [as defined in Table 1- Annex IV of Regulation (EU) No 480/2014] KR 1 KR 2 KR 3 KR 4 KR 5 KR 6 KR 7 KR 8 KR 9 KR 10 KR 11 KR 12 KR 13 MA IB(s) CA Note: The parts in grey in the table above refer to key requirements that are not applicable to audited entity. 10.2 Results of audits of operations Fund Programme CCI number Programme title A B C D E F G H Amount in Euros corresponding to the population from which the sample was drawn ( 7 ) Expenditure in reference to the accounting year audited for the random sample Amount of irregular expenditure in random sample Total error rate ( 8 ) Corrections implemented as a result of the total error rate Residual total error rate (F = (D * A) – E) Other expenditure audited ( 9 ) Amount of irregular expenditure in other expenditure audited Amount ( 10 ) % ( 11 ) 10.3 Calculations underlying the random sample selection and the total error rate ( 1 ) As defined in Article 2(29) of the Regulation (EU) No 1303/2013. ( 2 ) Random, systemic, anomalous. ( 3 ) For instance: eligibility, public procurement, State aid. ( 4 ) The stratum error rate is to be disclosed where stratification was applied under Article 28(10) of Regulation (EU) No 480/2014, covering sub-populations with similar characteristics such as operations consisting of financial contributions from a programme to financial instruments, high-value items, Funds (in case of multi-Fund programmes). ( 5 ) Total errors minus corrections referred to in point 5.8 above, divided by the total population. ( 6 ) The overall level of assurance shall correspond to one of the four categories defined in Table 2 of Annex IV of Regulation (EU) No 480/2014. ( 7 ) The column ‘A’ shall refer to the population from which the random sample was drawn, i.e. total amount of eligible expenditure entered into the accounting system of the certifying authority which has been included in payment applications submitted to the Commission (as established by Article 137(1)(a) of Regulation (EU) No 1303/2013), less negative sampling units if any. Where applicable, explanations shall be provided in section 5.4 above. ( 8 ) The total error rate is calculated before any financial corrections are applied in relation to the audited sample or the population from which the random sample was drawn. Where the random sample covers more than one Fund or programme, the total error rate (calculated) presented in column ‘D’ concerns the whole population. Where stratification is used, further information by stratum shall be provided in section 5.7 above. ( 9 ) Where applicable, column ‘G’ shall refer to expenditure audited in the context of a complementary sample. ( 10 ) Amount of expenditure audited (in case sub-sampling is applied under Article 28(9) of Regulation (EU) No 480/2014, only the amount of the expenditure items effectively audited under Article 27 of the same Regulation, shall be included in this column). ( 11 ) Percentage of expenditure audited in relation to the population.