Audit methods
Article 7
1. The audit methods relevant to the certification audit shall be defined in the audit strategy provided for in Article 6(2). 2. To achieve the audit objectives and to issue the opinion as laid down in Article 12(2) of Regulation (EU) 2021/2116, the audit steps shall include systems audits, substantive testing, where necessary, and the verification of reconciliations on financial and management declarations. 3. As regards the auditing of governance systems, the certification body shall perform systems audits that may include compliance testing and also testing of IT general controls and application controls, for the purpose of verification of the system design and implementation. 4. Substantive testing of expenditure shall cover the verification of legality and regularity of the underlying transactions at the level of the final beneficiaries as regards the measures laid down in Regulations (EU) No 228/2013, (EU) No 229/2013, (EU) No 1308/2013 and (EU) No 1144/2014 as well as for the crop-specific payment for cotton and support for early retirement under Title III, Chapter II, Section 3, Subsection 2, and Article 155(2), respectively, of Regulation (EU) 2021/2115. For those purposes, the certification body may accompany the paying agency when it carries out secondary level on-the-spot checks. The certification body may not accompany the paying agency when it carries out initial on-the-spot checks, with the exception of those situations, where it would be physically impossible to re-verify the initial check carried out by the paying agency. 5. As regards auditing of the performance reporting system, the certification body shall apply testing of records, databases to verify if reported performance output and result indicators are correctly reported and match the expenditure financed by the Union or objectives of intervention, respectively. Justifications provided for the differences between the annual expenditure declared for an intervention and the amount corresponding to the relevant reported output indicator in accordance with Article 54(2) of Regulation (EU) 2021/2116 shall be verified and confirmed by the certification body. The certification body’s work shall also include the verification of the calculation of the indicators. 6. The certification body may rely on the audit results of the external auditors of the bodies implementing financial instruments for the purpose of the overall assurance and on this basis, the certification body may decide to limit its own audit work. In the context of guarantee funds, the certification body may conduct audits of the bodies providing new underlying loans only when either one or both of the following situations occur: (a) supporting documents, providing evidence of the support from the financial instrument to final recipients, are not available at the level of the managing authority or at the level of the bodies implementing the financial instrument; (b) there is evidence that the documents available at the level of the managing authority or at the level of the bodies implementing the financial instrument do not represent a true and accurate record of the support provided. The Member State shall define the arrangements to ensure the audit trail for financial instruments in accordance with the template set out in Annex III, demonstrating the fulfilment of conditions or achievement of results. 7. The European Investment Bank (EIB), or other international financial institutions in which a Member State is a shareholder implementing financial instruments, shall by the end of each calendar year provide the Member States with the annual audit report referred to in the third subparagraph of Article 12(2) of Regulation (EU) 2021/2116 prepared by their external auditors covering the elements included in Annex IV to this Regulation. 8. The Commission shall provide further conditions and guidance on designing the audit procedures, sampling integration, planning and carrying out the on-the-spot re-verification of transactions, where necessary, through the guidelines as referred to in Article 6(4).