1 Page<Type> Financial Report for <Name Beneficiary>

1 | Page<type> Financial Report for <name Beneficiary>

Beneficiary
nameName Beneficiary
<address> address Beneficiary

We have [audited] [or in case ofdisclaimer of opinionbeen engaged to audit] the expenditure and revenue as stated in the Financial Report of the project entitled <title of the project>, the 'Project', for the period from <date> to <date> which is set out in ToR. This report has been prepared pursuant to Article <number> of the Contractual Conditions for the Project as agreed by the Beneficiary.

Remove the following paragraph for disclaimer of opinion

[Our findings are set out in the relevant sections of our report, which is made solely to the Beneficiary in order to gain assurance that the Project funding provided has in all material respects, been used in conformity with the applicable Contractual Conditions which are set out in Section 1.1 of our report, and to facilitate determination with the Beneficiary of any balance of funding which is payable or recoverable.]

Respective Responsibilities of the Beneficiary's management and auditors

In accordance with the Contractual Conditions, the Beneficiary’s management is responsible for the preparation of the Financial Report and for being satisfied that it presents fairly the actual expenditure incurred and revenue received for the Project in conformity with the applicable Contractual Conditions.

Our responsibility is to audit the Financial Report and to report our findings to the Beneficiary in accordance with the Terms of Reference for the audit engagement. These specify that we should carry out our work in accordance with International Standards on Auditing (issued by the International Federation of Accountants) insofar as these standards can be applied in the specific context of a contractual compliance audit. These standards require us to observe applicable ethical standards in the conduct of our work.

[Scope of the audit]Remove this section for disclaimer of opinion

The scope of our audit is set out in the Terms of Reference as noted in Section 2.2 of our report. It includes obtaining evidence for the amounts and disclosures in the Financial Report sufficient to give assurance, based on a confidence level of 100%, that the Financial Report is free from material misstatement, whether caused by error or fraud. For the purpose of determining what a material misstatement is, we have applied a materiality threshold of 0% of the total expenditure amount for the Project or € <amount> as requested by the Beneficiary. We have reported all our findings regardless of the amount involved.

Basis for <Opinion/Disclaimer of Opinion

For unqualified, qualified and adverse opinion

We have taken into account all the available evidence presented to us during our fieldwork which we finalised on <date of closing meeting>, including the subsequent comments and information of the Beneficiary up to the date of this report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Additional paragraphs for qualified and adverse opinion

We refer to our financial findings totalling € <amount> as set out in Summary of Findings of our report. These findings represent 100% of the total expenditure amount reported for the Project. € amount and % should correspond to the total of all financial findings, i.e. the combined effect of financial findings and financial findings for further consideration by the Beneficiary in Summary of Findings.

The wording below is suggested and can be used/adapted by the Auditor on case-by-case and based on the Auditor's professional judgment. The Auditor may want to make a distinction between 'financial findings' and 'financial findings for further consideration by CTA'.
See guidance for audit opinions.

[We consider these financial findings [if qualified opinionmaterial] [if adverse opinionboth material and pervasive] in the context of our audit.]

[We were unable to obtain sufficient appropriate audit evidence about describe issues because describe reasons / circumstances. The effects of this to the Financial Report and the total expenditure reported for the Project are material [if qualified opinionbut not pervasive] [if adverse opinionand pervasive] in the context of our audit.]

For disclaimer of opinion

The scope of our audit is set out in the Terms of Reference as noted in Section 2.2 of our report. We were unable to obtain sufficient appropriate audit evidence about the <describe issues> because <describe reasons / circumstances>. The possible effects of this to the Financial Report and the total expenditure reported for the Project, if any, could be both material and pervasive. As a result of this uncertainty, we do not have a basis for an opinion.

Unqualified / Qualified / Adverse / Disclaimer of> Opinion

[if unqualified, qualified and adverse opinionIn our opinion,]

[if qualified opinionexcept for the effects of the matters referred to in the preceding "Basis for qualified opinion" paragraph,]

[if adverse opinionbecause of the significance of the effects of the matters referred to in the preceding "Basis for adverse opinion" paragraph,]

[if disclaimer of opinionBecause of the significance of the matters described in the "Basis for disclaimer of opinion" paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an opinion.

Accordingly, we do not express an opinion as to whether:]

• The Financial Report [if unqualified, qualified and if disclaimer of opinionpresents] [if adverse opiniondoes not present] fairly, in all material respects,] the actual expenditure incurred and revenue received for the Project for the period from <date> to <date> in conformity with the applicable Contractual Conditions; and
• The Project funds provided by CTA where materiality threshold is 0%, in all material respects,] been used in conformity with the applicable Contractual Conditions.

[Emphasis of MatterFor unqualified opinion and if applicable

Without qualifying our opinion, we draw your attention to the financial findings totalling € amount as set out in Section 1 (Summary of Findings) of our report. These findings represent percentage% of the total expenditure amount reported for the Project and are therefore not considered material in the context of our audit. € amount and percentage% should correspond to the total of all financial findings, i.e. the combined effect of financial findings and financial findings for further consideration by the Beneficiary in Section 1 (Summary of Findings).Nevertheless, we report them to you in accordance with our Terms of Reference as they may be taken into account in determining any balance of funding payable or recoverable by CTA.]

Distribution and Use

CTA has requested this report and it is intended solely for the information and use of CTA, European Court of Auditors and the Beneficiary.

Audit Firm:

Auditor:

Position held:

Date:

1 | Page<type> Financial Report for <name Beneficiary>

Table of content

Summary of all findings6

1Engagement context7

1.1Contractual conditions7

1.2Project implementation7

1.3Financial information8

2Assessment8

2.1Objectives8

2.2Scope8

3Findings and recommendations9

3.1Financial findings9

3.2Findings for further consideration

3.3Internal control findings

3.4 Detailed breakdown of expenditure 12

1 | Page<type> Financial Report for <name Beneficiary>

Summary of all findings

Our financial findings are summarized further below in Sections <number sections>. The following tables show the relation of the financial findings with the total expenditure reported for the Project nameand with the total amount of CTA’s funding for the Project.

Summary by cost category/type of expenditure:

Expenditure category / Budget
€ / Actual expenditure / Ineligible / Comments
Total expenditure reported for the Project and subject to audit (see Financial Report Annex 1) / <amount>
Financial findings (ineligible expenditure established) / <amount> / <amount>
Financial findings for further consideration by the CTA (eligibility of expenditure questioned) / <amount> / <amount>
Total of all financial findings / <amount> / <amount>
Description / Budget allocation EUR / % / Eligible Cost / CTA’s contribution
Total expenditure reported for the Project and subject to audit
(see Financial Report Annex 1) / <amount>
Less: financial findings (ineligible expenditure established) / <amount>
Total eligible expenditure for the Project / <amount>
CTA’s contribution to eligible expenditure for the Project is [if applicablepercentage%] / <amount>
Total CTA’s funding for the Project / <amount>
Less: instalment(s) paid by CTA / <amount>
Balance of funding payable or recoverable by CTA / <amount>

Our detailed financial findings in Section <no. > can be summarised as follows:

Finding no / Contractual compliance issue Sec 2.2 / Title / Amount € / Related IC finding (1) / Beneficiary’s comments
1 / same as in Section 3.2 / same title as in Section 3.2 / IC finding no< / agreed / disagreed
2
3
etc.
Total financial findings

(1) Internal control finding (number) to which the financial finding is related (if applicable)]

1.Engagement context

1.1Contractual conditions

We obtained sufficient understanding of the contractual conditions, which apply to the Project and in particular of the compliance criteria. The agreements Terms and Conditions are set out in: the grant agreement, with contract number (mention contract number), including:

• Annex I:CTA General Conditions
• Annex II:CTA Special Conditions
• Annex III:Project Description
• Annex IV:Project Budget
• Annex V:Reimbursement of staff salary costs
• Other…

1.2Project implementation

The technical impact of the project is summarized in the narrative report.

Describe the characteristics of the Project subject to audit and its context including:

• The background and history of the Project;
• A description of the Project, objectives, results, main activities, Project locations and context (e.g. country, sector, type of project);
• The implementation structure for the Project covering the roles and responsibilities of the Beneficiary and of other parties, external stakeholders (e.g. ministries and departments of the partner government, agencies etc.) and specific instances such as for example project steering committees involved with the implementation of the project;
• Duration, state of implementation and notable successes or problems.>

1.3Financial information

The financial information subject to the assessment are the expenditures stated in the Financial Report of the Project for the period<mention period>.

2.Assessment

2.1Objectives

The objectives of this assessment were to express an opinion on whether:

• The annual progress report presents fairly, in all material respects, the actual expenditure incurred for the Project for the period from mention period> is in conformity with the applicable Contractual Conditions; and
• The Project funds provided by CTA have, in all material respects, been used in conformity with the applicable Contractual Conditions.

2.2Scope

Contractual conditions

As per CTA regulations which apply to the Project and in particular of the compliance criteria as set out in the terms and conditions of the legal and regulatory documents for the Project and in particular of the requirements for financial reporting, presentation and submission of financial information and the eligibility of expenditure.

Contractual terms and conditions are set out in Section 2.2 of this report.

Our understanding of Contractual Conditions and other relevant information specifically focused on:

• Documentation, filing and record keeping for Project expenditure;
• Eligibility of Project expenditure;
• Procurement rules insofar these conditions are relevant to determine the eligibility of Project expenditure;
• Payroll and time management; and
• Accounting (including the use of exchange rates) and financial reporting of Project expenditure.

Scope of work

The scope of work of this assessment covered the expenditure stated in the Financial Report of the Project for the period from June to September. Our work included but was not limited to an assessment of:

• Whethername Beneficiary has used the Project funds provided by CTA in accordance with the Agreement Terms and Conditions and the Project budget taking into account the objectives and activities of the Project;
• The Beneficiary's compliance with the requirements for reporting, presentation and submission of financial information. As a basic rule the Beneficiary should present the financial information for the Project in a Financial Report which presents and classifies the total expenditure for the Project in a manner appropriate to the Beneficiary's operations and the Project; and
• The Beneficiary's compliance with the terms and conditions for the eligibility of expenditure and rules and criteria for exchange rates.
• The amount covered by the audit (opinion) is 100% of the amount, which has been effectively subject of audit tests and procedures.

Risk assessment and materiality

We <Auditor>conducted a risk assessment in order to determine to which extent the financial reporting of the project for the period under review could present material financial misstatements. Our procedures led to the following conclusions:

• The original invoices respect, in their format and content, the contractual conditions detailed in section 2.2 of our report;
• There is no indication that the Contractual Conditions are not complied with regarding other aspects such as calculation.

The risk assessment is satisfactory and a materiality threshold of 0% with a level of confidence of 100% is considered adequate with regards to the points mentioned above.

Substantive procedures

description

Analytical procedures

description

3.Findings and recommendations

The Auditor may use separate pages for each finding. Each finding/item should be given a sequence number.Provide a summary (5 - 6 pages) of the detailed findings.

3.1 Financial findings

We report financial findings, which represent amounts included in the Financial Report presented to us for audit, which in our opinion are ineligible for funding under the Contractual Conditions. These financial findings are set out in detail below.

Finding no:number / Title:title of the finding
Compliance issue:compliance issue no 1 – 10
Description of the finding:describe in detail the finding covering facts, criteria, cause and impact.
For criteria mention relevant article(s) / contractual provision(s) in the Contractual Conditions
Accounting reference(s): detail here the accounting reference(s) related to this finding allowing its/their identification in the detailed breakdown of expenditure (Annex 3 of the Report)
Related internal control finding no:internal control finding number in Section 3.3 if applicable
Amount € in draft report:amount
[Comments from the Beneficiary:state whether the Beneficiary agrees or disagrees with the finding and describe Beneficiary comments>]
[Final comments of the Auditor:If the Auditor is of the opinion that the finding is still entirely valid, (s)he should rebut here the comments of the Beneficiary and justify why the finding is kept. If the Auditor accepts or partially accepts the comments of the Beneficiary, (s)he should state here and below the modified amount of the finding (possibly zero), indicate the initially stated ineligible amount (as above), mention 'withdrawn' or'partially withdrawn' in the title of the finding, and justify here why the finding is withdrawn or partially withdrawn.> ]
[Amount € in final report:amount>]

3.2 Financial Findings subject to further consideration by CTA

We report financial findings representing amounts included in the Financial Report presented to us for audit, which require further consideration by the CTA.

These findings concern expenditure which could be ineligible but where we have not been able to obtain sufficient appropriate evidence because relevant Contractual Conditions were either absent or not sufficiently clear. We requested the Beneficiary for clarification in accordance with the specific procedures set out in the Terms of Reference. However, we did not obtain a satisfactory clarification. Hence, we conclude that we have no sufficient appropriate audit evidence that the expenditure concerned is not eligible. We recommend that the CTA further consider these findings in order to determine the eligibility of the expenditure concerned.

Finding no:number / Title:title of the finding
Compliance issue:compliance issue no 1 – 10
Description of the finding:describe in detail the finding covering facts, criteria, cause and impact.
For criteria mention relevant article(s) / contractual provision(s) in the Contractual Conditions
Accounting reference(s): detail here the accounting reference(s) related to this finding allowing its/their identification in the detailed breakdown of expenditure (Annex 3 of the Report)
Related internal control finding no:internal control finding number in Section 3.3 if applicable
Clarification requested:briefly describe what sort of clarification was requested from the CTA and when it was requested.
Clarification obtained:briefly describe the clarification obtained from the CTA (if obtained), when it was obtained and why it was not considered sufficient by the Auditor. If the clarification was sufficient, the finding should either be reclassified as financial finding or the finding is no longer valid, i.e. the expenditure was found to be eligible after obtaining the clarification
Amount € in draft report: amount
[Comments from the Beneficiary:state whether the Beneficiary agrees or disagrees with the finding and describe Beneficiary comments>]
[Final comments of the Auditor: If the auditor is of the opinion that the finding is still entirely valid, (s)he should rebut here the comments of the Beneficiary and justify why the finding is kept. If the Auditor accepts or partially accepts the comments of the Beneficiary, (s)he should state here and below the modified amount of the finding (possibly zero), indicate the initially stated ineligible amount (as above), mention 'withdrawn' or 'partially withdrawn' in the title of the finding, and justify here why the finding is withdrawn or partially withdrawn.>]
[Amount € in final report:amount]

3.3Internal control findings

Finding no:number / Title:title of the finding
Internal control issue:internal control issue no 1 – 10
Description of the finding:describe in detail the finding covering facts, criteria, cause and impact.
For criteria mention relevant article(s) / contractual provision(s) in the Contractual Conditions.
Recommendation:descriptionRecommendations should be designed to correct existing situations, to improve the management and internal control system of the Project or to better comply with established controls and/or best practice.
Recommendation priority:Priority 1 - Urgent remedial action is required / Priority 2 - Prompt specific action is required / Priority 3 - Specific remedial action is desirable
Priority levels for ranking recommendations
Priority 1 - Urgent remedial action is required. Key internal controls are absent or are not complied with on a regular basis. There is a fundamental weakness or deficiency in an internal control or in a series of internal controls, which involves a substantial risk of either material error, or irregularity or fraud with regard to the expenditure and revenue stated in the Financial Report of the Project. There is a substantial risk of failure to achieve the control objectives for the Project, whichconcern reliability of financial reporting, effectiveness and efficiency of operations and compliance with applicable laws and regulations notably the Contractual Conditions for the Project. Such risks could lead to an adverse impact on the financial report of the Project. Remedial action should be taken urgently.
Priority 2 - Prompt specific action is required. There is a weakness or deficiency in an internal control or in a series of internal controls which, although not fundamental, relates to shortcomings which expose specific internal control areas (e.g. cash and bank management or budgetary and expenditure control) to a less immediate level of risk of either error, or irregularity or fraud. Such a risk could impact on the effectiveness of the internal controls and on the internal control objectives and should be of concern to the Beneficiary's management. Prompt specific action should be taken.
Priority 3 - Specific remedial action is desirable. There is a weakness or deficiency in internal control which individually has no major impact but where the Project would benefit from improved internal controls and/or where the Beneficiary would have the opportunity to achieve greater effectiveness and/or efficiency. There is a possibility of undesirable effects at the process level, which, combined with other weaknesses, could give cause for concern.
[Comments from the Beneficiary:state whether the Beneficiary agrees or disagrees with the finding and describe Beneficiary’s comments
[Final comments of the Auditor:complete only if the Beneficiary does not agree with the finding of the Auditor but the Auditor still believes that the finding is valid. In that case, the Auditor should rebut here the comments of the Beneficiary and justify why the finding is still made.>

3.4 Detailed Breakdown of Expenditure

This annex shall be provided in electronic form and spread sheet format (Excel or similar)