Audit Protocol (Controleverklaring) Forgeodata for Agriculture and Water (G4AW)

Annex III:

Audit protocol (controleverklaring) forGeodata for Agriculture and Water (G4AW)

Annex accompanying decisionPROJECT NUMBER, for the project named PROJECT NAME.

1. Introduction

This audit protocol (controleverklaring) must be followed in auditing the financial statement concerning the grant awarded by decision ofdatewithin the context of the G4AW facility: Geodata for Agriculture and Water, as published in the Government Gazette of

August7th 2013, number 22108.

This audit protocol sets out the applicable audit principles and requirements, and explains how the audit findings must be reported.

The auditor will be engaged bylead partner (subsidy recipient).The same auditor has to be engaged for auditing all financial statements for the project. The Minister may request that a review be conducted, in mutual consultation, to assess whether the external auditor has complied with the audit protocol.

1. Audit subject

The audit subjects are:

1. the financial report, Annex 6 to the Final Report and/or Yearly Reports;
2. the processes and records, listed under 3.2, on which these documents are based;
3. the specific conditions listed under 3.3.

1. Audit scope

Re 1.

The audit should be carried out in accordance with generally accepted auditing standards (ISA or IFRS).

In auditing the financial report, the auditor will assess regularity and whether the applicable requirements have been satisfied.The auditor must establish the completeness and accuracy of all receipts and expenditures, and that they derive logically from and are in line with the activity referred to under paragraph 1 of this protocol.

The auditor must observe a minimum level of reliability of 95% and a permitted tolerance of 3%.

The audit opinion will be drawn up in accordance with the model in paragraph 4 of this protocol.

Re 2.

With regard to the organisation’s and partnership’s processes and records, the auditor must establish that:

• the grant recipient (applicant) has an effective administrative organisation with a system of internal control measures (AO/IC), providing reasonable assurance of:
• compliance with legislation on, for instance, remittance of salaries tax, social insurance contributions and value added tax, and procurement;
• proper accounting and reporting;
• the grant recipient has, and acts in accordance with, a sound internal policy on implementing organisations or partners according to the Partnership Cooperation Agreement, which includes provisions on:
• assessing the management capacity of these organisations or partners;
• assuring all obligations according to the Partnership Cooperation Agreement by these organisations or partners have been met;
• sanctions to be imposed on organisations or partners should they fail to comply with their obligations.

The auditor should request a letter of representation from the grant recipient’s management or the project’s management committee stating that, to the best of their knowledge, the financial report encompasses all transactions and receipts, is accurate and complete in every respect and that all grant conditions, including those beyond the scope of the audit, have been met.In the letter of representation, management should specifically confirm that they have complied with article 15 of the grant decision, which states that:‘You must not offer to third parties or seek or accept from or be promised by third parties, for the benefit of yourself or any other party, any gift, remuneration, compensation or benefit of whatever kind, which could be interpreted as illegal or corrupt practice. Such practice may constitute grounds for the full or partial withdrawal of my decision to award the subsidy.’

If, in the course of the audit, the auditor finds evidence of illegal or corrupt practice, he or she must act in accordance with the COS 240 guideline on fraud.

The auditor must report any information that came to his notice during the audit which may reasonably be suspected to be relevant to the grant provider in finalising the grant award.

Although the auditor does not give an opinion on the narrative part of the annual report, he should ascertain by means of a limited review that the narrative and financial sections of the report are in agreement and contain no contradictions.

Re 3.

The auditor has established that the specific grant conditions of the grant decisionas mentioned above in paragraph 1 have been met as well as the conditions inthe Government Gazette of

September 5th 2014, number 24934.

1. Reporting

The audit opinion should in any event includethe aim and scope of the audit, the audit criteria applied, where relevant, and any restrictions imposed on the scope of the audit.

Furthermore the auditor will write a report of findings regarding the evaluation of the administrative organisation and internal control structure of the grant recipient in accordance with the Partnership Cooperation Agreement, identifying any matters worthy of mention, including any material shortcomings in the internal control system.

An unqualified audit opinion must be worded as follows:

"We have audited the financial statement of … at … for the project named … for the period from … to … .The financial statement is the responsibility of the management.Our responsibility is to express an opinion on the financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing standards and with due regard for the audit protocol.These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement.An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement.An audit also includes an assessment of the accounting principles used and significant estimates made by management, as well as an evaluation of the overall financial statement presentation and of the risks of material differences as a result of fraud.We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statement gives a correct and complete view of all receipts, invoices and expenditure.The grant conditions described in the grant decision have also been met."

The auditor will make separate mention, in the report of findings, of any material deviation from the requirements included in this protocol.This includes information which the auditor can reasonably suspect to be relevant to the grant provider in finalising the grant award.

• In the case of an adverse audit opinion, the auditor should indicate:

the influence on the transactions included in the financial statement;

the grant conditions that have not been met; and/or

any unlawful acts identified.

Explanatory note to the audit protocol, for budget holders

The audit protocol provided here is a template.Information and/or requirements applying specifically to the activity for which a grant has been awarded must be added.The audit protocol assumes that:

-a grant has been awarded;

-the audit protocol has been drawn up in accordance with the NIVRA audit protocol guidelines;

-an assessment of both expenditure and receipts and invoices is required.Assessing receipts and invoices may pose a problem for the auditor.If the Ministry has not laid down specific requirements as regards receipts, the auditor need only assess the regularity of expenditure, and the audit protocol and the standard text for the audit opinion may be amended accordingly;

-the budget holder is responsible for the audit protocol issued.The template in paragraph 4 (Reporting) should be used with care, as any audit protocol will ultimately need to be tailor made.Any additional text includedmust beitalicised;

-if the audit protocol causes a problem for the auditor commissioned by the recipient, you should discuss this matter with the auditor, seeking assistance from the Audit Department (ACD), if necessary.

Explanatory per paragraph in the audit protocol:

1. This paragraph refers to the grant decision to which the audit protocol applies.

1. The audit subject is defined in clear terms:
2. Does the audit concern the annual report or a financial statement on the grant?
3. These are explained under 3.
4. These are explained under 3.

1. This paragraph sets minimum requirements as regards the scope of the audit.The scope can be broadened by adding specific requirements.

Re 1. This remark defines standards and limitations for the audit.

Re 2. The points included under 2 concerning the quality of processes are the minimum that should be assessed.They may be supplemented with specific requirements.

Management is asked to confirm compliance with article 15 as part of the Ministry’s increased vigilance as regards corruption and fraud.

The auditor may be asked to carry out a limited review of the narrative part of the report if the budget holder expects himself to be incapable of adequately assessing the relationship between the narrative and financial sections.It must be understood, however, that the budget holder still bears primary responsibility for this task.

Re 3. This sentence must be included if the grant decision contains specific conditions that must be assessed by the auditor, such as a requirement on contributing own funds.The standard text for the audit opinion will need to be amended accordingly.

1. The text used for the audit opinion should be consistent with the requirements laid down in the audit protocol.

Be careful how you word the finding that the obligations imposed by the grant decision have been met.Take note of the optional text and use it for grant conditions to be assessed by the auditor, e.g. the 30 % own funding requirement for G4AW or the minimum private sector contribution of 25 %.

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