Flanders Audit Authority draws up an audit strategy per fund and per program period, which is updated annually.
This includes the following audit activities:
FAA must assess the management and control system of operational programmes. For this purposes, a representative sample of projects is selected annually for audit. This is a random sample drawn in accordance with the European guidance. Generally, a statistical sampling method is used, but if the population does not allow for this a non-statistical sampling method is applied.
The purpose of an audit of operations is to assess the management authority’s first level controls.
The audit verifies that:
- the operation meets the selection criteria for the operational programme, has been implemented in accordance with the approval decision and fulfils any applicable conditions concerning its functionality and use or the objectives to be attained;
- the expenditure declared corresponds to the accounting records and supporting documents held by the beneficiary;
- the expenditure relates to the eligibility period and was paid by the beneficiary;
- the expenditure relates to the approved operation;
- the information about indicators and milestones is reliable;
- the extent to which clear progress has been recorded, measured using general and programme-specific output and results indicators;
- the costs declared by the beneficiary comply with Community and national rules;
- the underlying documents are adequate, and there is a traceable audit trail;
- the rules for state aid, the requirements for publicity, sustainable development, sustainability and equal opportunities and non-discrimination are met;
- the national and European rules for public procurement are met;
- verification that the public contribution has been paid to the beneficiary.
System audits are regularly conducted at the management authority (MA), the intermediate bodies (IB) and the certifying authority (CA) in order to confirm the effectiveness of the system. A system audit investigates the appropriateness of the systems established and tests their effectiveness through a limited sample.
The following key requirements, as determined by the European legislation, are applied as audit objectives:
The following key requirements apply to the MA and IB:
- the functions of the MA/IB are clearly determined and assigned, and there is a clear delimitation of powers with respect to any intermediary organisations;
- appropriate procedures have been established for the selection of operations;
- beneficiaries are given information and guidelines appropriately;
- management verifications conducted by the MA/IB are appropriate;
- there is an effective system for an adequate audit trail;
- the computerised reporting systems for accounting, monitoring and finance, including links to the systems for electronic data exchange with the beneficiary are reliable;
- there are sufficient and proportionate measures against fraud;
- there are adequate procedures for the preparation of the management declaration and the annual summary of final audit reports and checks carried out.
The following key requirements are assessed for the CA:
- the functions of the CA are clearly determined and assigned, and there is a clear separation of functions within the CA and any intermediary organisations;
- the CA has appropriate procedures for the preparation and submission of payment claims;
- there is an appropriate computerised procedure for declared expenditure and the corresponding public contributions;
- suitable arrangements have been made for the administration of recoverable, collected and cancelled amounts;
- there are adequate procedures to establish and certify the completeness, accuracy and veracity of the accounts;
- recommendations will be made where appropriate, enabling the authority concerned to mitigate any such findings in the future.
By auditing the accounts the AA shall offer reasonable assurance as to the completeness, accuracy and veracity of the amounts declared in the accounts.
This audit will be carried out on the basis of the results of the CA system audits, the audits of operations in the audit year in question and any audits carried out by the European Commission, the European Court of Auditors or other audit bodies.
The results of operations audits will be used to verify the full amount of the eligible declared expenditure. Additional checks are carried out on the reliability of the CA’s accounting system and on the accuracy of the expenditure, amounts cancelled and recoveries recorded in the CA’s accounting system.
As audit authority, FAA is required to submit an annual control report (ACR) to the European Commission no later than 15 February containing:
- the results of the audits of operations relating to the financial year ending on 30 June;
- the results of the systems audits carried out, reporting any shortcomings in the management and control systems for the programme.
The accounts audit is also included in this report.
In addition to the annual control report, FAA issues an opinion on the effectiveness of the management and control system in order to provide reasonable assurance of the lawfulness and propriety of the transactions underlying the expenditure reported to the Commission.
The Group of Auditors for each fund is chaired by the responsible audit authority and is composed of one representative of each Member State participating in the cooperation programme. This forms the forum in which audit reports, inter alia, are discussed.