FREQUENTLY ASKED QUESTIONS (FAQ)CERTIFICATES ISSUED BY EXTERNAL AUDITORSTable of Contents1.Acronyms . 12.General issued related to CFS, CoM and Comav . 23.CFS - specific issues related to Certificates on the Financial Statements . 74.CoM - specific issues related to Certificates on the Methodology for personnel and indirect costs . 115.CoMav - specific issues related to Certificates On Average personnel costs . 14DisclaimerThis document is aimed at assisting beneficiaries and auditors. It is provided for information purposes onlyand its contents are not intended to replace consultation of any applicable legal sources or the necessaryadvice of a legal expert, where appropriate. Neither IMI nor any person acting on its behalf can be heldresponsible for the use made of these guidance notes1. AcronymsCFS: Certificate on Financial statementsCoM: Certificate on the methodology for personnel and indirect costsCoMAv: Certificate on average personnel costs.FP7: Seven Framework Program.Please refer to the IMI Guidance notes for beneficiaries and auditors in IMI 1 Projects for further details.Annex II to the SOP on preparation submission and assessment of CFS of IMI1 projectsRef. IMI2/INT/2015-03776 - Document version 2.0 of 25/05/2017
2. General issued related to CFS, CoM and Comav#1.TOPIC:QUESTION:ANSWER:Qualifications ofauditorsWhocandelivertheCertificates (CFS, CoM andCoMAv)?-The beneficiary is free to choose aqualified external auditor (includingthe statutory auditor) provided thatthe external auditor is independentfrom the beneficiary and qualified tocarryoutstatutoryauditsofaccounting documents in accordancewith national legislation implementingthe Directive on statutory audits ofannual accounts and consolidatedaccounts.-Competent public officer - pleaserefer to question 3.-YES.-Auditors who are qualified to providea Certificate on the FinancialStatements or on the Methodology inone Member State are qualified toprovide a Certificate on the FinancialStatements in any other MemberState.Multiple-countries2.Statutory AuditorIs it possible for an auditor(who is properly authorisedto issue Certificates on theFinancial Statements or onthe Methodology in an EUcountry) to certify the costsof a beneficiary located in adifferent Member State?Should the statutory auditorprovide the Certificate onthe Financial Statements(and/orontheMethodology)?Is there a contradiction inusing the statutory auditor?If the external ments and/or providesother services such as tax,consulting etc. doesthisnot restrict the auditor’sindependence, in as muchas there is an “economic”link between thetwo parties?The advantage of using the statutoryauditor (the same auditor of thebeneficiary’s annual financial statements)to provide the certificates is that they arefamiliar with the in-house procedures,which is one of the aspects reviewed.However, this is not an obligation and thebeneficiary is free to choose the auditor.-There is no contradiction.-Beneficiaries may use their statutoryauditors, provided that they areindependent. The fact that thebeneficiary usually engages thesame auditor does not affect theindependence of the latter.Page 2
3.Competentpublic officerHow does a public bodyestablish the legal capacityof the internal audit unit toact as competent publicofficer?Relevant national authorities establish thelegal capacity of the internal audit unit (ofa given public body) to act as competentpublic officer.Can the competent publicofficer be a staff member ofthe audited organisation,as long as they are notinvolved in the grantagreement activity?YES, the competent public officer can be amember of staff but his/her independencehas to be established by the relevantnational authorities.How do we demonstratethat the competent publicofficer is completelyindependent of the grantagreementactivity - scientifically,administratively andfinancially?An organisation chart and/or a jobdescription of the organisation can showthat the competent public officer is notinvolved in processing the financial claim(Form C). Internal audit officers usuallyhave this independence.Do we have to name thecompetent public officer tothe IMI in advance of afinancial statement?NO, the name of the competent publicofficer does not need to be given inadvance.Is an internal auditor of anInternational Organisationeligible to deliver ion?International organisations are treated aspublic bodies for the purposes of IMI grantagreements. Accordingly, suchorganisations can opt for an internalauditor.Would it be possible for theinternal audit service topresent an invoice for theservice to the department?N.B.: An internal auditor for a public bodymust meet the criteria described in the IMIfinancial guidelines.--4.Certificate on theFinancialStatements andon theMethodologytemplatesAre the model Certificateson the FinancialStatementsprovided in the IMI1 ModelAgreement and on theMethodology provided i nt h e E C F P 7 ModelGrant Agreementd t ?--The principle of using a p u b l i cc o m p e t e n t officer within the sameorganisation to prepare the Certificateon the Financial Statements meansthat the real costs (excluding any profitmargin) of carrying out that workwould be eligible.It is not possible to charge a marketprice (profit) for work carried out bythe same beneficiary within the IMIGrant AgreementYES, the model certificate provided inthe Annex VI-Form D of the IMI1Model Grant Agreement is mandatory.YES, the model certificate provided inthe Annex VII (certificate on themethodology) of the EC FP7 ModelGrant Agreement is mandatory.Page 3
Certificate on theMethodology5.The Certificateon theMethodology(CoM) versus theCertificate on theMethodology forAveragePersonnel Costs(CoMAv)What is the purpose ofSection 1.8 of Annex VIIon(CertificateMethodology)?Sections 1.1 to 1.8 of Annex VII(certificate on the methodology) are partof the Agreed-Upon-Procedures definedby the Commission and constitute theminim um terms of reference to framethe works undertaken by the auditor.Article 1.8 of the Terms of Referencewhich makes reference to "Other Terms"is in itself an open point that allowsbeneficiaries and auditors to insert anyspecific terms such as auditor's fees,liability, applicable law, etc.Are the certificates optionalor compulsory?-Following the Commission DecisionC(2011)174 on three measures forsimplifying the implementation ofFP7 both certificates (CoMandCoMAv)areoptional. Nevertheless, as describedunder point 2.1 below only certainbeneficiaries of multiple grants areeligible to submit a CoM forpersonnel costs (actual or average)and indirect costs.-The new criteria for the use ofaverage personnel costs are definedintheCommissionDecisionC(2011)174.Page 4
What information needs tobe provided whensubmitting a CoM/CoMAv?-The Certificate on the Methodologyshould be composed of threeseparate documents:(1) A list of the minimum terms(sections 1.1 to 1.8) required by theCommission to be included in theengagement letter between thebeneficiary and the auditor. Theengagement letter must be datedand signed by both parties.(2) The model auditor's Report ofFactual Findings (section 1.9) to beissued on the auditor's letterheadand dated, stamped and signed bythe auditor (or competent publicofficer).-6.Languageofcertificates7.CostsIn what language should thecertificates be provided?Costs of audits servicesregarding certificates(CFS/CoM/CoMAv)(3) A detailed description (table ofAnnex VIIForm E) including the statementsmade by the beneficiary and theprocedures to be performed by theauditor and the findings expected toresult there from. This table has to bedated, stamped and signed on theone hand by the beneficiary for thestatements in the left-column and onthe other hand by the auditor (orcompetent public officer) for theprocedures and the factual findings.The certificates should be in the languageindicated in Art. 4 of the grant agreement.-Costs incurred for the Certificateson the Methodology issued by theexternal auditors are eligible e"Subcontracting" category. They aretherefore subject to the requirementsof best value for money (Article fortheCertificates on the Methodologyestablished by the Competent PublicOfficers can be treated as "Otherdirectcosts"underthe"Management" activity. Where it isthe usual practice of the beneficiaryto consider these costs as indirectcosts, they cannot be charged asdirect eligible costs.Page 5
Cost incurred for the CFSThe cost of the CFS is an eligible cost inthe Grant Agreement for which thecertificate is submitted. The cost is linkedto a specific project.Cost incurred for aCoM/CoMAvThe cost of the CoM/CoMAv approved bythe Commission is an eligible cost in anyof the financial statement submitted inany IMI FP7 Grant Agreement. Pleasenote that costs are eligible after theacceptance of the certificate. The cost ofthe certificate can be claimed only once inthe lifetime of FP7 unless the submissionof a new certificate is required due to achange of the methodology.Should the cost for aCoM/CoMAv be claimedsolely through one FP7projectorapportionedacross them?The cost has to be claimed once in onesingle FP7 Grant Agreement. Therefore itis recommended that the consortiumpartners anticipate the submission andidentify the estimated costs already atproposal/ negotiation stage in order toavoid that this cost disproportionally weigha specific project.8.MethodologiesWhere canthebeneficiaryfindinformation with regard to theestablishment of themethodology? Is a record ofapproved methodologiesavailable?All necessary information and practicalhints for the establishment of the CoMand CoMAv (as well as CFS) areavailable in the Guidance Notes forBeneficiaries and Auditors on Certificatesissued by external auditors available onCordis (EC portal for FP7). Since eachbeneficiary will establish the methodologyin line with the usual accounting andmanagement principles depending on thenational legislative and financial frame,the approved methodology cannot bestandardized.9.Further questionsTo whom can I addressfurther questions?The IMI Helpdesk can be contacted at thefollowing emailaddress email@example.comPage 6
3. CFS - specific issues related to Certificates on the FinancialStatementsThis section applies to all participants in IMI projects.#1.TOPIC:CFSQUESTION:When do I need a CFS?ANSWER:FOR EFPIA COMPANIES:During interim periods only whencumulative in-kind contribution is 375,000 or more, in case there is noaccepted Certified Methodology onin-kind Contribution.WithanacceptedCertifiedMethodology on in-kind Contribution:CFS is only required at the end ofthe project.In all cases in final periodFOR BENEFICIARIES AND LINKED THIRDPARTIESDuring interim periods only whencumulative requested IMI contributionis 375,000 or more.-Which format does theexternal auditor have touse for the certificate?In all cases in final period unless thefollowing conditions apply (not forefpia companies):-Duringtheirparticipationthecumulated IMI JU contribution doesnot exceed EUR 50.000,or-In the final reporting period (at theend of the project) or, earlier, when abeneficiary(or a linked third party) isterminating its participation the twofollowing conditions subsist:a CFS has already been submittedby the concerned beneficiary/linkedthird party during the lifetime of theproject and has been accepted bythe IMI2 JU,the cumulative remaining amounts ofIMI JU contribution and EFPIAreceipts received by the beneficiarydo not exceed EUR 375.000-With an accepted CoM: CFS is onlyrequired at the end of the projectunless conditions above apply.-It is compulsory to use Annex VIForm D for the issue of CFS.Page 7
2.CostCan the auditors performdifferent procedures fromthe ones in the table inannex VI?NO, but they can perform moreprocedures and provide m o r e informationif they wish to.HowmuchshouldaCertificate on the FinancialStatements cost?-The cost of a Certificate on theFinancial Statements is determinedby the professional judgment of theauditor, who must find the rightbalance between carrying out theprocedures requested and on theother hand, the amount of workrequired (and the directly relatedprice according to market prices).-The cost of a Certificate on theFinancial Statements depends ontheauditorandthetestingprocedures to perform.Is there an upper limit tothe cost of a Certificate onthe Financial Statements?Generally t h er e is n o u pp er f i n a nc i a llimit set for the certificate itself. As anyother subcontract the costs have to reflecta reasonable market price and the generaleligibility criteria of the grant agreement(Art II.13 and II.14).To which activity should thecost of the Certificate onthe Financial Statementsbe charged?-Costs incurred for the Certificates onthe Financial Statements issued bythe external auditors are eligibledirect costs charged under the"Management"activityinthe“Subcontracting" category. There aretherefore subject to the requirementsof best value for money (Article II.7 ofthe IMI1 model Grant Agreement).-However the costs for the CertificatesontheFinancialStatementsestablished by the Competent PublicOfficers can be treated as "Otherdirect costs" under the "Management"activity. Where it is the usualpractice of the beneficiary to considerthese costs as indirect costs, theycannot be charged as direct eligiblecosts.Page 8
3.4.Eligibilitythe costsofPersonnel costs- Sampling ofstaffIs the cost of a CFS eligibleif the IMI contribution isbelow 375,000 and theCFS isnot otherwiserequired by the IMI?-Form D (ProceduresperformedbytheAuditor), procedure 1(PersonnelCosts)reads:-"For each employee inthe sample, the Auditorobtained the personnelcosts ."How should this section becompleted when the fullcoverage refers to a samplesmaller than 20?-Only those costs incurred to providethe mandatory CFS are eligible. Thecost of the certificate on the FinancialStatements is an eligible cost in theGrant Agreement for which thecertificate is submitted.-If the beneficiary decides to submit acertificate on the financial statementsvoluntarily (when it is not requiredby the Grant Agreement), the costof the CFS will not be eligible.The size of the sample proposed in thisprocedure is based on the population ofresearchers or research-related personsinvolved in the project. In this context, thesize of the sample has to respect thefollowing:-if the population is less than 20employees, full coverage.- if the population is equal orgreater than 20 employees :- a minimum of 20 employees- or 20 % of the employees(whichever is the greater)It is not allowed to change the wording ofthe procedures - only in the case ofexceptions where the standard wordingcann ot cover the case. E.g. If thepopulation is less than 20 and fullcoverage is needed, the standard wordingit would say for example "in the sampleof 8” which is then not compliant with theconditions. For these cases the followingtemporary solution is to add "out of X". Inthe example one would read "in thesample of 8 out of 8" so it is clear that itwas actually full coverage.Page 9
5.Third parties(special clause4 to the I M I 1model GA)In case of third parties,does the threshold of 375,000 apply separately tothe beneficiary and thethird party or together?-The threshold of 375,000 to submitthe CFS includes the total IMIcontribution (beneficiary third party(ies)).-According to the special clause 4 ofthe Grant Agreement, the thirdparties shall provide their individualCFS independently from those of thebeneficiary.However,ifthebeneficiary and the third party havethe same auditor, the IMI couldaccept one certificate comprising thecosts of both but identifying clearlywhich costs relate to whom.Page 10
4. CoM - specific issues related to Certificates on the Methodology forpersonnel and indirect costsThis section applies to beneficiaries who are also involved in FP6 and/or FP7 projects, in addition to IMI1projects and have a certified methodology.#TOPIC:1.Eligibility2.Advantages of anapproved Certificateon themethodology forpersonnel costs andindirect costs (CoM)QUESTION:Who is eligible for the CoM?What are the advantagesof the CoM?ANSWER:Beneficiaries who fulfil the followingeligibility criteria are eligible:1. Either at least 8 participations inFP6 contracts with an EUcontribution equal or above EUR375,0002. Or at least 4 participations in FP7Grant Agreements signed beforethe 1st January 2010 with an EUcontribution equal or above EUR375,0003. Or, at least 8 participations in FP7Grant Agreements with an EUcontribution equal or above EUR375,000 at any time during theimplementation of the FP7.An approved CoM brings the followingadvantages:1. Early assessment of compliance toprovisions of the Grant Agreementwhen calculating personnel andindirect costs;2. Waiving for interim CFS;3. Valid throughout all FP7 and IMIprojects;4. Reduced costs for thewhole certificationsystem.3.Scope of the CoMCan I submit a COM evenif I charge individualactual costs?Can the CoM cover onlythe indirect costs?YES-NO, the Certificate on theMethodology can NOT be submittedonly for the indirect costs.-The CoM must cover both personneland indirect costs.Page 11
Which possibilities do Ihave to claim indirectcosts?Beneficiaries who have an analyticalaccounting system that can identify andgroup their indirect costs in accordancewith the eligibility criteria must report theirreal indirect costs or choose the 20% flatrate option.4.Validity of acertificateWhat happens when thebeneficiary changes hismethodology?The beneficiary has to declare to theCommission any fundamental change inits cost accounting methodology, includingthe date of the change (e.g. the yearlyupdates of costing rates to the mostrecent financial data are not consideredas fundamental changes).A newCertificate on the Methodology has to besubmitted according to the procedure.Until the acceptance of this newcertificate, the requirement to provideintermediate Certificate on the FinancialStatements will not be waived.5.SubmissionDoesthebeneficiaryneed a CoM for each ofitscompaniesthatparticipate in a Europeanresearch project?--The CoM is to be submitted at thelevel of the Legal Entity. Differentdepartments or cost centers which areintegrating part of one legal entitywill be certified within the certificateof the legal entity. Please note that aCoM may indeed cover differentpractices used by variousdepartments of the legal entity. Insuch a case the methodologies shouldbe described in detail in the tableof Form E (and in annexes ifnecessary).Companies (including affiliates) whichhave an independent identity from alegal point of view will need to submita separate certificate.When can I apply fora CoM?-Anytime during the lifetime of FP7,but at the earliest on the start dateof the project of the first FP7 GrantAgreement signed with the EU.Is it compulsory to askfor eligibility if I intend tosubmit a CoM?YES.Page 12
How to submit a CoM?-Beneficiaries who consider to meetthe eligibility criteria may send arequest any time during the lifetimeof FP7 to the following functionalmailbox RTD- FP7-CostMethodologyCertification@ec.europa.eu-The mail should contain the GrantAgreement/contracts numbers (FP7theyand/or FP6) in whichparticipate/ed.Page 13
5. CoMav - specific issues related to Certificates On Averagepersonnel costs#1.TOPIC:Use of averagepersonnel costsQUESTION:Is it necessary to submit aCoMAv in order to claimaverage personnel costs inFP7 projects?ANSWER:Beneficiaries are no longer required tosubmit a Certificate on Average Perso
Beneficiaries and Auditors on Certificates issued by external auditors available on Cordis (EC portal for FP7) Since each . beneficiary will establishthe methodology in line with the usual accounting and management principles depending on the national legislative and financial frame, the approved methodology cannot be
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