by Franck Sottou
ETCP Director and Key International EU Funds Expert
8 in the morning. The Auditor is supposed to come at 9. What will be his first questions? What would be the investigations? What could be the corrections? 9.15, the meeting starts. He wants to see the documents. What documents? Invoices, timesheets, proofs of payment and… taxi receipts. This is it. But is it really the bulk of the mission?
Audit was supposed to have changed since 2012. Remember, a new Financial Regulation was released and the communication was clear: the new controls and audits are coming! Let’s read again the Commission Memo: “In most cases, EU grants are reimbursements of a share of the actual costs incurred by the beneficiary, which implies time consuming paperwork both for the beneficiary, who must itemise all expenditure, and the Commission, which then has to check the project not only against the delivery of the results, but also against the eligibility of all the costs claimed.” A clear motivation for simplification indeed, but how to make it work in practice?
In most cases the problems are not coming from the auditors. It’s coming from the rules that we made: too complicated. Think about a contract between the Managing Authority and the beneficiaries still based on real costs, including full details about costs and activities. Game over. The audit will follow the same old logic: “Show me the supporting documents, let’s focus on accounting and I will tell you if you can be certified”.
Another option, as you know, is to adopt the Simplified Costs Options. This is radical and could be risky as well. But without waiting for it, let’s think about a more “simplified contracting approach”. In brief, let’s be more demanding about the deliverables and the final production of the project in exchange of more flexibility on costs and activities. Not the full revolution but a major evolution. Imagine for a minute the consequences for one of our most sensitive (and time consuming) area of verification: timesheets. So far, we have been asking officers to fill in tables specifying tasks day by day, hour by hour. Thus, the reports (and control) will be input-oriented and not dealing with the outputs and outcomes. The change is to focus on the time spent on each expected deliverable and the reality of these deliverables one by one. No more questions about bus tickets and “what were you doing the 1st of January at 2 o’clock” but strong investigations about the products and services, their state of play, quality and quantities in relation to the amount of expenditures and time spent on it.
By not doing this, auditors are taking a risk: just to be able to verify the reality of the supporting documents, not the reality of the operation itself.
At the end of the day, this is a question of trust. Can I make an obvious deal with beneficiaries based on the outputs and their contribution to the programme results? And if not, how can I get more trust from the auditors? Trust shall work both ways.