Audit methodology for auditing financial instruments, programming period 2021-2027
Financial instruments (FI) help deliver cohesion policy to achieve territorial cohesion through innovation, digitalisation, economic transformation and support to small and medium-sized businesses as well as foster a greener, carbon free Europe and investing in energy transition, renewables and the fight against climate change.
This document presents the audit methodology for the audit of FIs under the 2021-2027 programming period. The audit work is detailed in the checklist in the Annex to this audit methodology.
The present audit methodology is prepared with the objective to assist the Commission auditors and AAs in their audits pursuant to Articles 70 and 77 of CPR. It sets out the overall audit approach of the Commission services to carrying out system audits and audits of FI operations, in accordance with the applicable rules and internationally accepted audit standards. It focuses on the key risk areas that might have a material impact on the legality and regularity of the expenditure related to the FI operations. Compared to 2014-2020, payment applications include expenditure incurred for financial instruments that is subject to the same assurance process as any other type of expenditure. This audit methodology aims to clarify the specificities of the audit work related to the nature of the FI operations and is relevant for audits of operations and system audits. System audits with respect to programmes providing support in the form of FIs should be conducted based on the key requirements listed in the CPR and the methodological note on the assessment of the management and control systems.
There are specific risks linked to the different FI implementation options, i.e. FI implemented directly by the MA or under its responsibility, including aspects of the selection of bodies implementing FI and the direct award of contract for the implementation of the FI according to Article 59(3) CPR (e.g. a publicly-owned bank or institution).
Typical risk areas include:
- the eligibility of expenditure, eligibility of final recipients, eligibility of management costs and fees including aspects of the selection of bodies implementing FI, i.e. HF and/or SF as applicable;
- compliance with State aid rules;
- compliance with public procurement rules in the selection of bodies implementing FI;
- combination of the different types of financial products (loans, (quasi-)equity investments, guarantees) with grants under Article 58(5) CPR.
This document is organised around three main sections. Section 2 below presents the legal basis for audit of FI operations. Section 3 sets out the management and control framework for FIs. Section 4 lays down the audit methodology based on identified risks.