Audit and Assurance
How to prepare for audits and when will they occur
The Audit Process
The right to carry out audit and assurance visits are within the award agreements of all the major funders. This is to check the Terms & Conditions of the award have been met and to provide assurance that funds have been spent with due regard to value for money and in accordance the policies and procedures of the beneficiary.
For some research funding programmes there may also be a requirement within the reporting at interim or final stages to provide an audit certificate prepared by an independent external auditor verifying the expenditure in the claim. Where these are required Research Grants Section will organise and liaise with the appointed auditors.
As well as financial audits, Scientific (Technical) reviews may be included or a Systems and Processes Audit may be an approach taken by the funding bodies.
If you receive notification of an audit announced on your award please contact your Research Grants Administrator for guidance.
Financial audits will be arranged and managed through your Research Grants Team.
Managing your project to be prepared for audit
Give consideration to compliance requirements for monitoring and audit at an early stage in the project.
Review your research project regularly to ensure that it is being carried out in accordance with funders’ terms and conditions, University practices and procedures, legal and ethical requirements.
Eligibility of Costs
All expenditure in relation to research projects must be checked to ensure that it is in line with the terms and conditions of funding.
As a general rule, and in order to justify any expenditure, consideration should be given as to whether the cost:
- was included in the original Justification of Resources/Proposal
- was subsequently awarded
- is of direct benefit to the research and proper use of public funds
- is economic, necessary and solely attributable to the project
- is not deemed to be in any way excessive or reckless
Acountability for compliance with College policy and Funder requirements ultimately rests with the Principal Investigator (PI). The PI is accountable to their Head of Department.
For financial audits, generally the following items will be looked at:
- Reconciliation of Income and Expenditure with submitted claims
- Copies of invoices and expense claims
- Supporting backup for personnel costs and payroll information
- Staff employment contracts, subsequent contract extension or contract change letters
- Staff Timesheets if applicable for the project
- Evidence procurement processes have been correctly followed
- Evidence that reimbursement of expenses in line with Institutional practices
- Check of costs back to bank statements
Technical audits will normally consider:
- Degree of fulfilment of the project work plan and deliverables for the relevant period
- Continued relevance of the objectives
- Management procedures and methods of projects
- The beneficiaries’ contributions and integration within the project
- Use of resources in relation to the achieved progress
- Expected impact of the project with focus on dissemination
UKRI Assurance Programme
Under the UKRI Funding Assurance Programme institutional visits or desk based reviews are undertaken to provide assurance relating to the regularity and accountability of public funds provided for research, ensuring funds are managed with integrity and used for the purposes intended. Compliance with the terms and conditions is checked across four “pillars” of assurance
- Research Grants and Fellowships
- Doctoral Training funding
- Transparent Approach to Costing
- Non-Financial terms and conditions
Enhanced scrutiny is afforded to the most research-intensive Research Organisations who should expect assurance activity approximately every three years.
EC Audit requirements under current Framework programme of Horizon 2020
For H2020 projects, a Certificate on the Financial Statements (Audit) covering all reporting periods will be required with the final claim when the total requested reimbursement is €325,000 or more on direct costs (excluding indirect costs). Some H2020 projects may not need to be certified that apply flat rates to claims such as Marie Sklodowska-Curie Actions (MSCA).
Certificate of Financial Statements (CFS)
- One audit at end of project covering all reporting periods
- Where EU requested contribution for direct costs is equal to/or greater than €325,000
- Undertaken by auditors appointed by beneficiary
- Sample of costs checked under standard procedures
- Audit fee eligible cost (provision of service not subcontracting under H2020)
On FP7 projects, the earlier EC Funding Programme, costs need to be certified when the EC contribution reaches €375,000 (cumulative). This includes Marie Curie Actions.
University of Edinburgh holds a Certificate of Methodology for this programme which exempts Edinburgh from interim audits when threshold reached and only the one audit at final reporting is required covering full project.
External Audit launched by EC
- EC arrange audits through an appointed firm of auditors, with their own staff in the Commission or EC Court of Auditors may launch an audit
- Can occur anytime throughout the duration of the project and up to 2 years after final payment is made (for H2020).
- Generally more rigorous audit than for CFS, often 100% of costs checked, review beyond purely transactional checks to include test of systems and controls plus a risk assessment
- Reviews the implementation of the project and its compliance with the grant agreement
- Covers scientific elements and technical implementation of action
- PI and researchers often interviewed
The following document summarises the most common errors and some key findings/recommendations from the various EC grants audits.
Annual NIH (US federal) audit
The University of Edinburgh is subject to an annual audit of projects funded by the U.S. Department of Health and Human Services, which the NIH (National Institutes of Health) are part of.
This annual audit usually starts in February each year.
The following document summarizes some key points to be considered when managing NIH awards and learning from previous UoE NIH annual audits findings.
Documents requested at audit
Full list supplied may vary between auditors and includes but not limited to:
- Grant Agreement plus any Amendments
- Signed Consortium Agreement
- Financial Reports and costs statements submitted to EC with all supporting schedules
- Reconciliations back to underlying accounting records/general ledger
- Supporting documents (sample selected but may request full backup)
- Any evaluations or external audit reports relating to programme
- Bank statements showing receipt of EC funding
- Sample of expenses claimed through to bank statements to prove payments made
- Activity (narrative reports) submitted
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The Audit Report
The audit report will set out the findings against the set review procedures undertaken by the auditor. The Beneficiary has a chance to repond to the draft report and supply further evidence to support the use of funds or procedures under question. It is vital that record keeping is in order so this process can be carried out quickly and efficiently other wise delays to finalisation of reporting and claw back of funding can be a consequence. We work with you to ensure that all audit queries are responded to in a timely manner and audit feedback and recommendations are recognised in grant management practices.
Audit session 15 June 2023