Entity requesting the assessment:

[Entity name and full address]

Country:

[Country where the entity is established]

Reference/date of request for services:

[Reference/date of the request for services or other equivalent document issued by the entity]

Period subject to assessment:

[The year (12-month period) ending on the day of the start of the field work (on-site procedures) for the assessment]

Start date of the assessment:

[Indicative start date. The estimated contractual date of the assessment (order form date)]

End date of the assessment:

[Indicative end date. The estimated date of receipt of the final report]

ENTITY SUBJECT TO ASSESSMENT

PILLAR

PILLAR SUBJECT TO ASSESSMENT(1)

YES

YES

YES

YES/NO

YES/NO

YES/NO

YES

YES

YES

Pillars 1, 2, 3, 7, 8 and 9 are always subject to assessment (3).

Pillars 4 to 6 may be subject to assessment, depending on the nature of the budget implementation tasks to be entrusted.

CONTACT DETAILS

Entity: [full name of the entity subject to assessment]

Address

Country

Phone

Fax

Website

Key contact

Name

Function

<indicate executive function e.g. Director, General Manager, Head of Finance and Accounting>

Email

Phone/Fax

Delegation of the European Union in [Country] <delete this table if not applicable>

Address

Country

Phone

Fax

Key contact

Name

Function

Email

Phone/Fax

European Commission service responsible for the relevant EU funding programme <delete if not applicable>

Key contact

Name

Function/unit

Email

Phone/Fax

PILLAR 1 — INTERNAL CONTROL

Level 1 (Financial Regulation). Has the entity set up and ensured the functioning in all material respects of an effective, efficient and economical internal control system based on international best practices and in line with the criteria set by the European Commission?

YES/NO

Level 2 criteria/questions (5 components for internal control)

SCORE

(0 – 10)

../10

../10

../10

../10

../10

Total score

../50

SCORE

Answer to level 1 question is YES if the total score for all 5 components is at least 70 % and the score for each individual component is at least 2/10 or 20 %.

Answer to level 1 question is NO if the total score is less than 70 % or the score for one individual component is lower than 2/10 or 20 %.

PILLAR 2 — ACCOUNTING

Level 1 (Financial Regulation). Does the entity use an accounting system that provides in all material respects accurate, complete and reliable information in a timely manner, based on international accounting standards and in line with the criteria set by the European Commission?

YES/NO

Level 2 criteria/questions (3 components for accounting)

SCORE

(0 – 10)

../10

../10

../10

Total score

../30

SCORE

Answer to level 1 question is YES if the total score for all 3 components is at least 70 % and the score for each individual component is at least 2/10 or 20 %.

Answer to level 1 question is NO if the total score is less than 70 % or the score for one individual component is lower than 2/10 or 20 %.

PILLAR 3 — INDEPENDENT EXTERNAL AUDIT

Level 1 (Financial Regulation). Is the entity subject to an independent external audit, required to be performed in all material respects in accordance with internationally accepted auditing standards by an audit service that is functionally independent of the entity, and in accordance with the criteria set by the European Commission?

YES/NO

Level 2 criteria/questions (3 components for independent external audit)

SCORE

(0 – 10)

../10

../10

../10

Total score

../30

SCORE

Answer to level 1 question is YES if the total score for all 3 components is at least 70 % and the score for each individual component is at least 2/10 or 20 %.

Answer to level 1 question is NO if the total score is less than 70 % or the score for one individual component is lower than 2/10 or 20 %.

PILLAR 4 — GRANTS

Level 1 (Financial Regulation). Does the entity apply appropriate rules and procedures for providing financing from EU funds through grants and in accordance with the criteria set by the European Commission?

YES/NO

Level 2 criteria/questions (3 components for grants)

SCORE

(0 – 10)

../10

../10

../10

Total score

../30

SCORE

Answer to level 1 question is YES if the total score for all 3 components is at least 70 % and the score for each individual component is at least 2/10 or 20 %.

Answer to level 1 question is NO if the total score is less than 70 % or the score for one individual component is lower than 2/10 or 20 %.

PILLAR 5 — PROCUREMENT

Level 1 (Financial Regulation). Does the entity apply appropriate rules and procedures in all material respects for providing financing from EU funds through procurement and in accordance with the criteria set by the European Commission?

YES/NO

Level 2 criteria/questions (3 components for procurement)

SCORE

(0 – 10)

../10

../10

../10

Total score

../30

SCORE

Answer to level 1 question is YES if the total score for all 3 components is at least 70 % and the score for each individual component is at least 2/10 or 20 %.

Answer to level 1 question is NO if the total score is less than 70 % or the score for one individual component is lower than 2/10 or 20 %.

PILLAR 6 — FINANCIAL INSTRUMENTS (3)

Level 1 (Financial Regulation). Does the entity apply appropriate rules and procedures in all material respects for providing financing from EU funds/budgetary guarantees through financial instruments/budgetary guarantees, and in accordance with the criteria set by the European Commission?

YES/NO

Level 2 criteria/questions (3 components for financial instruments)

SCORE

(0 – 10)

../10

../10

../10

Total score

../30

SCORE

Answer to level 1 question is YES if the total score for all 3 components is at least 70 % and the score for each individual component is at least 2/10 or 20 %.

Answer to level 1 question is NO if the total score is less than 70 % or the score for one individual component is lower than 2/10 or 20 %.

PILLAR 6 — FINANCIAL INSTRUMENTS — additional Section 6A (additional questions for budgetary guarantees (4) )

Level 2 criteria/questions (four additional components for budgetary guarantees) Does the entity have a credit risk management system and utilise an internal risk rating system appropriate to the nature, size and complexity of its activities?

YES/NO

../10

../10

../10

../10

Total score

../40

SCORE

Answer to level 2 question is YES if the total score for all 4 components is at least 70 % and the scores for each component are at least 2/10 or 20 %.

Answer to level 2 question is NO if the total score is less than 70 % or the score for one component is lower than 2/10 or 20 %

PILLAR 6 – FINANCIAL INSTRUMENTS — additional sections 6B and 6C (optional (5) )

Level 1. Does the Entity implement in the selection/implementation of financial instruments/budgetary guarantees supported by Union funds, standards equivalent to applicable Union legislation and agreed international and Union standards, and therefore: a) does not support actions that contribute to tax avoidance and b) does not enter into operations with entities incorporated or established in non-cooperative jurisdictions for tax purposes?

YES/NO

Level 2 criteria/questions (2 components for controls related to tax avoidance and non-cooperative jurisdictions)

SCORE

(0 – 10)

Controls related to Tax avoidance and Non-Cooperative Jurisdictions (NCJs)

Does the Entity implement in the selection/implementation of financial instruments/budgetary guarantees supported by Union funds, standards equivalent to applicable Union legislation and agreed international and Union standards(6) and therefore:

../10

Level 1. Does the Entity implement in the selection/implementation of financial instruments/budgetary guarantees, standards equivalent to applicable Union legislation and agreed international and Union standards, and therefore: c) does not support actions contributing to money laundering and terrorism financing and d) does not enter into new or renewed operations with entities incorporated or established in jurisdictions identified as high risk third countries?

YES/NO

Level 2 criteria/questions (2 components for controls related to anti-money laundering and countering terrorism financing)

SCORE

(0 – 10)

Anti-Money Laundering (AML) and Countering Terrorism Financing (CTF)

Does the Entity implement in the selection/implementation of Financial Instruments/Budgetary Guarantees, standards equivalent to applicable Union legislation and agreed international and Union standards that provide reasonably effective safeguards and therefore:

../10

Answer to level 1 question is YES if the total score for the relevant section is at least 70 %.

Answer to level 1 question is NO if the total score for the relevant section is less than 70 %.

PILLAR 7 — EXCLUSION FROM ACCESS TO FUNDING

Level 1 (Financial Regulation). Does the entity apply appropriate rules and procedures for excluding third parties from access to funding through procurement, grants and/or financial instruments (8) ?

YES/NO

Level 2 criteria/questions (3 components for exclusion from access to funding)

SCORE

(0 – 10)

../10

../10

../10

Total score

../30

SCORE

Answer to level 1 question is YES if the total score for all 3 components is at least 70 % and the score for individual components 1 or 3 is at least 2/10 or 20 % or the score for individual component 2 is at least 5/10 or 50 %.

Answer to level 1 question is NO if the total score is less than 70 % or the score for individual components 1 or 3 is lower than 2/10 or 20 % or the score for individual component 2 is lower than 5/10 or 50 %.

PILLAR 8 — PUBLICATION OF INFORMATION ON RECIPIENTS AND OTHER INFORMATION

Level 1 (Financial Regulation) Does the entity make public information on the recipients of funds in an appropriate and timely manner (9) ?

YES/NO

Level 2 criteria/questions (3 components for publication of recipients)

SCORE

(0 – 10)

../10

../10

../10

Total score

../30

SCORE

Answer to level 1 question is YES if the total score for all 3 components is at least 70 % and the score for each individual component is at least 2/10 or 20 %.

Answer to level 1 question is NO if the total score is less than 70 % or the score for one individual component is lower than 2/10 or 20 %.

PILLAR 9 — PROTECTION OF PERSONAL DATA

Level 1 (Financial Regulation) Does the entity ensure protection of personal data equivalent to that referred to in Article 5 of the FR (10) ?

YES/NO

Level 2 criteria/questions (3 components for protection of personal data)

SCORE

(0 – 10)

../10

../10

../10

Total score

../30

SCORE

Answer to level 1 question is YES if the total score for all 3 components is at least 70 % and the score for each individual component is at least 2/10 or 20 %.

Answer to level 1 question is NO if the total score is less than 70 % or the score for one individual component is lower than 2/10 or 20 %.

PILLAR

PILLAR SUBJECT TO ASSESSMENT (1)

YES

YES

YES

YES/NO

YES/NO

YES/NO

YES

YES

YES

Pillars 1, 2, 3, 7, 8 and 9 are always subject to assessment.

Pillars 4 to 6 may be subject to the assessment, depending on the nature of the implementation tasks to be entrusted.

PILLAR 1 — INTERNAL CONTROL

KEY QUESTION (level 1)

Auditor comments

Has the entity set up and ensured the functioning in all material respects of an effective, efficient and economical internal control system and in accordance with the criteria set by the European Commission?

Guidance

Article 154 of the Financial Regulation

The Commission may accept that the accounting systems and the internal control systems used by entities and persons entrusted with the implementation of Union funds or budgetary guarantees are providing equivalent levels of protection of the financial interests of the Union and of reasonable assurance of achieving the management objectives.

PILLAR 1 — INTERNAL CONTROL

Entity comments

Auditor comments

Key question (level 2): Does the control environment of the entity provide an adequate basis for carrying out internal control across the organisation?

Note: The control environment includes the governance and management functions and the attitudes, awareness and actions of those charged with governance and management concerning the entity's internal control and its importance in the entity.

1.1.1

Is there a written code of conduct that is communicated to all staff or a staff manual containing provisions promoting ethical behaviour and values?

TBCBE

1.1.2

Does management stress and communicate the importance of integrity and ethical values to staff (‘tone from the top’)?

TBCBE

1.1.3

Are there procedures (e.g. disciplinary sanctions, financial and personal liability) for staff who do not comply with integrity rules and ethical values?

TBCBE

1.1.4

Are there procedures in place to deal with possible conflicts of interest at management level?

TBCBE

1.2.1

Does the entity have a clear organisational structure (i.e. the framework within which an entity's activities for achieving its objectives are planned, executed, controlled and reviewed) which supports good management and governance?

TBCBE

1.2.2

What is the decision-making structure and who is the highest decision-making authority?

TBCBE

1.2.3

Are reporting lines and responsibilities clearly defined? For example: are responsibilities, authorities and reporting lines clearly stipulated in employment contracts and/or operating manuals?

TBCBE

1.2.4

Are job descriptions available?

TBCBE

1.2.5

How are the authority and responsibility for operating activities assigned and how are reporting relationships and authorisation hierarchies established?

TBCBE

1.2.6

What are the policies and practices that relate to, for example, recruitment, orientation, training, evaluation, counselling, promotion, compensation and remedial actions?

TBCBE

1.3.1

Is there a governance oversight body (e.g. oversight authorities, audit committee, regulators, governing board, executive body) which is independent of the management of the entity?

TBCBE

1.3.2

Are there rules for the appointment, remuneration and resignation of members of the governance oversight body?

TBCBE

1.3.3.

If there is no governance oversight body, has the entity's management taken measures to carry out its governance oversight responsibilities?

TBCBE

1.3.4

Does the entity have an internal audit function? If yes, refer to Section 5.2.

TBCBE

1.3.5

If no, how (i.e. by what other measures) does management exercise oversight of the development and performance of internal control?

TBCBE

1.4.1

Does the entity have formal written human resources policies and practices?

TBCBE

1.4.2

Does the entity have recruitment and remuneration policies?

TBCBE

1.4.3

Does the entity have a staff development (covering development and training needs) and appraisal system?

TBCBE

PILLAR 1 — INTERNAL CONTROL

Entity comments

Auditor comments

Key question (level 2): Does the entity identify risks to the achievement of its objectives across the entity and are risks analysed as a basis for determining how they should be managed?

2.1

Does the entity specify its objectives with sufficient clarity to enable the identification and assessment of risks relating to objectives?

2.2

Does the entity have risk assessment procedures in place which enable management to identify, assess and address existing or potential issues that may hamper the achievement of the entity's objectives?

TBCBE

2.3

Are risks assessed on a project basis or across the entity as a whole?

TBCBE

2.4

Are risk assessment procedures documented?

TBCBE

2.5

Does the entity have a risk register?

TBCBE

2.6

Does the entity have risk assessment procedures which:

TBCBE

PILLAR 1 — INTERNAL CONTROL

Entity comments

Auditor comments

Key question (level 2): does the entity deploy effective and efficient control activities?

3.1.1

Does the entity deploy control activities

TBCBE

3.1.2

Are the following key aspects addressed by the control activities deployed by the entity?

TBCBE

3.2.1

Is segregation of duties formally stipulated, for example in an operating or procedures manual?

TBCBE

3.3.1

What are the main features of the entity's filing systems (electronic, paper, operating instructions, use of databases and electronic archiving systems)?

TBCBE

3.3.2

Identify and document key features of the filing system/procedures.

TBCBE

3.3.3

Does the entity have a specific policy or procedures for documentation and filing relating to the processes for grants, procurement and financial instruments?

Note: specific requirements may apply, such as transparency and confidentiality.

TBCBE

3.4.1

Does the entity have formal and written procedures and controls with regard to its IT systems?

TBCBE

3.4.2

Does the entity have adequate and effective procedures for initiation, approval, recording, processing and reporting of transactions?

3.4.3

Does the entity apply an appropriate mix of manual and automated elements in internal control, taking into account the nature and complexity of the entity's use of IT and computerised information systems?

3.4.4

Do the controls over the entity's IT systems include effective general IT controls and application controls?

Guidance relating to computerised information systems

The entity's business/activity processes result in transactions that are initiated, recorded, processed and reported by the information system, which is either manually or computer operated or through a mix of manual and computer-operated procedures.

Is there an appropriate segregation of duties for key accounting functions i.e. for the initiation, approval, recording, processing (i.e. transfer to the general ledger) and reporting in the financial statements?

The use of IT affects the way that control activities are implemented. Controls over IT systems are effective when they maintain the integrity of information and the security of the data such systems process, and include effective general IT controls and application controls.

General IT controls are policies and procedures that relate to many applications and support the effective functioning of application controls. They apply to mainframe, miniframe and end-user environments. General IT controls that maintain the integrity of information and security of data commonly include controls over the following:

Application controls are manual or automated procedures that typically operate at a business process level and apply to the processing of transactions by individual applications. Application controls can be preventative or detective in nature and are designed to ensure the integrity of the accounting records. Accordingly, application controls relate to procedures used to initiate, record, process and report transactions or other financial data. These controls help ensure that transactions occurred, are authorised and are completely and accurately recorded and processed. Examples include edit checks of input data, and numerical sequence checks with manual follow-up of exception reports or correction at the point of data entry.

The use of manual or automated elements in internal control also affects the manner in which transactions are initiated, recorded, processed and reported:

An entity's mix of manual and automated elements in internal control varies with the nature and complexity of the entity's use of IT.

3.5.1

Does the entity consider the potential for errors, fraud and irregularities in assessing risks to the achievement of objectives?

TBCBE

3.5.2

Does the entity identify (sensitive) posts with risk of collusion (e.g. bank and cash management, procurement and purchase functions) and are there supervisory measures (e.g. rotation of functions, additional controls)?

TBCBE

3.5.3

Are there procedures for the reporting and follow-up of errors, fraud and irregularities?

TBCBE

3.6.1

Does the entity have a description of or procedures manual for its asset management system?

TBCBE

3.6.2

Obtain a sufficient understanding of the entity's asset management system i.e. practices and procedures for the acquisition and management of land and buildings, machinery, vehicles, equipment and intangible assets (e.g. intellectual property rights, licences).

Note: specific attention should be paid to procurement rules which are applicable for the acquisition of fixed and intangible assets (refer to pillar 5 — procurement).

Guidance

Document the above procedure with descriptions and references to relevant source material (e.g. systems, flowcharts, manuals etc.) and identify any shortcomings in the entity's asset management system.

Relevant issues include: roles and responsibilities (segregation of duties) for management of assets acquisition and purchase procedures, asset registration (use of asset registers, vehicle logbooks), controls and procedures for access, control and monitoring procedures, safeguard and access procedures, asset disposition and transfer of assets.

3.7.1

Does the entity have a description of or procedures manual for its inventory management system?

TBCBE

3.7.2

Obtain a sufficient understanding of the entity's inventory management system (practices and procedures for the acquisition, purchase and management of supplies such as materials, tools, spare parts and office supplies).

Note: specific attention should be paid to procurement rules which are applicable for the acquisition of supplies, goods and materials (refer to pillar 5 — procurement).

Guidance

Document the above procedure with descriptions and references to relevant source material (e.g. systems, flowcharts, manuals etc.) and identify any shortcomings in the entity's inventory management system.

Relevant issues include: (i) roles and responsibilities for the management of inventories, acquisition and purchase procedures, and inventory records; (ii) safeguards, access and use; (iii) control and monitoring procedures, stock taking and reconciliations; (iv) use and disposal of stocks

3.8.1

Does the entity have a description of or procedures manual for its bank management system?

TBCBE

3.8.2

Does the entity perform regular (at least on a monthly basis) reconciliations of accounting data held in the entity's accounts (general ledger account, cash book) with bank account data, and in such a way that no material differences are left unexplained?

3.8.3

Obtain a sufficient understanding of the entity's bank management system (practices and procedures for the management of bank accounts).

Guidance

Document the above procedure with descriptions and references to relevant source material (e.g. systems, flowcharts, manuals etc.) and identify any shortcomings in the entity's bank management procedures.

Relevant issues include: roles and responsibilities (segregation of duties, access rights, use of a separate treasury function) for management of bank accounts, type of accounts (e.g. interest bearing, currencies used), use of dual signature procedures, regular bank reconciliations, supervision and control, use of dedicated/specific bank accounts for projects; treasury policies.

3.9.1

Does the entity have a description of or procedures manual for its cash management system?

TBCBE

3.9.2

Does the entity perform regular (at least on a monthly basis) reconciliations of accounting data held in its accounts (general ledger account, cash book) with bank account data, and in such a way that no material differences are left unexplained?

3.9.3

Are there appropriate procedures for holding cash and cash counts?

3.9.5

Does the entity clear and reconcile suspense accounts and advances i.e. of cash payments made, from which no expenditures have yet been recorded, at least monthly within 30 days of the end of each month? Such advances may include travel advances and operational imprest(3) note accounts. This may also include transfers to other entities, which are classified as expenditures when they are made, even if reporting on any earmarked portion of the transfers is expected periodically.

3.9.6

Obtain a sufficient understanding of the entity's cash management system (practices and procedures for cash management).

Guidance

Document the above procedure with descriptions and references to relevant source material (e.g. systems, flowcharts, manuals etc.) and identify any shortcomings in the entity's cash management procedures.

Relevant issues include: roles and responsibilities (segregation of duties, access rights, use of a separate treasury function) for cash management; procedures for cash handling and limits of cash to be held; regular petty cash counts and reconciliations; management of cash advances (use, authorisation, limits, monitoring and clearance).

3.10.1

Does the entity have a description of or procedures manual for its recruitment system?

TBCBE

3.10.2

Obtain a sufficient understanding of the entity's recruitment system (practices and procedures for the management of expatriate, local and other staff).

3.10.3

Perform a walkthrough of the recruitment process from the approval of the selection procedure to the signing of the employment contract.

Guidance

Document the above procedures with descriptions and references to relevant source material (e.g. systems, flowcharts, manuals etc.) and identify any shortcomings in the entity's recruitment procedures

Relevant issues include: roles and responsibilities for the management of staff; selection and approval procedures; determination and approval of salaries, allowances and other conditions of employment; use of employment contracts; job descriptions.

3.11.1

Does the entity have a description of or procedures manual for its payroll and time management system?

TBCBE

3.11.2

Obtain a sufficient understanding of the entity's payroll and time management system i.e. practices and procedures for payroll and time management.

3.11.3

Are the personnel database(4) and payroll directly linked to ensure data consistency? Are reconciliations performed on a regular basis (in principle monthly)?

3.11.4

Are payroll and time management systems linked to ensure correct calculation of salaries and wages where applicable?

3.11.5

Is authority to change records and payroll restricted and are audit trails available?

3.11.6

Are there appropriate (approval) procedures for changes to the personnel records?

3.11.7

Are there procedures for identifying control weaknesses and/or ghost workers? For example: are (annual) payroll audits performed by an internal audit capability?

3.11.8

Does the entity have a system to allocate staff, salaries and related costs to projects?

3.11.9

What principles (i.e. plausibility of basic assumptions used and allocation keys) does the entity use to allocate salaries and salary-related costs to projects? How is time spent by staff for specific projects approved and recorded?

Guidance

Document the above procedures with descriptions and references to relevant source material (e.g. systems, flowcharts, manuals etc.) and identify any shortcomings in the entity's payroll and time management systems.

Relevant issues include: roles and responsibilities for the payroll and time management; recording, calculation and approval of salaries and salary components (fixed/variable; overtime; social security). Special attention should be paid to the entity's time management system: timekeeping procedures and records (use of timesheets), supervision control and approval procedures.

Key question (level 3):

3.12.1

Does the entity have a description of or procedures manual for its controls of other salary-related expenditure and allowances?

TBCBE

3.12.2

What procedures and controls are in place to determine and pay allowances for travelling and accommodation (i.e. per diems)?

3.12.3

What procedures and controls are in place to determine and pay expenditure for training and personnel development?

3.13.1

What procedures does the entity have in place for the contracting of services with external service provides (e.g. studies and research; advertising, promotion, publication and visibility actions; evaluations; audit, accounting and legal services; technical assistance; translation and interpretation; organisation of conferences and seminars; visibility actions)?

Note: specific attention should be paid to procurement rules which are applicable for the acquisition of services (refer to pillar 5 — procurement).

TBCBE

3.14.1

Does the entity have a description of or procedures manual for its controls of other (non-salary) expenditure?

TBCBE

3.14.2

Obtain a sufficient understanding of the entity's system for expenditure control (practices and procedures for expenditure control).

Guidance

Document the above procedures with descriptions and references to relevant source material (e.g. systems, flowcharts, manuals etc.) and identify any shortcomings in the entity's procedures for expenditure control.

Relevant issues include: roles and responsibilities for expenditure control; management procedures which ensure that expenditure control is in line with the entity's procedures; authorisation and approval of expenditure; performance of regular budget–actual comparisons of expenditure.

3.15.1

Does the entity have a description or manual of its procedures for monitoring operating performance?

TBCBE

3.15.2

What measures does the entity have in place to review operating performance i.e. the progress made on the implementation of activities and projects?

TBCBE

3.15.3

Has the entity adopted quality standards (e.g. ISO)?

TBCBE

3.15.4

If external standards are not, used are there internal standards?

TBCBE

3.15.5

Does the entity have procedures for the evaluation of operating performance (prior, during implementation and after implementation)?

TBCBE

3.15.6

By whom (internal or external) are these evaluations performed and how are results reported and followed up on?

TBCBE

3.16.1

Does the entity have a description or manual of its procedures to ensure compliance with regulations and rules for using funds?

TBCBE

3.16.2

Does the entity have procedures in place which ensure that actual expenditure incurred and revenue received for activities and projects are in conformity with applicable rules i.e. conditions set out in contracts and agreements?

3.16.3

Does the entity have procedures in place which ensure that specific rules and conditions are well-known and respected? Such rules and conditions can relate to e.g.: the eligibility of expenditure, procurement rules (see pillar 5), origin rules, rules for visibility of EU-funded actions, and rules for the transfer of assets at the end of a project.

PILLAR 1 — INTERNAL CONTROL

Guidance

Information is necessary for the entity to carry out internal control responsibilities to support the achievement of its objectives. The entity's management obtains or generates and uses relevant and quality information from both internal and external sources to support the functioning of other components of internal control.

Internal reporting (internal information and communication)

This concerns internal reporting, which covers financial reporting and reporting to the entity's management on the qualitative aspects of the implementation of activities and projects within the entity.

External reporting (external information and communication)

Two flows of external information and communication can be distinguished:

This concerns the reporting flows from grant beneficiaries to the entity and their accountability towards the entity. Reporting is based on specific rules and conditions set by the entity in order to comply with the requirements (including reporting requirements) for funding provided by the EU and other donors. These reporting flows constitute a vital element of internal control.

The above two types of external reporting are dealt with under pillar 2 — accounting.

PILLAR 1 — INTERNAL CONTROL

Entity comments

Auditor comments

Key question (level 2): Does the entity have controls and procedures in place which ensure reliable reporting — both internal and external (inbound and outbound) — in line with applicable requirements and standards?

4.1.1

Does the entity obtain or generate and use relevant, quality information (internal and/or external sources) to compile management reports?

TBCBE

4.1.2

Does the entity's management receive regular (monthly, quarterly) reports on progress made on objectives, activities, projects?

TBCBE

4.1.3

Does the information cover qualitative aspects of implementation such as use of performance indicators, implementation status and delays, key problems and issues?

TBCBE

4.1.4

Does the information cover financial aspects such as budget–actual comparisons and analyses of expenditure incurred by activity/project?

TBCBE

4.1.5

Does the entity internally communicate information, including objectives and responsibilities for internal control, necessary to support the functioning of internal control?

TBCBE

4.2.1

Does the entity prepare and present annual financial statements which are reliable?

‘Reliable’ means that the financial statements:

Guidance

Year-end financial statements are a critical condition for transparency. The ability to prepare year-end financial statements in a timely fashion is a key indicator of how well the accounting system is operating, and of the quality of records maintained.

In order to be useful and to contribute to transparency, financial statements must be understandable to the reader and deal with transactions, assets and liabilities in a transparent and consistent manner. This is the purpose of financial reporting standards. Some countries have their own public sector financial reporting standards, set by government or another authorised body. To be generally acceptable, such national standards are usually aligned with international standards such as the International Public Sector Accounting Standards (IPSAS), of which some are relevant for countries that adopt accrual-based accounting, while others are relevant for cash-based systems.

4.2.2

Does the financial information presented in the financial statements meet the following qualities which make it useful for the users?

4.2.3

Does the entity prepare and present annual financial statements which are in line with applicable international standards? What is the applicable financial reporting framework? What basic regulations and rules does the entity need to comply with when preparing and presenting its annual financial statements?

TBCBE

4.2.4

Other good practice disclosures

Do the financial statements of the entity disclose:

4.2.5

Does the entity comply with national accounting (including financial reporting) standards which apply in the country in which it is established? For example: the World Bank i.e. the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) comply with US Generally Accepted Accounting Principles (US GAAP).

4.2.6

Does the entity comply with international accounting standards (including financial reporting) or accounting policies and rules prescribed by specific regulations or conventions?

TBCBE

4.2.7

What is the accounting basis for preparing and presenting the financial statements of the entity:

Footnote: ‘Accrual basis’ means a basis of accounting under which transactions and other events are recognised when they occur (and not only when cash or its equivalent is received or paid). Therefore the transactions and events are recorded in the accounting records and recognised in the financial statements of the periods to which they relate. The elements recognised under accrual accounting are assets, liabilities, net assets/equity, revenue and expenses.

TBCBE

4.2.8

What period of time does the entity use as its financial year?

TBCBE

4.2.9

Do the entity's financial statements include the following components:

TBCBE

4.2.10

Are the entity's financial statements submitted for external audit within 6 months of the end of the financial year?

TBCBE

4.3.1

Does the entity have specific and dedicated reporting procedures for activities, projects or (trust) funds and financial instruments financed by the EU or other donors?

TBCBE

4.4.1

Does the entity have specific and dedicated reporting procedures for activities, projects, (trust) funds and financial instruments financed by the EU or other donors?

TBCBE

4.4.2

Does the entity provide conditions for reporting by grant beneficiaries on the financial and qualitative aspects of the implementation of activities, projects, (trust) funds and financial instruments?

TBCBE

4.4.3

Are conditions for reporting clearly and properly communicated (e.g. use of terms of reference, use of (web-based) guidelines, instructions, brochures)?

TBCBE

4.4.4

Does the entity monitor/verify whether reporting conditions are respected?

TBCBE

4.4.5

Does the entity obtain and review progress reports made by the grant beneficiaries on a regular basis?

TBCBE

4.4.6

Does the entity respond in an effective and timely manner to issues resulting from the review of these reports? Such issues may include: significant differences in budget–actual comparisons of expenditure, unusual expenditure items, (possible) ineligible expenditure, delays in project implementation, project activities not implemented as planned.

TBCBE

PILLAR 1 — INTERNAL CONTROL

Entity comments

Auditor comments

Key question (level 2): Does the entity monitor (the components of) its internal control system regularly and effectively?

5.1.1

What are the main activities that the entity uses to monitor (the components of) its internal control system?

TBCBE

5.1.2

How does the entity initiate remedial actions to deficiencies in (the components of) its internal control system?

TBCBE

5.2.1

Standards and internal audit charter

Does the internal audit function comply with the international professional standards and the Code of Ethics issued by the Institute of Internal Auditors (www.theiia.org)?

TBCBE

Guidance

Regular and adequate feedback to management is required on the performance of the internal control systems, through an internal audit function or equivalent systems monitoring function. In some countries, internal audit functions are concerned only with the pre-audit of transactions, which is then considered part of the internal control activities.

5.2.2

Standards and internal audit charter (cont'd)

Has the internal audit function adopted an internal audit charter which is consistent with the Definition of Internal Auditing, the Code of Ethics and the standards issued by the Institute of Internal Auditors?

Footnote: An internal audit charter is a formal document that sets out the internal audit activity's purpose, authority and responsibility. The internal audit charter: (i) establishes the internal audit activity's position within the organisation, including the nature of the chief audit executive's functional reporting relationship with the board; (ii) authorises access to records, personnel and physical properties relevant to the performance of engagements; and (iii) determines the scope of internal audit activities. Final approval of the internal audit charter resides with the senior management of the entity or an oversight body (audit committee) where appropriate.

TBCBE

5.2.3

Independence

How does the internal audit function fit into the entity's organisational structure?

TBCBE

5.2.4

Independence

Is the internal audit function independent i.e. does it have freedom from conditions that threaten its ability to carry out internal audit responsibilities in an unbiased manner?

TBCBE

5.2.5

Independence (cont'd)

Does the chief audit executive/head of the internal audit function have direct and unrestricted access to senior management and the oversight body as appropriate?

TBCBE

5.2.6

Objectives and scope of work

What is the nature of the internal audit function's responsibilities?

TBCBE

5.2.7

Objectives and scope of work (cont'd)

What are the activities performed, or to be performed, by the internal audit function?

TBCBE

5.2.8

Objectives and scope of work

Does the internal audit charter define the nature of the (assurance) services provided to the entity?

Note: ‘Assurance services’ involve the internal auditor's objective assessment of evidence to provide an independent opinion or conclusions regarding an entity, operation, function, process, system or other subject matter. The nature and scope of the assurance engagement are determined by the International Standards for the Professional Practice of Internal Auditing.

TBCBE

5.2.9

Objectives and scope of work

Does the internal audit function prepare a risk assessment of the activities and/or organisational functions (e.g. departments, units)?

Note: Evidence of an effective internal audit (or systems monitoring) function would also include a focus on high-risk areas.

TBCBE

5.2.10

Objectives and scope of work

Does the internal audit function draw up a multi-annual (usually three-year) audit plan as well as annual operational plans? How and by whom are audit subjects selected and approved?

TBCBE

5.2.11

Objectives and scope of work (cont'd)

Do these plans incorporate an appropriate range of audit types including compliance, financial audits, payroll audits, system including information technology audits, forensic and performance audits?

TBCBE

5.2.12

Objectives and scope of work

Is the internal audit operational for all activities managed by the entity?

TBCBE

5.2.13

Reporting

Are internal audit reports completed and issued to a fixed schedule and are they distributed to senior management and an oversight body or audit committee as appropriate?

TBCBE

5.2.14

Reporting (cont'd)

Does the internal audit function present regular (i.e. monthly, quarterly) progress reports to the management of the entity and an oversight body/audit committee as appropriate?

TBCBE

5.2.15

Follow-up on internal audit findings and recommendations

Are findings and recommendations resulting from internal audit duly addressed (to the entity's senior management and an oversight body/audit committee as appropriate) and resolved?

TBCBE

5.2.16

Follow-up on internal audit findings and recommendations

Does the entity's management respond promptly to internal audit findings?

TBCBE

5.2.17

Follow-up on internal audit findings and recommendations

Are internal audit recommendations implemented fully and timely?

Note: Evidence of an effective internal audit (or systems monitoring) function would also include action by management on internal audit findings. This is of critical importance since lack of action on findings completely undermines the rationale for the internal audit function.

TBCBE

5.3.1

Does management include a report regarding the effectiveness of its internal control system (i.e. an internal control report) in the entity's annual financial statements/annual report?

If yes, review the entity's internal control reports of the last 3 years and the independent auditor's report on management's assertion regarding the effectiveness of the internal control system.

If yes, which type of opinion (unqualified, qualified) did the external auditors express on management's assertion regarding the effectiveness of its internal control system?

TBCBE

PILLAR 2 — ACCOUNTING

KEY QUESTION (level 1)

Auditor comments

Does the entity use an accounting system that provides in all material respects accurate, complete and reliable information in a timely manner, based on national and/or international accounting standards and in line with the criteria set by the European Commission?

Guidance

Accounting policies are the specific principles, bases, conventions, rules and practices applied by the entity in preparing and presenting financial statements. A reliable basis means that the entity applies accounting policies which are relevant to the decision-making needs of users, and reliable in that the financial statements:

Article 154 of the Financial Regulation

The Commission may accept that the accounting systems and the internal control systems used by entities and persons to be entrusted with budget implementation tasks on behalf of the Commission are providing equivalent levels of protection of the financial interests of the Union and of reasonable assurance of achieving the management objectives.

PILLAR 2 — ACCOUNTING

Entity comments

Auditor comments

Key question (level 2): Does the entity use an adequate accounting system and does it have clear and written accounting policies?

1.1

Does the entity apply accounting policies which:

1.2

Does the entity have a manual of accounting policies and procedures, including detailed descriptions of accounting procedures for the various types of financial and accounting transactions?

TBCBE

1.3

Does the entity operate a double-entry bookkeeping/accounting system?

Note: A ‘double-entry’ accounting system is a set of rules for recording financial information in a financial accounting system in which every transaction or event changes at least two different nominal ledger accounts.

TBCBE

1.4

Does the entity have a chart of accounts which properly reflects its operations and activities?

TBCBE

1.5

Does the entity perform regular bank reconciliations and cash book reconciliations (where applicable)?

TBCBE

1.6

Does the entity perform regular reconciliations and clearings of suspense accounts and advances? Are separate (general ledger) accounts kept for the accounting of advance and final payments for different projects?

Note: reliable reporting of financial information requires constant checking and verification of recording practices. This is an important part of internal control and a foundation for good quality information for management and for external reports. Timely and frequent reconciliation of data from different sources is fundamental for data reliability.

TBCBE

1.7

Does the accounting system allow the processing and reporting of accounting and financial information relating to specific projects, activities, (trust) funds and financial instruments, no matter whether these are financed by the entity itself and/or external sources (such as the European Commission)?

TBCBE

1.8

Can the entity ensure an accounting trail for transactions (income and expenditure) relating to specific projects, activities, (trust) funds and financial instruments, no matter whether these are financed by the entity itself and/or external sources (such as the EC)?

TBCBE

1.9

How are advance payments made to the entity by external organisations (e.g. the EC) for funding of specific projects, activities, (trust) funds and financial instruments accounted for in the entity's accounting records?

TBCBE

1.10

Does the entity have procedures for ‘clearing’ advances paid by it to grant beneficiaries (e.g. are advances cleared on the basis of audit reports on the use of funds submitted by grant beneficiaries)?

PILLAR 2 — ACCOUNTING

Entity comments

Auditor comments

Key question (level 2): does the entity have a budget system and procedures which result in transparent and reliable budgets for its operations and activities?

2.1

Are budget procedures formalised (e.g. through a budget manual or circulars)?

TBCBE

2.2

At which intervals are budgets prepared (annual, half-yearly, quarterly)?

TBCBE

2.3

Who are the key actors involved with the budget process?

TBCBE

2.4

Which accounting and other data sources are used?

TBCBE

2.5

Does the entity have an appropriate budget classification system (classification criteria could, for example, include: operational and capital expenditure, activity-based budgets or functional, analytical classification, classification by project/sub-project).

TBCBE

2.6

Do budgets provide a coherent and clear presentation of projected/estimated costs in line with the entity's activities, operations and projects?

TBCBE

2.7

Are budgets transparent and comprehensive and do they properly reflect the operations of the entity?

2.8

Are assumptions used to prepare the budgets and to compute projected and estimated expenditure plausible? Are cost allocation keys, which are applied to compute budget cost data, based on logical, consistent and plausible assumption and principles?

2.9

Are budget data relevant and reliable so that they are of real use to the management and/or other users?

TBCBE

2.10

How and by whom are budgets approved?

TBCBE

2.11

Can the accounting system produce comprehensive reports for actual expenditure incurred in comparison to the initial budget?

TBCBE

2.12

Are reports stating actual total expenditure compared to the originally budgeted total expenditure prepared on a regular basis (quarterly, half yearly) and are they issued within a reasonable amount of time (1 month) after end of period?

TBCBE

2.13

Are differences between actual expenditure and the originally budgeted expenditure examined and properly explained?

TBCBE

2.14

In cases where the composition of expenditure varies significantly from the original budget, are such variances properly approved?

TBCBE

2.15

Do reports on budget execution also account for expenditure made from transfers to parts (e.g. offices in other locations) of the entity which operate in an autonomous/independent way from the entity's headquarters?

TBCBE

PILLAR 2 — ACCOUNTING

Entity comments

Auditor comments

The purpose of the questions in this section is to assess whether the entity's accounting system can produce reliable and timely reports on the use made by the entity — and/or by grant beneficiaries — of funds for specific activities, projects, (trust) funds and financial instruments(5). The users of these reports are the entity's management and/or external parties which have provided funding (such as the European Commission).

Key question (level 2): does the entity have accounting and budgeting procedures which allow adequate and timely reporting to donors/fund providers (including the European C) on the use of funds provided by them for projects, activities, (trust) funds and financial instruments and capacity and processes in place to produce financial statements (6)?

3.1

Does the entity have an accounting system and procedures which allow the generation of relevant and reliable information for preparing reports (with financial and qualitative information) and financial statements on activities, projects, (trust) funds and financial instruments financed by the EU or other donors?

TBCBE

3.2

Does the entity's accounting system allow the generation of financial reports for specific activities, projects, (trust) funds and financial instruments, or the generation of aggregate accounting data, which can be directly used to compile financial reports and financial statements?

TBCBE

Guidance

An entity's information system typically includes the use of standard journal entries that are required on a recurring basis to record transactions. Examples might be journal entries to record salary costs in the general ledger.

An entity's financial reporting process also includes the use of non-standard journal entries to record non-recurring, unusual transactions or adjustments. These may be necessary to account for cost items (including allocation of costs) relating to a specific project which are not covered by standard accounting procedures and journal entries. In manual general ledger systems, non-standard journal entries may be identified through inspection of ledgers, journals and supporting documentation.

3.3

To what extent does the entity need to make additional journal entries, adjust entries and/or carry out other manual processing and manipulation of financial and cost data to prepare complete and reliable reports?

TBCBE

3.4

To what extent does the entity use intermediate and/or (cost) allocation tables tracking the financial information presented in project-specific information to the entity's general ledger accounts and/or costing accounts?

TBCBE

3.5

To what extent does the entity make use of additional software (e.g. spreadsheet applications like MS Excel) outside its regular accounting software to produce financial reports?

TBCBE

3.6

Obtain a sufficient understanding of how financial information (i.e. expenditure) for projects is accounted for in the entity's accounting system (i.e. key assumptions, allocation principles) and how this information has been extracted and included (automatically/manual adjustments) in the financial reports.

TBCBE

3.7

Does the entity have a budgeting system and procedures which allow generation of relevant and reliable information for preparing budgets on activities, projects, (trust) funds and financial instruments?

Note: in principle the same questions apply as for the entity's general budget process.

TBCBE

PILLAR 3 — INDEPENDENT EXTERNAL AUDIT

KEY QUESTION (level 1)

Auditor comments

Is the entity subject to an independent external audit, to be performed in all material respects in accordance with internationally accepted auditing standards by an audit service functionally independent of the entity and in accordance with the criteria set by the European Commission?

Guidance

A high-quality external audit is an essential requirement for creating transparency in the entity's use of resources, including funds provided by donors. Key elements of the quality of external audit are: the objectives and scope of the audit, and adherence to appropriate auditing standards including independence of the external auditor i.e. the audit institution.

PILLAR 3 — INDEPENDENT EXTERNAL AUDIT

Entity comments

Auditor comments

Key question (level 2): does the entity have a clear regulatory framework for external audit?

1.1

Is the entity subject to an external audit performed by an independent professional external audit firm (private sector) in accordance with standards equivalent to international standards on auditing?

If yes, complete questions at 2.1 (Principles) and 3 (External audit procedures).

TBCBE

1.2

Is the entity subject to an external audit performed by a national audit institution (public sector) in accordance with standards equivalent to international standards on auditing? If yes, complete the questions in Section 3 below.

If yes, complete questions at 2.2 (Principles) and 3 (External audit procedures).

TBCBE

1.3

Is the entity subject to an external audit performed by an external audit or oversight body which operates under a specific regulatory or institutionalised framework (e.g. external auditor of the UN) in accordance with standards equivalent to international standards on auditing? If yes, complete the questions in Section 4 below.

If yes, complete questions at 2.3 (Principles) and 3 (External audit procedures).

TBCBE

PILLAR 3 — INDEPENDENT EXTERNAL AUDIT

Entity comments

Auditor comments

2.1.1

Is the audit performed by a professional external audit firm which is a member of an established national accounting or auditing body?

Is the national accounting or auditing body a member of IFAC?

2.1.2

Is the audit performed in accordance with the applicable national standards on auditing and are these standards in compliance with International Standards on Auditing (‘ISAs’) issued by the International Auditing and Assurance Standards Board (IAASB)?

2.1.3

Is the auditor who performs the audit governed by a code of ethics which establishes the fundamental ethical principles for auditors with regard to integrity, objectivity, independence, professional competence and due care, confidentiality, professional behaviour and technical standards?

Is this code of ethics compliant with the IFAC Code of Ethics for Professional Accountants issued by IFAC's International Ethics Standards Board for Accountants (IESBA)?

2.1.4

Is the fundamental principle of independence fully respected?

2.2.1

Is the audit performed by a national audit institution which is a member of INTOSAI?

2.2.2

Is the audit performed in accordance with the applicable national standards on auditing and are these standards in compliance with INTOSAI Standards?

2.2.3

Is the auditor who performs the audit governed by a Code of Ethics which establishes the fundamental ethical principles for auditors with regard to integrity, objectivity, independence, professional competence and due care, confidentiality, professional behaviour and technical standards?

Is this Code of Ethics compliant with the INTOSAI Code of Ethics (ISSAI 30) or equivalent?

2.2.4

Is the fundamental principle of independence fully respected?

2.3.1

Is the audit performed by an external audit or oversight body which operates under a specific regulatory or institutionalised framework? Obtain a brief description of this framework.

2.3.2

Is the audit performed in accordance with standards equivalent to the International Standards on Auditing (‘ISAs’) or INTOSAI standards?

2.3.3

Is the auditor who performs the audit governed by a Code of Ethics which establishes the fundamental ethical principles for auditors with regard to integrity, objectivity, independence, professional competence and due care, confidentiality, professional behaviour and technical standards?

Is this Code of Ethics compliant with the principles of the IFAC Code of Ethics for Professional Accountants issued by IFAC's International Ethics Standards Board for Accountants (IESBA), the INTOSAI Code of Ethics (ISSAI 30) or an equivalent code of ethics?

2.3.4

Is the fundamental principle of independence fully respected?

PILLAR 3 — INDEPENDENT EXTERNAL AUDIT

Entity comments

Auditor comments

Key question (level 2): is the entity subject to appropriate external audit procedures?

2.1

What type(s) of external audit apply to the entity (e.g. annual audits of the entity's financial statements, compliance audits and other audits)?

What are the objectives and scope of these audits? Do audits also cover aspects of legality and regularity related to funding provided by the European Commission and/or other fund providers?

With what frequency are the audits performed?

To whom does the auditor issue its report?

TBCBE

2.2

By which auditor(s) are these audit performed (see 1 — regulatory framework)?

TBCBE

2.3

Within how many months of the end of the entity's financial year is an audit report on its financial statements issued?

Which type of audit opinion was issued on the financial statements in the last 3 years?

TBCBE

2.4

Are findings and recommendations resulting from external audits duly addressed (to the entity's senior management and an oversight body/audit committee as appropriate) and resolved?

TBCBE

2.5

Does the entity's management respond promptly to external audit findings?

TBCBE

2.6

Are external audit recommendations implemented fully and in a timely manner?

TBCBE

PILLAR 4 — GRANTS

KEY QUESTION (level 1)

Auditor comments

Does the entity apply appropriate rules and procedures for providing financing from EU funds through grants and in accordance with the criteria set by the European Commission?

Guidance

The entity may conclude grant contracts directly with grant beneficiaries (7). A grant is a financial contribution by way of donation given to a specific beneficiary to finance activities carried out by the beneficiary or to finance the operation (i.e. the operating costs) of the beneficiary.

The entity should have procedures in place which ensure, to a reasonable extent, that these grant beneficiaries meet requirements for internal control, accounting and external audit. The principles of a grant system must be stated in a well-defined and transparent legal and regulatory framework that clearly establishes appropriate policies, procedures, accountability and controls. While the grant system operates within its own framework, it benefits from the overall control environment, including public access to information, internal controls operated by the entity, the entity's accounting system and external audit.

The Commission may accept that grant rules and procedures are appropriate if the following conditions are met:

PILLAR 4 — GRANTS

Entity comments

Auditor comments

Key question (level 2): Does the entity have a clear legal and regulatory framework for providing grants?

1.1

What types of grants does the entity provide? Does the framework properly define the term ‘grants’ and the forms of grants (e.g. maximum amount, percentage of total (eligible) cost of the action, use of lump sum financing etc.)?

TBCBE

1.2

For grants awarded following calls for proposals, are there guidelines for grant applicants and do these guidelines clearly describe procedures and rules from the application to the award of grants?

TBCBE

1.3

Does the entity use standard templates for grant contracts?

Do the contract templates allow for actions/activities to be clearly defined?

Are all beneficiaries identified in contracts?

Do contracts specify at least the subject, the beneficiary/ies, the duration, the maximum amount of funding, a budget for the action or work programme and the responsibilities of the beneficiary/ies?

TBCBE

1.4

Do contracts clearly set out the conditions, rules and criteria that must be respected?

If a grant is awarded to several entities, do the grant contracts clearly set out the obligations and responsibilities of the coordinator, if any, and of the other beneficiaries, and the conditions for adding or removing a beneficiary?

Amendments to grant contracts must not involve any changes that would influence the grant award decision or the equal treatment of applicants, where relevant. Are these criteria respected?

Are there basic rules for eligible costs (e.g. actual costs incurred by the grant beneficiary)?

TBCBE

PILLAR 4 — GRANTS

Entity comments

Auditor comments

Key question (level 2): are the following principles integrated in the procedures, rules and criteria of the entity's grant award system: transparency, equal treatment, eligibility criteria and avoiding conflicts of interest?

These principles must be integrated in the procedures, rules and criteria of the entity's grant award system in accordance with the overarching principle of proportionality. Principles are not absolute and a limited number of exceptions can be laid down provided that they are clearly stated, reasonable and justified.

2.1

Transparency Are calls for proposals published widely and in an easily accessible way? Do grant applicants have sufficient time to submit proposals?

2.2

Equal treatment Are calls for proposals evaluated by an evaluation committee which is impartial and which uses clear and published criteria? Are selections and awards performed on the sole basis of the application? Is communication with grant applicants allowed in these phases?

2.3.1

Eligibility criteria Does the grant award system provide eligibility criteria which are transparent and non-discriminatory? Are eligibility criteria published and easy accessible?

2.3.2

Eligibility criteria Are there eligibility criteria for grant applicants (e.g. legal and administrative status and rules on nationality)?

2.3.3

Eligibility criteria Are there eligibility criteria for the actions to be financed by the grants (e.g. types of activities, sectors or themes and geographical areas covered by the grant)?

2.5

Avoiding double funding Does the grant award system include basic rules which make it clear that the same costs cannot be financed twice for the same action?

2.6

Avoiding conflicts of interest Does the grant award system include procedures and rules to prevent conflicts of interest throughout the grant award process?

PILLAR 4 — GRANTS

Entity comments

Auditor comments

Key question (level 2): does the entity apply appropriate rules and procedures for providing grants?

3.1.1

Are calls for proposals published in national/international media (e.g. press, internet)?

TBCBE

3.1.2

Are relevant documents available and easy accessible (e.g. on websites) for grant applicants? Relevant documents may include: guidelines for applicants including important criteria such as eligibility rules for applicants, actions and expenditure, grant application forms, grant agreement or contract templates and annexes.

TBCBE

3.1.3

Does the grant award system provide the possibility to award grants without a call for proposals (i.e. direct award)? Are conditions for a direct award procedure strictly defined and limited to exceptional and duly justified situations e.g. grants to beneficiary countries, crisis situations, monopoly situations or similar cases?

TBCBE

3.1.4

Does the grant award system provide a support and information function (e.g. are information sessions with potential applicants organised, is there a contact point/helpdesk function, is there a FAQ mechanism, handbooks)?

TBCBE

3.2.1

Does the entity have procedures in place for the receipt, registration and keeping of proposals made by grant applicants?

Does the entity use electronic/IT systems to register and process grant applications? Are there measures and controls in place which ensure integrity, availability and, where appropriate, confidentiality of documents and the protection of personal data?

TBCBE

3.2.2

Are deadlines for the submission of proposals communicated to grant applicants?

TBCBE

3.3.1

Does the grant award system include rules which ensure security and confidentiality of proposals submitted, in particular by:

TBCBE

3.4.1

Does the grant award system lay down procedures for the opening of the proposals, in particular by:

TBCBE

3.5.1

Evaluation officers/committee (for evaluation committee guidance see procurement)

TBCBE

3.5.2

Administrative and formal checks

Are proposals made subject to administrative and formal checks by the evaluation committee or by other staff, in which case the results of their work need to be reviewed by the committee?

Do these checks focus on a full and correct completion of the grant application form and the submission of all required supporting documents?

Can these checks result in the rejection of an application, which means that a proposal is not considered for further evaluation?

Is it possible for applicants to provide, within a set deadline, missing information or supporting documents or to provide clarification?

TBCBE

3.5.3

Eligibility

Are proposals made subject to eligibility checks by the evaluation committee or by other staff, in which case the results of their work need to be reviewed by the committee?

Are these checks performed on the basis of a checklist with eligibility criteria?

Note: these criteria may include eligibility criteria for grant applicants (e.g. legal and administrative status, rules on nationality and grounds for exclusion) and eligibility criteria for the actions to be financed by the grants (e.g. types of activities, sectors or themes and geographical areas covered by the grant).

Do these checks involve a review of required supporting documents?

Can these checks result in the rejection of an application, which means that a proposal is not considered for further evaluation?

TBCBE

3.5.4

Financial and operational capacity

Are proposals made subject to checks of financial and operational capacity by the evaluation committee or by other staff, in which case the results of their work need to be reviewed by the committee?

Are these checks performed on the basis of a checklist with criteria?

Does the grant award system provide clear, objective and non-discriminatory criteria for assessing that applicants have sufficient financial and operational capacity?

Are these criteria specified and notified in the call for proposals?

Note: ‘Financial capacity’ refers to the availability of stable and sufficient sources of financing to ensure operating performance throughout the action period. ‘Operational capacity’ refers to available professional competence, skills, qualifications and experience to complete the proposed action. Assessments can be made on the basis of the supporting documents to the proposal, such as financial statements and audit reports, and proof of actions completed by the applicant.

Can these checks result in the rejection of an application, which means that a proposal is not considered for further evaluation?

TBCBE

3.5.5

Design and content of the action

Does the grant award system provide clear procedures, rules and criteria for the evaluation of proposals against set objectives? Key issues may include: design of the action, priorities, type of activities, quality aspects, expected impact, sustainability, efficiency and effectiveness, visibility.

Is use being made of an evaluation grid which sets out all relevant evaluation criteria? Do evaluation grids include a scoring of the key aspects of the evaluation?

TBCBE

3.5.6

Conclusions of the evaluation committee

Does the evaluation committee draw up and sign an evaluation report of all proposals ranked by scores attributed to the proposals? Are completed evaluation grids attached to this report?

Do these reports provide clear conclusions as to successful and unsuccessful applicants?

TBCBE

3.6.1

Is the decision to award a grant taken at an appropriate level (e.g. proposal made by the evaluation committee and formal decision taken by the entity's senior management)?

TBCBE

3.6.2

Do grant decisions have an appropriate form (are decision templates available)?

Do grant decisions specify: the total amount of funding; details of the grant beneficiary; the title/description of the action/activity; where relevant, the reasons for the award, particularly if these are not in line with the opinion of the evaluation committee; the names of rejected applicants and the reasons for rejection.

TBCBE

3.6.3

Are specific decisions taken with regard to unsuccessful applications?

TBCBE