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Audit process outsourced

Process description and steps

The general concepts of the Audit Management Services system also apply to the audit process. For a detailed description of the roles mentioned in this process, see the Roles and access rights in the H2020 Online Manual.

Audited organisations (auditee) will have an Audit Contact (AUCO) nominated, who will access AMS and carry out their audit related tasks. See Roles and access rights to follow the nomination process.

Outsourced audits are carried out by External Auditor Firms (EXAF) appointed by the Commission. The appointed EXAF will access AMS in order carry out their audit related tasks – for more information about the Audit Firm roles, please consult AUDIT Firm Roles.

Roles submitting to the EU

Remember that only the external auditor may submit to the EU. Audit team members may work in all tasks of each one of the steps described below, but cannot finish the tasks where the output is submitted to the EU.

Local auditors have rights only on tasks assigned to them.

If the outsourced audit flow is cancelled, the LEAR and the AUCO of the audited organisation and and the External Audit Firm (EXAF) will be notified about the cancellation of the flow via a PNS and a Formal Notification containing the Audit Cancellation Letter.

The audit process consists of several phases:

  1. The audit process is created and the Audit Input file is available in the process documents (Step 1)
  2. The Commission sends a letter of announcement to the AUCO
  3. The AUCO uploads the Audit Supporting Documents (ASD) requested in the Letter of Announcement
  4. The EXAF appointed by the Commission carries out the field work, prepares a Draft Audit Report (DAR) and sends the DAR to the AUCO for observations (contradictory) – this phase is broken down into the following steps:
    1. The EXAF prepares and submits a Preliminary Audit Report (PAR) to the Commission for review (Step 2)
    2. The EXAF sends the DAR (corresponds to the final PAR) to the AUCO for observations (contradictory) (Step 3)
  5. The AUCO submits their observations on the DAR to the EXAF
  6. The EXAF prepares and submits the DAR to the Commission for review (Step 4)
  7. The EXAF prepares and submits the Final Audit Report (FAR, which corresponds to the final DAR) to the Commission (Step 5)
  8. The Commission sends the Letter of Conclusion and the FAR to the AUCO

Step 1: The audit process is created and the Audit Input file is available in the process documents

At the start of the process, the Audit Firm receives a PNS informing it that the audit preparation has been launched and the external auditor can see the Letter of announcement.

 

If applicable, the Validated Audit Input File (VAIF) is accessible under Process documents. To view the content of the VAIF, click the link in the process box.

At this point, the external firm has been notified about the AUDIT and needs to upload the requested annexes, see Outsourced audit - steps for the audited organisations. From the moment all annexes have been submitted, the audit moves to the following step, PAR, and you can proceed with the actions of Step 2.

Step 2: The EXAF prepares and submits a Preliminary Audit Report (PAR) to the Commission for review

The External auditors receive a PNS (message in the portal, see Introduction to the Funding and Tenders Portal and My Area to know how to access this notifications, and Overview of notifications for more information about this PNS in particular). This notification informs the auditor each time that the Audit Contact of the auditee has uploaded and submitted an audit supporting document.  Once the last audit supporting document is uploaded, the Audit Firm receives another PNS informing that the PAR may be uploaded.

To upload the PAR, click the Upload button.

Select the attachment type (Preliminary Audit Report (PAR) is mandatory, the Other Supporting Document type is optional) and click Add new attachment. Browse for the file, select it and click OK.

You can use the Other Supporting Document type to upload other documents to be submitted to the EU with the report, but at least one of the attachments must have been uploaded as Preliminary Audit Report (PAR) to be able to finish the task.

Once the document has been attached, it appears listed. Use the cross on the right of the document to remove a document, and repeat the action as needed. Click OK to finish the upload. 

Click the Submit to EU button to submit your documents to the EU. 

At this point, the EU receives the PAR, which will undergo a validation process. Once approved, the final PAR will come back to you and you can start with the actions of Step 3.

Step 3: The EXAF prepares the DAR and starts the contradictory procedure with the audited firm

After the authorization of the Preliminary Audit Report (PAR) by the EU, the EXAF receives a PNS to upload the Draft Audit Report (DAR) and start the contradictory procedure with the audited organisation based on this DAR.

To consult the approved PAR, click Process documents, and click the link corresponding to the final PAR.

To reject the PAR, use the Reject back to EU button. You will need to provide a justification text when rejecting. This will send the PAR back to EU, so you will be again at the end of Step 2, waiting for an authorized version of the PAR.

When rejecting, you need to enter a reason for it and click Validate rejection.


To proceed with your actions in Step 3, click Upload to provide the Draft Audit Report (DAR).

In the pop-up window, select the type of attachment you wish to upload and click the Add new attachment. The Cover Letter and the Draft Audit Report are mandatory types of attachment. You cannot finish the task unless you upload them. The Other Support Documents can be used to upload any documents that you want to include in the Audit Report, but it is optional.

The documents will appear listed. Use  to remove documents from the list (if necessary), and repeat the actions to add new ones. Once finished uploading all necessary documents, click Ok to confirm.

After uploading the attachments, you may access them by clicking on the draft audit report link. 

In case that the audit includes a linked third party participation, the main beneficiary must be informed via an info letter. In this scenario, an additional task will appear between the DAR documents upload task and the Reject back to EU / Send DAR to auditee action buttons. Click Upload to add the Info Letter.

When the DAR is ready, click on Send DAR to auditee for the audited organisation to provide observations on the DAR. 

The auditee has 30 days to provide observations to the DAR. If no action is taken by the audited organisation by the deadline, you will receive a PNS notifying you about it. 

You will be also notified once the auditee uploads the letter of representation of the audit and any observations. You will find these documents under process documents.

Expand Observations on the DAR and click the link to see the document(s) provided by the auditee, then click each file to download it. 

At this moment, you can decide to either send the DAR back to the audited organisation by clicking on Go back to Auditee, or move on to the preparation of the final DAR (step 4) by clicking on Proceed to DAR to EU.

When clicking Go back to the auditee, you will be asked to confirm that you wish to proceed.

To send the DAR back to the auditee, you will need to upload the files again in the system.

The audit file will be numbered according to the version number of the DAR files submitted to the auditee for observations. Each time that you send the DAR back to the auditee, a different version number will be displayed in the audit file name.

If the 30-day time limit has been reached, you can extend the deadline by typing the number of  for extension days in the dedicated box.

To upload the new DAR files, click Upload

After the two mandatory documents have been provided (DAR and the Cover letter), you are able to send this new DAR version to the auditee by clicking on the Send DAR to auditee button.

The auditee will receive the DAR in AMS for further action.  Once the audited firm submits their observations and the Letter of Representation for the new version of the DAR, you will be notified and get the task back. 

At this point, you have again two options: 

  • send the DAR back to the auditee for observations and repeat the actions described above
  • move on to the preparation of the final DAR (step 4) by clicking on Proceed to DAR to EU.

The task is finished when you send the DAR to the EU for authorization.

After a few minutes, a new task is available for you and you can proceed with Step 4.

Step 4: The EXAF prepares and submits the DAR to the Commission for review

In this step, you prepare a final DAR consolidated version taking into consideration the observations provided by the auditee.

If necessary, you still have the possibility to move back to previous step by clicking Back for Observations. You will be able to create a new DAR version and start over the contradictory procedure with the auditee.

To finish the preparation of the final version of the DAR, click on Upload. Then select a type of document (please note that the Draft Audit Report (DAR) document is mandatory to be uploaded in order to complete the task).

Click Add new attachment and select your file. The document appears listed. Use to remove any files, and repeat the steps, if needed. Then, click Ok to confirm.

Click Submit to EU to complete the task.

At this point, the EU receives the consolidated DAR and the following two scenarios can take place:

  • the EU authorises the DAR and you will be notified about the authorisation via a PNS. After receiving the notification, you can proceed with Step 5.
  • the EU requests a new DAR and you will receive a notification in this sense via a PNS. In this case, you need to upload a new version of the DAR, and the new version number will be reflected in the link.
    • If before submitting a new DAR, you need to initiate a new contradictory procedure with the auditee, use the Send DAR to auditee button.

Step 5: The EXAF prepares and submits the Final Audit Report (FAR, which corresponds to the final DAR) to the Commission

After the authorisation of the Draft Audit Report (DAR) by the EU, the EXAF receives a PNS to upload the Final Audit Report (FAR).

Also, if the EU requests the EXAF to review the DAR, a PNS will be received asking to review the submitted DAR. See Overview of notifications for more information

To consult the approved DAR, click Process documents.

Then click the Final Draft Audit Report (DAR) from the list.

And finally click on the link corresponding to the document to download it.

To upload the Final Audit Report (FAR), click the "Upload" button.

In the pop-up window that opens, select from the drop-down list Final Audit Report (FAR).

Click the Upload mandatory attachment link to upload the file containing the FAR.

To add any other supporting documents (if necessary), choose Other Supporting Documents from the drop-down list.

Click the Add new attachment button

To remove any of the uploaded documents, click the corresponding cross.

Once finished uploading all necessary documents, click "OK".

Click "Submit to EU" to submit your Final Audit Report. 






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