All major funders expect recipient institutions of research funding to provide assurance that public funds are spent efficiently and in a cost-effective manner. Some research projects are subject to financial audits. Scientific (technical) and management risk audits may also take place.
Audit of your award
Audits can be of three types:
- Award specific audit, required by the funder, but UCAM appoints the auditor and arranges the audit (e.g. EC audits during the project period);
- Audits conducted by the funder, and the funder appoints the auditor. These may be award specific, or a number of awards made by the funder might be sampled (e.g. RCUK FAP audit)
- Internal audits, initiated by UCAM.
For financial audits, generally the following items will be looked at:
- Copies of invoices and expense claims;
- Billing report and reconciliation with submitted claims;
- Back up for personnel costs, including signed timesheet, Contract of Employment and any subsequent contract extension or contract change letters;
- Evidence of following procurement process;
- Evidence of due diligence checks.
- 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
The audit process
Audit Process usually includes the following steps:
- Sampling selection
- Preparation and pre-visit arrangements
- On-site visits
- Post visit queries
- Post Audit Report
Check the terms and conditions of your contract / agreement
On receipt of your contract / agreement it is important that you always check the audit and reporting requirements, as some funders have a strict timeframe within which the Audit report must be submitted also some funders will impose financial penalties if an audit report is not submitted on time, so it is important that you ensure that you work with your Departmental Administrator and Research Support Advisor to ensure that the deadline is met.
An external accountancy firm is used to audit expenditure on the University’s awards and the Research Operations Office can arrange for an audit to be carried out when required. The auditors will visit your department to verify expenditure records. Once completed, an audit report is produced and sent to the relevant sponsor.
Tips to make sure your audit goes smoothly
- Ensure that copies of any required timesheets are provided in full and signed as required
- If you are asked to provide copies of sample invoices please provide the auditor with copies of these, clearly labelled
- Once your costs have been incurred and you have the supporting documentation, please try to charge your costs to the grant as soon as possible, to avoid the auditor asking why an item was purchased in 2011 but not added to the grant until 2014. This may mean an adjustment to the reporting which can be time consuming
- Review your expenditure prior to the end of the financial period to check that everything is in the correct category and nothing has been charged in error. If you find something that is ineligible (e.g: VAT included on an EC FP7 grant), remove this beforehand to avoid the auditor picking it up and asking for it to be removed
- Check that the item being charged to the grant is directly related to the grant in question
- When adding expenditure to your grant please make sure that the costs are in the correct expenditure category, and the expenditure comment is clear and can be understood. This will ensure that the auditors know exactly what the costs refer to, and they will not have to question them with you further. For example:
European Commission Audits
EC FP7 Audits are the most frequent type of audit carried out. The FAQs below may assist you when dealing with an EC FP7 Audit, however please contact your Research Support Advisor if you have further questions.
Frequently asked questions
Q. Why doesn’t the expenditure on my report run at the department match the expenditure report run by ROO and the amount claimed?
Expenditure reports are run on GL dates, as opposed to the transaction dates. This is how we are required to report. There are other answers such as depreciation, Adjustment Form Cs, and previously disallowed costs. When there is a discrepancy in the claimed amount and the expenditure shown on a report your RSA will be able to explain to you the reason for this.
Q. How long will an audit take and when will we receive the report?
This usually depends on how large the grant is, and how well prepared the documentation for the auditor is. If you have ready everything for the auditor that they have requested then the audit will be much swifter. The higher the value of the grant, the more documentation they will need to see. An audit will usually take a half or a full day. If the auditor cannot understand from the expenditure comments what the cost relates to, then they will need to request further clarification. When there are queries provided to the department following the audit it is very important that these are responded to as soon as possible, as the auditors cannot proceed with their report until they are happy that all costs have been properly justified.
Q. Do we need to provide timesheets on EC grants even when the employee is working 100% on the grant?
It is University policy that timesheets must be kept regardless of whether or not 100% of time is being spent on the grant.