Quality procedures for ERDF project file management

1
Quality procedures for ERDF project file
management

• September 2005

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The processes defined in this document cover

• Audit Evidence
• The Audit Trail
• The project files
• Background Information
• Applications and Offer Letters
• Claims
• Procurement Publicity
• Further Information
• The Finance File
• Documentation Retention
• Contact Details

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Audit Evidence

• How much or how little audit evidence is needed
  on an audit file?
• According to ISA 330 the sufficiency and
  appropriateness of audit evidence to support the
  auditors conclusions throughout the audit are a
  matter of professional judgement.
• Working papers should provide sufficient
  information for an experienced auditor, with no
  previous connection with the project to
• Understand the nature of the project
• Confirm that the project complies with the
  approval letter and funding conditions
• Determine that expenditure is eligible, correctly
  stated and properly incurred.
• Audit View - If it is not documented (or on the
  file) it has not been done.
• Perception - If the project file lacks quality,
  the project lacks quality.
• Clear sequential referencing within each file
  section, and from one part of a file to another
  or if not on the file, clear sign-posting to
  where the evidence is located.

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The Audit Trail

• A step-by-step record by which data can be traced
  to its source.
• Electronic Files the hard copy file should have
  reference to any electronic spreadsheets or
  supporting documentation and where it can be
  found.
• There may be audit inspection from the EC,
  European Court of Auditors or the Member State.
  The end date for potential audit scrutiny is
  determined by the date at which the Member State
  receives the final payment for the Programme.

Applications
Background Information
Index
Administration File
Procurement Publicity
Claims
Further Information
Summary Position
Evidence of Review
Index
Financial File
Claims
Invoices
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The Project File

Action / Recommendations
Project Closure Review
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Key Controls The Project File (audit process)

• Project set-up allocate responsibility for the
  project files.
• File owner maintains the file on a regular basis
  ensuring that all necessary documentation is
  included.
• File is reviewed on a quarterly basis when
  funding claims are being compiled. The file
  should be signed off as reviewed.
• Add action / recommendations / review points from
  quarterly reviews, GONW audits, project closure
  reviews to file. Clearly document how review
  points have been addressed. It is important to
  retain evidence of review.
• Project closure reviews should ensure that all
  relevant documentation is on file so that it is
  ready for external review by the European
  Commission (as if they were coming that day).
• The project file should be fit for audit at any
  point in time.

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Background Information

• Project Summary a synopsis of what the project
  is about, including whether outcomes are (have
  been) achieved.
• Project review details / checklist.
• A description of relevant internal controls and a
  note to the extent of any audits including cross
  referencing to any reports.
• An organisation chart to illustrate who is
  involved in the project in terms of delivery,
  reporting and monitoring.
• Background to the organisation and its
  activities, locations, relevant personnel etc.
• Business plans or project update reports.
• Contact Details organisationally and for key
  individuals.
• If someone were to pick up the file, would they
  be able to tell easily and quickly what the
  project is about?

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Applications and Offer Letters

• Applications are all projects supported by
  original, valid ERDF applications?
• Matched Funding letter confirming matched
  funding.
• Offer Letters copies of original approvals.
• Amendments any letters detailing subsequent
  variations.
• Any other correspondence with grant-paying
  bodies.
• Details of advances / receipts on account,
  supported by relevant advice notes from the
  grant-paying body where applicable.
• Bank statements evidencing receipt of grant and
  other income.
• Do these sections of the file clearly document
  the history of the project approval process
  detailing any amendments and receipt of funding?

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Grant Claims

• For each claim there should be a statement by the
  claim signatory or delegate that they have
  reviewed the claim and working papers. That they
  are satisfied it has been accurately prepared and
  all entries are properly supported.
• Cross referencing of each cell on the claim or
  return to the relevant working papers on the
  Finance File.
• Are the claims cross referenced to the relevant
  part of the Project File or section in the
  Finance File?

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Procurement

• Evidence that contracts, where applicable, have
  been let in accordance with EU Directives (93/37
  EEC and 92/50 EEC)
• Contracts should be advertised in the Official
  Journal of the European Union (OJEU) where the
  contract sum demands it
• Justification of the method of procurement
  adopted
• Documentation supporting all the stages of the
  procurement process, evidencing that it has been
  let fairly and competitively
• The final assessment details should be included
  and any reason for not accepting the lowest bid
  should be fully recorded
• There are thresholds for which the advertising
  for tenders is necessary. The value of the
  thresholds are revised every two years. The next
  revision will be 1 January 2006.
• Currently the thresholds are as follows
  (excluding VAT)
• Supplies and Services 153,376
• Works 3,834,411

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Procurement (continued)

• Contracts should not be split up to keep each
  below the threshold for advertising.
• Examples of evidence that should be retained
• Documents advertising the call for tenders
• Minutes of meetings to open bids
• Selection criteria
• Justification of the choice of contractor
• Exchange of correspondence offering and
  accepting
• Contracts.

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Publicity

• The file should include evidence to show that the
  EU Publicity Directive (94/342/EC) has been
  complied with.
• The intention is to increase public awareness and
  transparency of EC action. Such material should
  be appropriately disseminated and made available
  to interested parties.
• Information and publicity measures should include
  the following
• In the case of infrastructure investments
• Billboards erected on the sites
• Permanent commemorative plaques for
  infrastructures accessible to the general public.
• In the case of productive investments and
  measures to develop local potential and
  employment
• Measures to make potential beneficiaries and the
  general public aware of European Community
  assistance
• Measures making the general public aware of the
  role played by the EC, for example, informing the
  media and publications such as brochures and
  pamphlets.

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Further Information

• Publicity Strategy (ensures consistency).
• Update reports and correspondence.
• Project outputs details of the system in place
  for recording project outputs and confirmation of
  declared achievements.
• Evidence of monitoring and review (reviews should
  be timely, well communicated and clearly
  documented).
• Audit reports.
• Details of action taken in response to reviews or
  audit.
• Emails should be treated like any other document.
  If they are significant to the project, they
  should be retained in the file.

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The Finance File

• Notes on the basis of any apportionments e.g.
  overheads or management time. Supported by an
  appropriate rationale and evidence of it being
  consistently applied.
• A comparison of expenditure with approvals,
  including an explanation for any significant
  variances.
• Summary position - a reconciliation of income and
  expenditure figures in the claim or return to
  working papers and account codes.
• Copies of each quarterly claim.
• Copies of supporting documentation for all items
  of expenditure (if not originals / certified
  copies, then details of where original documents
  are held should be included).
• Expenditure and activity dates should be within
  the project period.
• Expenditure should be committed before the end of
  the project period.
• Include evidence to show where ineligible spend
  has been excluded.
• Where possible original invoices should be
  retained on file

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Document Retention

Storage on site (Office for 2 years)
Closure Reviewed
Project Administration Finance Files
Hard Copy files
Electronic copies
Electronic Archive
Network
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Document Retention

• After project completion the Project and Finance
  files will be reviewed by the Project Closure
  Review Team.
• Hard Copy files should be stored as follows
• On-site in a local office for at least 2 years
  then archived so that they are retained for at
  least 3 years after the final payment on the
  Programme by the Commission
• Electronic copies (including e-mails) to be
  transferred to a file location on the network.
  The network should be backed up regularly
• Written instruction should be received for and
  file / document destruction after the required
  file retention period has lapsed.
• A failure to provide all relevant documentation
  for audit inspection could result in a
  requirement to repay grant

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• Contact Details
• Heather Hancock, Partner
• Direct 0113 292 1621
• Mobile [phone]
• Email hhancock_at_deloitte.co.uk
• Glenn McCauley, Senior Manager
• Direct 0113 292 1626
• Mobile [phone]
• Email gmccauley_at_deloitte.co.uk
• Richard Moore, Senior Consultant
• Direct 0191 202 5278
• Mobile [phone]
• Email rimoore_at_deloitte.co.uk