cfs methodology ga 2013

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Date: 31/05/2013

EIT methodology for certificates on the financial statements

EIT-KIC Grant Agreements 2013

I. Objective of the document

The objective of this document is to guide the KIC LE/Partners providing them with an EIT approved

methodology applicable across the three KICs for the purposes of producing

a. a Certificate on Financial Statements (KAVA CFS) to be submitted on KIC added value activities as

required by Article 6.2 of the GA 2013; and

b. a Certificate on the cost of KIC Complementary Activities (KCA CFS) incurred from 1 January 2010

to 31 December 2013 pursuant to Article 6.1 of the EIT-KIC Framework Partnership Agreement

(FPA).

II. Background

1. Definitions

KIC added value activities (KAVA) are activities carried out by the KIC LE and/or KIC Partners, or by them in co-operation with other entities, that within the priority areas of the KIC stimulate innovation.

These activities include education, research and innovation and entrepreneurial programmes as well as programmes and projects contributing to the integration of the knowledge triangle within the KIC.

The latter programmes and projects include, in particular, supporting and delivering the appropriate

leadership, governance, co-location centres, mobility, intellectual property rights, coordination, administration and engagement by the KIC with other actors in Europe and beyond.

KIC Complementary Activities (KCA) are activities other than KIC added-value activities, that are

carried out by the KIC LE and/or KIC Partners, or by them in co-operation with other entities, that primarily focus on KIC activities listed under article 4 of the FPA (nature of KIC activities) and meet

the criteria of Article 6(1) of the FPA. Whilst keeping in line with the above EIT requirements, the KIC LEs may establish their KIC specific system of criteria for KIC complementary activities that will serve

as a detailed guide to their KIC partners.

Eligible cost of KAVA in respect of the GA 2013 is defined as the sum of all costs of KIC added value

activities that meet the eligibility criteria set out in Article 7 of the GA 2013. The eligible cost of KAVA is financed by the sum of EIT funding and co-funding.

Cost of KCA is defined as the sum of all costs incurred for KIC complementary activities that meet the

criteria set out in Article 6.1 of the FPA.

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2. Certificate on Financial Statements to be submitted on KAVA in respect of GA

2013 (“KAVA CFS”)

In application of Article 6.21 of the Grant Agreement 2013 (GA 2013), the KIC LE and KIC Partners

shall provide certificates on the financial statements together with their KIC report. Moreover, it is

also defined in this article that the methodology followed by the KIC LE and the KIC partners shall be

approved by the EIT.

The scope of the KAVA CFS will be limited to reporting on factual findings. The auditor's role will thus

be limited to examine the factual information in the KIC LE/Partners' report and compare it with the

terms and conditions of the GA 2013. The KAVA CFS shall state that the costs claimed and the

revenue declared during the period for which they are provided, as well as the declaration of the

interest yielded by the pre-financing, meet the conditions required by the GA2013. In case of non-

compliance with any condition, the KAVA CFS must report on the factual findings of the auditor. As

this mandate does not include assurance, the auditor will not provide any audit opinion or assurance.

The EIT will assess for itself the factual findings reported by the auditor and draw on this basis its

own conclusions on the eligibility of the costs incurred and on the completeness of the receipts

declared.

To this end, Annex 4 specifies the detailed procedures to be carried out including the compulsory

templates to be used.

In application of Article 7.1. of the GA 2013, the cost of the KAVA CFS is considered eligible provided

it meets the other eligibility conditions spelled out in Article 7.2 of GA 2013, and explicitly excludes

any non-eligible costs as stipulated in Article 7.3 of the GA 2013..

3. Certificate to be submitted on KCA in respect of years 2010-2013 (“KCA CFS”)

Article 6.1 of the FPA sets out the following four criteria for the KIC global expenditure (which is the

total cost of the costs of KAVA and KCA):

- Incurred during 2010 and 2013 by the KIC LE and the KIC partners for the purpose of

carrying out KIC activities; and

- Recorded in their accounts in accordance with the applicable accounting principles and

declared in accordance with the requirements of the applicable tax and social legislation; and

- Identifiable and verifiable; and

- Certified by an independent auditor.

1 “A certificate produced by an approved auditor or, in case of public bodies, by a competent and independent public officer.

The certificate shall certify, in accordance with a methodology approved by the EIT, that the costs declared in the financial

statements on which the request of payment is based are real, accurately recorded and eligible and that all receipts have been

declared, in accordance with the agreement.”

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In application of the fourth criteria above, the KIC LE and KIC Partners shall provide – together with

the KAVA CFS in respect of the GA 2013 – a KCA CFS on the cost of KCA incurred from 1 January

2010 to 31 December 2013.

If the whole of the KCA costs reported by a KIC LE/Partner for the period 2010-2013 is

covered by an audit certificate required by another EU programme and it is clear from the

audit certificate that the whole of the KCA costs reported by the KIC LE/Partner incurred

between 1 January 2010 and 31 December 2013, then the KCA CFS required by the EIT can

be replaced by the audit certificate mentioned above.

In all other cases, audit certificates submitted for other EU programmes may be relied upon

by the Auditor when carrying out the procedures in Annex 5 in order to provide the EIT with

the KCA CFS.

The scope of the KCA CFS will be limited to reporting on factual findings. The auditor's role will thus

be limited to examine the factual information in the KIC LE/Partners' report – notably the table of

costs of KCA – by performing the procedures described in Annex 5 of this document. The KCA CFS

shall state that the cost of KCA reported for the period 2010-2013 meet the conditions required by

Article 6.1 of the FPA. In case of non-compliance with any condition, the KCA CFS must report on the

factual findings of the auditor. As this mandate does not include assurance, the auditor will not

provide any audit opinion or assurance.

The EIT will assess the factual findings reported by the auditor and draw on this basis its own

conclusions on the acceptability of the cost of KCA reported.

In application of Article 7.1.2 of the GA 2013, the cost of the KCA CFS is considered eligible provided

it meets the other eligibility conditions spelled out in Article 7.2 of GA 2013..

III. Framework of the certificates on the KICs financial statements and on costs of

KCA

1. Threshold and timing for submission of the KAVA CFS and the KCA CFS (the

“Certificates”)

KIC LE/Partners that request an EIT contribution of EUR 275 000 or above for KIC added value

activities implemented under the GA2013 shall submit both the KAVA CFS referred to in Article 6.2 and the KCA CFS pursuant to Article 6.1 of the FPA. This threshold has been established considering

the need to obtain reasonable assurance on the accuracy of the financial statements produced by the

KIC LE/Partners, while avoiding disproportionate costs of producing certificates and respecting so the principle of proportionality. The cost of the Certificates is considered eligible for KIC LE/Partners

requesting an EIT contribution of at least EUR 250 000 and for KIC Partners that have a budgeted EIT contribution in excess of EUR 275 000.

Each KIC Partner has to transmit its individual KAVA CFS and KCA CFS to the KIC LE. It is then the

responsibility of the KIC LE to send all Certificates to the EIT together with the financial statements

within 90 days of the end of the duration of the action as referred to in Article 6.1 of the GA 2013.

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The above provisions also apply to third parties linked to a KIC Partner in accordance with Article 9.4 of the GA 2013 that request and EIT contribution of EUR 275 000 or above for KIC added value

activities implemented under the GA 2013.

2. Compulsory elements of the Certificates

a. Engagement letter

In order to ensure comparability between factual findings reported by different auditors, and

consistency in the quality of work to be carried out, the EIT considers that auditors should be

engaged on the basis of the same minimum terms and requirements. Therefore, the engagement

letter shall include at least the minimum elements listed in the attached Terms of Reference (Annex

1). The engagement letter must be dated and signed by the KIC LE/Partner audited and the auditor.

While the engagement letter is a compulsory element of the Certificates, KIC LE/Partners do not need

to submit it to the EIT.

b. Detailed description of procedures to be performed

The procedures to be performed by the auditor are described in Annex 4 for the KAVA CFS and in

Annex 5 for KCA CFS. The auditor shall provide, together with the Reports on the factual findings, a

detailed description of procedures actually performed. It is important to underline that the auditor

shall report the actual results of the audit procedures performed. The standard factual findings2 can

be reported only if the verifications performed allow it. On the other hand, any non-compliance

(exception) shall be pointed out in the right-hand column of the description of procedures performed.

The tables including the procedures performed and their results has to be dated, stamped and signed

by the auditor on completion of its work.

c. Reports on the factual findings

The Reports on the factual findings shall be issued on the auditor's letterhead dated, stamped and

signed by the auditor. The model reports attached in Annex 2 (KAVA CFS) and Annex 3 (KCA CFS)

shall be used in order to guarantee the same level of detail and completeness in the reporting by

different auditors. The tables mentioned in point b. above confirming or not the standard factual

findings shall be annexed to the reports. If the auditor was not able to carry out some of the required

procedures (e.g. due to missing supporting evidence for a cost item), he auditor will include in the

Reports a description and the scope of the problem encountered.

d. Letter of representation

The representation letter is a document in which the KIC Partner/LE confirms in writing all

representations made to the auditor during the course of the audit procedures. The purpose of this

letter is to document the responsibility of the KIC Partner/LE with regard to the information presented

during the procedures (see Annex 6). This letter has to be dated, stamped and signed by the KIC

LE/Partner.

e. KIC report (signature page of the Cost report and KCA table)

The KIC report (signature page of the Cost report and KCA table) including the audited figures shall

be identified (i.e. stamped or certified by electronic means) by the auditor and submitted to the EIT

as part of the Certificates.

2 As described in the right-hand column of the table in Annex 4 and Annex 5

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3. Conflict of interest between the KIC LE/Partner and the auditor

The auditor shall declare in the engagement letter that (s)he is not in a situation of conflict of interest

in establishing the certificate.3

In case the auditor is a Competent Public Officer in the meaning of section 1.1 of the EIT Terms of Reference (Annex 1) and he/she is employed by the KIC LE/Partner, it must be ensured by the KIC

LE/Partner that the auditor is not involved in any way in the preparation of the KIC Report(s) subject

to the audit engagement.

4. Other conditions

a. Assessment by the EIT of the KAVA CFS and consequences of the exceptions reported

The EIT, when evaluating the costs claimed by the KICs, will consider all information included in the

KAVA CFS, in particular each exception reported, as well as any other evidence available in the KIC reports. The EIT will consider each exception in the context of the report as a whole.

The EIT will therefore make decisions on the eligibility of the costs qualified as "exception" on a case by case basis using all evidence at its disposal. If the EIT decides not to accept the eligibility of those

costs, the total costs of the action shall be reduced by the amount of the rejected costs and the final amount of the grant shall be recalculated accordingly.

The auditor should report complete information on the findings in order to facilitate this assessment process. The more details the auditor provides regarding exceptions, the easier and faster will be for

the EIT to assess the situation and come to a reasoned decision on the claim under consideration.

b. Assessment by the EIT of the KCA CFS and consequences of the exceptions reported

The EIT will assess the factual findings and exceptions reported in the KCA CFS on a case by case basis to establish a final amount of acceptable cost of KCA for the period 2010-2013. If the EIT

decides not to accept certain costs items for KCA, the total cost of KCA will be reduced by the amount

of the rejected costs.

On the basis of the final accepted total cost of KCA for 2010-2013 and the approved cost reports for the years 2010-2013, the EIT will calculate the global EIT financial contribution rate for the full 2010-

2013 period and apply financial corrections, if necessary.

c. No deviations from the detailed description of procedures to be performed

The procedures listed in the left-hand side of the tables in Annex 4 and Annex 5 are to be carried out

unaltered by the auditor with the potential limitations indicated in the table. As the EIT requires these procedures in order to obtain standardised and comparable reports from all auditors contracted by

the KIC LE/Partners, the auditors are expected to carry out the described work and procedures without adaptation to the particular circumstances of each KIC LE/Partner. If any such potential

3 A conflict of interest arises when the auditor's objectivity to establish the certificate is compromised in fact or in appearance when the auditor

for instance:

- was involved in the preparation of the performance and cost report; - stands to benefit directly should the certificate be accepted; - has a close relationship with any person representing the KIC Partner/LE;

- is a director, trustee or partner of the KIC Partner/LE; - is in any other situation that compromises his or her independence or ability to establish the certificate impartially.

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adaptions would be regarded necessary, they have to be reported as an exception in the right column of the table.

In particular, the minimum sample sizes should always be respected, and all procedures should be

carried out in full.

d. Exceptions to be reported

Where the auditor's factual findings are not consistent with the "Standard factual findings" provided

in the right-hand column of the tables in Annex 4 and Annex 5, then an exception shall be reported.

For each standard factual finding, non-exhaustive examples of exceptions are indicated in bold under the corresponding factual finding. If the auditor is not able to establish whether the information

provided by the KIC LE/Partner matches the standard factual finding defined by the EIT, this should also be reported as an exception to be further analysed by the EIT.

Annexes:

Annex 1 – Template Terms of Reference for an independent report on factual findings

Annex 2 – Template Independent report on factual findings (KAVA CFS)

Annex 3 – Template Independent report on factual findings (KCA CFS)

Annex 4 – Description of procedures to be performed by the auditor (KAVA CFS)

Annex 5 – Description of procedures to be performed by the auditor (KCA CFS)

Annex 6 – Representation template

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Annex 1

TERMS OF REFERENCE between <KIC Partner> and <Auditor>

FOR AN INDEPENDENT REPORT OF FACTUAL FINDINGS ON THE FINANCIAL STATEMENT

OF COSTS CLAIMED AND RECEIPTS DECLARED IN CONNECTION WITH THE GRANT

AGREEMENT 2013 <contract reference> AND ON COSTS OF KIC COMPLEMENTARY

ACTIVITIES REPORTED FOR 2010-2013

The following are the Terms of Reference (‘ToR’) on which <name of the KIC LE/Partner> ‘the KIC

LE/Partner’ agrees to engage <name of the audit firm> ‘the Auditor’ to provide an independent

report of factual findings on

a) the financial statement (FS) of the costs claimed and the receipts received by the KIC

LE/KIC Partner pursuant the provisions of the Grant Agreement <EIT-KIC 2013 title and number of the grant agreement> (the ‘Grant Agreement’) concluded under the

<EIT-KIC title and number of the Framework Partnership Agreement> (‘the FPA’);

and

b) the costs of KIC complementary activities (KCA) reported under the Grant Agreement for

the years 2010-2013.

Where in these ToR the European Institute of Innovation and Technology (‘EIT’) is mentioned this

refers to its quality as signatory of the Grant Agreement and the FPA with the KIC LE. The EIT is not

a party to this engagement.

Background

‘The KIC Legal Entity’ (KIC LE) refers to an entity that has been established to enable the KIC to

function as an integrated partnership, and to coordinate its activities.

‘A KIC Partner’ is an entity that has concluded an internal agreement with the KIC LE in accordance

with paragraphs 6 and 7 of Article 2 of the FPA.

In application of Article 10.2.2 of the Grant Agreement, the KIC LE shall submit to the EIT, in support

of the request for the payment of the balance of the grant, the Certificate(s) on Financial Statement

(“KAVA CFS”) referred to in Article 6.2. Such certificates in the form of independent report(s) of

factual findings produced by independent auditor(s) shall be compulsory for any KIC LE/Partner

requesting an EIT contribution for KIC added value activities above EUR 275 000. The Authorising

Officer of the EIT requires this Report, as his decision on the final amount of the grant will depend on

the total costs considered eligible. The factual findings of this Report will serve as a basis for the

assessment of the eligibility of the costs claimed.

Furthermore, in application of Article 6.1 of the FPA, the KIC LE/Partner shall provide – together with

the KAVA CFS in respect of the GA 2013 – a certificate on the cost of KCA incurred from 1 January

2010 to 31 December 2013 in the form of an independent Report of factual findings. The factual

findings of this Report will serve as a basis for the assessment of the acceptability of the costs of KCA

reported.

‘The Auditor’ refers to the auditor who is responsible for performing the agreed-upon procedures as

specified in these ToR, and for submitting an independent report of factual findings to the KIC

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LE/Partner.

The engagement

1. Responsibilities of the Parties to the Engagement

‘The KIC LE/Partner’,

• In compliance with the Grant Agreement , the KIC LE/Partner is responsible for preparing

the Financial Statement of the costs actually incurred and the receipts received in the

implementation of the KIC Added Value Activities financed by the Grant Agreement and

providing the Financial Statement to the Auditor. The KIC LE/Partner shall ensure that the FS

can be properly reconciled to the KIC LE/Partner’s accounting and bookkeeping system and to

the underlying accounts and records. Likewise, the KIC LE/Partner is responsible to prepare the

table of costs of KIC complementary activities and annex is to the KIC report submitted in

compliance with the Grant Agreement. Notwithstanding the procedures to be carried out, the

KIC LE/Partner remains at all times responsible and liable for the accuracy of the cost report.

• The KIC LE/Partner is responsible for the factual statements which will enable the Auditor to

carry out the procedures specified, and will provide the Auditor with a written

representation letter supporting these statements, clearly dated and stating the period covered

by the statements.

• The KIC LE/Partner accepts that the ability of the Auditor to perform the procedures required by this engagement effectively depends upon the KIC LE/Partner providing full and free access to the KIC LE/Partner’s staff and its accounting and other relevant records.

‘The Auditor’ must be independent from the KIC LE/Partner.

• [Option 1: delete if not applicable] The Auditor is qualified to carry out statutory audits of

accounting documents in accordance with the Directive 2006/43/EC of the European

Parliament and of the Council of 17 May 2006 on statutory audits of annual accounts and

consolidated accounts, amending Council Directives 78/660/EEC and 83/349/EEC and

repealing Council Directive 84/253/EEC or similar national regulations.

• [Option 2: delete if not applicable] The Auditor is a Competent Public Officer for which the

relevant national authorities have established the legal capacity to audit the KIC LE/Partner

and has not been involved in the preparation of the Cost Reports.

• The Auditor shall declare in its Reports that (s)he is not in a situation of conflict of interest in

establishing these Reports, as well as the fee received from the KIC LE/Partner for providing

the Report.

• The procedures to be performed are specified by the EIT and the Auditor is not responsible for

the suitability and appropriateness of these procedures.

2. Subject, reason and type of the Engagement

The subject of this engagement is the Financial Statement in connection with the Grant Agreement

for the period covering <dd Month yyyy to dd Month yyyy> and the table of costs of KIC

complementary activities for the period 2010-2013 annexed to the KIC Report.

This constitutes an engagement to perform specific agreed-upon procedures regarding an

independent report of factual findings on the Financial Statement and the table of costs of KIC

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complementary activities submitted under the Grant Agreement.

As this engagement is not an assurance engagement, the Auditor does not provide an audit opinion

and expresses no assurance. The EIT derives its assurance by drawing its own conclusions from the

factual findings reported by the Auditor on the Financial Statement and the table of costs of KIC

complenetary activities and the payment request of the KIC LE/Partner relating thereto.

3. Main principles governing the Engagement

The Auditor shall undertake this engagement in accordance with these ToR and:

in accordance with the International Standard on Related Services (‘ISRS’) 4400

Engagements to perform Agreed-upon Procedures regarding Financial Information as

promulgated by the IFAC;

in compliance with the Code of Ethics for Professional Accountants issued by the IFAC.

Although ISRS 4400 provides that independence is not a requirement for agreed-upon

procedures engagements, the EIT requires that the Auditor also complies with the

independence requirements of the Code of Ethics for Professional Accountants.

4. Planning, procedures, documentation and evidence

The Auditor should plan the work so that the procedures can be performed effectively. For this

purpose he/she performs the procedures specified in point 8 of these Terms of Reference (‘Scope of

Work – Compulsory report format and procedures to be performed’) and uses the evidence obtained

from these procedures as the basis for the Reports of factual findings.

5. Reporting

The Reports of factual findings should describe the purpose and the agreed-upon procedures of the

engagement in sufficient detail in order to enable the KIC LE/Partner and the EIT to understand the

nature and extent of the procedures performed by the Auditor. Use of the model reporting formats is

compulsory. The Reports should be written in English. In accordance with Article 15 of the Grant

Agreement and Article 12 of the FPA, the EIT, the European Commission, the European Anti-Fraud

Office (OLAF) and the Court of Auditors have the right to audit any activity carried out under the

Grant agreement for which costs are declared to the EIT, including the work related to this

engagement.

6. Timing

The Reports should be provided by [DATE].

7. Other Terms

[The KIC LE/Partner and the Auditor can use this section to agree other specific terms such as

Auditor’s fees, out of pocket expenses, liability, applicable law, etc.]

8. Scope of Work – Compulsory report formats and procedures to be performed

See Annexes 2 - 5.

<Date>

<Signature of KIC Partner> <Signature of Auditor>

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Annex 2

Independent Report of Factual Findings on the financial statement of costs claimed and

receipts declared in connection with the Grant Agreement 2013 financed under the EIT-

KIC Framework Partnership Agreement

To be printed on letterhead paper of the Auditor

<Name of contact person(s)>

< Position>

< KIC LE/Partner’s name>

<Address>

<dd Month yyyy>

In accordance with our contract dated <dd Month yyyy> with <name of the KIC LE/Partner> and

the terms of reference attached thereto (appended to this Report), we provide our Independent

Report of Factual Findings (“the Report”), as specified below.

Objective

We [legal name of the audit firm], established in [full address/city/state/province/country] represented for signature of this Report by [name and function of an authorised representative] have performed agreed-upon procedures regarding the financial statement of costs claimed and receipts declared by [name of KIC LE/Partner] hereinafter referred to as the KIC LE/Partner, to which this Report is attached, and which is to be presented to the EIT under grant agreement [EIT-KIC grant agreement reference: title, acronym, number] for the following period(s) [insert period(s) covered by the Financial Statement]. This engagement involved performing certain specified procedures, the results of which the EIT uses to draw conclusions as to the eligibility of the costs claimed.

Scope of

Work

Our engagement was carried out in accordance

with:

the terms of reference appended to this Report and:

International Standard on Related Services (‘ISRS’) 4400 Engagements to perform Agreed-upon Procedures regarding Financial Information as promulgated by the International Federation of Accountants (‘IFAC);

the Code of Ethics for Professional Accountants issued by the IFAC. Although ISRS 4400 provides that independence is not a requirement for agreed-upon procedures engagements, the EIT requires that the Auditor also complies with the independence requirements of the Code of Ethics for Professional Accountants;

As requested, we have only performed the procedures set out in the terms of reference for this

engagement and we have reported our factual findings on those procedures in the table appended

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to this Report.

The scope of these agreed upon procedures has been determined by the EIT and the procedures

were performed to assist the EIT in evaluating whether the costs and revenue declared by the KIC

LE/Partner in the accompanying Financial Statement have been declared in accordance with the

Grant Agreement. The Auditor is not responsible for the suitability and appropriateness of these

procedures.

Because the procedures performed by us did not constitute either an audit or a review made in

accordance with International Standards on Auditing or International Standards on Review

Engagements, we do not express any assurance on the Financial Statement.

Had we performed additional procedures or had we performed an audit or review of the financial

statement of the KIC LE/Partner in accordance with International Standards on Auditing, other

matters might have come to our attention that would have been reported to you.

Sources of Information

The Report sets out information provided to us by the management of the KIC LE/Partner in

response to specific questions or as obtained and extracted from the KIC LE/Partner’s information

and accounting systems.

Factual Findings

The above mentioned financial statement was examined and all procedures specified in the

appended table for our engagement were carried out. On the basis of the results of these

procedures, we found:

[Option 1: delete if not applicable]

All documentation and accounting information to enable us to carry out these procedures has been

provided to us by the KIC LE/Partner. No exceptions were noted.



provided to us by the KIC LE/Partner. Except as indicated below, no exceptions were noted:

[In some cases, the Auditor was not able to successfully complete the procedures specified or found

deviations from the standard factual findings.

These exceptions are as follows:]

Exceptions

Exceptions such as inability to reconcile key information, unavailability of data which

prevented the Auditor from carrying out the procedures, etc. should be listed. The EIT

will use this information to decide on the eligibility of the amounts declared.

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Use of this Report

This Report is used solely for the purpose set forth in the above objective.

This Report is prepared solely for the confidential use of the KIC LE/Partner and the EIT

and solely for the purpose of submission to the EIT in connection with the requirements as set out

in Articles 6.2 and 10.2.2 of the EIT-KIC Grant Agreement 2013. This Report may not be relied upon

by the KIC LE/Partner or by the EIT for any other purpose, nor may it be distributed to any other

parties. The EIT may only disclose this Report to others who have regulatory rights of access to it,

in particular the European Commission, the European Anti-Fraud Office and the European Court of

Auditors.

This Report relates only to the financial statement specified above and does not extend to any other

financial statements of the KIC LE/Partner.

The Auditor is not in a situation of conflict of interest in establishing this Report. The fee paid to the

Auditor for providing the Report was € ……. .

We look forward to discussing our Report with you and would be pleased to provide any further

information or assistance which may be required.

[legal name of the audit firm]

[[name and function of an authorised representative]

<dd Month yyyy>,<Signature of the Auditor>

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Annex 3

Independent Report of Factual Findings on the costs of KIC complementary activities

reported for 2010-2013 in connection with the EIT-KIC Framework Partnership

Agreement

To be printed on letterhead paper of the Auditor

<Name of contact person(s)>

< Position>

< KIC LE/Partner’s name>

<Address>

<dd Month yyyy>

In accordance with our contract dated <dd Month yyyy> with <name of the KIC LE/Partner> and

the terms of reference attached thereto (appended to this Report), we provide our Independent

Report of Factual Findings (“the Report”), as specified below.

Objective

We [legal name of the audit firm], established in [full address/city/state/province/country] represented for signature of this Report by [name and function of an authorised representative] have performed agreed-upon procedures regarding the costs of KIC complementary activities reported for 2010-2013 by [name of KIC LE/Partner] hereinafter referred to as the KIC LE/Partner, to which this Report is attached, and which is to be presented to the EIT under grant agreement [EIT-KIC grant agreement reference: title, acronym, number]. This engagement involved performing certain specified procedures, the results of which the EIT uses to draw conclusions as to the acceptability of the costs of KIC complementary activities reported.

Scope of

Work

Our engagement was carried out in accordance

with:

the terms of reference appended to this Report and:

International Standard on Related Services (‘ISRS’) 4400 Engagements to perform Agreed-upon Procedures regarding Financial Information as promulgated by the

International Federation of Accountants (‘IFAC); the Code of Ethics for Professional Accountants issued by the IFAC. Although ISRS 4400 provides

that independence is not a requirement for agreed-upon procedures engagements, the EIT requires that the Auditor also complies with the independence requirements of the Code of Ethics for Professional Accountants;

As requested, we have only performed the procedures set out in the terms of reference for this

engagement and we have reported our factual findings on those procedures in the table appended

to this Report.

The scope of these agreed upon procedures has been determined by the EIT and the procedures

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were performed to assist the EIT in evaluating whether the costs reported by the KIC LE/Partner in

the accompanying table of costs of KIC complementary activities are in compliance with the

conditions of the EIT-KIC Framework Partnership Agreement. The Auditor is not responsible for the

suitability and appropriateness of these procedures.

Because the procedures performed by us did not constitute either an audit or a review made in

accordance with International Standards on Auditing or International Standards on Review

Engagements, we do not express any assurance on the table of costs of KIC complementary

activities.

Had we performed additional procedures or had we performed an audit or review of the table of

costs of KIC complementary activities prepared by the KIC LE/Partner in accordance with

International Standards on Auditing, other matters might have come to our attention that would

have been reported to you.

Sources of Information

The Report sets out information provided to us by the management of the KIC LE/Partner in

response to specific questions or as obtained and extracted from the KIC LE/Partner’s information

and accounting systems.

Factual Findings

The above mentioned table of costs of KIC complementary activities was examined and all

procedures specified in the appended table for our engagement were carried out. On the basis of

the results of these procedures, we found:



provided to us by the KIC LE/Partner. No exceptions were noted.



provided to us by the KIC LE/Partner. Except as indicated below, no exceptions were noted:

[In some cases, the Auditor was not able to successfully complete the procedures specified or found

deviations from the standard factual findings.

These exceptions are as follows:]

Exceptions

Exceptions such as inability to reconcile key information, unavailability of data which

prevented the Auditor from carrying out the procedures, etc. should be listed. The EIT

will use this information to decide on the acceptability of the amounts declared.

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Use of this Report

This Report is used solely for the purpose set forth in the above objective.

This Report is prepared solely for the confidential use of the KIC LE/Partner and the EIT

and solely for the purpose of submission to the EIT in connection with the requirements as set out

in Articles 6.2 and 10.2.2 of the EIT-KIC Grant Agreement 2013. This Report may not be relied upon

by the KIC LE/Partner or by the EIT for any other purpose, nor may it be distributed to any other

parties. The EIT may only disclose this Report to others who have regulatory rights of access to it,

in particular the European Commission, the European Anti-Fraud Office and the European Court of

Auditors.

This Report relates only to the table of costs of KIC complementary activities specified above and

does not extend to any other financial statements of the KIC LE/Partner.

The Auditor is not in a situation of conflict of interest in establishing this Report. The fee paid to the

Auditor for providing the Report was € ……. .

We look forward to discussing our Report with you and would be pleased to provide any further

information or assistance which may be required.

[legal name of the audit firm]

[[name and function of an authorised representative]

<dd Month yyyy>,<Signature of the Auditor>

17

Annex 4

PROCEDURES PERFORMED BY THE AUDITOR (KAVA CFS)

The Auditor designs and carries out his work in accordance with the objective and scope of this engagement and the procedures to be performed as specified below. When performing these procedures the Auditor may apply techniques such as inquiry and analysis, (re)computation, comparison, other clerical accuracy checks, observation, inspection of records and documents, inspection of assets and obtaining confirmations or any others deemed necessary in carrying out these procedures.

The EIT has issued guidance together with example definitions and findings to guide the Auditor in the nature and presentation of the facts to be

ascertained. The EIT reserves the right to vary the procedures by written notification to the KIC LE/Partner. The procedures to be performed are listed as

follows:

18

Procedures Standard factual finding and basis for exception reporting

Personnel Costs

[Applicable only if the KIC LE/Partner declares personnel costs on actual bases.]

1/a. Recalculate hourly personnel and overhead rates for personnel

Full coverage if less than 20 employees, otherwise a sample of

minimum 20 or 20% of employees, whichever is the greater. Indicate

the number of productive hours used and hourly rates. Where

sampling is used, selection should be random with a view to producing

a representative sample.

'Productive hours' represent the (average) number of hours made available by the employee in a year after the deduction of holiday, sick leave and other entitlements. This calculation should be provided by the KIC LE/Partner.

Or in the absence of integral time records

‘Working time' declared represent the actual number of hours spent on GA 2013 KIC added value activities by the employee.

For each employee in the sample of out of ____, the Auditor obtained the personnel costs (salary and employer's costs) from the payroll system together with the productive hours from the time records of each employee.

The sample audited covered ____ % of the total personnel costs declared.

For each employee selected, the Auditor recomputed the hourly rate by dividing the actual personnel costs by the actual productive hours, which was then compared to the hourly rate charged by the KIC LE/Partner.

No exceptions were noted.

The average number of productive hours for the employees selected

was .

If the productive hours or costs of personnel cannot be identified, they should be listed (together with the amounts) as exceptions in the main report.

Or

The authenticity of the time declared was tested by crosschecking with the relevant activities.

If hours declared are not reasonable when compared with the activity, they should be listed (together with the amounts) as exception in the main report.

19

[Applicable only if the KIC LE/Partner declares personnel costs based on averages.]

1/b. Use of average personnel costs.

Full coverage if less than 20 employees, otherwise a sample of

minimum 20 or 20% of employees, whichever is the greater. Indicate

the number of productive hours used and hourly rates. Where



The Auditor found that the personnel costs declared in the KIC Report:

- are calculated using average costs in accordance with the EIT Financial Guide applicable for the GA 2013 pursuant to Article 7.2.2 of the GA 2013;

- have been calculated using amounts derived from the relevant period which can be reconciled to the accounting records of the relevant period, where relevant period means the most recent reporting period of the KIC LE/Partner for which closed financial statements exist.

Where categories are used, the Auditor verified that the employees had been correctly classified.

The Auditor obtained confirmation from the KIC LE/Partner that the rates used were not budgeted or estimated amounts. If amounts cannot be reconciled, or if estimates or budgeted amounts were used, this should be reported as an exception in the main report.

20

1/c. Verify the eligibility of costs of in-house consultants (if applicable)

Full coverage if less than 20 consultants, otherwise a sample of

minimum 20 or 20% of consultants, whichever is the greater. Where



The Auditor found that the following cumulative criteria are fulfilled for the in-house consultants in the audited sample:

The KIC LE/partner had a contract to engage a

physical/natural persons to work for it and the work involves

tasks to be carried out under KAVA;

The physical persons worked under the instructions of the

KIC LE/partner (i.e. the work is decided, designed and

supervised by the KIC LE/partner);

The physical persons worked in the premises of the KIC

LE/partner (except in specific cases where teleworking had

been agreed between both parties);

The result of the work belongs to the KIC LE/partner;

The costs of employing the consultant are not significantly

different from the personnel costs of employees of the same

category working under labour law contract for the KIC

LE/partner;

The remuneration is based on working hours rather than on

the delivering of specific outputs/products and should be

recorded in the accounts of the KIC LE/partner.

If the following conditions are not met, it should be reported

as an exception in the main report.

21

1/d. Verify the eligibility of costs declared for the SME owner(s) in the form of flat-rates as set out in table IV.8 of Annex IV of the GA 2013 (if applicable).

Full coverage is required.

The Auditor found that costs declared for the SME owner(s) in the form of flat-rates comply with the provisions of Article 7.2.2 of the GA 2013 and the conditions of the EIT Financial Guide. The Auditor confirmed that the costs declared are based on the flat-rates set out in Annex IV of the GA 2013.

If the above conditions are not met, it should be reported as

an exception in the main report.

2. For the employees and in-house consultants selected in Procedures 1/a, 1/b and 1/c as well as for the SME owner(s) mentioned in Procedure 1/d examine and describe time recording (paper/ computer, daily/weekly/monthly, signed, authorised).

Employees and in-house consultants record their time on a daily/ weekly/ monthly basis using a paper/computer-based system. [delete what is not applicable]

The time-records selected were authorised by the project manager or other superior.

If no time records or alternative evidence of equivalent probative value are available which fit the above description, this should be listed as an exception in the main report.

22

3. Employment status and employment conditions of personnel.

For the employees selected in Procedure 1/a and 1/b [or a selection of employees in line with the requirements above, if Procedure 1 itself is not applicable] the Auditor should obtain the employment contracts of the employees selected and compare with the standard employment contract used by the KIC LE/Partner. Differences which are not foreseen by the Grant Agreement 2013 should be noted as exceptions.

For the employees selected, the Auditor inspected their employment contracts and found that they were:

– directly hired by the KIC LE/Partner in accordance with its

national legislation,

– under the sole technical supervision and responsibility of the

latter, and

– remunerated in accordance with the normal practices of the KIC

LE/Partner.

Personnel who do not meet all three conditions should be

listed (together with the amounts) as exceptions in the

main report. E.g. the employee is hired by a different entity

including other KIC Partners, he/she is remunerated in a

“lump sum” for a specific deliverable instead of via a salary

arrangement etc.

Subcontracting

4. Obtain a breakdown of subcontracts from the KIC LE/Partner. (A list of sub-contracts entered into shall be annexed to the Cost Report with the exception of contracts below the EUR 5,000 threshold in accordance with the EIT Financial Guide.)

On the basis of the breakdown of subcontracts provided by the KIC LE/Partner the Auditor found that costs declared in respect of sub-contracts:

- are incurred during the eligibility period of the GA2013 as defined in Article 2 of the GA2013;

- no profit is included in the contract value in case of contracts concluded between KIC LE/Partners or between the KIC LE/Partner and its subsidiary (e.g. statements from the subcontractors have been provided that the contracts were concluded at cost).

If the above conditions are not met, it should be reported

as an exception in the main report.

23

5. Inspect documents and obtain confirmations that subcontracts are awarded according to a procedure including an analysis of best value for money (best price-quality ratio), transparency and equal treatment.

Full coverage if less than 20 items, otherwise a sample of minimum 20, or 20% of the items, whichever is the greater.

The Auditor obtained tendering documents for each subcontract entered into and found that a tendering process following the usual procurement practices of the KIC LE/Partner was carried out and that the KIC LE/Partner can demonstrate that the principle of value-for-money has been followed in the final choice of subcontractor, or that the contract had been awarded as part of an existing framework contract entered into prior to the beginning of the project. The Auditor found that the conditions set out in the EIT Financial Guide were respected. (In accordance with the GA 2013, the terms of the GA take precedence over the Financial Guide.)

The sample audited covered ____ % of the total subcontracting costs declared.

If the Auditor is not provided with evidence of either of the above situations, the amount of the subcontract should be listed as an exception in the main report.

Financial support to third parties - Sub-granting and prizes

6/a. Sub-granting: Provisions of the GA 2013 are respected

Verify that the thresholds for financial support given to each third party set out in Article 9 of GA 2013 are not exceeded.


The Auditor obtained the agreements signed between the KIC LE/Partner and third parties and found that the financial support actually given complies with the rules set out in these agreements.

The financial support given took the form of either reimbursement of the proportion/total of the eligible cost actually incurred by the third party or the form of flat rates or lump-sums as specified in Annex IV of the GA 2013.

The Auditor found that financial support given to each third party does not exceed EUR 60 000.

The sample audited covered ____ % of the total sub-granting costs declared.

If the above conditions are not met, it should be reported as an exception in the main report.

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6/b. Prizes: Provisions of the GA 2013 are respected

Verify that the conditions set out in Article 9.3 of GA 2013 and in the EIT Financial Guide are respected.


The Auditor reviewed the prizes given by the KIC LE/Partner and found that the rules of the contest had been defined by the KIC in the Business Plan (Annex 1 of the GA 2013) laying down the conditions for participation, the award criteria, the amount of the prize and the payment arrangements. The Auditor found that the conditions set out in Article 9.3 of the GA 2013 and in the EIT Financial Guide were respected.

The sample audited covered ____ % of the total prizes declared.

If the above conditions are not met, it should be reported as an exception in the main report.

Other Direct Costs

25

7. Provisions of the GA 2013 are respected

[Applicable to all KIC Partners and KIC LE.]

Equipment purchased and/or depreciation declared is correctly identified and allocated to the GA 2013 KIC added value activities.


The Auditor traced the equipment charged to the GA 2013 KIC added value activities to the accounting records and the underlying invoices. The KIC LE/Partner has documented the link with the GA 2013 KIC added value activities on the invoice and purchase documentation.

The asset value was agreed to the invoice and no VAT or other identifiable indirect taxes were charged unless the asset in question is used for activities in relation to which the VAT paid is considered eligible in line with the conditions of the EIT Financial Guide. (In accordance with the GA 2013, the terms of the GA take precedence over the Financial Guide.)

If not declared as capital expenditure, the depreciation method used to charge the equipment to the KIC value added activity was compared to the KIC LE/Partner's normal accounting policy and found to be the same.

The sample audited covered ____ % of the total equipment/depreciation costs declared.

If assets have been charged which do not comply with

the above, they should be listed (together with the

amounts) as exceptions in the main report.

8. Travel costs correctly identified and allocated to the GA 2013 KIC added value activities (and in line with KIC LE/Partner's normal policy for non EIT work regarding first-class travel, etc.).

The KIC LE/Partner should provide written evidence of its normal policy for travel costs (e.g. use of first class tickets) to enable the Auditor to compare the travel charged with this policy.


The Auditor inspected the sample and found that the KIC LE/Partner had allocated travel costs to the project by marking of invoices and purchase orders with the project reference, resulting in traceable allocation in the project accounts.

The costs charged were compared to the invoices and found to be the same. The use of first class travel was in line with the written policy provided by the KIC LE/Partner. The sample audited covered ____ % of the total travel costs declared.

Costs which are not allocated to project accounts and do not have a clear attribution (normally by writing the project number on the original invoice) should be listed (together with the amounts) as exceptions in the main report.

26

9. Consumables and other specific direct costs correctly identified and allocated to the GA 2013 KIC added value activities.


The Auditor inspected the sample and found that the KIC LE/Partner had allocated consumable costs to the GA 2013 KIC added value activities by marking of invoices and purchase orders with the project reference, resulting in traceable allocation in the KIC LE/Partner’s accounts.

The costs charged were compared to the invoices and found to be the same. No VAT or other identifiable indirect taxes were charged unless the consumables in question are used for activities in relation to which the VAT paid is considered eligible in line with the conditions of the EIT Financial Guide.

The sample audited covered ____ % of the total consumables costs declared.

Costs which are not allocated to project accounts and do not have a clear attribution (normally by writing the project number on the original invoice) should be listed (together with the amounts) as exceptions in the main report.

Indirect Costs

27

[Applicable only if the KIC LE/Partner declares indirect costs on actual bases. In case a KIC LE/Partner combines actual indirect costs and flat-rates, both procedures 11 and 12 shall be carried out.]

10. Obtain and review a detailed breakdown of Indirect costs (reconciled to the accounting records) and confirm that the following costs are not present:

a. expenditure treated as capital expenditure in accordance with the tax and accounting rules applicable to the KIC LE or the KIC Partner and

recorded in the fixed assets account of its balance sheet, not falling within the scope referred to in Article 7.2.2 and for a total value

exceeding the threshold set therein;

b. return on capital;

c. debt and debt service charges;

d. provisions for losses or potential future liabilities;

e. interest owed;

f. doubtful debts;

g. exchange losses;

h. deductible VAT;

i. costs declared by the KIC and covered by another action or work programme receiving a Union grant;

j. excessive or reckless expenditure.

The Auditor obtained the total overhead amount which was allocated and reconciled this to the accounting records for the period in question.

The Auditor recalculated the ratio of indirect costs [as a percentage of personnel costs/ as a fixed personnel hourly rate / as another cost driver specified by the KIC LE/Partner] and agreed it to the rate used in the Cost Report(s).

The Auditor obtained a detailed breakdown from the accounting system of the indirect costs which have been charged to the contract, and reconciled the individual amounts to the general ledger of the KIC LE/Partner.

The Auditor found that costs for the non-KIC added value activities, such as manufacturing, had not been included in the calculation.

For each element of the breakdown, the Auditor obtained the KIC LE/Partner's confirmation that it contained none of the ineligible costs specified (typical examples are leasing costs, loan charges, provisions for doubtful debt (but not normal accruals), local business and property taxes, customs duties, exchange losses from billing in a foreign currency).

Amounts which do not meet the above criteria or where the Auditor is not provided with sufficient information in order to inspect and compare the types of cost should be listed (together with the amounts) as exceptions in the main report.

28

[Applicable only if the KIC LE/Partner declares indirect costs on a flat-rate basis. In case a KIC LE/Partner combines actual indirect costs and flat-rates, both procedures 11 and 12 shall be carried out.]

11. Assess use of flat-rates

The indirect costs incurred may be eligible for flat-rate funding fixed at not more than 20% of the total eligible costs, excluding the direct eligible costs for subcontracting and sub-granting. In the case of non-profit public bodies, higher education establishments, research organizations or SMEs unable to identify with certainty their real indirect costs, this threshold may be 40%. (see Article 7.2.5 of the GA2013)

The Auditor confirmed by recalculation that the level of indirect costs declared is not above 20% or 40% (whichever is applicable) over the direct eligible costs excluding costs relating to subcontracting or sub-granting.

In case the KIC LE/Partner used a 40% flat-rate, the Auditor confirmed that the KIC LE/Partner qualifies as either a non-profit public body, higher education establishment, research organization or an SME unable to identify with certainty its real indirect costs.

Any deviations found from the rules set out in GA2013 should be listed (together with the amounts) as exceptions in the main report.

12. Inspect and compare exchange rates into Euros.

The Auditor compared the exchange rate used for conversion by the KIC LE/Partner: to the average of the monthly accounting rates established by the Commission and published on its website, corresponding to the period covered by the concerned KIC Cost report and found them to be the same.

Where rates cannot be agreed, an exception should be noted, (together with the amount) in the main report.

29

13. Identification of revenue.

The KIC LE/Partner shall declare in its Cost Report any receipts related to the KIC added value activities (income from events, rebates from suppliers etc.)

The Auditor examined the relevant accounts and obtained representations from the KIC LE/Partner that the amounts listed in the Cost Report represent a complete record of the sources of revenue connected with the project.

The amount included in the Cost Report regarding receipts is the same as the amount recorded in the KIC LE/Partner’s accounting.

Any discrepancies in the receipts noted in the accounts and those reported by the KIC LE/Partner should be noted (together with the amount) as exceptions in the main report.

30

Annex 5

PROCEDURES PERFORMED BY THE AUDITOR (KCA CFS)

The Auditor designs and carries out his work in accordance with the objective and scope of this engagement and the procedures to be performed as specified below. When performing these procedures the Auditor may apply techniques such as inquiry and analysis, (re)computation, comparison, other clerical accuracy checks, observation, inspection of records and documents, inspection of assets and obtaining confirmations or any others deemed necessary in carrying out these procedures.

The EIT has issued guidance together with example definitions and findings to guide the Auditor in the nature and presentation of the facts to be

ascertained. The EIT reserves the right to vary the procedures by written notification to the KIC LE/Partner. The procedures to be performed are listed as

follows:

31

Procedures Standard factual finding and basis for exception reporting

Audit trail verification

1. Obtain a detailed breakdown of the costs of KIC

complementary activities reported for the period 2010-2013 and reconcile it with the total costs reported by the KIC

LE/Partner.

The Auditor reconciled the detailed breakdown of costs of KIC

complementary activities with the total costs reported by the KIC

LE/Partner and found that the breakdown supports the reported totals.

Any interruptions in the audit trail (i.e. discrepancies between the cost breakdown and the KIC report) should be reported as

exception in the Report.

Verification of costs reported for KIC complementary activities

The Auditor shall carry out the procedures below for each activity, if there are less than 20 items reported. In case of more than 20 items, the Auditor shall select a random sample of minimum 20 items or 30% of the expenditure, whichever is greater.

[Applicable if the cost of the selected activity is supported by accounting entries.]

2. Obtain an extract of costs generated by the accounting

system of the KIC LE/Partner for the activity in question and

reconcile it with the total cost reported by the KIC LE/Partner for the activity. Verify that the cost items included in the

extract of costs incurred between 1 January 2010 and 31 December 2013.

The Auditor obtained an extract of costs generated by the accounting system of the KIC LE/Partner for every activity in the sample and

reconciled it with the total costs reported by the KIC LE/Partner for the activities. No discrepancies were found.

The Auditor verified that the cost items included in the extracts of costs

incurred between 1 January 2010 and 31 December 2013.

Any discrepancies between the accounting entries and the reported costs of KIC complementary activities should be

reported as exception in the Report. Any cost items that

incurred before 1 January 2010 or after 31 December 2013 should be reported as exception in the Report.

[Applicable if the cost of the selected activity is supported by financial statements/cost reports submitted to other funding

The Auditor obtained financial statements/cost reports submitted by the

KIC LE/Partner to the funding organisations for every activity in the

32

organisations.] 3. Obtain the financial statement/cost report for the activity in

question submitted by the KIC LE/Partner to the funding organisation and reconcile it with the total cost reported by

the KIC LE/Partner for the activity. Verify that only cost items

incurred between 1 January 2010 and 31 December 2013 are included in the total cost reported by the KIC LE/Partner in

the costs of KIC complementary activities.

(If the financial statement/cost report covers a period that starts before 2010 and it does not contain an annual

breakdown of costs, the Auditor should obtain alternative

evidence for the reasonableness of cost allocation to the 2010-2013 period and to the KIC complementary activity in

question.)

sample and reconciled them with the total costs reported by the KIC

LE/Partner for the activities. No discrepancies were found.


incurred between 1 January 2010 and 31 December 2013.

Any discrepancies between the financial statements/cost

reports and the declared costs of KIC complementary activities

should be reported as exception in the Report. Any cost items

that incurred before 1 January 2010 or after 31 December

2013 should be reported as exception in the Report.

[Applicable if the cost of the selected activity is supported by a combination of accounting entries and financial statements/cost reports.]

4. Verify by carrying out steps 2 and 3 that the costs reported for the KIC complementary activity in question are supported

by costs incurred by the KIC LE/Partner in the period 2010-

2013.

The Auditor obtained accounting records and financial statements/cost reports submitted by the KIC LE/Partner to the funding organisations

for every activity in the sample and reconciled them with the total cost

reported by the KIC LE/Partner for the activities. No discrepancies were found.


and financial statements/cost reports incurred between 1 January 2010

and 31 December 2013.

33

Annex 6

Letter of Representation4

(KIC LE/Partner letterhead)

(Date-same as date of the factual findings report)

(Addressed to the Audit firm)

Dear Madam, Dear Sir,

Taking into consideration our responsibility, as mentioned in Article 1.1 of the Terms of Reference for an

Independent Report on Factual Findings under the GA 2013 for providing a certificate on the financial

statements in respect of EIT-KIC Grant Agreement 2013 N° xxxxx with the European Institute of

Innovation and Technology (EIT) and for providing a certificate on the costs of KIC complementary

activities in accordance with Article 6.1 of the EIT-KIC Framework Partnership Agreement No XXXX and in

connection with your engagement to perform agreed-upon procedures regarding the financial statement

of costs and receipts declared covering the period from <date> to <date> (the “Cost Report”) and

regarding the table of costs of KIC complementary activities, we hereby confirm the following

representations made to you during your engagement:

We are responsible for the preparation of the KIC LE/Partner level Cost Report covering the

period starting <date> and ending <date> in accordance with the EIT-KIC Grant Agreement

2013 (Partner Level Grant Agreement) and for the preparation of the table of costs of KIC complementary activities covering the period from 1 January 2010 to 31 December 2013 and for

their accuracy and completeness. We have made available to you all records, documents, statements and information that we

believe are relevant for the purpose of the agreed-upon procedures you have performed.

We have complied with the provisions of the EIT-KIC Framework Partnership Agreement.

Personnel costs

o [Option 1: delete if not applicable] Personnel costs are reported in the Cost Report are not based on budgeted or estimated amounts. They are calculated using rates based on

actual costs, and reflect the time actually worked on the KIC added value activities

during the period covered by the Cost Report.

4 Related to the Certificate on the Financial Statements

34

o [Option 2: delete if not applicable] Personnel costs are reported in the Cost Report are not based on budgeted or estimated amounts. They are calculated using average rates

which do not significantly deviate from the actual costs and which are compliant with the methodology guidance established by the EIT and reflect the time actually worked

on KIC added value activities during the period covered by the Cost Report. Subcontracts and contracts to suppliers of goods and services are awarded in accordance with a

procedure including an analysis of best value for money (best price/quality ratio), transparency

and equal treatment.

Indirect costs reported in the Cost Report do not include any of the following costs:

o Identifiable indirect taxes including value added tax (for instance local business and property taxes);

o Duties (for instance customs duties); o Interest owed;

o Provisions for possible future losses or charges (for instance provisions for doubtful debt

(but not normal accruals); o Exchange losses, cost related to return on capital (for instance exchange losses from

billing in a foreign currency); o Costs declared or incurred, or reimbursed in respect of another EU funded project;

o Debt and debt service charges, o Excessive or reckless expenditure (for instance loan charges);

o Implicit interest (leasing costs or other credit arrangements);

o Costs attributable to activities other than KIC added value activities covered by the Business Plan to the EIT-KIC Grant Agreement 2013.

Purchases in connection with the EIT-KIC Grant Agreement 2013 are made according to the

principles of best value for money (best price-quality ratio), transparency and equal treatment. No excessive or reckless expenditure is included in the Cost Report.

The receipts declared in the Cost Report represent a complete record of the sources of income

connected with the KIC added value activities (for example, income from events, rebates from

suppliers…), and have been recorded in accordance with our normal accounting practices. No event has occurred after ending last day of the period covered by the Cost Report, which

would have an impact upon the Cost Report.

[Option 1: delete if not applicable] Nothing has come to our attention during the period under

review, including management actions and/or other matters of importance that might be considered to represent financial irregularities, fraud or an illegal act which would have an impact

on the Cost Report. [Option 2: delete if not applicable] The following financial irregularities, fraud or illegal acts

which have an impact on the Cost Report have occurred: […] and sufficient measures have been

taken to correct them and to prevent repetition and they have all been fully disclosed to you.

[Other matters, as applicable]. ….

(Name of the KIC LE/Partner)

(date, Stamp and Signature)

cfs methodology ga 2013

Documents

costs of kic

kic report

definitions kic

andor kic partners

fpa nature of kic activities

kic lepartners report

value activities kava

criteria of article