Updates on the Certificate on the Financial Statements (CFS) in Horizon Europe

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About the Author: Paula Morán

Financial Manager - Paula owns a Double Degree in Law and Business Administration by the University Carlos III of Madrid (ES) and a master’s degree in international business management by ICEX-CECO and UIMP (ES). She has a great international business vision that she’s developed through her Erasmus scholarship in the University College Dublin (IRL) and her job in the Commercial Office of the Spanish Embassy in Zagreb (HR).

Just as with Horizon 2020, cost calculation in Horizon Europe, as well as cost documentation, needs to be checked by an external auditor who will provide a Certificate on the Financial Statements (CFS).

However, it is important to highlight that the EC still has the final decision on the eligibility of the costs, regardless of the CFS.

A CFS given by a certified auditor must be provided if the amount of the EU grant per beneficiary reaches or exceeds a certain amount. The CFS expenditures qualify as “other direct costs,” hence they must be budgeted during the proposal phase.

Which are the main differences with the CFS in Horizon Europe?

Increase in the threshold for mandatory CFS: from 325,000 € to 430,000€
Change in threshold calculation method: all costs are taken into account for the threshold, that is, if the requested EU contribution to costs of a beneficiary (including the 25% flat-rate for indirect costs) reaches or exceeds 430,000 € a Certificate on the Financial Statements (CFS) issued by a qualified auditor must be submitted
Addition of a special threshold for beneficiaries with a systems and process audit of 725,000€.

Conditions to apply for a systems and process audit (SPA)

Conditions to apply for a systems and process audit (SPA) can be checked in the article 24.4 of the latest version of the Annotated Grant Agreement:

Beneficiaries which:

use unit, flat rate or lump sum costs or contributions according to documented (i.e. formally approved and in writing) usual costs accounting practices or
have formalised documentation on the systems and processes for calculating their costs and contributions (i.e. formally approved and in writing), have participated in:
- at least 150 actions under Horizon 2020 or the Euratom Research and Training Programme (2014-2018 or 2019-2020)
- and participate in at least 3 ongoing actions under Horizon Europe or the Euratom Research and Training Programme (2021-2025 or 2026-2027)

may apply to the granting authority for a systems and process audit (SPA).

This audit will be carried out as follows:

Step 1 — Application by the beneficiary.
Step 2 — If the application is accepted, the granting authority will carry out the systems and process audit, complemented by an audit of transactions (on a sample of the beneficiary’s Horizon Europe or Euratom Research and Training Programme financial statements).
Step 3 — The audit result will take the form of a risk assessment classification for the beneficiary: low, medium or high.

Low-risk beneficiaries will benefit from less (or less in-depth) ex-post audits (see Article 25) and a higher threshold for submitting certificates on the financial statements.

How much does a CFS cost?

The costs for an audit on a Horizon Europe project depend on many factors (size of project, complexity, …) and is estimated to cost between 2,500€ an 8,000€.

Can I declare my CFS costs?

As in Horizon 2020, the costs of producing a CFS are eligible as long as it was mandatory, and the related costs fulfil the eligibility conditions. You can declare these costs in the final report.

This article has been prepared by Paula Morán, Innovarum´s Financial Project Manager

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