CFS: Certificate on the Financial Statements

The Certificate on the Financial Statements (CFS) is a document you commission yourself and attach to the financial statement. The auditor does not assess the project and gives no opinion on the organisation's accounts. The auditor works through the list of procedures in the Commission template and records what was found: whether the costs are in the accounts, whether they are backed by documents, whether they meet the terms of the agreement.

When the certificate is mandatory

The conditions are set in Point 4.3 of the Data Sheet of the grant agreement. In the Horizon Europe model agreement they are:

• the threshold is a requested EU contribution to costs of EUR 430,000 or more;
• it is counted for each beneficiary and affiliated entity separately, not for the consortium;
• it is submitted only with the final payment;
• for participants that have passed a systems and process audit the threshold is higher, EUR 725,000.

Unlike in the previous programme, the threshold is counted on the whole requested EU contribution to costs, not only on actual costs. So the share attributable to indirect costs also brings you closer to it. Costs already audited by the granting authority are excluded from the calculation. Other EU programmes use a different threshold, most often EUR 325,000, so check your own agreement. How these figures diverge in official documents is explained in the article on reporting.

Who can issue it

A qualified external auditor who is independent of the beneficiary and complies with Directive 2006/43/EC or similar standards. It may be your usual auditor. Public bodies may entrust the check to a competent independent public officer who was not involved in drawing up the statement. The auditor works under the international standard ISRS 4400 and only with the template from the Portal: a free-form audit opinion will not be accepted.

Cost and two traps

The cost of a mandatory certificate is an eligible cost, so it is budgeted as a service. The amount a beneficiary expects is known at the budget planning stage, so the need for a CFS is visible in advance.

• If a certificate was required and was not submitted or was rejected, the EU contribution is capped at the threshold minus one euro.
• If a certificate was submitted when not required, below the threshold or with an interim report, the auditor's fee is not reimbursed.

When to commission it and what comes after

1. At the start, check the threshold and put the cost in the budget.
2. A few months before the end, choose the auditor and show them the template. There are only 60 days for the final report, and the audit has to fit into them.
3. Prepare the cost ledger, contracts, payment records, the daily rate calculation and the time records.
4. If the auditor finds an error, take that cost out of the statement before submission.

The certificate gives no protection against an audit by the granting authority, the European Court of Auditors, OLAF or the European Public Prosecutor's Office. In Horizon Europe an audit can be started within two years of the final payment, so records are kept after the certificate too.

How other donors do it

The names differ: expenditure verification, project audit, independent auditor's report. The substance is shared: an external check of costs before the last payment. What differs is who pays. At the Ukrainian Cultural Foundation an independent auditor's report is mandatory for the final report, but it cannot be paid for from the grant, only from co-financing or other sources. So read the audit terms before you apply.