Assurance and audits
All major funders expect recipient institutions of external research funding to provide assurance that public funds are spent efficiently and in a cost-effective manner. Project funding should therefore be managed appropriately and only expended for the purpose for which it is awarded.
Some research projects are subject to financial audits initiated by the funder. Scientific and management risk audits may also take place.
Assurance and Audits
Financial audits - project specific
Some funders (or their appointed auditors) conduct audits covering College processes and the financial transactions of specific research projects to ensure that expenditure has been incurred according to the terms and conditions of the award. Visits usually span several days and all funders have the right to audit the research they fund. If any Principal Investigator or Department are approached directly by a funder or by the funder’s appointed auditor, they should contact their School, Institute and Department Manager (SID Manager) or Departmental Operations Manager (DOMs) and respective RS / JRO teams immediately.
Previous audits include:
- European Court of Auditors and the European Commission
- Research Councils Assurance Programme – previously known as Dipstick Audits
- National Institutes of Health (USA)
- Wellcome Trust
- Big Lottery Fund
- Cancer Research UK
Eligibility of costs
All expenditure in relation to research projects must be checked to ensure that it is in line with the terms and conditions of funding. As a general rule, and in order to justify any expenditure, consideration should be given as to whether the cost:
- was included in the original Justification of Resources/Proposal?
- was subsequently awarded?
- is of direct benefit to the research and proper use of public funds?
- is economic, necessary and solely attributable to the project?
- is not deemed to be in any way excessive or reckless?
NB: Accountability for compliance with College policy and Funder requirements ultimately rests with the Principal Investigator (PI). The PI is accountable to their Head of Department.
Responsibility for the day-to-day management of project finances may however be delegated to administrative or other staff as governed by the College’s Post Award Management Policy [pdf]. Where responsibility is delegated to administrative or other staff, they are responsible for ensuring that external research funding is properly spent and that such spend is managed within the lifetime of the project as per the funder’s terms and conditions. Frequently Asked Questions (FAQs) on the eligibility of costs [pdf] have been developed to aid staff responsible for the day-to-day management of project finances. The main purpose of these particular FAQs are to provide guidance, based on real case scenarios, on the eligibility of certain costs that can occur during the lifetime of a research project. Currently these are available as a pdf document, however the Research Office will be exploring more interactive options.
Recommended College best practice guidance is available for:
Certificate on the Financial Statement (FP7 and H2020)
For European Commission (EC) funded projects there are different certification (audit) requirements for FP7 and H2020 projects.
External audit for FP7 projects is currently provided by PKF Littlejohn LLP.
On all FP7 projects (including European Research Council and Marie Curie Actions), costs need to be certified when the EC contribution reaches €375,000 (cumulative). This means that some FP7 projects may not need to be certified. For these projects, Faculty Research Services / Joint Research Office will apply a percentage adjustment to the total value of expense claims being claimed prior to the submission of cost statements. This is to ensure parity with audited projects. The adjustment rate is an average of VAT errors identified on expense claims, based on LittleJohn error statistics. The Research Office will monitor the average rate of VAT error every six months and inform Faculty Research Services / Joint Research Office.
For projects requiring certification, Faculty Research Services / Joint Research Office should use the CEC FP7 Littlejohn Audit Preparation Checklist (PDF) to ensure that all required documents are provided to the auditors.
For H2020 projects, a Certificate on the Financial Statements (Audit) covering all reporting periods will be required with the final claim when the total requested reimbursement is €325,000 or more. For Research and Innovation Actions, Innovation Actions & ERC grants, the €325,000 threshold is based on actual and unit costs, excluding Indirect Costs. No audit is required for Marie Skłodowska-Curie Actions. Some H2020 projects may not need to be certified and there is no requirement for Faculty Research Services / Joint Research Office to apply a percentage adjustment.
It should be noted that the Consortium may decide that partners do need to provide certificates on the financial statements even when the European Commission contribution is below the threshold (either €375,000 for FP7 or €325,000 for H2020). In these cases, the costs associated with the certification are not eligible to be charged to the project, so will have to be covered by the Academic Department.
Availability of fully executed staff contracts
The European Commission requires that the employment status and employment conditions for all personnel directly charged (or charged via HR18) to European Commission funded awards are auditable. As a corollary to this, evidence of employment is required as part of the ‘Certificate on the Financial Statement’ and may be further required at audit. The following documentation must be available upon request:
- Always - The original employment contract confirming the commencement of employment at Imperial, signed by HR and employee (irrespective of funding source).
- Where applicable - Any subsequent contract extension or contract change letters, signed by HR.
- Where applicable - The letter confirming that a fixed term contract has been converted to an open ended contract, signed by HR.
If staff transfer to another institution, either a copy of their contract (and extensions) should be retained by HR or a copy will need to be requested from the institution they have transferred to.
Failure to present these documents at audit will lead to salary costs being rejected and therefore will not be recoverable from the Commission.
Research Councils UK (RCUK) Assurance Programme
The RCUK Assurance unit undertakes an annual programme of institutional visits on behalf of the Research Councils to provide assurance relating to the regularity, probity and accountability of funds provided. The last visit to Imperial was undertaken in February 2014.