The annual plan implementing the strategy for the audit of DG ECHO partners and the verification of cost claims covers:
The plan bases itself principally:
The plan also provides for the possibility of meeting special requests that may originate from within DG ECHO.
The audit methodology for headquarter and field audits is harmonised and is being implemented by the contracted external auditor. This enables a better dovetailing of the field audits with HQ audits.
All costs and documentation are drawn together at Partners’ Headquarters and the majority of auditing is therefore carried out in the Partners’ Headquarters.
Each contracted audit consists of an evaluation of the internal controls of the partner along with substantive testing and validation normally of up to five specific grant agreements that the partner had with ECHO.
The ECHO audit sector supervises the process and takes delivery of the audit results, which are then actioned, as appropriate, by ECHO staff.
This contracting of audit support allows ECHO to achieve a higher audit coverage of its projects.
The partner implements the activities that ECHO has contracted to it by means of field projects. This is therefore an essential area of audit as this is where the real work is carried out by the partner. Audits cover financial and operational aspects of the projects with visits and testing at on-going projects and local and regional partner offices and various project locations (e.g. refugee camps, health structures and distribution points). At present, these audits are undertaken primarily by the same externally contracted firm as for the HQ audits, minimally assisted by ECHO staff. They involve discussions with Partner's staff and beneficiaries.
Each audit is conducted in line with generally accepted auditing standards. Programmes have been developed to guide the audit; files are drawn up with supporting documentation leading to conclusions and a report is issued for each audit.
The audit methodology is being continuously developed in order to ensure more efficient, productive and effective audits.
Within the confines of business confidentiality, all audits are carried out in openness and transparency with the involvement of the auditees at each stage of the process. The audits are facilitated by exchanges of information not only from the partners to ECHO, but also from ECHO to the partners. The majority of ECHO’s audit reports have been completed with agreement between ECHO and the auditee on their contents. The results of the audits are discussed with the senior management of the partner concerned, including the actions that they intend to take. At the next audit visit the actions taken as a result of the recommendations will be subject to audit review.
Whilst the vast majority of ECHO partners have been found to have met at least a minimum standard of financial control and accounting, a need for certain improvements has been noted. In particular, many ECHO partners could improve the quality of financial information available for internal decision-making along with an improvement in the level of financial control and accounting between headquarters and field offices.
References and useful links