Q. Is there a possibility to differentiate between “error rate” and “exception rate”, that is, between the amount of irregularities found by the Audit Authority during the audit process and the amount of irregularities identified by the project auditors/public officers during expenditure verification? If yes, and taking into account that the threshold for error rate is usually set at 2%, which should be the level of tolerance with exceptions found by auditors/public officers?

A. The auditors/public officers must report any error found, regardless of its amount. There is no tolerance with the exceptions found by auditors/public officers when carrying out the expenditure verification of the financial reports prepared by the beneficiaries. Any error identified by the auditors/public officers, the programme bodies and the participating countries needs to lead to financial corrections (if applicable) without any level of tolerance.

The concept of “exception rate” is not included either in the ENI CBC IR or in the Financial Regulation. Setting a so-called “exception rate” is an internal decision of the MAs and its level cannot be considered as a level of tolerance.

The European Commission and the European Court of Auditors define “a materiality threshold” for considering that the programme accounts give a true and fair view, which is set at 2%. This is the threshold for the Audit Authority for an unqualified audit opinion of the accounts. Therefore, the concepts of “exception rate” and “a materiality threshold” shall be regarded separately.