ESF Guidance Manual 4 Annex 11: Article 13: ESF Verification ...

will follow the procedures set out in the Managing Authority Manual.
Extrapolation of irregularities – CFOs
31a. Where A13 On the Spot verification visits establish that there are
irregularities within one or more subset populations being tested (such as
participants with job outcomes) and they have similar characteristics (such as
missing participant records), the sample will be extended. This will establish
whether or not the irregularity is likely to be repeated within the rest of the
subset population.
If the extended sample establishes that there are similar irregularities, the
principle of extrapolation will apply. The extrapolation will cover the remaining
unchecked population in order to calculate the full extent of the irregularity
within that subset population. A formula will be applied to extrapolate the error
across the whole population under that payment type, provision and claim
period. This process is also in line with A16 procedures.
CFOs should also note that the impact may extend beyond the period tested
to the remaining unchecked subset population, other claims or operations. If
this is the case the CFO will be asked to conduct further work on the
remaining population to identify any additional irregular expenditure. CFOs
should inform the MA of the methodology used, subsets and periods covered
by their audit activities to demonstrate the basis for any additional irregular
expenditure. This work may be reviewed by the Managing and Audit
Authorities.
Coverage
32. All CFOs and all their claims will be subject to Article 13 on the spot
verification activity. The selection of the expenditure and providers will be
undertaken on a sample basis. The Managing Authority is required to set a
sample size that achieves ‘reasonable assurance as to the legality and
regularity of the underlying transactions’ (extract from EC guidance).
Following consultation with the Audit Authority, the sample Article 13 on the
spot verification at CFO level aims to cover a minimum of 20 per cent of ESF
and match expenditure claimed, but excluding administrative costs, during the
lifetime of the programme. A key principle is that all providers/sub-contractors
may be the subject of an on the spot check during the lifetime of the
programme. The level and frequency of verification activity is summarised in
the tables below.
CFO verifications
Verification activity
Administrative
verifications
On-the-spot
verifications of
Undertaken
by
GLA
Managing
authority
Managing
authority
Coverage
All interim and final claims will be
checked
All CFO interim claims will be subject
to selection through the sampling
Manual 4 Annex 11 - Article 13 Strategy | September 2012 Page 8 of 33