CFS for Horizon Europe and Erasmus+: when it is required and who issues it
A Certificate on the Financial Statements (CFS) is an independent auditor’s report that an EU grant beneficiary submits together with its financial statement. In Horizon Europe it is mandatory when the EU contribution you request for your costs reaches EUR 430,000. In Erasmus+ and other programmes that use the EU model grant agreement the threshold is EUR 325,000. It is calculated separately for each beneficiary, not for the consortium as a whole.
For Ukrainian universities, research institutes, NGOs and companies this is now a practical question: Ukraine takes part in Horizon Europe as an associated country, and Ukrainian organisations join Erasmus+ consortia. Below: when you need a CFS, who can issue it and how to prepare so the final payment is not delayed.
Short answer
When an EU grant requires a Certificate on the Financial Statements and who can issue it
Under the EU model grant agreements a Certificate on the Financial Statements (CFS) is required when the EU contribution requested for one beneficiary’s costs reaches EUR 430,000 in Horizon Europe (EUR 725,000 after a systems and process audit) or EUR 325,000 in Erasmus+. In Horizon Europe it is usually submitted only with the final report. It is issued by a qualified independent external auditor; for a Ukrainian beneficiary that is an auditor entitled to audit under Ukrainian law. The cost is eligible. Lump sum grants usually do not need one; point 4.3 of the Data Sheet decides.
When is a CFS required?
The conditions are set out in point 4.3 of the Data Sheet and in Article 24 of your grant agreement. This is what the Commission’s model agreements provide:
| Programme | Threshold per beneficiary | When it is submitted |
|---|---|---|
| Horizon Europe | Requested EU contribution to costs of EUR 430,000 or more; EUR 725,000 for beneficiaries that passed a systems and process audit (SPA) | For most actions only with the final report; for EIT KIC actions also with interim reports |
| Erasmus+ and other programmes on the EU model grant agreement | Requested EU contribution to costs of EUR 325,000 or more | With the interim or final report once the threshold is reached |
Agreement texts: the Horizon Europe model grant agreement and the Erasmus+ model grant agreement on the Commission’s portal.
Two details people often get wrong. First, the threshold is measured against the requested EU contribution, not the total project budget, and in Horizon Europe it includes the 25 percent flat rate for indirect costs. Second, if your grant is a lump sum grant, there is no statement of actual costs, so a CFS is usually not required. Your own agreement has the final word: check point 4.3 of the Data Sheet.
Who can issue the certificate?
The agreement calls for a qualified external auditor who is independent of the beneficiary and works to standards comparable to EU Directive 2006/43. For an organisation from a third country, including Ukraine, that means an auditor entitled to perform audits under national law. Public bodies may use a competent independent public officer instead.
The beneficiary chooses the auditor. There is no need to hire an auditor from the coordinator’s country or from the EU, and the Commission keeps no list of approved firms. What matters is that the auditor did not take part in keeping the project accounts or preparing the financial statement.
What does the auditor check?
The certificate follows a mandatory Commission template: terms of reference with a list of procedures and an auditor’s report of factual findings. For EACEA programmes the template refers directly to ISRS 4400 on agreed-upon procedures. The auditor does not give an opinion on the statement as a whole but performs each procedure and reports what was found. We explain the format in our article on ISRS 4400 reports.
A typical set of procedures:
- personnel costs: employment contracts, time records or timesheets, hourly rate calculation, payroll taxes;
- subcontracting and purchases: best value for money rules, absence of conflicts of interest;
- travel, equipment, depreciation, other goods and services: supporting documents, link to the project, period;
- exchange rates: conversion of hryvnia costs into euros under the agreement rule;
- unit costs, if any: whether they were calculated correctly;
- reconciliation of the financial statement with the accounts and bank statements.
How to prepare and how much time to allow
A CFS is usually held up by documents rather than by the auditor. The advice is simple: agree on the auditor while the project is still running and look at how you record working time. Timesheets and the hourly rate calculation cause most findings in Horizon Europe projects.
- Budget for the certificate. The cost is eligible; in Horizon Europe it is planned under other goods, works and services.
- Keep separate project accounts: a separate bank account or separate cost centre.
- Collect timesheets every month, not at the end of the project.
- Keep procurement files together with the reason for choosing each supplier.
- Allow 4-8 weeks for the auditor before the final report deadline.
The documents needed for a grant expenditure check are listed in our grant audit preparation checklist. For expenditure verification under other EU grants, see our article on EU grant audits.
Preparing for a grant audit? A checklist of documents and audit stages as a PDF, no sign-up needed. Stages, timing and tips on the checklist page.
Download the checklist (PDF)Frequently asked questions
Do we need a CFS if the grant is below the threshold?
No, there is no obligation. The Commission or a national body may still audit the project for several years after it closes, so keep your records in order.
Can a Ukrainian auditor issue a CFS for Horizon Europe?
Yes, if the auditor is qualified to perform audits under Ukrainian law and is independent of the beneficiary. The agreement does not require an EU auditor and has no list of permitted firms.
Who pays for the certificate?
The beneficiary, but the cost is eligible: it is planned in the project budget and claimed in the financial statement.
How we help
MK Audit has worked since 2000 and audits donor-funded projects under ISRS 4400, ISA 800 and ISA 805. We prepare the report on the Commission template in Ukrainian and English. See our grant audit page for details, or write to us to discuss your project: send the agreement and we will tell you whether a certificate is needed and what to prepare.
Prepared by the MK Audit team