• Obtained directly by the Auditor (e.g. inspection of assets) is more reliable than evidence obtained  indirectly (e.g. inquiry about the asset).  Page 11 of 16  For example:  the Auditor finds that an amount of 1.000€ relating to expert fees is not supported by the  hours worked on the timesheets. The Auditor quantifies the amount of the verification exception found and the potential impact on the  EC contribution, should the Commission declare the fee or expenditure item(s) concerned ineligible.  The Auditor reports all exceptions found including the ones of which he cannot quantify the amount of  the verification exception found and the potential impact on the EC contribution. The Auditor reports all  exceptions found including the ones of which he cannot measure the financial impact.  The Auditor verifies the fees and the expenditure by carrying out procedures 3.1 and 3.3 listed in  Annex 2A and reports all the factual findings and exceptions resulting from these procedures.  Verification exceptions are all verification deviations found when performing the procedures set out in  Annex 2A. The Auditor must carry out a  complete  and  exhaustive  verification of all the fees and all expenditure  claimed on the invoice and in the Financial Report. Fees and expenditure subheadings can be broken down into individual fee and expenditure items or  classes of expenditure items with the same or similar characteristics. The form and nature of the  supporting evidence (e.g. a timesheet, a contract, an invoice etc) and the way fees and expenditure  are recorded (e.g. computerised time recording, journal entries) vary with the type and nature of the  fees and expenditure and the underlying actions or transactions. However, in all cases fees claimed  must relate to the fee rates agreed in the Budget and the time worked as attested to by the timesheets  as required by Article 24.2 of the General Conditions. Expenditure items should in all cases reflect the  accounting (or financial) value of underlying actions or transactions no matter the type and nature of  the action or transaction concerned.  The fees and expenditure claimed by the Contractor in the Financial Report are presented under the  following headings: Fees (including overheads) and Incidental Expenditure. These headings may be  broken down into subheadings. If the Auditor finds that the terms and conditions to be verified are not sufficiently clear he should  request clarification from the Contractor. The Auditor obtains an understanding of the terms and conditions of the Service Contract and of  Annex II of the Service Contract, which contains the Terms of Reference for the Contractor. Moreover,  the Auditor pays special attention to the rules for subcontracting as set out in Article 4 of the General  Conditions of the Service Contract. If the Auditor finds that the above criteria for evidence are not sufficiently met, he/she should detail this  in the factual findings.  2  Obtaining an understanding of the terms and conditions of the Contract (Annex 2A -  procedure 1.1)  3  Verification of Fees and Expenditure (Annex 2A - procedures 3.1 and 3.2)  4  Verification Coverage of Fees and Expenditure (Annex 2A - procedures 3.1 and 3.2)  5  Procedures to verify Fees and Expenditure (Annex 2A - procedures 3.1 and 3.3) 