Transcript Document

WELCOME!
FINANCIAL REQUIREMENTS
What project promoters cannot ignore about
INTERREG IVB NWE project management
Financial Requirements
The Basics
General considerations: the big picture
 EU regulations in general, notably General Regulation
1083/2006. This includes equal opportunities and non discrimination
(art.16), sustainable development (art.17).
 Regulation (EC) 1080/2006
 Public procurement rules
 State aid
You should also be aware of your national legislation
as well as national laws from your partners’ countries.
Financial Requirements
The Basics
Table of contents
 The Lead Partner Principle
 The Partnership Agreement
 The Audit Trail
 Eligibility of Expenditure
 Project Modifications
 The Payment Procedure
Financial Requirements
The Basics
The Lead Partner Principle
Financial Requirements
The Basics
The Lead Partner Principle (LPP)
Compulsory
implementation
the 2007-2013
programming
Compulsory For
the 2007-2013for
programming
period
period (article 20 of ERDF Regulation (EC) 1080/2006)
The LPP requires one project partner to step up as the
administratively responsible partner on behalf of the whole
partnership. The Lead Partner is the administrative link between
the programme and the project (flow of information and fund).
As such, they bear responsibility for ensuring the project’s
implementation. However, each partner bears full
responsibility for their own actions
=> a Partnership Agreement becomes mandatory.
Financial Requirements
The Basics
The Lead Partner Principle (LPP)
Compulsory
Devolved
legal
For and
the 2007-2013
financial responsibility;
programming period
The LP
• drafts the Partnership Agreement, setting mutual rights,
obligations and duties among project partners.
• ensures that expenditure is eligible, even if partners remain
liable for their own actions and related expenditure
• is responsible for reporting and other administrative actions
to the JTS
• distributes ERDF to partners
Financial Requirements
The Basics
The Lead Partner Principle (LPP)
Partnership Agreement
Lead Partner Principle
Overall responsibility
on project
implementation:
content of the project +
finance management
Responsibility for
Project Management
•Signature of Subsidy Contract
•Transfer of received ERDF
funds to partners
•Organisation of audit of all
expenditure
Contact with JTS
Submission of
progress reports,
payment claims, audit
reports, project
modifications…
Financial Requirements
The Basics
The Lead Partner Principle (LPP): Implementation stage
•Compulsory
Joint implementation:
activities
must be carried
out and
For the 2007-2013
programming
period
coordinated by all partners.
• Reporting and monitoring: jointly, timely, activities +
expenditure. Progress reports make a link with the application
and the payment claim.
• First Level Control and Control regulations: national rules
apply
• Payments: the principles of post-reimbursement, the time lag
between expenditure and reimbursement and the grant rate must
be clear.
• Irregularities / recoveries: prevention is better than cure
• Decommitment issues: information plays a vital role!
Financial Requirements
The Basics
The Lead Partner Principle (LPP): closure & assessment
•Compulsory
Final report
For
& the
First
2007-2013
Level Control:
programming
the LP must
period
make sure from
the beginning of the project that duties and requirements for the
completion of the project are clear to all partners.
• Eligibility: the LP should make sure that the partners are aware
of deadlines and procedures for the closure, forward all eligible
expenditure in due course and know the filing requirements.
• Assessment: projects are strongly recommended to assess how
successful the project has been in terms of processes, level
of cooperation and quality of management.
Financial Requirements
The Basics
The Partnership Agreement
Financial Requirements
The Basics
The Partnership Agreement: recommended clauses (1)
Does your partnership agreement address all these points?
Compulsory For the 2007-2013 programming period
• Common project objectives;
• Duration of the Agreement - from the day all partners sign until the LP
discharges its obligations towards the MA (years after project closure!);
• Role and responsibilities of the LP;
• Roles and responsibilities of the project partners;
• Detailed information on project activities - the project work plan;
• Organisational structure of the partnership - steering group?;
• Deadlines and penalties for non-compliance;
Financial Requirements
The Basics
The Partnership Agreement: recommended clauses (2)
Does your partnership agreement address all these points?
Compulsory For the 2007-2013 programming period
• Cooperation with third parties - ultimate responsibility remains within
the partnership; third parties need to be selected according to public
procurement rules;
• Definition of eligible expenditure;
• Monitoring, reporting and evaluation requirements to be fulfilled by the
LP and other partners;
• Financial control and audit requirements;
• Communication and publicity requirements;
• Dissemination of project outcomes - issue of intellectual property
rights;
Financial Requirements
The Basics
The Partnership Agreement: recommended clauses (3)
• No commercial use and full public access to project results
Compulsory For the 2007-2013 programming period
• Confidentiality Agreement inside the partnership;
• Dispute settlement and changes in the partnership;
• Reimbursement to the LP in case of non-completion of obligations;
• Working language;
• Applicable national legislation and optional clauses of 'force majeure';
• Concluding provisions on how to make changes to the Partnership
Agreement.
Financial Requirements
The Basics
The audit trail
Financial Requirements
The Basics
Audit trail: organise your controls
• Internal controls at partner and project level
Ensure smooth implementation: know what you’ve done and where
you’re going, content-wise and financially. Always have a good overview!
• First Level Controls
Controls at project level, prior to the submission of payment claims.
All partners will be controlled independently in their own countries
(art. 16 (EC) 1080/2006)
• Other controls
Second level controls (art. 16 (EC) 1828/2006), DG Regio and Member
States audits, Certifying Authority audits, Quality controls, etc…
Every partner in every project will be controlled several times and
by different bodies during the project’s lifetime. Save time and
money with an efficient organisation!
Financial Requirements
Approval of project at PSC
Partners from MS with a centralised
First Level Control system
The JTS informs the involved
MS control bodies of the
partners’ contact details
The involved MS control
bodies contact the
relevant partners and
inform them of their FLC
procedure (name and
contact details of
controller, timeframe and
deadlines, necessary
documents, etc.).
First Level Controls
The Basics
Partners from MS with a decentralised
First Level Control system
The JTS informs the involved MS approbation
bodies of the partners’ contact details
The involved MS approbation bodies
contact the relevant partners and
inform them of their FLC procedure
(shortlist of approved controllers,
timeframe and deadlines).
The partners send the information
back to their MS approbation body
The involved MS approbation bodies
contact the relevant partners and inform
them of their FLC procedure (form to be
filled in and signed by partner and
controller, timeframe and deadlines)
The partners send the information
back to the MS approbation body
The MS assesses the provided information
and checks if all criteria are fulfilled.
The partner’s controller
qualifications are satisfying
The partner’s controller
qualifications are not satisfying
The MS approbation body sends a certificate that
confirms the controller to the partner (JTS in copy)
Financial Requirements
The Basics
Audit trail: First Level Control
The First Level Control checks the expenditure declaration
included in each payment claim. The expenditure must be real,
actually incurred, supported by documents of probative value
and eligible.
• Real: the good or service exists and can be shown.
• Actually incurred: expenditure was paid out. Invoices can only be
included if they have been paid in full by a partner => advances are
not eligible.
• Supported by documents of probative value: a receipt, an invoice
or a document that has an accounting value is compulsory.
• Eligible: in line with EU and national rules, direct demonstrable
connection with the Application Form, incurred in the lifetime of the
project as set in the Subsidy Contract
Financial Requirements
The Basics
Audit trail: First Level Control
Case study: the finance manager bought a car and includes its
cost in the payment claim. Is it eligible?
Is it real? the good or service exists and can be shown.
Is it actually incurred? expenditure was paid out.
Is it supported by documents of probative value? There is a receipt
Is it eligible? in line with EU and national rules, direct demonstrable
connection with the Application Form, incurred in the lifetime of the project
as set in the Subsidy Contract
Financial Requirements
The Basics
Poll: first level control
Who has already declared their first level
controllers?
Who has received an answer from the
approbation bodies?
Was any proposal rejected?
Financial Requirements
The Basics
Audit trail: other controls
• Site visits
One Finance and one Project Development Officer will spend roughly
one day to check the management of the project, the audit trail and the
deliverables.
• Second Level Control
Audits organised at Programme level on a yearly sample and carried
out by an external audit firm, under supervision of the national
auditors.
• Certifying Authority’s quality controls
The Certifying Authority will perform punctual audits, on demand.
• Commission and Member States checks
The Commission, in cooperation with the Member States, can perform
on-the-spot checks with a minimum of one day’s notice.
Financial Requirements
The Basics
Eligibility of expenditure
Financial Requirements
The Basics
Eligibility of expenditure: eligibility period
Start date:
All costs are eligible one year prior to the closure of the call for
proposals as long as the actions are not completed before that
date.
End date:
The end date indicated in the Application Form is the date by
which the final report should be submitted to the Secretariat.
Any expenditure (including costs linked to the project
closure) incurred, invoiced or paid after the official project
end date is ineligible.
Financial Requirements
The Basics
Eligibility of expenditure: Partner staff
Staff costs are the costs of the actual time worked by the persons directly
carrying out the work under the project and directly employed by the
partners.
All staff costs must be based on real costs, supported by proper
documentation (payslips and timesheets) and calculated on the following
basis:
Remuneration costs (taken from payroll) = total gross remuneration +
employer’s portion of social charges. Remuneration costs must be calculated
individually for each employee and must be based on the monthly payslip.
Working time must be recorded (eg. timesheets) throughout the duration of
the action. The records should be certified at least once a month. Estimates of
hours/days worked are not acceptable.
Overhead costs cannot be added to staff costs (to be included under
"Administration costs“).
Financial Requirements
The Basics
Eligibility of expenditure: External Experts & Consultants
Work done by independent consultants must be essential to the project
and reasonably priced. Costs must be paid on the basis of contracts
and against invoices.
The recommended maximum rate for a senior consultant is €800 per
day (excluding VAT). Costs above this amount must be justified in full
by applicants.
It is the Partner’s responsibility to ensure that public procurement
rules are respected and that contracts are awarded at normal market
prices.
Travel and accommodation expenses for external experts should be
recorded under the external experts budget line.
Exceptions: specific actions such as website development or communications should be
recorded under the "Publicity" budget line; all audit related costs are recorded under the
“Audit/First level control" budget line.
Financial Requirements
The Basics
Eligibility of expenditure: travel costs
Travel costs and related subsistence allowances for project staff are
eligible under certain rules. All tickets, invoices and receipts must be
kept by partners so that their eligibility can be checked and audited. Costs
must be directly related to, and essential for, the effective delivery of the
project and cover economy class travel on public transport. Additional
costs for business or first class travel are not eligible. Recommendation for
maximum daily subsistence allowances are based on the Commission
subsistence allowances paid to experts on assignments requiring an
overnight stay. The recommendations given for each Member State are
maximum figures in line with EC per diem rates and include breakfast, two
main meals and local transportation. Daily subsistence allowances where
an overnight stay is not required are not eligible. In this case, it is expected
that only meal costs will be charged to the project.
Expenses for individuals other than staff should be included under the
appropriate budget line (external expert, audit, communication).
Financial Requirements
The Basics
Eligibility of expenditure: meetings & seminars
Costs related to the organisation of meetings and events
(renting of premises and equipment, meals, etc), participation in
meetings and seminars related specifically to the project are
eligible under this budget line.
Related travel costs and external expert costs must not be claimed
under this budget line (external expert, audit, communication).
Financial Requirements
The Basics
Eligibility of expenditure: publicity
Expenditure with the main aim of promoting the project should
be part of this cost category. This includes website, promotional
material and printed publications.
Public procurement rules must be observed in selecting
company or individual who will carry out the assignment.
Financial Requirements
The Basics
Eligibility of expenditure: equipment
Durable equipment charged to the project must be essential for the delivery of
the project and used for that purpose.
A clear distinction must be made between what is included in the
investment budget line (where the total cost is eligible) and the equipment
budget line (where depreciation should be the rule).
The depreciation should be made in accordance with the internal accounting
rules of the partners and generally accepted for items of the same kind. Only
the portion of the equipment's depreciation corresponding to the duration
of the project and the rate of actual use for the purpose of the project may
be taken into account. Once the eligible amount is determined, it must be
claimed in full at once upon purchase of the equipment.
Goods purchased before the start of the project can be claimed at
a depreciated rate as long as they have not previously been financed
by any other source.
Financial Requirements
The Basics
Eligibility of expenditure: investments
All eligible expenditure must be fully described in the approved
Application Form.
Financial Requirements
The Basics
Eligibility of expenditure: administration costs
Administration costs include items such as office rent, maintenance
and furniture, electricity, heating, water, insurances, telephone, fax,
internet, stationary and other administrative structure costs.
Under the IVB NWE Programme, administration costs are limited to a
maximum 10% of the total eligible budget at project level and
20% of the staff costs at partner level.
When claiming administration costs, partners have 2 options:
Direct costs: partners directly claim, cost item per cost item. Paid
invoices are the underlying proof of expenditure.
Indirect costs or overheads: partners must use the calculation of the
total overheads of their organisation and a distribution key related to
the partner staff involved in the project. This must be properly
documented and periodically reviewed.
Financial Requirements
The Basics
Eligibility of expenditure: revenue
The Lead Partner must keep separate accounts for the project so
that all expenditure (costs) and all revenue (receipts) can be
posted and audited, and detailed summary reports drawn up.
All revenue generated from sales, rentals, subscriptions, fees
or other equivalent sources must be reported and must be
deducted from the eligible costs. A separate budget line for
revenue is included in the Application Form and the payment
claim.
In case of a revenue-generating projects, the current value of the
net revenue from the investment must be estimated over a
specific reference period. Where it is not possible to estimate the
revenue in advance, the revenue generated within 5 years
following project closure must be reported (article 55 of EU
Financial Requirements
The Basics
Eligibility of expenditure: expenditure outside
eligible area
For partners from the NWE area, any expenditure incurred outside
the eligible area (for example, costs of a meeting or conference
held outside the area) must be justified in full and a clear need for
the expenditure to be incurred outside the area must be
demonstrated.
Projects must get formal approval from the Secretariat before
incurring expenditure outside of the NWE area.
Financial Requirements
The Basics
Eligibility of expenditure: in-kind contributions
This consists of the provision of land or real estate, equipment or
raw materials, research or professional work or unpaid voluntary
work provided free of charge to the partners. Staff paid by the
partner organisation is not contribution in kind.
All contributions should be costed using either an accepted market
value for materials or goods, or notional salary for individual’s time.
In-kind contribution can only be included in Payment Claims if
it was included in the approved Application Form attached to
the Subsidy Contract.
Financial Requirements
The Basics
Eligibility of expenditure: ineligible costs
(non-exhaustive list)
• National banking charges
• VAT unless it is genuinely and definitively borne by the final
beneficiary
• Fines, financial penalties and expenditure on legal disputes
• Interest on debt
• Decommissioning of nuclear power stations
• Housing
• Exchange rate loss (or gain)
Further Information:
General Regulation (EC) No 1083/2006 - article 56
ERDF Regulation (EC) No 1080/2006 - articles 7 and 13
Implementation Regulation (EC) No 1828/2006 - articles 48-53
Financial Requirements
The Basics
Eligibility of expenditure: preparation costs
Costs related to project development and application are eligible if:
- The activities show a direct, demonstrable connection to the
development of the project.
- Costs were incurred up to one year prior to the closure date of
the call.
They may include staff, external experts, travel and subsistence,
meetings, publicity.
Preparations costs must be claimed all at once in a Payment Claim
(usually the first or second one)
They are subject to a ceiling of €100,000 total eligible cost
(max €50,000 ERDF).
Financial Requirements
The Basics
Eligibility of expenditure: coordination costs
Costs related to coordination and the management of the project
must be recorded under the partner who will incur the
expenditure.
Partners can contribute financially to the coordination costs but this
should not be mentioned neither in the budget, nor in the
Payment Claim.
"Coordination costs" is not a specific budget line, but is assimilated
to a "work package". A special column for coordination costs is
included in the Application Form.
Financial Requirements
The Basics
Project modifications
Financial Requirements
The Basics
Project modifications
The project’s implementation plan and budget are approved as part
of the Application Form. During the lifetime of a project, you may wish
to amend the partnership, change the budget line split, modify the
envisaged project implementation or the project end date.
Theses changes are allowed 3 times in total, no later than 6
months before the end date of the project and only upon formal
request and approval by the Secretariat or the Programme’s
Steering Committee – depending on the significance of the changes.
The “request for changes” form must be used.
The Secretariat should be notified of minor changes as soon as
possible by official letter from the Lead Partner. This would be, for
example, a change of bank account, a new contact person, a change
of address, etc.
Financial Requirements
The Basics
Project changes: budget/finances
Budget Line Modifications (BLM)
Projects can be overspent by a maximum of 20% on an individual
budget line. Increases of more than 20% on individual budget lines
must be submitted and duly justified to the Secretariat using the
request for changes form. The project will receive formal approval
from the Secretariat if appropriate.
Other financial changes
Ex: a reduction of grant rate at partner level or a decrease in the overall
budget -> use the request for changes form.
Note: it is not possible to increase the project’s total ERDF
amount.
Financial Requirements
The Basics
Project changes: activities/output
The approved Application Form details the project content and
management structure, as well as the expected results, outputs and
impacts, and concrete deliverables of the Project.
In some cases (the drop-out of a partner, unexpected results
preventing the project from further advancing in the direction originally
planned, unforeseen administrative delays, etc.), projects may notice
that they cannot successfully implement all actions of the approved
Application Form and / or that they wish to implement other or
additional actions.
The Lead Partner must inform the Secretariat about those
changes and use the request for changes form. Depending on their
significance, approval might be given by the Secretariat or the
Programme’s Steering Committee.
Financial Requirements
The Basics
Payment procedure
Financial Requirements
Payment procedure
Joint Technical Secretariat
The Basics
Payment Claim Flow
Money Flow
Certifying Authority
Assesses the Progress Report and
the Payment Claim received
Programme Bank Account
Prepares the payment request to the
Certifying Authority
Payment Claim
Project Lead Partner
Submits a Progress Report and a Payment Claim:
end April - full version and end October - light version
Reimburses the other project partners according to their
expenditure
Project Partner
Project Partner
Financial Requirements
The Basics
Payment procedure: some rules
• Payment will be made only if both the Progress Report and
Payment Claims are deemed acceptable.
• Payment Claims and Progress Reports must be filled out in
English, submitted together, twice a year (end of April and end
of October).
• “First come, first served” applies. Plan your cash flow as the
reimbursement can take from one month to several months.
• A maximum of 85% of the ERDF project budget can be paid
before the submission of the final claim.
Financial Requirements
The Basics
Payment procedure: how to speed up the process?
• Check that both the Payment Claim and the Progress Report are
correct before you submit them. They must bear all the required
dates and signatures and be supported by a full set of verification
sheets and annexes.
• Fill in the comment sections as much as possible.
• Answer the JTS queries as soon and as accurately as possible.
• Circulate the assessment report to all partners and find ways to
implement the recommendations for improvement that will be
listed.
• Be proactive and communicate with the JTS: inform us of any
delay or project modification since these may have substantial
consequences.
Financial Requirements
The Basics
Payment procedure
Financial reporting uses the Payment Claim Template. Note that a
new template will be sent to you after each payment (data is
cumulated), in an MS-Excel format.
There is a worksheet per partner and each partner worksheet feeds
the project claim sheet. There are formulas and links in the
document: be careful when handling it. Any “damaged” files will be
rejected for administrative reasons (upload in our programme
monitoring system).
All controller declarations must be filled in and signed.
Verification sheets of expenditure must be fully completed
and annexed to the Payment Claim.
Financial Requirements
The Basics
Payment procedure
The
VoE payment claim template and verification sheets of expenditure
Let’s start with the VoE!