FINANCIAL REQUIREMENTS ...and other usefull things to know for your IVB Project Utrecht, 15 January 2013
Financial Requirements The Basics Table of contents • The Lead Partner principle • Audit and Control • Eligibility of Expenditure • The Payment Procedure • Project Modifications
Financial Requirements The Basics The LP Principle
Financial Requirements The Basics The Lead Partner Principle (LP principle) Compulsory For the 2007-2013 programming period The Lead Partner is the administrative link between the programme and the project. As such, they bear responsibility for ensuring the project’s implementation. However, each partner bears full responsibility for their own actions.
Financial Requirements The Basics The Lead Partner Principle (LP principle) Compulsory For the 2007-2013 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 Responsibility for Overall responsibility Contact with JTS Project Management • Signature of Subsidy Contract Submission of on project progress reports, implementation: • Transfer of received ERDF payment claims, audit content of the project + funds to partners reports, project finance management • Organisation of audit of all modifications… expenditure
Financial Requirements The Basics Audit and Control
Financial Requirements The Basics What is the audit trail? The audit trail is a comprehensive set of documents which provide a complete history of a project and provide evidence that proper procedures were apllied and outcomes achieved. What documents do you need?
Financial Requirements The Basics • Approved Application Form, Subsidy Contract, Partnership Agreement (in copy at partner level) • Relevant project correspondence (financial and contractual) •Progress Reports, Payment Claims, Partners controllers’ confirmations (and checklists/control reports) • Bank account statements proving the reception and the transfer of ERDF • Invoices of all expenditure declared in the Payment claims • Bank account statements / proof of payment for each invoice • Method used by all partners outside the EURO-zone for converting national currency into EUR • Staff costs: information on actual annual working hours, labour contracts, payroll documents and time records of personnel working for the project
Financial Requirements The Basics • List of subcontracts and copies of all contracts with external experts and/or service providers • Calculation of administrative costs, proof and records of costs included in overheads • Documents relating to public procurement, information and publicity • Public procurement notes, terms of reference, offers/quotes, evaluation, order forms, contracts • Proof of delivery of services and goods : studies, brochures, newsletters, minutes of meetings, translated letters, participant lists, travel tickets, etc.) • Record of assets, physical availability of equipment purchased in the context of the project.
Financial Requirements The Basics In what form? Original documents (at partner level), but also photocopies (at Lead Partner level), microfiches or electronic versions of original documents. Where? The Lead Partner is responsible for storing all relevant documentation for all partners and all sub-partners. They must be filed separately, even if this leads to a dual treatment of accounts. Importance of Partnership Agreement ! How long? It is essential that all documents and accounting records be kept available for a period of three years following the closure of the Programme, that is 31st December 2021. Projects that cannot provide sufficient documentation risk losing their ERDF grant.
Financial Requirements The Basics • When to control? Example: Closure of accounts at partner level: end July Documents to the project controller: end August Documents to the LP (controller): end September Documents to the JTS: end October -> Maximum for the whole process : 3 months (Article 16 of 1080/2006)
Financial Requirements The Basics On the spot checks by the FLC • Commission Regulation 1828/2006 was updated in 2009. Article 13 says now that verifications by the controllers shall include on-the-spot verifications. • What is the added value for going on the spot? • See the reality of investments and the project as a whole • Check that the EU Logo is printed on brochures, that commemorative plaques have been installed. • What do you check if a project has no investments?
Financial Requirements The Basics The Commission verifies that the FLC have checked the follwing community rules: • Gender equality • Environment • Publicity • State Aid • Public Procurement For help please take a look at the COCOF “ Guidance document on management verifications to be carried out by Member States on operations co-financed by the Structural Funds and the Cohesion Fund for the 2007 – 2013 programming period”.
Financial Requirements The Basics Most common mistakes/problems at JTS level: • Calculation of staff costs • Administration costs had no project relation • Wrong signatures of FLC • Modified controller‘s declarations, empty declarations • FLC findings should be cut already before the claim is presented to the JTS • The comment boxes are not used enough (for external expert rates or hotel stays) • Frequent problems with data protection • Public Procurement mistakes not detected by the FLC
Financial Requirements The Basics Findings of Second Level Control: • Mistakes in timesheets • Usage of wrong budget line • Missing original documents and bad quality • No project relation • Breach of public procurement • Administration costs had no project relation • FLC comments in checklist did not correspond to payment claim
Financial Requirements The Basics Mistakes found by DG Regio during their audit in Germany • Staff cost calculation was based on average hours worked, time sheets did not exist. • Controllers did not document their work sufficiently (checklist and controller‘s declaration are the minimum requirements). • Public procurement procedures for contracts below 21.000 € were not documented transparently. One explanation for an in house tender procedure was not accepted by the Commission. The conclusion was an interruption of payment to all German partners as of August 2012.
Financial Requirements The Basics Eligibility of Expenditure
Financial Requirements The Basics 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. Project expenditure can be eligible until 31 December 2015. 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 NWE Budget Lines: 1 Partner Staff 2 External Experts & Consultants 3 Travel and Acommodation 4 Meetings and Seminars 5 Publicity 6 Equipment 7 Investment 8 Audit costs 9 Administration Costs 10 Revenues
Financial Requirements The Basics Partner staff (1) Staff costs are the costs of the actual time (no averages) 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.
Financial Requirements The Basics Partner staff (2) Working time must be recorded (eg. timesheets) throughout the duration of the action. The records should be certified at least once a month and signed by the employee and the supervisor. Estimates of hours/days worked are not acceptable. Employees working full time on the project, do not need to fill in time sheets.
Financial Requirements The Basics External Experts & Consultants Work done by independent consultants must be essential to the project and reasonably priced. Pay attention to: • Costs must be paid on the basis of contracts and against invoices . • Maximum rate for a senior consultant is € 800 per day (excluding VAT). • Public procurement rules apply. • Travel and accommodation expenses belong in this budget line
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