Part-financed by the European Union WS 4: Financial issues Joint Technical Secretariat Lead Applicant Seminar Hamburg, 2-4 April 2008

Part-financed by the European Union

WS 4: Financial issues

Joint Technical Secretariat

Lead Applicant SeminarHamburg, 2-4 April 2008

2Lead Applicant Seminar, Hamburg, 2-4 April 2008

AGENDA

1

2

Questions& Answers

It’s your turn

Financial resources

& budget lines

Special financial issues

& financial control

Questions& Answers

It’s your turn

(45 min.)

(45 min.)


WS4: Financial issues – BLOCK 1

Dana HenningsJoint Technical Secretariat



Content

1) Financial resources

2) Budget lines

3) Questions & Answers

4) It’s your turn


Content


2) Budget lines


4) It’s your turn


A project’s financial resources

TO

TA

L P

RO

JEC

T B

UD

GET

ERDF budget

ERDF co-financing

(50%, 75%, 85%)

ERDF partner’s contribution

(50%, 25%, 15%)

Norwegian budget

Norwegian co-financing

(50%)

Norwegian partner’s contribution

(50%)

ENPI budget

ENPI co-financing

(90%)

ENPI partner’s contribution

(10%)

More details: Working Session 2 “Partnership and work plan”


Content


2) Budget lines


4) It’s your turn


Budget lines

BL1 – Personnel

BL2 – External services

BL3 – Travel and accommodation

BL4 – Equipment and investment

BL5 – Other direct costs

Budget flexibility rule


Budget lines


Budget lines

BL1 – Personnel







BL1 – Personnel

• Personnel costs of project staff

– Directly employed by project partners listed in the application form

– Basis: employment/labour contract

– Carrying out project activities

– Gross salary + employer’s obligatory contributions

• NON-ELIGIBLE

– Any voluntary remuneration and employer contribution

– Administration costs


BL1 – Personnel

• Unpaid voluntary work

– Written agreement

– Carrying out project activities

– No remuneration at all

– Limit: project partner’s contribution (10%, 15%, 25%, 50%)

• NON-ELIGIBLE

– Unpaid voluntary work of project partner’s own staff


BL1 – Personnel


Budget lines

BL1 – Personnel








• Expenses paid by project partners to external providers

External = not employed by project partner institutions

• Basis:

– Contracts of work, supply contracts, service contracts

– Invoices/requests for reimbursement.

• Public procurement!

• NON-ELIGIBLE

– Contracting between project partners


Be clear and precise!


Budget lines

BL1 – Personnel








• Travel and accommodation + subsistence allowances

• Essential for project activities

• Most economic way of transport

• Observe national and organisation internal rules!

• Prior approval of travels outside the programme area and the EU!


Budget lines

BL1 – Personnel








EQUIPMENT

• Tool/device to carry out project activities

• Not used by project target group after completion of activities

• Depreciation costs only!

INVESTMENT

• Result of project activities

• Used by project target group after completion of activities

• Full costs

More details: Plenary session!





• Group your equipment!:

– Office equipment: day-to-day management

– Multimedia equipment: interactive

– Measurement, research & laboratory equipment

– Others: Please specify!


Budget lines

BL1 – Personnel








• ELIGIBLE

– Transnational transfer charges and bank charges

– Participation fees for external events

– Direct office running costs

• NON-ELIGIBLE

– Overheads!

– Any general costs allocated on a percentage or pro rata basis

– Debit interest and exchange rate losses

• Other expenses

– essential for project implementation

– exist because of the project

– supported by invoices directly attributable to the project/project staff


Budget lines

BL1 – Personnel








BL1 BL2 BL3 BL4 BL5 Total

WP1 Flexibility

WP2 Flexibility

WPn Flexibility

Total Flexibility Flexibility Flexibility Flexibility Flexibility Total budget

Reallocated amount (cumulated since project start) ≤ 20% or 40,000 EUR, whichever is higher

• NOT POSSIBLE

– Changes of equipment/investment items

– Changes between project partners’ budgets


Any questions?


It’s your turn


WS4: Financial issues – BLOCK 2

Václav KaplanJoint Technical Secretariat



Content

1) Time dimension

2) Horizontal rules

3) Control system


5) It’s your turn


Content

1) Time dimension

2) Horizontal rules

3) Control system


5) It’s your turn


Project phases (1st call)

Preparation Contracting Implementation Closure Post-project

~ 17 months 3 months see application form 3 months

No costs can be reported

Limitations in BLs or WPs

-> Preparations costs BL 1-3/WP 0 only -> Closure costs WP 1 only

Eligible costs can be reported in all BLs and WPs

31/05/2007MC decision

(~ October 2008) 31/12/2025


Preparation phase

• From: 1 year before the call closure (31 May 2007)

To: MC decision date (expected end October 2008)

• Only personnel (BL1), external services (BL2) and travel & accommodation (BL3) in the Work Package 0

• Max. 50,000 EUR or 2% of the project budget, whichever is lower

• PPs eligible for ERDF/Norwegian co-financing

• For approved projects


Contracting & Implementation phase

• Contracting phase:3 months starting from day after MC decision date

• Implementation phase:duration 12-36 months according the application form

• All BLs and WPs in both phases

• Thematic & management activities


Closing phase

• 3 months after the end of project implementation phase

• All BLs in WP 1

• Costs related to the preparation of the final report/auditing

• Costs will be reported together with the last reporting period

• Last date of eligibility = Due date for submission of the final report

Post-Project phase

• No costs eligible


Spending plan & De-commitment

• ERDF information basis for eventual de-commitment

• Norwegian/ENPI information for assessment only

TOTAL: 0.00

Total expenditure per reporting period

0.00 0.00 0.00 0.00 0.00 0.00 0.00

ENPI

ERDF

Reportingperiod 1

Reportingperiod 2

Reportingperiod 3

Reportingperiod 4

Reportingperiod 6

month 1-6 month 7-12 month 13-18 month 19-24Expenditure co-financed from:

Project implementation and closure expenditure

month 31-36

Reportingperiod 5Preparation

expenditure month 25-30

Norwegian



• Basis for quality assessment

• Basis for eventual budget cuts in case of significant under-spending

SPENDING PLAN MUST BE REALISTIC & LINKED TO WORK PLAN



Average project spending in IIIB (% of total budget)

=> ENABLE QUICK START

Year 1 Year 2 Year 3 Year 4 Total

Planned requests 31.0% 39.0% 30.0% 0.0% 100.0%

Real requests 21.0% 30.0% 32.0% 9.0% 92.0%


Content

1) Time dimension

2) Horizontal rules

3) Control system


5) It’s your turn


“10% Flexibility rule”

Costs paid outside EU eligible only if :

• benefit EU MSs of the programme area

• do not exceed 10% of the ERDF co-financing

• are approved by MC (application form, pt. 3.10.2.) or by MA in advance

• Concerns ERDF funds only

• Do not confuse it with 20% rule ( covered in WS Partnership)


Value Added Tax (VAT)

• Recoverable VAT is not eligible

=> Partners who can get VAT refunded/offset by tax authorities have to plan their budgets without

VAT

• IMPORTANT: VAT status of partners must be declared => in the application form & => in the Partner declaration


Other financial charges

• Financial charges e.g. for transnational transactions, bank accounts of project or where required guarantees are eligible

• Debit interests, exchange rate loses are NOT eligible


Revenues & interests generated by projects

• Revenues

Example: Selling of project outputs, conference fees…

• Interests (and equivalent benefits) generated by ENPI co-financing

reduce the eligible expenditure


Cost sharing

• Pro rata allocation of expenditure to at least 2 partners

• Plan carefully => Prepare a written agreement on shared costs => Include partner shares in the partner budgets

• Indicate it in the application form

1 2 3 4 5 6 71

Value of the contract

Project co-ordination 100,000.00

1

External service corresponding WP Cost sharing

Contracting partner


Further points for consideration

• Total budget - project duration/scope/complexity of activities/partnership

• Detailed budget (per BL & WP) - Activities

• Ratio “WP1/total budget”

• Ratio “equipment/total budget”

• External services/equipment/investments


Content

1) Time dimension

2) Horizontal rules

3) Control system


5) It’s your turn


Control system

Other controls EU and national audit bodies, JTS, MA, CA, AA …

Second level audit(selected samples of projects)

Audit Authority (AA) & Group of Auditors (GoA)/

ENPI: External auditor

First level control(Validation/verification at PP and LP level)

ENPI: First level controller to confirmed by

MS/MA


Country-specific control requirements (ERDF/Norway)

• Organisation of the control = responsibility of MS/Norway

• Main types of systems

– Centralized system: Estonia, Latvia, Lithuania, Poland, Sweden

– Decentralized system: Finland, Germany, Norway

– Mixed system: Denmark


ENPI control requirements

• First level controller contracted by the Lead Partner, in exceptional cases by the project partner

• Selection has to be confirmed by MA

• Internationally recognized supervisory body for statutory auditing & member of IFAC


Do the project partners pay the First Level Controller?

GER DK EST FIN LT LV NOR PL SWE

Yes Yes No Yes Yes No Yes No No

• ERDF: Depends on the national system

• ENPI: Yes


Any questions?


It’s your turn


Further information

•Operational programme

•Programme Manual

•Programme website (eu.baltic.net)

•Joint Technical Secretariat


WS4: Financial issues

Dana Hennings & Václav KaplanFinancial Managers, Joint Technical Secretariat

Phone: +49 381 45 484 5271/-5290email: [email protected], [email protected]

eu.baltic.net

Documents

Part-financed by the European Union WS 4: Financial issues Joint Technical Secretariat Lead Applicant Seminar Hamburg, 2-4 April 2008