FP 6 Financial Aspects

1

• FP 6 Financial Aspects
• Alexandre Bonnyns
• Brussels Enterprise Agency

2
FP6 Financial aspects

• Forms of EU financial contribution
• Costs
• Cost reporting models
• Payment modalities
• Reporting to EC
• Audit certificates

3
FP6 financial contribution from EU

• Public procurement
• Grant or subvention
• - flat rate financing / lump sum
• - Reimbursement of costs

4
Public procurement

• Selection procedure call for tenders
• Purchase by the EC of
• goods/services for its own operation
• EC pays 100 of a market price
• Permits a profit
• Outcomes of project belong entirely to EC
• Only used for certain Specific Support Actions -
  SSA

5
Grant or subvention

• Selection procedure call for proposals
• Outcome of project belong to contractor
• Used in most FP6 projects
• - Integrated Project IP
• - Network of Excellence NoE
• - Specific Targeted Research Project STREP
• - Collective Research
• - Cooperative Research CRAFT
• - Coordination actions

6
Grant or subvention

• EC financial contribution limited to
• - a lump sum grant (scholarships, prizes,
  training actions,)
• OR
• - partial reimbursement of certain costs
• up to 100 of eligible costs
• - grant for integration
• - grant to the budget

7
Grant or subvention

• Non profit principle
• - no benefits EU grant lt 100 total costs
• - BUT benefits from projects results OK
• Cofinancing principle
• - EU funding ? 100 total costs
• Supplementarity principle
• - if non-public funding exists
• - max. total public funding 75 budget

8
Grant for Integration

• For Networks of Excellence NoE
• Fixed grant calculated depends on
• - degree of integration
• - number of researchers
• - characteristics of the research field
• - joint programme of activities (JPA)
• Paid out on the basis of results (JPA) provided
  expenses gt grant

9
Grant to the budget

• For Integrated project, STREP, CRAFT,
• Calculated as a percentage of the estimated
  budget
• Percentage depends on
• - cost model (FC, FCF or AC)
• - type of activity (RD, training, mgmt)
• maximum reimbursement rates (receipts)
• Instrument specific provisions

10
How are the costs reimbursed?

• Maximum reimbursement rate (minus receipts)

Total management costs up to 7 of total EC
contribution
11
Eligible costs

• To be eligible, costs must be
• actual, economic, necessary to the project
• incurred during the project - except final
  report
• New principles in FP6
• determined recorded in partners accounts (or
  third parties) according to usual accounting
  rules
• no cost categories but list of ineligible costs
  indirect taxes, duties, interests,

12
Eligible costs direct indirect

• Direct costs
• Costs directly attributed to the project
• Indirect costs overheads
• Costs incurred in direct relationship with
  direct costs attributedto the project

Direct costs Personnel, materials, equipment,
travel
Indirect costs Secretariat, building (rental,
maintenance),
13
Eligible costs direct indirect

• Indirect costs (overheads) age of direct costs
• That age depends on the chosen cost model
• FCF / AC indirect costs 20 of direct costs
• FC indirect costs X of direct costs,
  according to usual accounting practices
• ex for BEA (FC model), indirect costs 52 of
  direct costs

14
Financing Cost Models

• 3 models for
• cost reimbursement
• General Rules
• Choice depends on your usual accounting method
  Can you distinguish the share of projects
  direct costs and indirect costs related to the
  project?
• yes FC / FCF
• no AC

• Full Costs - FC
• Full Costs Flat rate - FCF
• Additional Costs - AC

15
Financing Cost Models

• One legal entity same cost model for all FP6
  contracts
• One exception possibility to change once
• from AC to FCF or FC
• from FCF to FC
•  One-way ticket 

16
Full Cost model - FC

• Actual direct indirect costs
• Indirect costs X of direct costs,
• according to usual accounting practices
• and except subcontracting

• FC requires analytical accounting
• FC not for Physical persons
• FC mandatory for non-SME private companies
• FC interesting if overheads gt 20

17
Full Cost Flat rate model FCF

• New in FP6 !
• Actual direct costs lump sum for indirect costs
• Indirect costs 20 of direct costs, except
  subcontracting

• FCF requires analytical accounting
• FCF interesting if overheads lt 20
• FCF mandatory for SSA CA unless specified
  otherwise in the call

18
Additional Costs model - AC

• Additional costs marginal costs (compared to
  normal recurring costs) not covered by any other
  source of funding
• Actual direct marginal costs lump sum for
  indirect marginal costs
• Indirect marginal costs 20 of direct marginal
  costs, except subcontracting

19
Additional Costs model - AC

• Marginal costs must be related to project
• Ex permanent staff not covered, except
• - if employment contract depends fully or
  partly on additional external financing
• - for project management costs

Costs charged to the project exclude all costs
covered by normal recurring financing
If identifiable justifiable, actual direct
management costs (additional non-additional)
are charged to the project, no overhead.
20
Additional Costs model - AC

• 2 other possibilities to charge personnel costs
  under AC model
• temporary contract to complete a doctorate
• temporary contract to work under EC contract for
  the project

• AC mandatory if no analytical accounting
• AC mandatory for Physical person

21
Which cost model do I use?

• SMEs, non-commercial or non-profit organisations,
  international organisations, universities FC /
  FCF or AC
• depends on accounting system allows the share
  of direct and indirect costs by department to be
  distinguished?
• YES FC or FCF NO AC
• Private companies non SMEs FC mandatory
• Physical persons AC mandatory

22
Payment modalities of EC financial contribution

• Maximum that can never be exceeded
• Exception Additional EC financial contribution
  by supplementary calls for proposals to
• - cover new activities
• - expand the consortium
• Paid to consortium through coordinator
• Coordinator has the obligation to distribute to
  consortium without unjustified delays

23
Payment modalities of EC financial contribution

• System of periodic pre-financing advances
• To assure financial certainty to consortium
• 1st pre-financing within 45 days to date of
  entry into force of the contract (gen.)
• All pre-financing belongs to EC untill accepted
  as final payment potential debt

24
Payment modalities of EC financial contribution

• Payments based on the approval of periodic
  reports
• Audit certificates must accompany reports
• When report is approved, pre-financing turns
  into settled payment

25
Reporting

• Reports to be provided to EC by
• - electronical means
• AND
• - originals by registered mail with
  acknowledgement of receipt
• Periodic Final reports
• - activity report
• - management report (! Financial report !)
• - budget distribution report (only for
  coordinator)

26
Audit certificate

• Certification of the costs (and if relevant
  receipts) claimed under the project for a
  specific period of time
• Commissionned by each contractor of the project
• Performed by eligible external auditor or
  competent officer for public bodies
• Each contractor is free to choose its auditor

27
Auditor

• Independent from the audited contractor
• Qualified to carry out statutory audits of
  accounting documents
• List of independent auditors
• www.fee.be/members/countries.htm

28
Status of the auditor

• External auditor subcontractor
• Competent public officer
• - independent from the audited
  contractor subcontractor
• - official of the audited contractor
• 3rd party

29
Format of audit certificate

• no standard format
• BUT
• the auditor should follow the model proposed by
  the EC

30
Contents of audit certificate

• An audit certificate will certify
• - eligible costs
• - receipts
• - interests yielded (only for coordinator)
• - exchange rate (for non Euro countries)
• - price of the audit certificate

31
Receipts

• types of receipts
• - financial transfers contributions in kind
• from 3rd parties
• - allocated to the contractor specifically
  for use on the project
• - not reimbursed by the contractor
• to the 3rd party
• - income generated by the project

32
Documents needed

• The audit certificate is carried out on the basis
  of the following original documents
• - Form C (Financial statement per activity)
• - time sheets
• - salary slips
• - invoices
• - receipts
• - boarding cards (sometimes)

33
(No Transcript)
34
SALARY SLIP
35
Number of audit certificates

• At least 1 audit certificate per contractor
  covering the whole duration of the project
• For each reporting period for which an audit
  certificate is required
• ex IP/NoE every 12 months
• Always when EC contribution exceeds 750.000 for
  a reporting period

36
Timing issue

• Audits certificates of all contractors must be
  submitted by the coordinator to the EC together
  with reports within 45 days after end of
  reporting period (except final report)
• any problem in the audit certificate process
  will have important consequences

37
Timing issue

• t-60 agree on schedule and procedure with
  auditor
• t end of reporting period to be audited
• t5 provide auditor will all documents
• t25 final check with auditor
• t30 contractor sends audit certificate to
  coordin.
• t45 coordinator sends all audit certificates
  to EC

38
Reimbursement of audit certificate

• Audit certificate costs claimed as
• - direct management costs 100 funding
• - subcontracting no overhead
• Exception
• public officer of the same organisation as the
  audited public body 3rd party
• 100 funding overheads

39
Useful Links

• Model contracts
• http//europa.eu.int/comm/research/fp6/working-g
  roups/model-contract/
• Consortium agreements
• http//www.unite.be
• Intellectual property rights
• http//www.ipr-guide.com
• General FP6 information
• http//www.cordis.lu
• Support
• http//www.cordis.lu/fp6/getsupport.htm

40

• Thank you for your attention
• Alexandre Bonnyns
• Brussels Enterprise Agency
• Rue Gabrielle Petitstraat, 4 bte 12
• B 1080 Brussels
• ? 32 2 422 00 45
• abo_at_abe.irisnet.be