Title: ECOnetus Workshop
1ECOnetus Workshop
- Financial Procedures Regulations for Framework
Projects
European and External Resource Office
11 November 2009
2Workshop Agenda
- 10.00 10.15 Introduction of speakers
explanation of the topic - 10.15 11.15 Comparison of FP6 FP7 Structure,
Financial Procedures Regulations - 11.15 11.30 Coffee
- 11.30 12.30 Preparation of an FP7 budget
- 12.30 13.30 Lunch
- 13.30 14.30 Indirect Costs in FP7
- 14.30 15.00 State Aid Implications
- 15.00 15.15 Coffee
- 15.15 16.00 Audit Requirements
- 16.00 16.30 Question and Answer Session
- 16.30 Close
3Introduction of Speakers
- The European and External Resource Office (EuRO)
assists all researchers with Framework Programme
proposals - EuRO has successfully accessed in excess of 37
million from Structural Funds, and approximately
1.5 million in FP6 funding, including Marie
Curie actions
4European External Resource Office
- Tactics
- Pro-active approach to identifying future
opportunities - Establish quality thresholds
- Progressive control over project management
- Strategy
- To support new initiatives through a one stop
shop of relevant expertise - To co-ordinate activities, secure internal
approval and manage the institutions exposure to
risk
Remit Secure external resources to enable the
implementation, delivery and successful
completion of extra curricula activities and
initiatives that are central to the Universitys
strategic objectives
5European External Resource Office
- Finance Officers
- Monitor project expenditure outputs attainment
- Ensure all expenditure complies with EU
regulations guidance - Compile submit claims
- Construct audit trails
- Monitor income
- Close the project down
- Negotiate with auditors
- European Officers
- Prepare applications for funding
- Agree methodology of implementation
- Cost projects
- Secure internal approval
- Secure external funding
- Monitor implementation and negotiate change of
contract with funding agency
6Brief Overview of FP7 Structure
7- Four programmes corresponding to four basic
components of European research - Co-operation
- Ideas
- People
- Capacities
8FP7 Budget ( billion)
9FP7 Co-operation Programme
- Four sub-programmes
- Collaborative research
- The bulk of EU research funding
- Joint Technology Initiatives
- European Technology Platforms
- 3. Co-ordination of non-Community research
programmes - International Co-operation
- Between EU and third countries
10FP7 Co-operation Programme
- 10 high-level themes bn
- Health 6.05
- Food, agriculture and biotechnology 1.935
- Information and communication technologies 9.11
- Nanosciences, Nanotechnologies, Materials
- new Production Technologies 3.5
- Energy 2.3
- Environment and Climate Change 1.9
- Transport and Aeronautics 4.18
- Socio-economic Sciences and Humanities 0.61
- Security 1.35
- Space 1.43
11FP7 Ideas Programme
- European Research Council
- 7.56 billion - significant funding
- Enhance the dynamism, creativity
- and excellence of EU research in
- all scientific and technological fields
- Frontier research, cutting-edge, world-class
initiatives - Support to individual teams to promote excellence
through a Europe-wide competition - The 3 Rs Recruit, Repatriate, Retain top talent
to EU
12FP7 Ideas Programme
- ERC Starting Independent Researcher Grant
- Only programme to be funded in 2007
- 300m to be committed 200 grants funded for up
to 5 years - Establish ca. 200 new investigators in any field
per annum ca. 1400 in 7 years - Sole selection criterion Excellence of person
proposal - ERC Advanced Investigator Grant
- Start-up expected in 2nd year
- From ca. 250m to gt 1 bn/ year (ca. 3m/
proposal) ca. 200 grants committed per year - Sole selection criterion Excellence of proposal
track record
13FP7 People Programme
- 4.777bn
- Quantitative qualitative strengthening
- of Human Resources in RTD in Europe
- Attracting, training retaining
- researchers in the EU
- Marie Curie Initial training of researchers
- Individual Fellowships Life-long learning
career development - Industry-academia pathways and partnerships
knowledge-sharing scheme (especially SMEs) - International Fellowships (in out)
- Specific Actions Awards for Excellence
14FP7 People Programme
- Initial training
- Marie Curie Research Training Networks
- Marie Curie Host Fellowships for Early Stage
Research Training - Marie Curie actions - Large Conferences
- Marie Curie actions - Series of events
- Marie Curie Chairs
- Industry-academia
- Marie Curie Host Fellowships for the Transfer of
Knowledge - Life-long training
- Marie Curie Intra-European Fellowships
- Marie Curie European Reintegration Grants
- International dimension
- Marie Curie Outgoing International Fellowships
- Marie Curie Incoming International Fellowships
- Marie Curie International Reintegration Grants
15FP7 Capacities Programme
- 4.2 billion
- Research Infrastructures (existing and new)
- Research for the benefit of SMEs
- Trans-national research co-op
technology-transfer - Regions of Knowledge research-driven clusters
- Research potential of Convergence Regions
- Trans-national secondments, research equipment,
- knowledge transfer activities, etc.
- Science in society
- Encourage debate on science technology,
their relation to - society culture
- Support to the coherent development of Research
Policies - International co-operation
- Horizontal support actions and measures (third
countries)
16Comparison of FP6 FP7 Financial Procedures
Regulations
17Comparison of FP6 FP7 Financial Procedures
Regulations
- Move to the full cost model
- Introduction of indirect cost options for FP7
18New Terminology in FP7
19Key Documents
20From FP6 Instrumentsto FP7 Funding Schemes
21Financial rules Forms of grants
- Three forms of grants are proposed for the
Community financial contribution - Reimbursement of eligible costs
- Lump sum amounts
- Flat-rate financing (a percentage for indirect
costs or scales of unit costs) - These may be used to cover the entire financial
contribution from the EC for a funding scheme or
more than one may be used in combination - For most funding schemes, reimbursement of
eligible costs will continue to be the preferred
method, particularly at the beginning of FP7.
Lump sum and flat rate financing will be
introduced gradually and if successful will be
used more extensively - For frontier research actions, the ERCs
Scientific Council will propose appropriate
funding modalities within the terms established
by the RFP (Rules for Participation in FP7) and
the Financial Regulation
22FP7 Contract
- Structure
- Core part Grant Agreement parameters
- Annex I DoW
- Annex II General Conditions
- Annex III Specific Provisions for Funding
Schemes - Annexes IV, V VI Forms A, B C
- Annex VII Form D (Terms of Reference for the
Certificate of Costs) and Form E (Certificate on
the Methodology) (New) - Consortium Agreement mandatory (except if
excluded by Call)
23FP7 Contract Similarities with FP6
- Signed by co-ordinator and EC
- Accession of beneficiaries via Form A
- Later accession of beneficiaries via Form B
- Entry into force upon signature by co-ordinator
and EC
24FP7 Contract Differences Improvements from
FP6
- Changes to financial provisions and reporting
provisions
25Consortium Agreement
- Except where otherwise provided in the call for
proposals, all legal entities wishing to
participate in an indirect action shall draw up
an agreement, hereinafter the consortium
agreement, to govern the following - (a) The internal organisation of the consortium
- (b) The distribution of the Community financial
contribution - (c) Additional rules on dissemination and use
including intellectual property rights
arrangements, as appropriate - (d) The settlement of internal disputes
26Consortium Agreement
- Key point
- Each partner is responsible for their own
finances, and could be subject to an audit
27Implementation of the Project Guarantee Fund
- Beneficiaries are technically responsible for
carrying out the project jointly and severally
towards the Community - But no collective financial responsibility as
under FP6 - Instead Establishment of a beneficiary Guarantee
Fund to cover risks - EC will establish Guarantee Fund and its
modalities for implementation
28Guarantee Fund (GF)
- GF belongs to all beneficiaries of FP7 grant
agreements - All beneficiaries contribute to GF to insure
against financial losses of the project - Contribution 5 of the EC financial
contribution foreseen for each beneficiary - In principle, this amount will be reimbursed at
end of action - Financial interest generated will serve to cover
financial risk
29GF - Ongoing Grant Agreement
- A beneficiary does not reimburse to the
- co-ordinator any amount requested by EC
- Remaining beneficiaries agree to continue with
implementation of grant agreement - EC orders the transfer of an equivalent amount
directly from the GF to the co-ordinator - Amounts transferred from the GF shall substitute
the EC financial contribution not reimbursed by
the beneficiary
30GF - Recoveries after Termination or Completion
of Grant Agreement
- The EC requests the beneficiary concerned to
reimburse the amount due (recovery order) - If payment not made by the due date, sums may be
recovered by offsetting them against any sums the
EC owes to the beneficiary concerned - Where offsetting is not possible, the EC recovers
from the GF the amounts due
31GF Recoveries to the Benefit of the GF
- Where amounts have been
- Transferred from the Fund to an ongoing project,
or - Recovered from the Fund by the EC
- the beneficiary owing them shall reimburse the
GF - For this purpose, the EC shall issue a recovery
order against this beneficiary to the benefit of
the GF
32GF Financial Viability and Guarantees
- Exoneration of verification of financial
viability of beneficiaries (excluding
co-ordinators) requesting less than - 500,000
- No bank / financial guarantee may be requested
33Preparation of an FP7 Budget
34Evaluation Criteria
Appropriateness of allocation of budget is
evaluated under Implementation
Source UKRO
35Preparation of an FP7 Budget
- FP based on principle of co-financing
- EC does not fund 100 of costs, with some
exceptions - No financial profit
- Must match the budget to the corresponding work
packages project activity - Resources to be committed (2 pages of Proposal)
- Can applicants illustrate a critical mass of
resources? Have applicants accessed other funding
sources? - Can applicants illustrate integrated financial
planning (budget distribution, accuracy, cash
flow)?
36Reporting Reimbursement of Eligible Costs
- The definition of eligible costs has been
simplified - Previous three cost reporting models have been
abandoned - Participants can include direct indirect costs
or have the option of a flat rate for indirect
costs - Costs will be determined according to the usual
accounting and management principles of the
participants to achieve the project objectives
based on principles of economy, efficiency and
effectiveness
37Reporting Reimbursement of Eligible Costs
- The Community financial contribution will cover
- A maximum of 50 of eligible costs minus receipts
both for research and for demonstration
activities, with a top up of a maximum of 25 for
research activities for SMEs, public bodies,
secondary and higher education establishments and
non-profit research organisations - 100 of frontier research actions for all
entities - Up to 100 for all other activities, including
coordination and support actions, and training
and career development of researchers, for all
entities
38Maximum Reimbursement Rates
Co-ordination Support Actions, Training,
Management
39Reporting Reimbursement of Eligible Costs
- The maximum indicated on the previous table are
applied to all eligible costs even where part of
the reimbursement of costs, or even the full
funding of the project, is based on lump sums or
flat rates - For Networks of Excellence, a special lump sum is
proposed, with a fixed amount per researcher per
year. Portions of the lump sum would be paid
periodically according to indicators showing
progressive implementation of the Joint Programme
of Activities (JPA)
40Eligible Project Costs
- Costs incurred for the implementation of the
project shall meet the following conditions in
order to be considered eligible. They must be - Actual
- Incurred by the beneficiary
- Incurred during the duration of the project
- Exceptions costs incurred in relation to final
reports, reports corresponding to the last
period, certificates on the financial statements
when requested for the last period, final
reviews, etc., incurred during the period of up
to 60 days after the end of the project or the
date of termination, whichever is earlier
41Eligible Project Costs (Continued)
- Determined according to the usual accounting and
management principles and practices - The accounting procedures used in the recording
of costs and receipts shall respect the
accounting rules of the State in which the
beneficiary is established. They shall permit the
direct reconciliation between the costs and
receipts for the implementation of the project - Used solely to achieve project objectives and its
expected results, in a manner consistent with the
principles of economy, efficiency and
effectiveness - Recorded in the accounts of the beneficiaries
- Exclusive of non-eligible costs
42Ineligible Costs
- Indirect Taxes, for example VAT
- Profit
- Interest Owed
- Provision for future losses or charges
- Costs declared, incurred or reimbursed from
another EC project - Return on Capitol employed
- Debt and debt service charges
- Excessive or reckless expenditure
43Personnel Costs
- Use Actual costs
- Include on costs Statutory deductions
- Include a cost of living increase 3 per annum
is a good guide - Bear in mind the Entitys policies and the rate
of inflation in the Member State concerned
44Average Personnel Costs
- Average personnel costs accepted if
- Consistent with the management principles and
accounting practices of the beneficiary, and - They do not significantly differ from actual
personnel costs if identified according to a
methodology approved by the EC (NEW)
45Management Costs
- The 7 limit of total costs in FP6 has been
removed in FP7 - The EC will fund 100 of Management Costs
- BUT Participants are expected to self-regulate
- Costs must be reasonable
- Management of the consortium activities includes
- Maintenance of the consortium agreement, if it is
obligatory - The overall legal, ethical, financial and
administrative management including for each of
the beneficiaries obtaining the certificates on
the financial statements or on the methodology - Implementation of competitive calls by the
consortium for the participation of new
beneficiaries. - Obtaining any financial security such as bank
guarantees, when requested by the Commission - Any other management activities foreseen within
the work programme, except - co-ordination of research and technological
development activities
46Key Points
- Discuss budget early
- Costs of activities discussed first
- Each partner is to be fully aware of the
contribution required - Remember limits imposed by EC
- Compliance with State Aid Rules
- Researchers Administrations should both be
involved
47Preparation of FP7 Budget
- Fully worked example will follow the next section
on Indirect Costs
48Coffee
49Indirect Costs in FP7
50What are Eligible Indirect Costs?
- Eligible indirect costs are the costs which are
not attributable directly to the project - They will have been incurred in a direct
relationship with the direct eligible costs
attributed to the project
51Indirect Costs for Public Sector organisations
- Public Sector organisations have 2 choices
- available when deciding how to calculate
- Indirect costs for the project
- Flat rate at 60 of total eligible costs (up to
end of 2009) - (Relatively Simple)
- Calculate indirect cost per staff hour according
to the organisations published annual accounts
(Can be complicated)
Note For CSA (Co-ordination and Support
Actions), limit of 7 of direct costs
52Indirect Costs for Industrial Partners
- Industrial partners have 2 choices available when
- deciding how to calculate indirect costs for the
- project
- Flat rate at 20 of total eligible costs
- (Relatively Simple)
- 2. Calculate indirect cost per hour according to
the organisations published annual accounts (Can
be complicated)
Note For CSA (Co-ordination and Support
Actions), limit of 7 of direct costs
53Option 1 Flat Rate _at_ 60
- Simplified Project Costing
- Staff Costs 350 000
- Other Costs 350 000
- Total Costs 700 000
- Overheads 60 420 000
- Total Project Costs 1 120 000
Note Apply relevant reimbursement rate to total
project cost, not including management costs
54Flat-Rate Budget for FP7 Research Project
55Flat-Rate Budget for FP7 Demonstration Project
56Option 2 Calculate Actual Indirect Cost Rate
Eligible Costs
Total Operational Costs
Eligible Direct Costs
In-eligible Direct Costs
In-eligible In-direct Costs
Eligible In-direct Costs
Total Eligible Cost Pool
57Indirect Costs A formula based approach
Total Research Costs
Research Hours
Total Operational Costs
Technical Costs
Administration Costs
Management Costs
58Staff Time The Cost Driver
Eligible In-direct Costs
Administration Staff Costs
Technical Staff Costs
Management Staff Costs
Indirect cost per delivery hour 21.77
Academic Research Hours
Time
Project based non Delivery Staff Time
59Staff time The cost driver
- Convert all delivery staff to full time
equivalents (ftes216 days _at_7.4hrs) to determine
total number of academic hours worked during
financial year. - Convert all other staff to a cost base and add
value to eligible indirect operating costs. - Remove the time and monetary value of delivery
staff and other staff that are working on
externally funded projects from the above
calculations - Divide total eligible in-direct operating costs
by total academic and support staff hours - Gives a single hourly rate attributable to all
projects that attract Structural Funds.
60Reconciliation to Year end Accounts
- Hourly overhead rate for year N is calculated
after the annual accounts have been audited. - Overhead rate for year N is then applied to all
applications submitted during year N1. - Projects often start some 6-12 months after the
application has been formally approved. - Overhead rate could therefore be upto 2 years in
arrears.
61Reconciliation to Year end Accounts
- Example of timing for Indirect cost claimed
- Actual overhead rate for 2005 is 25 per staff
hour. - Overhead rate in applications for a 3 year
project 2006-8 uses the rate for 2005. - Actual overhead rates for 2006-7 can be amended
prior to submitting the final claim. - Overhead rate for 2008 cannot be used (not
known). - Take a prudent approach to final year, reconcile
accounts when relevant hourly rate is available. - Any significant deviation will be resolved when
the project is audited.
62Advantages of Staff Based Overhead Methodology
- Single hourly overhead rate used for delivery and
support staff. - Used for ESF, ERDF and most other EU funding
programmes. - Auditable, no risk of double counting.
- ASSOCIATED RISKS
- Has to be applied consistently
- Dependent on evidence of staff activity
- MITIGATION Constant monitoring.
63Lunch
64State Aid Implications
65State Aid Rules Guiding Principles
- Treaty of Union commits the EU to principles of
an open market economy with free
competition - Three main objectives
- Prohibit the provision of state aid to ensure
that the richer nations/regions do not provide
subsidy to the private sector to enhance their
position distorting the market - To allow compatible state aid that addresses
regional economic disparities and market
failure - To provide a transparent framework under which
compatible aid is awarded
66 undertaking, entity or end user
- The concept of an "undertaking" entity or end
user embraces public sector as well as private
sector entities - An undertaking" means any entity or end user
which is engaged in economic activities - It does not have to be profit-making so long as
the activity carried out is one which in
principle has commercial competitors - Charities, universities, research institutions
and voluntary organisations may be caught within
the meaning of "undertaking" if they carry out
economic activities
67What is State Aid?
No formal definition but...
- ...any form of aid is incompatible with Common
Market if it distorts or threatens to distort
competition within the EU
- In addition to EU programmes, SAR apply to
- National/ local government aid
- Any source of funding the public sector controls
68The Four Tests to establish Aid
- State aid exists within the meaning of Article
87(1) - where all four "tests" in that Article are met
- provided through public resources (EU or Member
State) - favours certain undertakings or the production of
certain goods (selectivity) - distorts or threatens to distort competition
(economic advantage) - potential to affect trade between Member States
69Article 87(I)
Article 87(2)
Article 87(3)
87 (3) Schemes need to operate under regulations
otherwise aid is deemed to be illegal.
Compatible Aid
Aid that may be compatible
Meets 4 tests
Social Aid (individuals)
a) Development of activities where aid does not
affect the single market (Convergence )
Illegal
b) Develop activity in areas of low EA, high
unemployment (Competitiveness Employment)
Natural Disasters Exceptional Circ.
c) Promotes important pan EU projects
East Germany
d) Promotes Culture Heritage
Other EU
e) Other as specified by Commission agreed by
Council
70Horizontal Aid
Regional Aid Tier 1 2
Vertical Aid Industrial Sectors Coal, Steel,
Motor Vehicles, etc
712007-2013
200,000 3 Years
De Minimis
Assisted Area T1
Regional Aid
Intermediate Areas T2
Multi-Sectoral Framework
Non Assisted Areas
State Aid
SME
Employment
Horizontal Aid
Training
Co. in Trouble
RD
Environmental
Sector Specific Rules
Vertical Aid
Notified Scheme
None of Above
72Common Factors
- Aid intensity includes ALL public sector support
for a scheme/project - Aid intensity gross amount of aid expressed as
a percentage of the projects eligible costs - Eligible costs identified before deductions for
direct taxation - In kind aid (not of a cash benefit) shall be the
equivalent of the cash value of the benefit
73Proximity to Market
- Three categories of RD
- Fundamental Research activity designed to
broaden knowledge not linked to industrial or
commercial objectives (Max 100) - Industrial Research planned research aimed at
acquisition of new knowledge geared at developing
new products, processes or services (Max 75) - Experimental Development (previously known as
pre-competitive research) shaping of results of
industrial research into plan, arrangement or
design for new, altered or improved products (Max
50)
74Activities outside the RD Framework
- State Aid for RD is generally subject to the RD
framework - except where public funding
- Is awarded via an open tender procedure
- Supports fundamental research
- Supports public, non-profit-making
higher-education or research establishments
where - the results are made available to Community
industry on a non-discriminatory basis - studies are carried out on behalf of or in
collaboration with industry, on condition that
the research establishment or companies carrying
out the research have paid for it and the results
are published
All of the above can attract 100 Funding
75 IPR Protection or Dissemination
- Full publication dissemination negates any
competitive - advantage therefore there is NO State Aid
- Protection of IPR (Partial) provides economic
advantage in - a competitive market and will have the potential
to affect - trade between Member States therefore State Aid
exists - If State Aid exists the sponsor must administer
the project - appropriately and provide management products to
verify - the fact
76Activities supported within the RD Framework
compatible with FP7
- Personnel costs
- Instruments Equipment
- Buildings land
- Consultancy
- Operating expenses
(materials, supplies etc) - Indirect costs
- Technical/Feasibility Studies
- Patenting Costs
77RD Industrial Research
Assisted Areas Entity SME FP7
XB Max
Tier 1 Areas
60
15
15
10
75
Tier 2 Areas
55
15
15
10
75
Non Assisted Areas
50
15
15
10
75
78RD Experimental Development
Assisted Areas Entity SME FP7
XB Max
Tier 1 Areas
35
15
15
10
50
Tier 2 Areas
30
15
15
10
50
Non Assisted Areas
25
15
15
10
50
79Definition of an SME
- Medium Enterprise
- lt 250 employees
- Turnover lt 50 m or balance sheet lt 43 m
- lt 25 of capital or voting rights owned by an
enterprise that is not an SME
- Small Enterprise
- lt 50 employees
- Turnover lt 10 m or balance sheet lt 10 m
- lt 25 of capital or voting rights owned by an
enterprise that is not an SME
- Micro Enterprise
- lt 10 employees
- Turnover and balance sheet lt 2 m
80RD Aid Intensity under SME Block Exemption
Research Ceiling Region FP7
XB MAX
Fundamental
100
Industrial
60
10
15
10
75
Experimental Dev
35
5
15
10
50
Amending Regulation 364/2004 Introduced rates for
RD for SMEs within SME Block Exemption
81Example
Total Project Cost 1.1 M Total
available 770,000
82Coffee
83Audit Requirements
84General Principles
- The Certificate on the Financial Statements is a
document provided by an external auditor - It provides reasonable assurance of project
costings to the EC - The certificate is the main assurance mechanism
in the processing of costs claimed and their
subsequent payment
85General Principles (Continued)
- The submission of an audit report does not waive
the right of the EC to carry out its own audit - Each beneficiary of a project must each obtain a
Certificate on the financial Statements
86Audit Requirements When?
- Periodic reports shall be submitted to the EC
regarding eligible costs, financial interest
yielded by pre-financing, and where appropriate,
a Certificate on the Financial Statements - It is usually an annual report
87Audit Requirements Who?
- In the case of
- Public Bodies
- Research organisations
- Higher secondary educational establishments
- The above entities may opt for a competent public
officer to provide their certificate on financial
statements and on the methodology, provided that
the relevant national authorities have
established the legal capacity of that competent
public officer to audit that entity and that the
independence of that officer, in particular
regarding the preparation of the financial
statements, can be ensured
88Audit Requirements Who?
- In the case of the private sector
- Certificates on the financial statements and on
the methodology shall be prepared and certified
by an external auditor and shall be established
in accordance with the terms of reference - Each beneficiary is free to choose any qualified
external auditor, including its usual external
auditor, provided that the cumulative following
requirements are met - i) the auditor must be independent from the
beneficiary - ii) the auditor must be qualified to carry out
statutory audits of accounting documents in
accordance with national legislation implementing
the 8th Council Directive on statutory audits of
annual account and consolidated accounts or any
Community legislation replacing this Directive.
Beneficiaries established in third countries
shall comply with national regulations in the
same field and the certificate on the financial
statement provided shall consist of an
independent report of factual findings based on
procedures specified by the Community
89Audit Requirements Thresholds
- Notwithstanding the financial regulations and the
implementation rules, a certificate on the
financial statements shall only be compulsory
when the cumulative amount of interim payments
and balance payments made to the participant is
equal to 375,000 or more - For actions of a duration of 2 years or less, one
certificate of financial statements shall be
requested from the participant, at the end of the
project
90Audit Requirements Thresholds(Continued)
- For actions entirely reimbursed by means of lump
sums or flat rates, Certificates on the Financial
Statements shall not be required
91Form E Certificate on the Methodology (New)
System Verification
- Aims at certifying the methodology of calculating
(average) personnel costs overhead rates - Valid throughout FP7, on a voluntary basis, must
be accepted by EC - Particularly aimed at legal entities with
multiple participation - Waives obligations of certificates for interim
payments - Simplified certificate for final payments
92Form E Certificate on the Methodology (New)
Advantages
- EC will receive consistent certifications and
cost claims clean from errors - Beneficiaries will gain legal security?
- Beneficiaries in many projects will have to
submit less certificates - EC beneficiaries will have fewer processes to
handle fewer certificates less money spent on
certificates - EC gains significantly in terms of assurance on
legality and regularity
93List of frequent errors found During Audit
94EC Procurement Thresholds
- Directives set out
- Minimum thresholds for OJEU (Official Journal of
the European Union) - Rules to be observed in advertising tenders
(duration, selection criteria etc.) - Definitions of different types of contract/tender
- Rules on calculating value of contracts
- Directives set out best practice, thresholds
identify method of advertisement
95Main Contract Thresholds
(From 31 January 2006)
a) Government Departments b) Other (including
Universities and Research Institutes)
96Non-Substantiation of Working Time
- Staff time must be recorded throughout the
duration of the project by reliable means
(including time sheets) - A simple estimation of hours worked is not
sufficient - There must be a system in place that allows any
time worked on the project to be followed and
audited
97The Calculation of Hourly Personnel Rates
- The hourly personnel rate is to be calculated as
the actual costs (gross remuneration plus
employers proportion of on costs) divided by the
number of productive hours - Audit evidence indicates that in general a
plausible number of productive hours is in the
order of 1600 hours per year - 1600 calculated by 216 days x 7.4 hours
98Indirect Costs
- Inclusion of non-chargeable activities like time
spent by the beneficiary on internal research
projects - Use of estimated rates
- Inclusion of notional costs (internal re-charges)
- Inconsistent method across years used to
calculate indirect costs
99Substantiation of costs claimed
- The beneficiary is obliged to keep full
supporting documentation to justify the costs
claimed on file - In order to substantiate costs for the project,
all documentation for the purchase must be kept
on file so that there is a proper audit trail
100Question Answer Session
101Close
- Thank you for your attention!
102Contact Details
- Martyn Jeffries
- mjeffrie_at_glam.ac.uk