1

Financial Aspects

David PelsFinancial Officer-EACEA A1

12-13 February 2020

1. Declaration of honours.

2. General rules of eligibility of the costs.

3. Which are the costs that can be considered under the "definition of staff"

and under what conditions?

4. Calculation of the annual productive working days.

5. Calculation of the daily/hourly staff cost.6. Remaining in line with the application budget (terms of working days and categories for staff costs).

7. Timesheets .8. Remuneration rates.9. Supporting documents (what is expected in terms of supporting documents).

…/…

2

Index

10. Subsistence costs ("actual costs spent" or "per diem").

11. Equipment (different elements to take into account for reporting ).

12. Subcontracting.13. Procurement rules of application .

14. Other costs .

15. Operational grant ( definition consequence).

16. Budget transfers and amendment.

17. Exchange rates to be used.

18. Audit.

-Audit certificate.

-Ex-Post Audit.

3

Index

GA = Grant AgreementSC = Special conditionsGC = General conditionsGCPM = Guidance on contractual

Project Management.

GENERAL RULES

1. At application stage the project coordinator has signed a declaration in whichshe/he declares that all the partners have the operational capacity to carry outthe proposed actions/work programme. What does this mean exactly ?

By signing the declaration of honours the legal representative declares that eachpartner has the operational capacity. This means that they have sufficient staff,(number of employees and qualifications), premises (facilities and equipment) tocarry out the tasks allocated to them, based on what is presented in the proposal andwithin the eligibility rules.

2. What are the general rules of eligibility of the costs?

"Eligible costs" of the action are costs actually incurred by the beneficiary which meet the following criteria:

a) Incurred within the eligibility period with the exception of costs relating to the request for payment of the balance and the corresponding supporting documents ;

b) Indicated in the estimated budget of the action ( annex III)

c) In connection with the action and necessary for its implementation;

d) Identifiable and verifiable;

e) Comply with the requirements of applicable tax and social legislation; and

f) Reasonable, justified, and comply with the principle of sound financial management, in particularregarding economy and efficiency.

GA GC art. II.19

STAFF

3. What are the costs that can be considered under the "definition of staff" and onwhat conditions?

• Statutory staff, having either a permanent or a temporary employment contractwith the beneficiary;

• Temporary staff, recruited through a specialised external Agency;• Other types of contracts as far as the national labour law assimilates them to

staff;• Under certain conditions secondment and in-house consulting;• Any other specific situation will be treated on a case by case approach.

GA GC art II.19 ; GCPM art.4.1.1

4. How do you calculate the annual productive working days?

On the basis of 8 hours/day this makes a total of 1.736 hours in a year

(217 days x 8hrs/day = 1.736 hours per year)

GCPM art.4.1.1 a)

1 Total number of days in a year (2017) 366

2 Less weekends 105

3 Less public holidays 20

4 Less annual leave actually taken 24

Total number of productive days in the year

(1-2-3-4)

217

5. How do you calculate the daily/hourly staff cost? Examples:

Annual gross salary + social charges48.000 €

----------------------------------------------------Total actual annual productive

working days or hours(1.736 hours)

This results is an hourly rate of 27,65€ and a daily rate of 221,20€ in the above examplewhere one works 8 hours a day.

GCPM art.4.1.1 a)

6. How important is it to remain in line with the application budget morespecifically in terms of working days and categories for staff costs?

The budget for staff has been assessed at application stage in terms of staffcategories and number of days/work as adequate to carry out the project.

Any significant deviation will be questioned at final report assessment stageaccording to the results and could be reduced impacting thereof the amount of thefinal grant.

GA GC art.II.19.1

7. How do you register time worked on the project?

Minimum information:

GCPM art 4.1.1a)

8. Can your remuneration policy be different for staff working on the project fromstaff working on "normal tasks within your organisation"?

The rates at which staff is charged to the project must correspond to theBeneficiary's normal policy on remuneration (documented by a salary grid, long-termwork contracts etc…).

GA GC art.II.19.2 ; GCPM art 4.1. a) p15

"Personnel costs charged to a project receiving an EU grant should not be inflated, but remain in line with the usual remuneration policy of the beneficiary."

9. Costs shall be supported by evidence. Provide examples of supporting documentsto keep at the disposal of the Agency, more specifically for staff costs.

• Existing employment contract with the organization or the seconding entity;• Monthly salary slips or a copy of payroll issued by HR Department;• Timesheets or equivalent system ;• Calculation of the hourly or daily rate requested together with the official

documents on which this calculation is based;• Proofs of payment;• If secondment : secondment letter/agreement;• In case of specific contract linked to the project, specific indication of tasks,

reference to the project, to the duration of the contract and the hourly/daily rateshould be indicated.

• The usual accounting documents such as invoices, and proofs of payments

TRAVEL & SUBSISTENCE

10. Should you pay subsistence costs on the basis of "actual costs spent" or "perdiem"?

Reimbursement must be based on the existing internal rules of the beneficiaryorganisations and/or on the basis of actual costs (reimbursement of receipts).

If in your organisation there are internal rules for missions, you have to ensure thatthese rules are respected. If there are no existing rules prior to the beginning of theproject you have to work on the basis of actual costs, keeping in mind the generalrules of eligibility…

The number of days of a meeting needs to be adequate and if your meetings are unrealistically long. The Agency when assessing the reports could decide to cut the costs if the length of some meetings is unjustified.

GA GC art. II.19.2 ; GCPM 4.1.1 b) & c) p19

EQUIPMENT

11. What are the different elements to take into account for reporting the costs ofequipment?

GA art II.19.2 ; GCPM 4.1.1 d) p21

12. SUBCONTRACTING

Subcontracting refers to the implementation of specific tasks being part of the project as described in the annex to the Grant agreement, by a third party, to which a procurement contract has been awarded by one or several beneficiaries. In this case, the general conditions of the Grant agreement set out a series of conditions as regards the eligibility of subcontracting costs (i.e. execution of a limited part of the project, maximum %, etc.).

Coordination and/or project management tasks represent core activities and may not be subcontracted. Τhe tasks concerned must be set out in the description of the project and the estimated costs of subcontracting must be clearly identifiable in the estimated budget.

Any recourse to subcontracting while the project is under way, if not provided for in the grant application, shall be communicated to the Agency for approval. The subcontracted third party may not be employed by any of the beneficiaries.

=> Follow internal Rules and National Rules.

GA art II.19.2 ; GCPM 4.1.1 e) p22

OTHERS

13. Do procurement rules apply to anything that is purchased?

• Yes, anything purchased has to follow internal and national rules as well asprocurement rules.

14. Should you declare costs of lunch/dinners of meetings in the category "othercosts" ?

• Catering costs for a meeting or other event (where those being provided for arenot members of the Contractor or Partner organisations) can be declared underthis budget category.

• In case a partner pays for a common meal, the relevant participant's per diemmust be reduced accordingly (and the financial report should explicitly indicatesuch cases). Under no circumstances should the relevant amounts be charged tothe project twice.

INDIRECT COSTS

15. What is an operational grant and what is the consequence if one of the partnersreceives an operational grant during the eligibility period of your project?

• Operating grants finance the operating expenditure of a body pursuing an aim ofgeneral European interest or an objective that forms part of an Union policy;

• Indirect costs shall not be eligible under an action grant awarded to a beneficiarywho already receives an operating grant from the Commission during the periodin question.

GCPM art II.19.4 h)

TRANSFERS BETWEEN BUDGET CATEGORIES

16. What is the maximum amount that can be transferred between budget headings without a request for amendment, in the example below?

GA SC art I.8

Heading A Staff costs 300.000 € Max. 30.000 €

Heading B

Travel &

Subsistence

50.000 €

Max. 20.000 €Equipment 0 €

Subcontracting 60.000 €

Other costs 90.000 €

Indirect costs 35.000 € NA

• 17. Exchange rates.

18 . AUDIT REPORT

What is the Audit report of factual findings?

• The auditors will certify all costs linked to the project after the end of the project.• Use the mandatory template.• Ensure that all supporting documents are made available to the auditor. The agency will not

accept costs listed by the auditor as not supported by adequate documentation.• The report of factual findings has to be sent at final report stage only; together with its annexes

(the engagement letter,...).• Keep and maintain exhaustive and appropriate financial documentation about the project for a

period of 5 years after final payment/recovery (ex-post audits).GA GC art II.27 II.27.9

GA I.4.4 c) Audit certificates

The Payment of the Balance shall be accompanied by :

GA SC art.I.4

Type 1: 60.000 -750.000 Eur

Type 2 : > 750.000 Eur

"Report of Factual Findings on the Final Report Type I" (annex VII)

1. Procedure to be Performed by the Auditor.

2. Template of the Engagement Letter.

3. Template of the Audit Certificate .

NB: please discuss any findings for which you do not agreewith your auditor before sending us your Audit Certificate.

Thank you for your attention !