Handbook for EU Programm

8/10/2019 Handbook for EU Programm

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Project Implementation Handbook

for the

Hungary-Croatia IPA Cross-border Co-operation Programme2007-2013

CCI Number: 2007 CB16 IPO 003

Approved by the Managing Authority on 1 February 2013

Regarding the projects selected in the frame of the3rdCall for Proposals


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List of contents

1 Introduction, background ...............................................................................3

2 Responsibilities and tasks of the Lead Beneficiary.........................................42.1 Lead Beneficiary principle and co-operation among partners (practical guidance)..42.1.1 Partnership Agreement...........................................................................................52.2 Concluding the Subsidy Contract for EU Contribution.............................................62.2.1 Modification of the EU Contribution Subsidy Contract, other project changes.......112.3 Reporting and Reimbursement Process of the EU Contribution............................162.3.1 Preparation costs .................................................................................................162.3.2 Progress Report ...................................................................................................172.3.3 Preparation and content of the Application for Reimbursement ............................202.3.4 Procedure of reimbursement of EU Contribution ..................................................212.3.5 Final Project Progress Report...............................................................................222.3.6 Project Follow-up Report......................................................................................242.3.7 Monitoring visits....................................................................................................253 ANNEXES .....................................................................................................26


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1 Introduction, background

The Project Implementation Handbook of the Hungary-Croatia IPA Cross-border Co-operation Programme 2007-2013 was developed on programme level and based on thefollowings:

COUNCIL REGULATION (EC) No 1085/2006 of the 17th of July 2006establishing an Instrument for Pre-Accession Assistance (IPA);

COMMISSION REGULATION (EC) No 718/2007 of the 12th of June 2007implementing Council Regulation (EC) No 1085/2006 of the 17 th of July 2006establishing an Instrument for Pre-Accession Assistance (IPA) (hereinafterreferred to as the IPA Implementing Regulation);

Hungary-Croatia IPA Cross-border Co-operation Programme 2007-2013,approved by the European Commission on 13 March 2008, Decision No.C(2008)911 (hereinafter referred to as the Programme);

Call for Proposals package of the 3rd Call for Proposals launched on 22November 2011, with special attention to the Guidelines for Applicants and theHandbook to Tourism Projects;

Experience gained during the implementation of the 1stand 2ndCall projects ofthe Hungary-Croatia IPA CBC Programme and the past programmes: InterregIIIA in Hungary and Phare CBC in Croatia.

The Project Implementation Handbook is intended to guide Lead Beneficiaries (LB) andProject Partners (PP) of operations in the implementation phase on questions related toadministrative and financial management, on monitoring, reporting and control

procedures and on other programme related requirements. It gives advice on questionsof general importance to all actions.

Should there be any amendments made to the Handbook due to legislative changes orother requirements which influence implementation of already approved projects, theywill be available on the official website of the Hungary-Croatia IPA Cross-border Co-operation Programme 2007-2013, www.hu-hr-ipa.com.

For specific problems related to your project please contact the Joint TechnicalSecretariat (JTS) for advice. You can find the contact details on the above-mentionedofficial website.

We wish you success in the implementation of your project!


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2 Responsibilities and tasks of the Lead Beneficiary

2.1 Lead Beneficiary principle and co-operation amongpartners (practical guidance)

All projects must follow the so-called Lead Beneficiary Principle:

The Lead Beneficiary principle introduces responsibilities on partner level, meaning thateach PP has its own responsibility till the limit of the tasks undertaken and fundsrequested. The aim of this main programme level principle is to contribute to the properand effective functioning of cross-border partnerships, to emphasize the sustainablecross-border co-operation leading to sustainable actions, results and impacts.

The LB shall be solely responsible towards the programme management structure forthe implementation of the terms of the EU Contribution Subsidy Contract, as well as forthe timely and correct reporting towards the JTS.

The delegated LB shall manage the project implementation process, shall co-ordinatethe work of the partnership, and shall fulfil administrative and professional tasks. The co-operation between the PP-s shall be established in order to serve the successfulimplementation of project activities. The LB shall guarantee that the PP-s understandand are aware of the activities that have to be fulfilled and shall find and develop themost efficient way and source of communication.

The overall tasksof an LBare the following:

Conclusion of the EU Contribution Subsidy Contract;

Overall project co-ordination;

Activities linked to project management;

Continuous contact and information of PP-s on project progress; Preparation of Progress Reports (PR) and Applications for Reimbursement (AfR);

Submission of the PR-s and AfR-s to the JTS and making revisions if required;

Receiving the EU contribution and transfer the relevant amounts to the PP-s;

Maintenance of separate accounting for project implementation purposes in amanner ensuring the identification of each financial operation within the project;

Complying with European Union regulations and with the relevant nationallegislation for the whole partnership, with special regard to public procurement,State Aid, publicity, furthermore rules on sustainable development and equalopportunities;

Handling irregularities;

Managing activities related to project closure;

Follow-up of the project results after project closure, ensuring the sustainability ofthe project results.

.


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2.1.1 Partnership Agreement

The LB and the PP-s shall lay down the arrangements for their relation andresponsibilities in the project in an agreement. As the EU Contribution Subsidy Contractestablishes a legal base between the Managing Authority (MA) and the LB, thePartnership Agreement establishes a legal base between the LB and all PP-s;

accordingly, the LB should ensure that the Partnership Agreement has been signed byall legally authorised representatives of the PP-s included in the partnership consortium.

The Partnership Agreement shall give an overview of the PPs role in the project,activities to be fulfilled, timeframe of the activities, and relationship between the PP-s, aswell as the procedure used in case of disputes. The agreement shall be prepared in away to cover all the special situations that might occur during the project implementationphase, as well as steps to be taken following project closure. The PP-s shall agree onthe ownership of the project results, on the ways to ensure the achievement andsustainability of the project results, and on solutions regarding the handling of risksituations. The PP-s shall be fully committed towards successful project implementation.

The Partnership Agreement lays down provisions regarding:

Activities of the LB and the PP-s in the Project,

Specific obligations of the LB,

Obligations of the PP-s,

Specific obligations of the Project Partners from Adjacent Region,

Responsibilities of the LB and of the PP-s,

Reporting obligations of the PP-s,

Audits,

Information and publicity,

Ownership Use of Results, Changes in the project partnership,

Irregularities and the repayment of funds,

Co-operation with third parties, assignment.

It is important to point out that the Partnership Agreement can be further amended bythe PP-s. Modifications of the Partnership Agreement might cause the necessity ofmodifications to the EU Contribution Subsidy Contract as well. Due to this LB-s and PP-sare required to carefully plan the division of tasks and finances in the framework of theirpartnerships.

In a case where the LB organisation is dissolved without a legal successor, themaintenance of project results shall be ensured by the remaining PP(s) who have toconclude a written agreement (property rights agreement) and have to submit it to theMA while in parallel time notifying the JTS.

In a case where one of the PP-s is dissolved without a legal successor, the LB bears theresponsibility for reaching the written agreement (property rights agreement) with theremaining PP(s), and it has to submit it to the MA while in parallel notifying the JTS. Incase there was only one PP in the project and it is dissolved, after the project


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implementation the LB has to maintain the project results, of which it is obliged to informthe MA and the JTS in an official letter.

2.2 Concluding the Subsidy Contract for EU Contribution

The EU Contribution Subsidy Contract is due to guarantee on one hand the rights andobligations of the LB, on the other the rights and duties of the MA, being the responsiblebody for the correct use of EU Contributionwithin the framework of the Programme.

After the Joint Monitoring Committee (JMC) decision, the EU Contribution SubsidyContract shall be concluded between the LB and the MA. As a first step the letter onthe award of subsidy issued by the MA, constituting the legal basis for contracting issent to the successful LB; it contains all relevant information and condition(s) essentialfor contracting. For concluding the EU Contribution Subsidy Contract the LB has tosubmit all listed documents and has to fulfil all conditions stipulated in the letteron the award of subsidy, in general within 30 or 60 calendar days following thereceipt of the respective letter. The completion is calculated on the basis of the

date of the stamp of posting (in case of postal or courier service delivery) or onthe basis of the proof or receipt issued by the JTS (in case of personal delivery).Upon negotiation between the LB and the JTS, the fulfilment of conditions can also beaccepted without request for missing documents within seven working days from thereceipt of documents submitted by the LB (see registry number (iktatszm) of VTINonprofit Ltd. or proof or receipt issued by the JTS).

In duly justified cases, before the expiration date, the LB can ask the JTS in writtenform for the extension of the deadline for fulfilment of contracting conditions only once,for a maximum of 30 calendar days period.

Lack of complete fulfilment of stipulated documents and conditions after the expiration ofthe deadline might result in the withdrawal of the awarded subsidy by the MA.

The documents listed in the letter on the award of subsidy for concluding the EUContributionSubsidy Contract which have to be submitted to the JTS are the following:

No Document Comment

1.

Original documents proving thefulfilment of the conditions set bythe JMC in its co-financing decision

(e.g. modified AF Sheets, otherdocuments, declarations,explanations etc.)

Only relevant if the project was approvedwith conditions.

Original documents connected to thefulfilment of the conditions set by the JMCfor contracting in the form required in theformulation of the conditions, each

document being certified by the legallyauthorised representative of the LB (exceptfor letters of support / other declarationswhich are issued by third parties).Compulsory templates will be provided bythe JTS if applicable.

2. Information on eventual changes inthe data as supplied in the

In form of original declarations, certified bythe legally authorised representative of the


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No Document Comment

application, concerning the LB orany of the PP-s

(e.g. name of legally authorisedrepresentative, specimen of

signature, address, contact detailsetc.; VAT status of Hungarian LBand/or PPs)

individual LB/PP affected by the change(s).There are no compulsory templates.

Declarations on VAT status (only relevant inHungary) have only to be submitted if

changes have occurred since thesubmission of the project proposal. (In thesecases the template of the VAT declarationas published with the application package ofthe 3rdCall for Proposals has to be used.)

3.

Original declarations of the LB andof the PP-s, certified by the legallyauthorised representative,concerning the current non-

existence of the reasons forexclusion as listed in Chapter 3.1.2of the Guidelines for Applicants

Declarations will have to be submitted onlyfor those organisations where changes inthe compliance with the exclusion criteriahave eventually occurred. There is nocompulsory template.

Cases when an organisation does notsubmit a declaration, although it is notanymore in compliance with the exclusioncriteria, shall belong under the legalresponsibility of the affected organisation.

4.

Updated spending forecastaccording to the 4-month periods ofproject implementation per eachPP / LB recipient of subsidy

The data have to be provided in an updatedSheet 14 of the Application Form.

5.Data of the bank account openedby the LB for the purposes of theproject in EUR currency

To be submitted in form of an originalstatement signed by the bank. There is nocompulsory template.

Minimum data requirements: name andaddress of bank, IBAN number and SWIFTcode of the account.

6.

Original specimen of signature,

certified by a public notary, of thelegally authorised representative ofthe LB

Only relevant if the signatory party to the EUContribution Subsidy Contract is notidentical with the person who certified theAF.

The document has to be original, meaningthat the stamp and signature of the public

notary are present on the document withblue ink.

In case the person in question does notpossess a specimen of signature or in caseof local governments who would like tosubmit a specimen of signature provided bya bank, the same document can beaccepted which was deemed proper in the


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No Document Comment

formal completion phase of the actualproject.

7.

Partnership Agreement, signed bythe LB and all PP-s

(Optional to sign for AssociatedPartners.)

Compulsory for every project. The template

provided to the LB can be extended but thecompulsory content has to be present.

In case of substantial extensions the JTShas to be consulted in order to avoidcontradictions between the extendedPartnership Agreement and provisions ofthe Subsidy Contract and/or the applicableCommunity and national legislation.

Three originals have to be submitted to theJTS.

8. Land or building registrationcertificates

They have to be original documents (issuedand certified by the respective institutionwhich issues land or building registrationcertificates) or copies, certified by a publicnotary.

The certificates cannot be older than 30calendar days and must be in the originallanguage.

9. Legally binding building permit

documents

They have to be originals or copies certifiedby a public notary.

If relevant, the environmental permit alreadyis taken into consideration in the issuing ofthe building permit in Hungary.

10.Environmental impact assessmentand environmental permits (ifrelevant)

The documents have to be originals orcopies, certified by a public notary.

In case the works component is not subjectto permission procedures, the documentscertifying this fact should be requested.

11.

Approval of the responsible body

for the acceptance of theintervention in the environment, orapproval of the responsible bodythat the conduction of anenvironmental assessment is notrelevant

Relevant only in Croatia. The document hasto be an original or a certified copy.

In the case of exemption fromenvironmental impact assessment, theoriginal approval (or a certified copy thereof)of the responsible body can also beaccepted if it states that the conduction ofan environmental assessment is notrelevant in the respective case.


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The EU Contribution Subsidy Contract shall serve as a basis for the monitoring activities,

and it is a core document in the event of settlement of disputes.From the date of signature by the LB the contract enters into force and the project shallstart on the date indicated in the EU Contribution Subsidy Contract. The starting dategenerally cannot be later than 2 months upon the signature of the contract. (At the sametime, a project can be started by the partnership also before the stipulation of the EUContribution Subsidy Contract but after the receipt of the project proposal by the JTS see Chapter 3.3.1.1 of the Guidelines for Applicants.)

Assessment of applications receivedJTS

Decision on funding

Sending the letter on award of

subsidy to the LB

MA

Checking the documents

submitted and thefulfilment of conditions

(conditional approval of

project)

JTS

Preparation of Subsidy

ContractJTS

Signature of the Subsidy

ContractMA

Signature of the Subsidy

Contract

LB

Entering the SC into IMIS

2007-2013

JTS

Updating the contact details,requesting necessary documents

from the LB

JTS

Latest deadline forsigning the Partnership

A reement

LB,PP-s

JMC

LB

Submitting the requested

documents

Concluding EU Contribution Subsidy Contract (SC)

On-the-spot visit

(optional)JTS

/

MA


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After signing the Subsidy Contract, the Applicant becomes a Lead Beneficiaryresponsible for implementing the EU co-financed operation. All other PP-s are alsobeneficiaries of European funds. If relevant, the LB and the PP-s will each sign aseparate contract for state contribution.

Please note that costs incurred during the implementation period of projects are

eligible in Croatia from 1 February 2013, the date from when the FinancingAgreement between the European Commission and the Republic of Croatia isapplicable.

2.2.1 Modification of the EU Contribution Subsidy Contract, other projectchanges

Even if well planned and prepared, the implementation of a project might face thenecessity of modificationsfor several reasons. The LB has to request the modificationof the EU Contribution Subsidy Contract in case of substantial changes in the projectspecified in the EU ContributionSubsidy Contract, which are the following:

a) changes in the composition of project partnership (excluding changesrelated to Associated Partners);

b) substantial changes in the content of the project (resulting in a more than20% deviation from the quantified outputs);

c) changes to activities (introducing new or replacing old ones);

d) budget reallocation between budget lines exceeding 20% of eithereffected mainbudget lines1and exceeding 5.000 EUR within the budgetof the LB or the particular Project Partner;

e) prolongation of the project duration.

Additional Project Partners above the number designated in the approved Application

Form cannot be included in the project. Furthermore, budget reallocation between PP-sis not allowed.

The project changes with the corresponding outcomes are presented in the tablesbelow.

Modifications of the Subsidy Contract Outcomes

a) Changes in the composition of projectpartnership (e.g. replacement ofpartner resigned/backed out from theproject);

b) Any other cases decided upon by MA/ JTS to be considered by JMC.

Written approval of the JMC,

Addendum to the Subsidy Contract, Revised Application Form.

Written approval of the MA and JTS (in

1 Main budget lines are: 1 Preparation costs; 2 Staff cost; 3 Travel and accommodation; 4 Service; 5

Equipment / Supply; 6.Investment / Works; 7 Administrative costs.


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Modifications of the Subsidy Contract Outcomes

c) Substantial changes in the content ofthe project (resulting in a more than20% deviation from the quantifiedoutputs);

d) Budget reallocation between mainbudget lines exceeding 20% ofeither budget line and exceeding5.000 EUR within the budget of theLB / PP;

e) Changes to activities (introducingnew ones or replacing old ones);

f) Prolongation of project duration2within the maximum project durationas defined in the Guidelines forApplicants.

consultation with first level controllers,if necessary),

Addendum to the Subsidy Contract, Revised Application Form.

Other changes Outcomes

a) Changes in the LB data (e.g. contactperson, address, bank account);

b) Changes in the content of the project(resulting in 20% or less than 20%deviation from the quantified outputs;e.g. output, result, indicator);

c) Changes in the activities of the project(e.g. slight changes in the terms orquality);

d) changes in the timeframe of theproject (shortening the projectduration which does not affect thenumber of implementation periods);

e) Budget reallocation between budgetlines not exceeding 20% of eithereffected main budget lines or notexceeding 5.000 EUR within thebudget of the particular LB/PP.

Request for other changes in theproject, submitted by the LB to the JTSand confirmed by JTS;

Revised Application Form.

f) Changes in the PP data (contactpersons, etc.);

- Approval of the respective Control Body.

2 Prolongation of project implementation/duration over the maximum project duration period as defined inthe Guidelines for Applicants for the 3rdCall for Proposals / Handbook to Tourism projectsis not possiblefor projects selected within the framework of the 3 rdCall for Proposals.


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g) Changes in the project managementstaff;

h) Changes in the PP bank account.

Any budget modification should be carefully prepared by involving all PP-s and byclarifying their needs.

The limit of budget reallocation is calculated from the concluded original EUContribution Subsidy Contract,so the accumulation of changes is counted togetherand rules are applied accordingly. By its nature, any increase of budget of a budgetline(s) on one side leads to a reduction of budget of other budget line(s) on the otherside, therefore each affected budget line is taken into consideration, in line with therespective rule.

Given the case of a project that wants to do budget increases within the 20% limit:

Budget lineOriginalbudget

Modifiedbudget

Increasedamount

EUContributionSubsidyContract rule

Approvalby

4 Service 20 000 EUR 22 000 EUR 2 000 EUR 10% increase JTS

5 Equipment/ Supply 100 000 EUR 98 000 EUR 2 000 EUR 2% decrease JTS

The following requests for increase will be subject to a case-by-case decision by the MA:

Budget lineOriginalbudget

Modifiedbudget

Increasedamount

EUContributionSubsidyContract rule

Approvalby

4 Service 20 000 EUR 30 000 EUR 10 000 EUR 50% increase MA

5 Equipment/ Supply 100 000 EUR 90 000 EUR 10 000 EUR 10% decrease MA

All indicated changes in the project have to respect the rules of the Call for Proposals aslaid down in the Guidelines for Applicants, meaning that if a limit for a certain type of costhad been given in the Guidelines for Applicants, the notified (initiated) change also hasto respect the limit.


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The PP-s have to bear in mind that new activities cannot be budgeted in the project.Also, in general, budget items which have been affected by budget cuts are not eligiblefor the increase of their amount.

Modifications of the Subsidy Contract

Maximum project duration, defined per Actions in the Guidelines for Applicants forthe 3rdCall for Proposals / Handbook to Tourism projectsfor the projects selected withinthe framework of the 3rdCall for Proposals, cannot be exceeded.

Subsidy Contract modification can be requested only once during the project lifecycle for projects whose duration is up to 12 months, while for those projectswhose duration is 16 to 24 months, modifications can be made two times.(Concerning these longer projects it is possible to request one modification in the first 12months of implementation and one in the remaining period.)

In any case the request for modification has to be submitted to the JTS at least 45calendar days before the project end date (end of the last reporting period), as well as45 calendar days before the end of any of the reporting periods. Requests for Subsidycontract modification which are submitted after these deadlines will be subject toautomatic rejection.

Any request for modification of the EU contribution Subsidy Contract has to be justifiedand submitted by the LB to the JTS in a written form using the given form (Annex 1,Request for Subsidy Contract modification). The JTS will revise the request ofmodification and in the above-detailed cases will submit it for approval to the MA or theJMC, depending on the type of the modification requested.

After the approval of the MA/JMC the finalised Addendum to the EU Contribution

Subsidy Contract has to be signed by both parties (i.e. LB and MA). The date from whichthe changes contained in the Addendum shall be effective is to be identified in the text ofthe Addendum.

It is important to note that modification of the EU Contribution Subsidy Contract needsapproximately 30 calendar days in regular cases, and the verification of costs on projectpart level is not possible if the content of the modification is related to the given reportingperiod.

Other project changes

Other changes in the project will not require EU Contribution Subsidy Contractmodification, but the LB has to notify in written the JTS, within maximum 30 calendardays before the end date of the project (end of last reporting period) and withinmaximum 30 days before the end of the any of the reporting periods. Requests for otherchanges, submitted after these deadlines for will be subject to automatic rejection.

In every case the JTS has to confirm that the project change is accepted. Theconfirmation on acceptance shall explicitly identify the date from which the projectchange is effective. This date cannot be earlier than the starting date of the


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reporting period in which the given change has been requested. Before thechanges are proposed by the LB to the JTS for confirmation, it is advised for therespective PP to discuss the changes in question with the designated first levelcontrollers.

Please note that only the LB is entitled to request and discuss other changes from the

designated programme manager / project manager of the JTS the PP-s have todiscuss and finalise the request for other changes with the LB who is responsible forchannelling information and documents with the JTS.

In general, the LB is entitled to initiate only one round of administration of other changesonly once during the project life cycle for projects whose duration is up to 12 months,while for those projects whose duration is 16 to 24 months, changes can be made twotimes. (In case of these longer projects it is possible to request one change in the first 12months of implementation and one in the remaining period.) Exceptions are possibleonly in duly justified and urgent cases (i.e. Subsidy Contract addendum has not beenrequested at all) or in case changes are affecting LB/PP data (referred to as type a,Changes in the partner data; e.g. in AF or change of the separate project bank account).

Procedure wise the initiation of other changes is the following:

The LB fills in Annex 2, Request for other changes in the project, officiallycertifies it and sends it in scanned form to the respective JTS programmemanager via e-mail; (in case content wise confirmation of the changes will beneeded, it is advised to send the proposal to the programme manager in Wordformat preceding the signature of the request, for the discussion of possiblesolutions);

The respective programme manager of the JTS sends back the confirmeddecision on the signed and scanned Request for other changes in the projectdocument to the LB via e-mail, indicating the confirmation or rejection of the

requested other changes; The LB informs the respective PP(s) about the outcome of the request by

sending them the scanned Annex 2, Request for other changes in the projectdocument;

In case of a confirmed request, the programme manager of the JTS informs therespective first level controllers of the related PP(s) about the outcome of therequest by sending the scanned Annex 2, Request for other changes in theprojectdocument via e-mail.

The LB has to officially, in written form notify the JTS in case of a change in the separate

project bank account within 15 calendar days counted from the change incurred, or withthe submission of the Application for Reimbursement at the latest. In case the LB fails toproperly inform the JTS on the details of its separate project bank account, allconsequences, including those of financial nature, shall be borne by the LB.


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2.3 Reporting and Reimbursement Process of the EUContribution

The payment of EU Contribution is connected to the submission and approval of PR-s.The aim of the PR-s is to present the progress in the implementation of the project andthe way PP-s acted in order to obtain these results. The PR furthermore underpins the

content of the Application for Reimbursement, proving that the costs incurred are directlylinked to the tasks and activities stipulated in the EU Contribution Subsidy Contract.Each PR submitted to the JTS will have to be prepared by the LB and will have to beaccompanied by an Application for Reimbursement which indicates the amount of EUContribution the PP-s are requesting for reimbursement. An essential condition of thetransfer of EU Contribution is the timely submission of PR-s in the right format and withthe correct information, together with the necessary supporting documents / annexes. Incase of delays in submitting the PR and AfR (or request for modification in due time)defined in Article 4.14 of the EU Contribution Subsidy Contract, or in case multiplecompletions of the PR and/or AfR are required attributable to the LP and/or any of thePP-s, the MA is entitled to apply a proportional reduction to costs related to projectmanagement up to 25%.

The PR-s shall be submitted on a regular basis according to the dates specified in theEU Contribution Subsidy Contract. In order to help the successful preparation of the PR-s, the Head of JTS nominates a programme manager for each project, being theresponsible colleague for the proper follow-up of a given project. The programmemanager sends an e-mail to the LB 30 calendar days before each PR / AfR submissiondeadline as defined in the EU Contribution Subsidy Contract.

Following the receipt of the notification, the LB shall inform the PP-s on the required andnecessary partner level information to be introduced in the PR. To support the work ofthe LB, all PP-s shall submit the partner level activity report and its annexes which werepreviously submitted and approved by the nominated first level controllers.

Additional obligatory deadlines to submit an Application for Reimbursement above thoseregulated in Article 4.14 of the Contribution Subsidy Contract may be set by the MA inorder to avoid decommitment of EU contribution at programme level.

The EU Contribution will be transferred directly to the LBs bank account (sub-account)exclusively opened for the project.

2.3.1 Preparation costs

Preparation costs represent special eligible expenditure which may incur in thepreparation / development phase of the project These costs entangle activities achievedbefore the start date of the project as stipulated in the Subsidy Contract.

Preparation costs can only be eligible if they were incurred on or after 1 January 2007for projects or parts of projects implemented in Hungary, and for projects or parts ofprojects implemented in Croatia on or after the date of the signature of the FinancingAgreements (1 December 2008 and 25 March 2011), furthermore for both countriesbefore the start date of the project.

Only budget lines foreseen in the Application Form and only PP-s affected by thepreparation costs according to the AF can be considered entitled for the reimbursementof these costs.


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During project implementation, in general, preparation costs cannot be reallocated toany other sub-budget line if not reimbursed, and they can only be reimbursed during thefirst Project PR.

2.3.2 Progress Report

At the end of each reporting period of the implementation (after every 4 months), the LBwill have to prepare a Project PR, informing the programme management bodies aboutthe activities carried out and the expenditure that has occurred since the last reporting.In order to elaborate a comprehensive report, the LB will have to gather data anddocuments regarding the entire project from all PP-s, they also will have to prepare theirown Partner Reports concerning their part of the activities implemented, necessary forthe validation of their own expenditures by the Control Bodies. The PP-s should beaware that this is a time- and resource consuming process, therefore the precisepreparation of the documents is essential for the successful reimbursement process.

With the submission of the PR (which includes an activity- and a financial report as well)the LB has to submit the AfR, the Declaration on Validation of Expenditure (DOVE) and

documents relevant for the given period, for every project part, as well as other relevantcompulsory annexes, supporting documents etc.

The deadline for the LB to submit to the JTS the PR and the AfR for each four-monthreporting period is 90 calendar days from the end date of each reporting period. Theproject starting date wherefrom the reporting periods are counted, the reporting periodsand the actual deadlines for submission are indicated in the EU Contribution SubsidyContract.

Preparation and content of the Project PR, procedures

The Project PR is developed and required in order to follow regularly the implementation

of project activities in a given period of time. The report shall provide an overview of theproject implementation status as well as present the inefficiencies and un-accomplishments (deviations, delays) in comparison with the planned project evolutionpresented in the EU Contribution Subsidy Contract. On programme level the report shallserve as an information source on the progress of the Programme towards the EuropeanCommission and programme management structure.

The Project PR has two main parts: a technical- and a financial report. The technicalpartshall contain information on the steps taken in the given reported period regardingthe professional implementation of the project, emphasising especially the following:

- presentation of the ongoing and implemented activities (including activitiesrelated to EU horizontal policy on equal opportunities and sustainable

development);- presentation of the process on choosing the designated sub-contractors;

- progress in the fulfilment of the project indicators;

- comparison of initially established targets and those achieved;

- differences / deviations in terms of activities and timeframe;

- problems encountered within the partnership;


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- presentation of the information and publicity actions;

- presentation of the changes in the project.

The financial report shall contain information and give a general overview on the

expenditure incurred by the activities implemented in the reporting period. The reportmust contain information on the expenditure paid out during the reporting period,supported by invoices or accounting documents of equivalent probative value andvalidated by the controllers in the frame of the first level control process. The LB shallensure that the expenditure presented by the PP-s for reimbursement is not doublefinanced, is in compliance with the principle of sound financial management and isincluded in the approved budget of the project. The financial report shall present thecosts incurred and revenues gained in the reported period on partner level mainbudgetary lines, a summary on project level only on main budgetary lines. This part shallcontain also information on the transfer of the EU Contribution by the LB to the PP-sregarding the preceding reporting period.

The following documents are to be submitted with the Project Progress Report:

1. Declaration on Validation of Expenditure of all PP-s (in this respect the LB is alsoa PP) uploading of the scanned versions of the originally certified DOVE-s tothe Monitoring and Information System (IMIS) and submission of the originaldocuments in hard copy as well;

2. Documents supporting the reported progress related to the indicators planned onSheet 10 of the Application Form (e.g. in form of own declarations, photos,newspaper articles etc.) with clear reference to the given indicator specified inthe Application Form, to be submitted in hard copy where both pages have tobear the signature of the LB;

3. One issue/piece of the published publication, brochure, book, study, databaseetc. in hard copy and in electronic format (on CD-Rom, DVD or pen drive) withclear reference to the original activity indicated in the Application Form;

4. Photo documentation of the works or equipment/supplies in electronic format (onCD-Rom, DVD or pen drive) with clear reference to Sheet 16 of the ApplicationForm (Location of works) and/or to budget line 5 and 6 (Equipment/Supply Investment/Works) of the individual PPs budgets (AF Sheets 11), if relevant;

5. Bank statement of the LB proving the transfer of EU Contribution to PP-s (relatedto the antecedent reporting period) in hard copy, if relevant.

The language of reporting is English.

Please note that the Project PR, the AfR, as well as all other relevant supportingdocuments have to be certified by the LB.

Deadlines for submitting the Project PR, the AfR and the supporting documents throughthe IMIS are to be in line with the deadlines indicated in the EU Contribution SubsidyContract (Article 4, point 14). The spending forecasts indicated in Article 4 point 14 must


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be respected. In case of deviation from the spending forecasts the MA is entitled todecommit the project by reducing the original project budget and the corresponding EUcontribution if underspending compared to the spending forecast result in n+3decommitment.

The hard copy format of the Project PR (in one original certified copy), AfR (in twooriginal certified copies) and its compulsory annexes, either in hard copy or recordedin electronic form (on CD-Rom, DVD or pen drive), shall be submitted to the JTS in linewith the deadlines indicated in the EU Contribution Subsidy Contract (Article 4, point 14).The date on the stamp of the post office where the package was submitted will prove thekeeping of the submission deadline.

The Project PR, the AfR and all other relevant supporting documents should be sent tothe following postal address:

VTI Nonprofit Kft.HUNGARY-CROATIA JOINT TECHNICAL SECRETARIAT

Gellrthegy u. 30-32, 1016 Budapest, Hungary

The envelope has to be sealed and properly marked in such a way that it includes allthese elements:

The full name and address of the LB The project ID number (HUHR/1101//) The acronym of the project proposal (as indicated in the Application Form) the wording: Do not open Project Progress Report and Application for

Reimbursement for the Hungary-Croatia IPA Cross-Border Co-operationProgramme 2007-2013

Following the receipt of the documents, the nominated programme manager / financialmanager starts the necessary formal and technical (professional) verification. Throughthe verification process the delegated manager of the JTS may request further additionalinformation or the completion of documents if that will be necessary for the properunderstanding and approval of the submitted documents. The verification process stopsin case a completion of documents or further data are needed for decision.

The verification process is divided into two main phases: verification of the Project PRand verification of the AfR. The documents will be considered ready to be forwarded tothe next step of the reimbursement process only in case both the Project PR and theAfR are checked and approved.

The verification of the documents starts with the formal and technical check. In the

verification process of the Project PR, special attention will be paid to the following:Technical check:

- Activities detailed in the Project PR correspond with the approved application andthe Subsidy Contract;

- the objectives of the project described in the application are completed within thegiven activities in the reporting period;


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- the indicators reported in the application are in accordance with the progress ofthe project implementation;

- the progress of the project is in line with the time plan stated in the approvedapplication;

- the activities have been implemented by the assigned PP-s indicated in the

application;- the obligations for information and publicity are completed,

- the obligations for horizontal policies are met.

Financial check:

- The expenditure stated in the report is in line with the items approved in thebudget;

- the financial report is in line with the DOVE-s submitted with the Project PR (e.g.do not contain calculation mistakes; the costs affected by State Aid stipulationsare concerned, revenues are deducted).

In case the Project PR is not appropriate in content and/or in its format, the programmemanager of the JTS shall request for completion or for further documents that shallclarify the content questions. The LB has 7 working days at its disposal after receivingthe notice to submit the required clarifications and/or missing documents. Thedocuments may be submitted according to the needs by post, fax or in electronic form.(In general, completed / corrected documents have to be submitted in the way and formas it is described for the given type of document in this section.) If the LB does notrespond to the request of the JTS to complete the missing documents, the delegatedprogramme manager shall send a warning notice again, emphasizing the expectedconsequences. After the second, unsuccessful notice the Project PR and the AfR will berejected.

2.3.3 Preparation and content of the Application for Reimbursement

The AfR shall be prepared and shall summarize the expenditure incurred by the LB / PP-s following their approval in the frame of the control process by the designated first levelcontrollers. The reimbursement shall cover costs arisen by PP-s in a given period of timeand shall incorporate the amount planned to be reimbursed from EU Contribution.

The AfR submitted by the LB shall contain only validated expenditure and shall besupported by the DOVE-s issued by the Control Bodies. The LB shall ensure that theexpenditure presented by the PP-s participating in the project has been incurred for thepurpose of implementing the project and that it corresponds to the activities agreedbetween those PP-s.

In case the DOVE-s are not received from each PP for a given reporting period, the LBshall submit the AfR on the basis of the DOVE-s that are available for the reportingdeadline. The expenditure of the PP-s not validated for the given reporting period withinthe deadline can be requested only for the next reporting deadline to the reporting periodconcerned.

The AfR shall be filled in and submitted electronically as well as in paper format (in twooriginal signed copies where both pages have to bear the signature of the LB) with itscompulsory annexes to the JTS together with the Project PR. The AfR shall be prepared


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in the required format, having calculations set in EUR for the given reported period. Thedocument shall be submitted to the JTS having as compulsory annexes the DOVE-s forPP-s where costs were incurred. In the verification process of the AfR special attentionwill be paid to the following aspects:

a) The AfR does not contain any formal or calculation mistakes and is in line with the

DOVE-s received;b) The DOVE for each PP indicated in the AfR is attached to it;

c) The DOVE-s do not contain any formal or calculation mistakes;

d) The DOVE-s are issued by the designated controllers and signed by the authorizedperson;

e) The subsidy requested in the AfR is within the frame of the approved amount ofsubsidy.

In case the AfR or the DOVE-s are not appropriate in content and/or in format, the LBwill be required in writing to correct the discovered mistakes. The LB has 7 working daysat its disposal after receiving the notice to correct the mistakes and to submit the

corrected documents. If the LB does not respond to the request of the JTS to completethe missing documents, a renewed warning notice (5 working days after the deadline forsubmitting the missing documents expired) shall be sent out, emphasizing the expectedconsequences. After the second, unsuccessful notice the PR and the AfR will berejected and the LB notified.

Handling deductions from the AfR:

The amount of the AfR shall be reduced and the DOVE has to be reissued due to thefollowing reasons:

a) Ineligible expenditure in the actual PR;

b) DOVE not issued by the designated controller or not signed by the responsibleperson in the respective Control Body.

In case of any correction to the amount of the AfR the LB has to reissue and sign theAfR in order to ensure that the LB is aware of the accepted amount.

In case the JTS does not receive the corrected and signed DOVE and AfR within 30calendar days from the notification of the LB at the latest, the total amount of the givenDOVE will be deducted from the AfR.

Any financial correction of requested EU Contribution related to irregularities in previousperiods has to be made at this point as well.

2.3.4 Procedure of reimbursement of EU Contribution

Once the monitoring of the PR and AfR has been completed, the JTS is in charge ofinitiating the payment of the EU Contribution to the LB through the Financial TransferUnit (FTU).

The MA, after having verified that all contractual clauses and other requirements of theaudit trail have been respected, will make arrangements in co-operation with theCertifying Authority for the availability of the EU Contribution and they will transfer the


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requested payment to the FTU. Finally the FTU will launch the payment procedure forthe amount claimed from the EU Contribution to the LBs bank account (sub-account),exclusively opened for the project.

It should be noted that the controls performed by the MA may result in additionalrequests for clarification to the LB even if the report was technically approved by the

JTS.After receiving the EU Contribution the LB is obliged to transfer in time and in full theshare of the EU Contribution that corresponds to each PP according to the approvedAfR, within the timeframe agreed in the signed Partnership Agreement. In case there arespecific national rules concerning the use of the national currency, the LB has to complywith these rules while not violating the provisions of Article 40 of the IPA ImplementingRegulation. Assistance to the LB-s such transfers of EU contribution are specified in thenational level Project Partner Guidelines.(Applicable only in case of Croatian LB-s).

2.3.5 Final Project Progress Report

The JTS programme manager sends an e-mail to the LB 30 calendar days before thedeadline for submission of the Final PR and AfR, as well as the listed requirements thathave to be fulfilled as defined in the concluded Subsidy Contract.

The LB has to submit the Final PR and AfR within 90 calendar days from the end date ofthe project as indicated in the EU Contribution Subsidy Contract. The Final PR has to besubmitted in the pre-defined format. The JTS verifies the Final PR submitted and checkswhether all the activities are fulfilled according to the approved Application Form, andwhether all the requirements arising from the EU Contribution Subsidy Contract arefulfilled. If the Final PPR is not appropriate in content and/or in its format, the programmemanager asks the LB in writing (by e-mail or by fax/post, if needed) to submit themissing documents and/or to clarify the content questions. The LB has 7 working daysafter receiving the notice to submit the clarifications and/or missing documents. The

documents may be submitted according to the needs by post, fax or in electronic form(in general, completed / corrected documents have to be submitted in the way and formas it is described for the type of document in this section).

The following documents are to be submitted with the Final PR:

1. DOVE of all PP-s (from this respect the LB is also a PP) uploading the scannedversions of the originally certified DOVE-s to the IMIS and submission of theoriginal documents in hard copy as well;

2. Documents supporting the reported progress related to the indicators planned onSheet 10 of the Application Form (e.g. in form of own declarations, photos,

newspaper articles, etc.) with clear reference to the given indicator specified inthe Application Form; documents are to be submitted in hard copy;

3. One issue/piece of the published publication, brochure, book, study, databaseetc. in hard copy and in electronic format (on CD-Rom, DVD or pen drive) withclear reference to the original activity indicated in the Application Form;

4. Photo documentation of the works or equipment/ supplies in electronic format (onCD-Rom, DVD or pen drive) with clear reference to Sheet 16 of the Application


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Form (Location of works) and/or to budget line 5 and 6 (Equipment/Supply Investment/Works) of the individual PPs budgets (AF Sheets 11), if relevant;

5. Bank statement of the LB proving the transfer of EU Contribution to PP-s (relatedto the antecedent reporting period) in hard copy, if relevant.

6. Valid permission of use (hasznlatba vteli engedly / uporabna dozvola); recordof the technological delivery session (mszaki tads-tvteli nyilatkozat /zapisnik o primopredaji radova); any other permits prescribed by regulations, ifrelevant;

7. Other project specific documents described by the JTS, if relevant.

The language of reporting is English.

Please note that the Final PR, the AfR, as well as all other relevant supportingdocuments have to be certified by the LB.

Deadlines for submitting the Final PR, the AfR and the supporting documents throughthe IMIS are to be in line with the deadlines indicated in the EU Contribution SubsidyContract (Article 4, point 14).

The hard copy format of the Final PR (in one original certified copy), AfR (in twooriginal certified copies where both pages have to bear the signature of the LB)and the compulsory annexes either in hard copy or recorded in electronic form (on CD-Rom, DVD or pen drive) shall be submitted to the JTS in line with the deadlinesindicated in the EU Contribution Subsidy Contract (Article 4, point 14). The date on thestamp of the post office where the package was submitted will prove the keeping of thesubmission deadline.

The Final PR, AfR and all other relevant supporting documents should be sent to thefollowing postal address:

VTI Nonprofit Kft.HUNGARY-CROATIA JOINT TECHNICAL SECRETARIAT

Gellrthegy u. 30-32, 1016 Budapest, Hungary

The envelope has to be sealed and properly marked in such a way that it includes allthese elements:

The full name and address of the LB The project ID number (HUHR/1101.//) The acronym of the project proposal (as indicated in the Application Form) the wording: Do not open Final Project Progress Report and Application for

Reimbursement for the Hungary-Croatia IPA Cross-Border Co-operationProgramme 2007-2013

If the LB does not fulfil the request for the missing documents, the JTS programmemanager sends a warning notice again. After the second, unsuccessful notice theFinal PR and the final AfR will be rejected and the LB will be informed about thepossible/applied sanctions (e.g. suspension of last payment, repayment of subsidy,


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withdrawal from Subsidy Contract). If the Final PR contains ineligible expenditures, theamount of these shall be deducted from the AfR.

The project closure procedure, as the final step of the project implementation period,means the procedure related to the payment of the EU Contribution based on the finalAfR. While project closing, the JTS verifies the Final PR submitted by the LB and checks

whether all activities are fulfilled according to the approved Application Form, andwhether all requirements arising from the EU Contribution Subsidy Contract are fulfilled.(E.g. the project has been fully implemented by carrying out the planned activities, theplanned outputs and results, the project is developed in due time, etc.) Following theapproval of the Final PR the JTS initiates the financial closing of the project in the IMISin order to calculate the exact amount of EU Contribution to be paid to the project.

After the final payment to the LB the project is considered closed and the LB is informedabout the closure within 5 calendar days after approval of the AfR by the CertifyingAuthority. The project folders are also archived. Financial closing cannot be initiated incase other processes such as irregularity and recovery procedures related to the projectare not closed.

While the project is considered closed, the project data in the IMIS are available forfurther audits during the programme period and after 3 years from the closure date of theProgramme. During this period, irregularity procedures and repayments can be initiatedrelated to the project.

2.3.6 Project Follow-up Report

The project retains the EU Contribution only if it does not, within five years from the enddate the project, undergo a substantial modification

a) affecting its nature or its implementation conditions or giving to a firm or apublic body an undue advantage;

b) resulting either from a change in the nature of ownership of an item ofinfrastructure or the cessation of a productive activity.

The LB is obliged to notify the JTS of any such changes described beforehand.

In general outputs and results of the project and budget items in budget line 5(Equipment/Supply) and 6 (Investment/Works) are considered to be subject to theobligation for sustainment, which can be deviated by the JTS at the time of the closure ofthe project. The JTS considers the depreciation of the budget item, the importance of thegiven output/result and the aim of the project among other circumstances when decidingabout deviation.

The Project Follow-up Reports have to be filled by the LB-s after they finished their

projects successfully. In this report the LB submits professional and financial informationabout indicators in the project, their effect on the partnership co-operation, generatedrevenues etc. in order to prove to the JTS the sustenance of the project outputs.

Project Follow-up Reports shall cover 12-month periods from the end date of the projectand shall be submitted to the JTS within 15 calendar days from the end of these periods.If the Project Follow-up Report is not appropriate in content and/or in its format, the JTSprogramme manager asks the LB in writing (by e-mail or by fax/post, if needed) to


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complete it. The LB has 7 working days after receiving the notice to submit theclarifications and/or missing documents.

Even if the project was closed, all the activities were implemented, the Final PR wasaccepted and the final payment claim was paid, the obligations of the beneficiariestowards the Programme are not totally fulfilled. There are still some tasks to be

completed by the LB and the PP-s, such as keeping the project documentation in a safeplace for the possible second level control or controls from the European institutions, orpreparing and submitting the Project Follow-up Reports. Additional financial controls arestill possible during the entire programme period and three years after the programmeclosure (expected date 2021), and the PP-s shall be able to provide documentationproving expenditure incurred and payments received.

2.3.7 Monitoring visits

The JTS performs monitoring visits in order to check the progress of the project from aprofessional point of view. The monitoring visit takes place at least once during theimplementation period, or multiple times, if necessary. The visit may also be

connected to a project event where the PP-s are participating. The goal of the visit is forthe JTS to check the professional accomplishment and the reality of the project, and italso provides possibility for the partners for project consultation. The monitoring visit isnot considered as an audit but it contains checking criteria related to the implementationof the project. Therefore the JTS can propose specific actions, including suspendingpayments or withdrawal from the Subsidy Contract, in case the project implementation issignificantly different from the objectives indicated in the Subsidy Contract, or if anirregularity is suspected.

The aim of the monitoring visit:

On-the-spot monitoring of the project progress, personal consultation of problemsoccurred as well as identifying reasons of significant delay (if any);

To clarify and gain more information about occurred professional/technologicalchanges in the project (e.g. to gain sufficient information for a modification of theEU Contribution Subsidy Contract);

To clarify information included in the Project PR, Final PR and Project Follow-upReport in case there are conflicting or not properly elaborated data;

To visit the main or important event(s) of the project;

The enquiry of obligations borne on the PP-s connected to the implementation ofthe project (e.g. publicity, safekeeping of documents etc.)

In case of investment projects a preliminary monitoring visit can be organised to check

the level of readiness before concluding the Subsidy Contract.The JTS notifies the LB (by e-mail or by fax/post) about the monitoring visit and theproposed date at least 5 calendar days before the monitoring visit.

As a result of the monitoring visit the JTS programme manager prepares a report on themonitoring visit, to which he or she attaches the attendance sheet of the event (ifrelevant), signed by all participants.


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3 ANNEXES

Annex 1: Request for Subsidy Contract modification

Annex 2: Request for other changes in the project