Technical Assistance Office TCP Projects 2005 Contractual and Financial Management Administrative and Financial Handbook Prepared by IA, 14/12/2001 SOCRATES PROGRAMME

Agenda Essentials Financing of 2005 projects Handbook Structure Approved Budget Eligible Expenditure Financial Management Partnerships Partner Agreements

Essentials Many projects fail because the Contractor did not understand the basic rules Where are the rules contained – Grant Agreement and Annexes (including the Handbook), EU’s Financial Regulations

Financing of 2005 Contracts No more lump sums for staff costs – details of these costs have to be now given at the final report EU grant is based on a fixed percentage of the Approved budget of the project (see points A.4 and A.5 of the Grant Agreement). The above amount represents the maximum grant (see point A.3 of the Grant Agreement). You can never get more than the maximum. Greater flexibility in the budget transfer rules The detailed financial rules are contained in the Handbook

Prepared by IA, 14/12/2001 HANDBOOK STRUCTURE Purpose of the Handbook Annex to the Agreement and enforceable Aid for beneficiaries and a management tool Definitions (Beneficiary, Partner Legal Representative, Approved budget) Chapters 1. Approved budget 2. Modification of the Agreement 3. Eligible Expenditure 4. Financial Management 5. Reports 6. Supporting Documents & Audit

Prepared by IA, 14/12/2001 APPROVED BUDGET Concept of Approved Budget (Annex II of the Agreement) – reference point for assessment of the final report How has it been assessed ? * External Experts * Project aims and rules on eligibility 1. An amount approved for Staff costs 2. An amount approved for Direct costs 3. General costs The percentage financing is applied to the total of points 1-3 above to arrive at the maximum grant that will be paid by the EU

Prepared by IA, 14/12/2001 ELIGIBLE EXPENDITURE General Principles Costs must be reasonable and in accord with the principles of sound financial management. Must be incurred by the partnership and necessary. No member organisation of the partnership may derive a profit from the grant All expenditure for Staff and Direct costs must be justified by invoices or accounting documents of an equivalent value

Eligibility of Expenditure Ineligible Costs Expenditure incurred before or after the end of the eligibility period (A.6) Excessive or reckless expenditure VAT unless the Beneficiary cannot recover it Expenses for travel to and from countries not eligible to participate in Socrates Eligibility Relate directly to approved activities Are in accordance with the rules Relate to activities involving eligible countries

Some Examples Staff Costs These costs shall be calculated on the hourly, daily, monthly gross cost multipled by the number of hours, days or months worked. The beneficiary and partners must keep full and accurate records Personnel costs should not exceed the norm for the labour market concerned Volunteer costs not eligible – i.e; real costs only

Direct Cost Examples Subcontracting costs: “ Any amount paid to an outside body which is not part of a member organisation of the partnership and which carries out specific & limited work for the project.” Only allowed if the staff of the partners do not have the skills required EU approval must be sought if not foreseen in the application and if the costs will exceed Euro (including linked costs) Cannot subcontract the basic activities (entire management & general administration) Prepared by IA, 14/12/2001

Subcontracting Three quotes if more than € in total (including linked costs). Must be able to supply copies of these if required Consultants fees should not normally exceed 400 € per day Cannot exceed 30% of the total eligible costs of the project Costs of an independent consultant working full-time or frequently for the project should be reported under staff costs

General and Other Costs General Costs – Normal overhead costs of the organisation. They do not have to be detailed in the final report and no proof required. Limited to 7% of the eligible costs Other Costs – Includes the costs of producing, translating and publishing documents when performed by the partners

FINANCIAL MANAGEMENT Bank Account (in €, Name of beneficiary) – cash withdrawals should be avoided Accounting System * Analytical – identifying the sources of funding and the project expenditure. Proof of payment will be required for Direct and Staff costs * Keep track of time sheets of persons who have worked on the project (identifying the person and time spent and activity) Partnership * Partners must be in the application or approved later by the Commission * Ensure active cooperation (management structure ) * Partnership agreements – must be entered into Prepared by IA, 14/12/2001

Transnational Partnerships What makes a successful project Identify the risks and challenges at the beginning of the project and at key points Work with known partners Spend time developing trust within the partnership Coordinator needs good communication skills Ensure institutional support Clear and transparent financial and management practices – proper allocation of tasks

Partnership Agreements Duties and obligations of the partners Delivery schedule of results Management Structures for the project and powers Budget and Grant share Quality and evaluation system Payment conditions – payment based on results or some other system? Reporting & accounting – regular reporting is a good monitoring tool IPR Termination and notice provisions – allow for exits Choice of law and Incorporation of EU agreement