Consumers, Health And Food Executive Agency FINANCIAL MANAGEMENT Klára KASNYIK Financial Officer Consumers, Health, Agriculture and Food Executive Agency Info Day Public Health Programme Belgrade, 16 th March, 2016

Consumers, Health And Food Executive Agency 2 Content 1.General information and principles 2.Budget structure 3.Nature of EC Contribution 4.Budget planning exercise 5.Tips and observations

Consumers, Health And Food Executive Agency 1. General Information 3

Consumers, Health And Food Executive Agency Financial Regulation (FR) applicable to the general budget of the Union (EU, Euratom) No 966/2012 Title V: Public Procurement and Concessions Title VI: Grants Rules of Application (RA) - Interpretation of the Financial Regulation, No 1268/2012 Consolidated version of the above regulations are available: or Legislative context 4

Consumers, Health And Food Executive Agency Principles Definition: a grant is a direct financial contribution to an action or functioning of a body Co-funding rule: external co-financing from a source other than EC funds is required (own resources or financial contributions from third parties, project income) Non-profit rule: the grant may not have the purpose or effect of producing a profit for the beneficiary Non-retroactivity rule: only costs incurred after the starting date stipulated in the grant agreement can be co-funded Non-cumulative rule: only one grant can be awarded for a specific action carried out by a given beneficiary 5

Consumers, Health And Food Executive Agency 2. Budget Structure 6

Consumers, Health And Food Executive Agency 7 Defined period of the action / project (based on the proposal of the consortium it is set in the grant agreement. Expressed as starting date of the action + number of months. All activities that are defined in the work program of the action and that generate costs must be completed during that timeframe. Only those costs are accepted for reimbursement that are generated in that period. Duration

Consumers, Health And Food Executive Agency General conditions - Cumulative requirements : Connected with the action as described; Necessary for the implementation of the action; Reasonable and justified - “ good housekeeping ”; Incurred during the defined period; Actually incurred by the beneficiaries of the grant; Identifiable and verifiable, in particular being recorded in the accounting records of beneficiary in accordance with accounting standards and the beneficiary’ accounting practices. Eligible costs 8

Consumers, Health And Food Executive Agency Form of costs 9 Direct Costs 1.Direct personnel cost (beneficiary own resources) 2.Subcontracting (resources of third parties) 3.Other direct cost related to the implementation a.Travel costs and subsistence allowances b.Equipment c.Other goods and services 4. Flat rate of 7% of total direct costs Indirect Costs

Consumers, Health And Food Executive Agency Staff = employment contract or equivalent appointing act with one of the beneficiaries. Costs claimed: salary + social security + taxes; Any other costs included in the remuneration (= statutory charges) based on national law or employment contracts; Additional remuneration, if it is part of beneficiary's usual practices, objective and generally applied regardless of sources of funding. Considered as personnel costs Costs of natural persons working under a direct contract with the beneficiary other than employment (on the beneficiary's premises, results belong to the beneficiary with similar costs of employment) Costs of personnel seconded by a third party against payment. Personnel costs 10

Consumers, Health And Food Executive Agency Contracts awarded to cover the execution of a limited part of the action / tasks, because the beneficiaries does not have resources / expertise, etc. Part of activities undertaken by the project Service contracts Invoices (including taxes, charges, travel & subsistence costs) Core elements and technical / financial management of the action cannot be subcontracted; Tasks subcontracted must be clearly explained in the work programme of the action; Requirement of transparency, best value for money and, if appropriate, lowest price. Conflict of interest must be avoided; Documents of procedures applied must be available. Subcontracting 11

Consumers, Health And Food Executive Agency Travel & subsistence incurred as costs by the beneficiary for all participants, except subcontractors shall be claimed here: Personnel Collaborating stakeholders Invited experts, speakers Board members Trainees, other participants Costs should be in line with the beneficiary's usual practice and rules on travel and subsistence. In case there are no internal rules, EU rules can be applied. Travel and Subsistence 12

Consumers, Health And Food Executive Agency Specific equipment (software, PC, laptop, fee for licence, etc.) necessary for the action; Costs eligible: Portion of equipment's depreciation costs only, for the period of the action, if recorded in the beneficiary's accounts. Purchase and depreciation is in accordance with international accounting principles and the beneficiary's usual accounting practices. Costs of renting equipment Cost of leasing equipment (excluding financing costs); Common software (Microsoft Office, Excel, Word,) are part of Indirect Costs Equipment 13

Consumers, Health And Food Executive Agency Services / goods of third parties to support the implementation of the action or a specific requirement of the grant agreement; Must be directly linked to the action; Requirement of transparency, best value for money and, if appropriate, lowest price. Conflict of interest must be avoided. Examples Dissemination of information; Specific evaluation of the action; Certificates of financial statements; Translations, reproduction of reports; Consumables and supplies (excluding general office supply); Conference fees, costs related to meetings / events; Bank charges (please refer to Article 12.9); Cost of financial guarantee, if applicable. Other goods and services 14

Consumers, Health And Food Executive Agency 15 Receipts Funding sources Co-funding from the EU budget: Financial contribution granted by European Union. Applicant's financial contribution: Own financial contribution provided by the applicants. Income generated by the project: Revenues linked to or generated by the action itself (e.g. admission fee to a conference, sale of equipment used, etc.) Other external resources: Other grants allocated at international / European / national / regional / or local level and/or financial transfers received from donors/sponsor – specifically targeted to cover the costs of the action.

Consumers, Health And Food Executive Agency 3. Nature of EC Contribution 16

Consumers, Health And Food Executive Agency Grant = partial reimbursement of costs that are actually incurred by beneficiaries of the grant agreement. It is assessed at the level of the action / project, allocation of the grant among beneficiaries is an internal agreement of the project consortium Grant amount is expressed: as a maximum grant amount as the proportion of the fixed reimbursement rate applied to the total costs of the action. Double-ceiling of the grant: maximum grant amount compared to the result of reimbursement rate applied to the consolidated total eligible costs of the action In case of over-expenditure – maximum amount is paid In case under-expenditure – reimbursement % is applied Form of grant 17

Consumers, Health And Food Executive Agency 18 Cash flow of the action Starting date Duration of the action: beneficiaries carry out activities, generate costs and record the costs in their accounting system End date Final report Interim report(s) Pre-financing payment Report approval, Assessment of costs, Reimbursement Contribution from 3 rd party Income of the action: Conference fee Applicant's contribution Report approval, Assessment of costs, Reimbursement

Consumers, Health And Food Executive Agency 19 “Maximum grant amount”: the maximum amount, decided by the Agency at the beginning of the action as contribution to the action’s costs that could be paid. The decision of the Agency is based on the proposal of the beneficiaries after the evaluation of independent experts. It is then set out in the grant agreement and serves as a threshold for payments from the EU budget. “Final grant amount”: equals to or is lower than the maximum grant amount. Established at the end of the action, at the time of balance payment. The calculation of the final grant amount is based on actual eligible costs incurred by the action, reported by the beneficiaries and accepted by the Agency. Calculation method is defined in the grant agreement. Grant amount

Consumers, Health And Food Executive Agency Budget Planning

Consumers, Health And Food Executive Agency 21 Know your role in the action / project: What is your expertise? What is your contribution to the project? Which activities do you participate in? Do you coordinate any of the activities / work packages? Which are the events you organize / you participate? Do you have enough resources or you need third party involvement? Identify: SMART objectives for the action / project Activities necessary to achieve objectives Cost elements ( and cost category) of each activity Partners participating in a given activity Planning

Consumers, Health And Food Executive Agency 22 Participants Co-ordinator Executive Agency Co-beneficiaries Parties of the Grant Agreement Co-beneficiaries who join to the signature of the grant agreement Signature of the Grant Agreement Third party financial donors Affiliated entities Subcontractors Collaborating Stakeholders Legal / capital link with one of the beneficiaries Service providers to one of the beneficiaries Interest in the outcome of the action Direct money transfer to the action

Consumers, Health And Food Executive Agency 23 Work package No 1 Project management StaffT & SEquip.Consum.Subcontr.Other Project coordinatorXX Steering committees XXX Project WebsiteXXX Financial coordination XXX ReportingXXX Exercise per Work Package and per Partner Example I.

Consumers, Health And Food Executive Agency 24 For each activity you ask questions to identify cost types and cost items…like: Website – questions to be considered for the budget planning Person with IT background? Special software? Engage third party to deliver part of website? Licenses to be paid? When you have the answers then you ask for help of… Human Resources Accounting Procurement / Sourcing Legal Department Example II.

Consumers, Health And Food Executive Agency Tips and observations

Consumers, Health And Food Executive Agency 26 Double-limit to the EU Contribution Maximum amount of the grant based on the Award Decision Reimbursement rate of total eligible costs Recording in the accounts by applying internationally accepted accounting standards and usual accounting practices of the beneficiaries Number of associated partners All partners with specific knowledge crucial to the action Too many – difficult to manage higher share – more commitment Consortium Agreement Signed by each partner Internal project management, roles and responsibilities

Consumers, Health And Food Executive Agency 27 Consult HR, Accounting, Procurement and Legal Department HR department – who is staff, components of salary Accounting – have all the financial information and supporting documents Procurement / Sourcing – contracts with third parties Avoid obvious over / under estimation Over-estimation may lead to decrease of final EU contribution Under-estimation: objectives are not achieved Project manager at coordinator and Work Packages leaders, Financial manager at coordinator Communication! Contact with coordinator and co-beneficiaries Read the grant agreement

Consumers, Health And Food Executive Agency Thank you for your attention! Questions? 28