Chisinau, Republic of Moldova 2017 Financial reporting Training on Project Management and Implementation for Grant Beneficiaries and Partners TC Programme MD-UA Cătălina Arghir, EaPTC MA, GIZ Chisinau, Republic of Moldova 2017

Financial reporting – general aspects Financial reporting is described in article 4 of the Special Conditions of the contract and complemented by: Article 15.1 of General Conditions, explaining the conditions for payment claims and the documents to attach: Financial report Model of payment request, Annex V Model of financial report , Annex VI Model of expenditure verification report, Annex VII

Pay attention ! The Beneficiary (LP) is responsible for the correctness of the information in the tables; Check the information sent by your partners!

What payment requests are to be submitted during the project? According to Option 1 in Article 15.1 of your grant contract General Conditions, when the project duration is shorter than 12 months or when the grant is lower than €100,000, there are: - A pre-financing request of 80% on the signature of the grant contract; - A request for payment of the balance which accompanies ONLY ONE FINAL REPORT.

What payment requests are to be submitted during the project? According to Option 2 in Article 15.1, when the project duration is longer than 12 months or when the grant is higher than €100,000, there are: a) A first instalment of pre-financing payment (100 % of the part of the estimated budget financed by the Contracting Authority for the first reporting period, excluding not authorised contingencies, subject to the provisions of Annex II) b) Forecast further instalment(s) of pre-financing payments (80 % of the part of the estimated budget financed by the Contracting Authority for the following reporting period, excluding not authorised contingencies, subject to the provisions of Annex II) when: - The expenditure financed by the grant amount (as calculated according to the percentage set out in your grant contract Special Conditions) is at least at 70% of the previous payment and 100% of any other payments - They are supported by an interim report and Expenditure Verification Report - The total sum of pre-financing does not exceed 90% of grant A request for payment of the balance on submission of the final report.

Financial reporting – key elements: Look at the final and interim reports NOW! Any information needed for reporting has to start its collection from the beginning. Prepare the project accounting (Beneficiary and partners) with the necessary information for reporting, not just the amount of expenditure. Keep you accounting on an on-going basis; you will not know when you reach the thresholds if you do otherwise. Agree regular updates of financial information with your partners; reporting in CBC projects is a team work! Involve your auditors/ controllers from the beginning, when preparing the payment claim is too late to find a share understanding of the rules.

Financial reporting – key elements: The financial part of Annex VI is an Excel sheet with five parts: General information: Gives information on how to use the Excel; Forecast budget and follow-up: This is requested for information purposes only, but can also be very useful for your financial monitoring of the project! Interim Report: The amount of eligible expenditure has to be indicated in this sheet; Sources of funding: This sheet has to be included in both interim and final reports. Other: Figures have to be rounded to the nearest euro cent LET’S SEE THEM IN DETAIL!

Exchange rate: The project accounting has to be kept in the national currency used by each partner; Grant amount transferred by MA should be kept in euro. Interim and final reports include, for each budget line, four columns for each currency: number of units, unit cost in original currency, total cost in original currency and total cost in Euro; Exchange rate to use is monthly rate in the month of payment in Inforeuro.

Go to Inforeuro web site, indicate your currency: Exchange rate: Go to Inforeuro web site, indicate your currency: http://ec.europa.eu/budget/contracts_grants/info_contracts/inforeuro/index_en.cfm List of countries List of currencies

Go to Inforeuro web site, indicate your country or currency: Exchange rate: Go to Inforeuro web site, indicate your country or currency: http://ec.europa.eu/budget/contracts_grants/info_contracts/inforeuro/index_en.cfm

Exchange rate:

Interim report Identify the project with its number and implementation period, indicate the period covered by the report and copy the budget in the contract

Interim report If MA has authorized any reallocation between budget lines or the use of part of the reserve for contingency, indicate it in the columns beside the “original” budget

Interim report For each currency and budget line, fill-in the requested information: number of units, unit cost, total cost in original currency and total cost in Euro, using the exchange rate, calculated as mentioned in previous slides

For each currency (UAH, MDL) and budget line, fill-in the requested information, i.e. the number of units, the unit cost, the total cost in the original currency and the total cost in euro. 28.0565 # Units Unit cost (in currency n°1) Total cost (in Total cost (in EUR) (d 1 ) (e (f1)=(d1)*(e1) (g )= (f )*(Fx-rate 8.00 11.500,00 92.000,00 3.279,10 Per currency Ukranian Hrivna (UAH) Exchange rate of the period

Supporting document for Financial Report is Expenditure List Position and Name of staff member (as per the Budget of the Action) Date of payment Payment currency (e.g. EUR, MDL, UAH) Payment amount (salary incl. social security charges and other remuneration-related cost) in payment currency Unit (as per the Budget of the Action, e.g. "per month", "per day") Total number of units worked by staff member Number of units worked on the project (please make sure figures correspond to Timesheets) % of time worked Eligible salary in payment currency EUR exchange rate (average of official EC Inforeuro rate over the reporting period) 1. Human Resources (gross amount) (gross amounts) 1.1. Technical 1.1.1 Technician 1 Beneficiary month 4 31/06/2016 UAH 11.500,00 Month 1,00 0,43 43,00% 4.845,00 28.0565 1.1.1 Technician 1 Beneficiary month 5 28/07/2016 0,37 37,00% 4.255,00 1.1.1 Technician 1 Beneficiary month 6 31/08/2016 0,55 55,00% 6.3250,00 1.1.1 Technician 1 Beneficiary month 7 30/09/2016 0,60 60,00% 6.900,00 1.1.1 Technician 1 Beneficiary month 8 31/10/2016 0,39 39,00% 4.485,00 Position and Name of staff member (as per the Budget of the Action) 1 Human Resources (gross amount) (gross amounts) 1.1. Technical 1.1.1 Technician 1 Beneficiary month 4 1.1.1 Technician 1 Beneficiary month 5 Eligible salary in payment currency EUR exchange rate (Official EC Inforeuro in the reporting period) Cost in EUR 4.845,00 28.0565 172.69 4.255,00 28.8765 151.66

For each category, add up the number of units from all currencies and the total amount in Euro for each currency: Fx-rate: # Units Unit cost (in currency n°1) Total cost (in currency n°1) Total cost (in EUR) Unit cost (in currency n°1) Total cost (in Units total # for all currencies Total cost of the period (in EUR) (d 1 ) (e (f1)=(d1)*(e1) (g )= (f )*(Fx-rate Sum (d à d n (h)= Sum (g g Per currency Total for the period in EUR Moldova Leu (MDL) Exchange rate pof the period (01/06/2016-02/11/2016): Ukranian Hryvnia (UAH) Exchange rate pof the period :

This is a key table to verify that the project remains within the budget flexibility rules, as mentioned in article 9.2 of the General Conditions and it will still remain at the end of the following period. As a result of this calculation, you may identify the need to request authorization for a budget change. Forecast Budget & follow-up Real Previous Period 1. Human Resources 1.1 Technical 1.1.1 Technician Per month 1.1.2 Technician 2 1.2 Administrative Contract n° Implementation period of the contract (dd/mm/yyyy-dd/mm/yyyy) Unit # Units Unit cost (in EUR) Costs (in EUR) Following period (dd/mm/yyyy-dd/mm/yyyy) Forecast Previous Coût unitaire (en EUR) Coûts Expenditures

Last but not least, do not forget that it is compulsory to include the table with the actual sources of funding so far.

Reason for Expenditure Verification (Audit) All expenditure under a grant contract should be verified as to its: Incurrence (it really happened) Accuracy (the amounts are stated correctly) Eligibility (the amounts satisfy the eligibility criteria) Expenditure Verification work is contracted to competent auditors or national controllers to ensure its independence There is a template Terms of Reference and draft report template for expenditure verification

General Procedures Understand the Grant Contract Check that the financial report meets the terms and conditions Check the accounting and record keeping rules are complied with (Article 16 of General Conditions) Check the Financial Report agrees with the accounting records Check that correct exchange rates were used in the financial report Check the budget is stated correctly in the report and includes any amendments

Expenditure Verification Procedures: Eligibility of Costs Eligibility of Direct Costs e.g. payroll costs; Provision for Contingency Reserve – is it within the limit, if allowed; Administrative costs – are they supported and within the allowed limits; Contributions in kind – what is allowed? Non-eligible costs – are they excluded in the report; Revenues – does the report follow the rules; Coverage must be at least 65%, if a lot of errors found – increase to 85% to 100% and report the effect of the errors on the amounts claimed;

Thank you for your kind attention! Arghir Catalina catalina.arghir@giz.de