Operational and Financial aspects Part 2 Guido DI FIORE, Financial Coordinator Gilles GERVAIS, Project Advisor Brussels, 23rd January 2012

Presentation overview Principles of sound financial management Amendments

Principles of sound financial management

Eligible costs (art. II.14 of grant agreement) Check the Project Handbook 2011* (also named Guidelines for administrative and financial management and reporting) which is the Annex III or IV of your agreement. Refer to pages 29 to 40 (Financial rules) (EN version, for FR and DE other pages) Directly connected with project and budgeted Necessary for implementation of the project Reasonable and justified Generated during the eligibility period of the project Actually incurred, duly recorded in accounts Identifiable and verifiable *http://eacea.ec.europa.eu/llp/beneficiaries/2011/reporting_lifelong_learning_2011_en.php

Budget of the action (Annex II of grant agreement)

Staff costs (1) Staff costs = salary + social charges To be reported on real basis, keep also time sheets in order to document the number of working days Example (on the basis of 220 working days/year): For Ms. X, the annual cost (21.632,60 EUR) is composed by the gross salary (16.000 EUR) and social security charges (5.632,60 EUR). We can calculate the daily cost as 21.632,60 ÷ 220 working days = 98,33 EUR/day Report this actual rate even if above maximum eligible rate Actual costs spent for staff may be reduced in case of weak implementation (art. I.10.6/art. I.11.6)

Staff costs (2) Staff costs must be entered by partner organisation/co- beneficiary and by staff category in the reporting tables. Statutory staff, having either a permanent or a temporary employment contract with the partner organisation. Temporary staff, recruited through a specialised external firm (staff recruited through temp/interim agencies). In order to calculate the daily cost, fees paid to the interim firm can also be taken into account. Maximum rates published for the Call 2011 are applicable for the whole duration of the action.

Travel and Subsistence costs Subsistence costs must be applied and reported based on partners' internal regulations. If they exceed maximum eligible daily rate (of the country of destination), the exceeding part will be declared ineligible. Maximum rates published for the Call 2011 are applicable for the whole duration of the action (same remark than for staff rates) To be reported on real basis: either based on reimbursement of actual costs (hotel, meals) or based on lump sum (i.e. per diem paid to the travelling staff) or a mix of both systems. In all cases keep invoices and/or receipt signed by the staff receiving the reimbursement/subsistence. Travel and subsistence costs to be reported only for staff members If no overnight stay, subsistence cost maximum rates are reduced by 50% Example: Meeting from 01/02/2012 to 03/02/2012 (2 nights stay): actual subsistence costs will be compared to 2,5 days (and not 3 days) x maximum subsistence rate

Equipment costs Limit for total equipment costs: max 10% of total eligible direct costs Rent/lease: no depreciation Depreciation according to annual depreciation rate under national legislation (e.g. use of 25% below) Rules for procurement apply (see Subcontracting costs)

Subcontracting costs (1) Limit for sub-contracting: 30% of total eligible direct costs The estimate/offer will cover all costs (staff costs, travel costs etc…) Management of the project may not be subcontracted Procurement contract to an external body, organisation or individual (self-employed) Individual must not be an employee of any of the Partner organisations of the consortium

Subcontracting costs (2) Award the contract to the tender offering best price-quality ratio (i.e. value for money) following the rules for procurement set in art. II.9 and art. I.10.2/art. I.11.2 of the agreement (and keep proof of tender procedures): < 12.500 € simply on presentation of an invoice between over 12.500 € and 25.000 € procedure involving at least three tenderers between over 25.000 € and 60.000 € procedure involving at least five tenderers > 60.000 € national rules to apply Award the contract to the tender offering best price-quality ratio (i.e. value for money) following the rules for procurement set in art. II.9 and art. I.10.2/art. I.11.2 of the agreement (and keep proof of tender procedures): < 12.500 € simply on presentation of an invoice between over 12.500 € and 25.000 € procedure involving at least three tenderers between over 25.000 € and 60.000 € procedure involving at least five tenderers > 60.000 € national rules to apply

Other costs Activities which are specific and necessary for achieving the goals of the project Distinction between subcontracting and other costs Example: if you wish to produce a dissemination brochure, you may ask a supplier to do the full work (lay-out, proofreading, translation, printing, etc). This is considered as a subcontract. On the other hand, if the brochure is done by internal staff (drafting, editing, photocopying) the costs of stationary and photocopies should be reported under other costs (when those costs are not normal administrative/running costs, as already covered under indirect costs). Catering costs considered eligible only during working meetings Transfer costs charged by banks are eligible (but costs for opening and operating bank accounts are not eligible)

What about VAT for 2011 projects? Depending on the legal status of the organisation (public or private) and if VAT is recoverable or not by the organisation self. For 2011 projects, the approach and application of the rules do not change in comparison with the past. Possible change starting from 2012 on the basis of the approach proposed by DG BUDG.

Ineligible costs Costs may be ineligible By nature of costs i.e. not linked to the project If not compliant with the "10%" transfer rule (art. I.3.4/I.4.4 of the agreement) If not compliant with maximum ceilings of some budget categories (equipment 10%, subcontracting 30% and fixed flat rate of (max. 7%) indirect costs) If not compliant with maximum rates for Staff & Subsistence costs (rates of the Call 2011) Project handbook gives more details on types of costs which are in no case considered eligible

Third country costs (1) Costs incurred following participation of third country(ies) partners/cobeneficiaries (3rd countries = non LLP countries) « Same » rules than for LLP countries BUT: Equipment and subcontracting costs are not eligible categories Staff cost also reported on real daily staff cost rates, but must be broken down into categories 1 to 4 of the International Standard Classification of Occupations (ISCO). Under no circumstances may the eligible daily rate exceed the following maximum amounts: Staff category 1 (maximum amount EUR 450/day) Staff category 2 (maximum amount EUR 300/day) – University Professors Staff category 3 (maximum amount EUR 250/day) Staff category 4 (maximum amount EUR 125/day)

Third country costs (2) Only real travel costs to the European participating countries and within the home (third) country are eligible Maximum eligible daily subsistence rates for the destination (third) country of the trip: http://ec.europa.eu/europeaid/work/procedures/implementation/ per_diems/index_en.htm (please refer to the update of 2010)

Exchange rate Stated in art. I.10.1/art. I.11.1 of the grant agreement Any conversion of actual costs into euros shall be made at the monthly accounting rate established by the Commission for the first month of the eligibility period (i.e. October 2011). http://ec.europa.eu/budget/inforeuro

Amendments

Amendments (1) Submission of the request Who? Coordinator/ Beneficiary – request duly signed by the Legal Representative of the beneficiary organisation/coordinator Why? Only when absolutely necessary! How? Requests should be duly justified in relation to the project objectives Modifications should be detailed When? Modifications should be introduced before they take place and at least one month before the project end. Where? To the Executive Agency – the relevant sub-programme/action, by registered mail: Mónika Holik Head of Unit Office BOU2 03/107 Ave de Bourget 1 B – 1040 Brussels, Belgium

How? Amendments (2) Formal request using the Contractual Modification Form (amendment form) Change of the beneficiary organisation (called “coordinator” in the multibeneficiary agreement) Change of name of the beneficiary organisation/coordinator (but still the same organisation) Partner(s)/co-beneficiaries withdrawal* New / Replacement partner(s)/co-beneficiaries joining the project Changes to the work programme affecting the project objectives Change of bank account Changes to the eligibility period Changes to the budget breakdown above 10% between the budget headings staff costs and operational costs; change of the fixed flat rate of indirect costs (up to max 7%)

How? Amendments (3) Formal request not needing the Contractual Modification Form: Change of coordinating organisation/operational coordinator (if it is already a partner/co-beneficiary) Change of Legal Representative of the beneficiary Organisation c. Change of project coordinator

Change to the budget breakdown (art. I.3.4 / art. I.4.4 of grant agreement) (1) An amendment is not necessary when the project adjusts the eligible direct costs by making a transfer between staff costs and operational costs of maximum 10% of the amount of the heading for which the transfer is intended, irrespective of the adjustment made betweens categories of operational costs. Direct costs include staff costs heading and operational costs heading (the latter being divided among various categories). Accepted only if this adjustment of expenditure does not affect implementation of the action. Please note: total budget and maximum EU grant cannot be increased.

Change to the budget breakdown (art. I.3.4 / art. I.4.4 of grant agreement)(2) Example 1: Staff costs in Eligible budget (Annex II of the grant agreement) = 100.000 € increased to 108.000 €, no amendment needed as <= 10% increased to 112.000 €, an amendment is needed because +12.000 € is > 10% Example 2: Operational costs = 100.000 € (including 20.000 € in Equipment costs, and 80.000 € in travel and subsistence costs) increased to 108.000 €, no amendment needed as <= 10% (even if Equipment costs increased to 28.000 €, travel and subsistence costs decreased to 78.000 €, and other costs increased from nil to 2.000 €)

DO’s - Examples of good practices in amendment requests Discuss amendments in advance with your project advisor in case of doubt Ensure that partners are fully committed to the need for an amendment If adding a new partner, should have highly specific skills and competences to improve and add value to the project outcomes Ensure all annexes are complete and budget and work plan are re-aligned to the amendment request The amendment request must be sufficiently detailed and convincing

DON’Ts - Examples of inadequately justified amendment requests Partner(s) withdrawal / replace / add new partners:  When a person changes institution, adding the new institution to the partnership  Adding a new partner without clear/relevant tasks and added value to the project Changes to the eligibility period  Normally not in case of late start of the project Changes to the budget breakdown  Re-allocation from « travel » to « staff » costs in order to avoid underspending without justified need for more working days

CONTACTS María Luisa GARCIA MINGUEZ (coordination) EACEA-ERA-MULTILATERAL@ec.europa.eu Gilles GERVAIS, Natalia RIESGO, Alba PRIETO GONZALEZ, Misia COGHLAN, Mireia FABREGA-IGLESIAS, José MATOS MARTINS, Magalie SOENENS EACEA-ERA-NETWORKS@ec.europa.eu Katia DE SOUSA EACEA-ERA-ACCOMPANYING@ec.europa.eu Natalia RIESGO