Grants 2015 INFORMATION MEETING ON FINANCIAL ISSUES Luxembourg, 12/03/2014 ESTAT Unit A4 Budget, financial management and internal control

Information meeting on Financial Issues - 2015 Content Unit costs for staff costs Questions & answers unit costs What's new 2015? Main sources of errors FPA and MBGA Financial controls The case of ONAs Information meeting on Financial Issues - 2015

1. Unit costs for staff costs: A) Reminder Information meeting on Financial Issues - 2015

Submission of unit costs documents We strongly recommend to submit the information on unit costs as soon as available, to solve any potential issues before signature of the first grant agreement! Approval of unit costs with signature of grant agreement. Information meeting on Financial Issues - 2015

Information meeting on Financial Issues - 2015 Unit costs templates Grant application: The grid of unit costs and a copy of signed declaration(s) and checklist shall be attached to each grant application. Information meeting on Financial Issues - 2015

Grant application: Join copy of unit costs grid Information meeting on Financial Issues - 2015

Information meeting on Financial Issues - 2015 Grant application: Join copy of declaration on the correct application of the method To be signed by an authorised person such as Director General, Resources Director or Chief Accountant Information meeting on Financial Issues - 2015

Grant application: Join copy of checklist with main control points Information meeting on Financial Issues - 2015

Unit costs: Estimated budget (1) In order to allow an appropriate evaluation of the proposal with regard to the description of the action (technical specifications), costs shall be broken down by profiles (e.g. statistician, project manager, IT expert etc.) and by pay grade. The corresponding unit costs rates (daily rates) have to be used. Information meeting on Financial Issues - 2015

Unit costs: Estimated buget (2) Information meeting on Financial Issues - 2015

Agreement on unit costs Grant agreement: Unit costs are part of each grant agreement. Once the grant agreement has been signed, the unit costs agreed upon will remain valid for the entire duration of the agreement and are not subject to updates during subsequent years. Information meeting on Financial Issues - 2015

Unit costs: Final financial statement (1) For grant agreements signed as from 2015: At the moment of the final financial statement, the calculation has to be made on the basis of the staff that actually performed the work (i.e. their pay grades). Information meeting on Financial Issues - 2015

Unit costs: Final financial statement (2) For grant agreements signed as from 2015: Information meeting on Financial Issues - 2015

B) Some clarifications concerning the unit costs method Information meeting on Financial Issues - 2015

Information meeting on Financial Issues - 2015 Reference year Payroll data for the reference year. Payroll data has to be reconcilable with accounting data. To determine which costs pertain to the reference year, each beneficiary shall take into account its own accounting rules and practices, notably the use of cash or accrual accounting. Information meeting on Financial Issues - 2015

Impact of own accounting practices on reference year Cash accounting: Include in the calculation all the amounts effectively paid in the year of reference, irrespective of the year to which they pertain. Accrual accounting: Include payments pertaining to the reference year and exclude payments pertaining to another accounting year, irrespective of the actual date of the payments themselves. Example: Salary increase for year N, which has been decided and payed in February N+1 Cash accounting  to be included in calculation of unit costs in year N+1 Accrual accounting  to be included in calculation of unit costs for year N Information meeting on Financial Issues - 2015

Full-time equivalent (FTE) FTE reflects the employment contract. Maximum 1 FTE per staff member. Normal statutory holidays do not impact FTE. No FTE-adjustment for overtime. Adjustments possible (but not obligatory!) for: absences such as unpaid leave, maternity leave or sick leave; under the condition that the salary is not paid by the beneficiary. Where information on FTE is not available, the calculation may be based on the total number of staff. Information meeting on Financial Issues - 2015

Information meeting on Financial Issues - 2015 Additional remuneration schemes specifically benefitting officials participating in EU-funded projects To be eligible, personnel costs may not exceed the remuneration costs defined by the beneficiary according to its usual remuneration policy. Overtime compensations can in principle be included, provided that they are in line with the beneficiary's usual policy on remuneration and in compliance with national legislation. Any additional remuneration scheme granted specifically in the context of EU-funded projects is not eligible. Exclusion from calculation of unit costs. Exclusion for reimbursement of actual costs (cost claim). This increase in the basic salary shall be financed by other sources of funding than the EU grant. Information meeting on Financial Issues - 2015

2. Questions & answers unit costs Information meeting on Financial Issues - 2015

Information meeting on Financial Issues - 2015 3. What's new 2015? Information meeting on Financial Issues - 2015

Information meeting on Financial Issues - 2015 Changes in templates Changes related to the implementation of unit costs (see before). Information meeting on Financial Issues - 2015

Information meeting on Financial Issues - 2015 Changes in templates Simplification: No more selection criteria: obligation to justify the operational capacity has been waived. CVs: now part of description of the action (if applicable) Sub-contracting: justification and description of the action in section III.1 Information meeting on Financial Issues - 2015

Information meeting on Financial Issues - 2015 Changes in templates Simplification: Audit certificate required only for grants for which the total contribution in the form of reimbursement of actual costs is > 750.000 €. Amount to be calculated excluding unit costs for staff costs and indirect costs. Example: Total eligible costs: 950.000 € Unit costs for staff costs: 600.000 € Indirect costs: 180.000 € Other costs: 170.000 €  No audit certificate required Information meeting on Financial Issues - 2015

Information meeting on Financial Issues - 2015 Changes in templates Simplification: Payment request to be transmitted by e-mail only For all grants signed as from 2015 ESTAT-GRANTS-PAYMENT-REQUEST@ec.europa.eu Information meeting on Financial Issues - 2015

Information meeting on Financial Issues - 2015 Any questions? Information meeting on Financial Issues - 2015

4. Main sources of errors (reminders) Information meeting on Financial Issues - 2015

Information meeting on Financial Issues - 2015 What we have seen: Information meeting on Financial Issues - 2015

A - Amendment to the grant agreement Any changes which alter the action as described in the Description of the action has to be subject of an amendment. Any request for amendment has to be duly justified and sent to Eurostat in due time before it is due to take effect. At all events it should be sent no later than one month before the closing date of the action. Information meeting on Financial Issues - 2015

B - Budget transfers – current rules Transfers within the beneficiary's estimated budget are possible without amendment if: the transfers do not affect the completion of the action and the transfers are between items of eligible cost items. For originally empty cost items and in case they affect the completion of the action, changes have to be reflected in the final implementation report (which is subject to approval by Eurostat). Exception: For transfers involving sub-contracting, any additional recourse to the award of contracts while the action is under way shall be subject to an amendment. Information meeting on Financial Issues - 2015

Budget transfers – current rules Information meeting on Financial Issues - 2015

Budget transfers – current rules Example: Participation in a conference by internal staff instead of external experts (i.e. no impact on the completion of the action). The change has to be explained in the final technical report. No amendment! Information meeting on Financial Issues - 2015

Budget transfers – current rules Example 3: Staff costs 30.000 EUR 40.000 EUR Travel costs 10.000 EUR 10.000 EUR Depreciation of Equipment 0 Consumables 0 Subcontracting 20.000 EUR 10.000 EUR Any other direct costs 10.000 EUR 10.000 EUR Indirect costs (30%) 9.000 EUR 12.000 EUR Total eligible costs 79.000 EUR 82.000 EUR Impact on indirect costs. The maximum amount of the EU contribution cannot be exceeded! Original budget Adjusted budget Information meeting on Financial Issues - 2015

Budget transfers – current rules Original budget Adjusted budget Information meeting on Financial Issues - 2015

Budget transfers – overview of rules For grant agreements signed: since 2013: current rules as described above signed in 2012: 20% ceiling (calculated on the receiving cost item) For grant agreements signed in 2011 and before: 10% ceiling (calculated on the receiving cost item) In case of doubt, check paragraph on "Budget adjustment" in the respective grant agreement (indicating the ceiling of 10 or 20%, and in MBGAs, if transfers between partners are allowed) and the respective Guide for applicants. Information meeting on Financial Issues - 2015

Information meeting on Financial Issues - 2015 C - Time-recording Identified weaknesses: Missing audit trail in the IT systems or difficulties to retrieve data Retroactive time-sheets Lack of time-recording (presence time registration used instead or submission of a HR Department certificate) Missing signature of immediate superior Weak internal control or no effective control of time spent on EU grants Information meeting on Financial Issues - 2015

D - Evaluation of results and costs Delivering of results (report, methodology, application…) Evaluation: Quantity and quality of the results (with regard to the activities and results foreseen in Annex I of the grant agreement). Final implementation report: Overview of the results / deliverables provided and of the time spent for each task in order to justify the eligible costs declared. Evaluation together with the cost claim  Are declared costs: connected with the subject of the grant agreement? consistent with the quantity/quality of deliverables? necessary for the implementation of the action? eligible? Information meeting on Financial Issues - 2015

Information meeting on Financial Issues - 2015 Any questions? Information meeting on Financial Issues - 2015

Information meeting on Financial Issues - 2015 5. FPA and MBGA Information meeting on Financial Issues - 2015

Framework Partnership Agreements (FPA) FPA sets out, with a binding effect, the framework conditions governing potential grants to partners on the basis of an action plan and jointly agreed objectives: including roles and responsibilities; including special and general conditions) FPA does not create obligations related to the implementation of a concrete action or for payment of a determined financial contribution. FPA may be supplemented by Specific Grant Agreements (SGA) for implementation of concrete actions : include technical and financial provisions for the specific action. Duration shall be aligned with the ESP and in principle up to 4 years. Information meeting on Financial Issues - 2015

Framework Partnership Agreement with Specific Grant Agreement(s) FPA Preambule (justification & nature of action) Special & General conditions Roles & responsibilities Annexes SGA Action 1 Action 2 (no SGA) SGA Action … Technical & financial provisions for the specific action Jointly agreed objectives and action plan Concrete actions Information meeting on Financial Issues - 2015

Multi-beneficiary grant agreement (MBGA) Equivalent to mono-beneficiary grant agreement, but with more than one beneficiary. The usual agreement for supporting ESS-nets. Action(s) need to be clearly defined. Duration normally up to 4 years. Information meeting on Financial Issues - 2015

Main common features of FPA and MBGA One coordinator for each FPA/SGA or MBGA. Co-beneficiaries are: jointly responsible for carrying out the action in accordance with the terms and conditions of the grant agreement; responsible for complying with any legal obligations incumbent on them jointly or individually; make appropriate internal arrangements for the proper implementation of the action, consistent with the provisions of grant agreement. Information meeting on Financial Issues - 2015

Maximum contribution from co-beneficiaries Co-financing rate specified in each grant agreement. EU-funding up to 95% for collaborative networks. No obligation that the individual beneficiaries co-finance the action with an equal percentage contribution. Coordination tasks of the coordinator can be financed up to 100% within the limits of the maximum EC-contribution. Information meeting on Financial Issues - 2015

Budget transfers MBGA – current rules Same rules apply as for mono-beneficiary grant agreements: between cost items between beneficiaries Example: a workshop envisaged by one partner is carried out by another The second sub-paragraph of article II.22 provides for the right of the beneficiaries to request an amendment in order to change the share of the maximum grant (which determines the financial responsibility of each beneficiary). Information meeting on Financial Issues - 2015

Information meeting on Financial Issues - 2015 Budget transfers MBGA Information meeting on Financial Issues - 2015

6. Payment of grants and controls Information meeting on Financial Issues - 2015

Transition period for grants without UC In depth ex ante control based on additional supporting documents: Random sample – each payment may be sampled Targeted sample – based on criteria such as amount, results of last controls, other information which may impact on EU funds Desk controls, by exception on the spot controls Follow-up controls to test corrective measures. Supporting documents requested for checks: Pay slips, time recording, calculation of hourly rate Invoices, bank statements … for other costs categories. Risk based ex post control (periods for record- keeping) Information meeting on Financial Issues - 2015

Grants with Unit costs: checks on payment Generalised implementation of unit costs for staff costs as from 2015 should lead to a lower risk of errors and a decrease of in depth ex- ante/ex post controls Cumulative effect of simplification measures (unit costs/flat rate for indirect costs..) Controls on payment requests will be limited to time reporting and the justification of the pay grade (no check of statutory records) Invoices, bank statements .. for other cost categories. Information meeting on Financial Issues - 2015

Methodology: Periodic assessment Externalised periodic assessment on a sample of beneficiaries (check of statutory records). Input for next Commission decision on the UC methodology for the next ESP (further improvement, when appropriate). Would potential errors in implementing the methodology be detected, correction expected for future grant agreements. Information meeting on Financial Issues - 2015

Information meeting on Financial Issues - 2015 7. The case of ONAs Information meeting on Financial Issues - 2015

The case of Other National Authorities (ONAs) High number of ONAs which can potentially participate at Eurostat grants. Unit costs have to be implemented as from 2015 For ONAs only, in 2015 only, derogation possible (2014 Commission decision) but should be avoided. Information meeting on Financial Issues - 2015

Information meeting on Financial Issues - 2015 Any questions? Information meeting on Financial Issues - 2015