Presentation by Mrs. Isabel Serra, EMPL/F/3 Concept of real costs in the framework of grants/aid schemes Presentation by Mrs. Isabel Serra, EMPL/F/3

Concept of real costs in the framework of grants/aid schemes Objective and nature of ESF activities Intangible character (individuals) Specificities on the eligibility of expenditure Non eligibility of purchase of land and real estate Equipment - Depreciation

Concept of real costs in the framework of grants/aid schemes Equipment - depreciation Traditionally ESF finances depreciation (rule 1.6) National rules are of application Analysis of opportunity Depreciation versus renting/leasing

Concept of real costs in the framework of grants/aid schemes Focus of management and control in ESF Effective implementation of the action Expenditure effectivelly incurred and paid Coherence between "physical" and financial aspects

Concept of real costs in the framework of grants/aid schemes Article 32(1) subparagraph 3 of Council Regulation 1260/1999 Rule n° 1 of Commission Regulation 448/2004 Interpretative note of Commission services

Concept of real costs in the framework of grants/aid schemes Payments by final beneficiaries In the form of cash (exceptions in-kind contributions, depreciation and overheads) expenditure incurred and actually paid out Opposed to the concept of advances from final beneficiary to final recipient Not to confuse with payment on account

Concept of real costs in the framework of grants/aid schemes Payments by final beneficiaries Salaries Direct costs or overheads Direct pay Social security/taxes obligatory by national law VAT and other taxes

Concept of real costs in the framework of grants/aid schemes Payments by final beneficiaries In-kind contributions Eligible for funding if the conditions of rule 1.7 are respected Final Recipient should keep evidence Independent certification Calculation of value Time-sheets for hours worked

Concept of real costs in the framework of grants/aid schemes Final beneficiary does not carry out implementation of the action Agreement for the implementation Financially responsible for the project Expenditure paid by final recipient supported by invoices Responsible for verifying the reality and eligibility of the project and expenditure Audit trail maintained down to final recipient

Concept of real costs in the framework of grants/aid schemes Differenciation of the justification of real costs [NOT] Public procurement Invoices in accordance with contractual terms

Concept of real costs in the framework of grants/aid schemes Each Euro declared as expenditure incurred and paid on a project is justified by : receipted invoices or, accounting documents of equivalent probative value

Concept of real costs in the framework of grants/aid schemes At Project level Need of complete and clear budgets Avoid interpretation Main categories of costs on one side Identify possible revenues Identify clearly sources of funding on the other side

Concept of real costs in the framework of grants/aid schemes Main categories of costs Direct costs – Costs linked to the specific project Overheads – Costs necessary to the regular activity of the final recipient Charged on a pro-rata basis Based on real costs National guidelines to final recipients

Concept of real costs in the framework of grants/aid schemes Sources of funding: ESF National, Regional, Local Private Budget should be equilibrated – No over financing Eligibility rules apply to total expenditure of the project independently of financing source

Concept of real costs in the framework of grants/aid schemes At the time of final declaration of expenditure Other revenue Identified in Eligibility rule n° 2 Deducted from eligible costs Net amount presented for funding Sources of funding cover net eligible costs No over financing