Reporting and payment claims Black Sea Basin ENPI CBC Programme Training for Grant Beneficiaries and Partners Bucharest 18 June 2014 Financial Unit

Financial reporting in contract The narrative and financial reporting is described in article 4 of the Special Conditions of the contract and complemented by: Article 15.1 of General Conditions derogated by art SC, explaining the conditions for payment claims and the documents to attach Annex V to contract: model of payment request Annex VI to contract: model of financial report Annex VII to contract: model of expenditure verification report Financial Unit

Payment claims during the project According to General Conditions article 15.1 Option 2 derogated by Special Conditions art. 4.2 Option 2, for projects not exceeding 24 MONTHS and where the financing provided by JMA is between € up to €, there is: A pre-financing of 30% from ENPI grant after the signature of the contract Forecast second pre-financing instalment representing maximum 50% of the ENPI grant A balance representing maximum 20% of the grant Total sum of pre-financings not exceeding 80% of ENPI grant. The reports shall cover the Action as a whole, regardless of which part of it is financed by the JMA. Financial Unit

Annex VI of Grant Contract (Excel file) The financial part of Annex VI is an Excel sheet with five parts: General information on how to use it Forecast budget and follow-up Interim Report Sources of funding Final report Financial Unit

General information Nota bene: The Beneficiary alone is responsible for the correctness of the information in the tables check the information sent by your partners!! Forecast budget and follow-up Requested only for information purposes but very useful also for your project financial monitoring!! Other The sheet “sources of funding” has to be included both in interim and final reports Figures have to be rounded to the nearest euro cent Financial Unit

Use of exchange rates Exchange rates: The project accounting has to be kept in the national currency used by each partner 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 the arithmetical average of the one in Inforeuro for the concerned period (sum of the exchange rates of the months of the reporting period rounded to 4 decimals, divided by the number of months) Let’s see an example of calculation of exchange rate for the report! Financial Unit

Use of exchange rates 1.Go to Inforeuro web site, indicate your currency and press Enter Financial Unit

Use of exchange rates 2.Click “Download in table format” and open the Excel file with all the monthly exchange rates: ue&currency=507&Language=en Financial Unit

Use of exchange rates 3.Calculate the average exchange rate to use in the Excel (see example for a reporting period from Mar 2011 to August 2011): Financial Unit

Interim/ Final report The amount of eligible expenditure has to be indicated in the sheet called “Interim Report” Financial Unit

Interim/ Final report 1.Identify the project with its number and implementation period, indicate the period covered by the report and copy the budget in the contract Financial Unit

Interim/ Final report 2.If JTS/JMA 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 Financial Unit

Interim/ Final report 3.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 Financial Unit

Interim/ Final report For each category, add up the number of units from all currencies and the total amount in Euro for each currency: Add the cumulated costs of previous period, if it is not the first payment claim, and calculate the cumulated cost (i)(h)+(i) 0 Cumulated costs (from start of implementation to present report included) (in EUR) Cumulated costs (before current report) (in EUR) Financial Unit

Budget forecast and follow-up 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. Financial Unit

Sources of funding Do not forget that it is compulsory to include the table with the actual sources of funding so far. Financial Unit

Annex V: request for payment Annex VI with the table has to be an attachment to Annex V, which is the formal request for payment. You will find the model as an annex to your contract. Financial Unit

Rules concerning verification system Financial Unit Obligations of the Beneficiary/ partners after the activities are accomplished and payments of expenditures are made  Drawing the individual and consolidated reports (narrative and financial) – Annex VI;  Requesting individual and consolidated expenditure verification reports – Annex VII (3a and 3b), accompanied by the Notice concerning payment request – issued by the First Level Controller/Auditor – ENDORSEMENT OF THE REALITY, REGULARITY AND LEGALITY OF THE EXPENDITURE VERIFIED  To provide an active bank account for the project - Financial Identification Form  To fill in the annex Sources of funding - included both in interim and final reports Joint Managing Authority

Financial Unit III. Identified problems in the Financial reporting - concerning: Annex V of the contract: Payment request Annex VI oh the contract: Financial reports Annex VII of the contract: Expenditure verification reports

III.1. Payment claims - findings Financial Unit PRE-FINANCING PAYMENT OF FINAL BALANCE  Requesting the entire amount of the payment claim mentioned in the contract – although the beneficiary didn’t spend at least 70% of the previous payment and 100% of any previous ones;  The amount claimed for deduction from the total sum of pre-financing should be the amount covered by the consolidated expenditure verification report ;  The period mentioned in the payment claim should be the same with the one from the consolidated financial report.  Presenting all the necessary documents mentioned in second slide – additional supporting documents if is necessary.

III.2. Individual and consolidated reports (financial) – Annex VI (I) The control bodies/ auditors when verifying the reports must take into account the following aspects: 1. All the information and amounts from the consolidated report - should be in line with those presented in the individual reports:  for each currency and budget line, fill-in correctly the number of units, unit cost, total cost in original currency and total cost in Euro, using the exchange rate – there are four columns for each currency;  budget forecast and follow-up – very important key table to verify that the project remains within the budget flexibility rules and it will still remain at the end of the following period. As a result of this calculation, the beneficiary/partner may identify the need to request approval for a budget change. Financial Unit

III.2. Individual and consolidated reports (financial) – Annex VI (II) 2. The reports shall cover the Action as a whole, regardless of which part of it is financed by the JMA - exception of costs relating to final reports, expenditure verification and evaluation of the action. Expenditure is to be understood “incurred” at the date of the actual payment made by the Beneficiary or its partners. 3. All the reported expenditure should respect the budget – in case of need the beneficiary has to notify or request an addendum - in due time. 4. The interest from the pre-financing should be filled in the financial reports – where is the case and where is not - zero. Financial Unit

III.2. Individual and consolidated reports (financial) – Annex VI (III) 5. The expenditure incurred should be declared in the correct reporting period – Ex: salaries paid for the months included in the final reporting period should not be declared in the intermediary report 6. Numbers in the financial reports should be rounded at - two decimals 7. The incorrect use of the exchange rate – use of the arithmetical average of Inforeuro for the concerned period (sum of the exchange rates of the months in the reporting period rounded at 4 decimals, divided by the number of months); 8. An addendum request – if the beneficiary need to amend the headings for administrative costs or the contingency reserve; also, if he wants to use the contingency reserve, he needs prior approval of the JMA; 9. Please respect the percentage limits established within the contract for the administrative costs or other special costs – at the project level Financial Unit

III.3.Expenditure verification reports (I) In the individual reports – the auditor/controller should present a clear situation of the eligible and ineligible expenditure - all the exceptions must be justified; Each individual expenditure verification report should be accompanied by the Notice concerning payment request – issued by the First Level Controller/ Auditor – very useful tool in the verification process In the individual report - the table from point 2 of the report “Procedures performed and factual findings” includes: Budget (main headings in euro), Expenditure reported (main headings in euro), Expenditure verified and Expenditure coverage ratio (% verified Euro); Financial Unit

III.3. Expenditure verification reports (II) The controller/auditor should fill in the consolidated report with all the information from the individual reports - JMA found errors concerning the validated expenditure; The interest from the pre-financing should be filled in the expenditure verification reports – where is the case and where is not - zero. JMA identified arithmetical errors in the reports – beneficiary/partner can request to correct the report. Financial Unit

.. Thank you for your attention! Petrua VOICU, Counsellor Directorate of Programme Authorizing European Territorial Cooperation Programme Authorizing Unit Financial Unit