1. KNOW CITIES Knowledge Cities in the Atlantic Arc FINANTIAL INFORMATION 7th-8th  May  2009

2. ELEGIBLE EXPENDITURES Regulation(CE) 1083/2006. Regulation(CE) 1080/2006. Regulation(CE) 1828/2006. Rules Operational Programme and national rules and requirements  Directly related to the project  Part of the approved Application Form  Economic efficiency and cost-effectiveness, reasonable and justified  Eligibility period (2/3/09 – 30/11/09), except Preparation Costs – done during 2008 (9 partners)  Payments must be supported by receipts, invoices or accounting documents of equivalent probative value Project Know- Cities Financial Information

3. Which are non elegible expenditures? Art. 7 Regulation(CE) 1080/2006. Among others….  Interest on debt  Recoverable value added tax. Which are elegible expenditures? Among others….  Charges for transnational financial transactions  The bank charges for opening and administering the account or accounts Project Know- Cities Financial Information

4. Budgetary lines (I) HUMAN RESOURCES  Real costs, supported by proper documentation  Total gross remuneration plus the employer’s portion of social charges  Calculated individually for each employee and based on the monthly payslip SERVICES SUPPLY  Costs for work done by a sub-contractor  It is the Partner’s responsibility to ensure that public procurement rules are observed in selecting a company or individual to provide services.  A sub-contractor cannot be part of the project partnership Project Know- Cities Financial Information

5. Budgetary lines (II) OPERATIONAL COSTS  Associated with the implementation of the project but they are not specific actions.  Examples: Office rent, maintenance, electricity, heating, water, insurances compulsory, telephone, internet, mailing, administration expenditure. TRAVEL AND ACCOMMODATION  Travel costs and related subsistence allowance for staff taking part in the project, if:  they comply with the participant’s established internal rules and/or Member State national rules where applicable.  all tickets, invoices and receipts are kept by partners  directly related to, and necessary for, the effective delivery of the project  economy class travel on public transport Project Know- Cities Financial Information

6. Budgetary lines (III) MEETINGS AND SEMINARS  Costs related to meetings and seminars (rent, equipment, meals...)  Travel and accommodation costs related to meetings or seminars must be included in ≪ Travel and Accommodation ≫. PROMOTION AND DISSEMINATION  Expenditure with the main aim of promoting the project: website, promotional material and printed publications. EQUIPMENT  Durable equipments charged to the project as far as they are essential for the delivery of the project, are eligible if:  they have not previously been claimed in other national or EU funded programmes  the depreciation is made in accordance with the tax and the rules applicable to the partner  the cost is referred to the amount of time that the equipment will be used on project’s benefit Project Know- Cities Financial Information

7. CURRENCY  Amounts set out in operational programmes submitted by Member States, certified statements of expenditure, applications for payment and expenditure mentioned in the annual and final report of implementation shall be denominated in EURO.  Member States which have not adopted the euro shall convert into euro the amounts of expenditure incurred in national currency, (using the monthly accounting exchange rate of the Commission in the month during which the invoice was paid http://ec.europa.eu/budget/infoeuro/index.cfm)http://ec.europa.eu/budget/infoeuro/index.cfm DECOMMITMENT RULE - Regulation (CE) nº 1083/2006  Projects may have funds decommitted by the European Commission in case the allocations set in the financial tables are not translated into effective requests for payment within the set timeframe– Rule N+ 2 (not paid before 31st Decembre two years after they were committed).  To avoid losing funds:  implementation should start quickly  monitoring these aspects effectively during implementation  all partners ensure regular, timely and full reporting of the expenditure foreseen Project Know- Cities Financial Information Budgetary lines (IV)

8. JOINT EXPENDITURESJOINT EXPENDITURES budgetary change approvalchange  Joint activities developed for the general interest of the partners of the Project and which have generated the same expectations among them.  These joint activities imply the external engagement of the services or products they involve.  These joint activities will lead to different shared costs that must be distributed among the projects partners  How do they work?  The partner responsible for the joint activity carries the corresponding engagement procedure (after signing, if in Spain, an agreement - Encomienda de Gestión- where the management of this activity is clearly commissioned ). The cost of these subcontracted joint activities shall be distributed among all the partners. Encomienda de Gestión  All the partners pay for the committed amounts directly to the firm engaged to develop the joint activity. This firm will issue as many invoices as partners are committed to pay for each activity.  The expenses paid according to every partner’s invoice are included in the execution report and the related claim for reimbursement Project Know- Cities Financial Information

9. ADVANCE PAYMENT  At the request of Lead Partner  Up to 3% of the maximum amount of approved European funding  This amount will be deducted from the first payment/ reimbursement request INTERIM EXECUTION REPORT AND / OR FINAL REQUEST FOR REIMBURSEMENT  Activity reports must submitted with the claims for reimbursement (half-yearly)  Activity reports shall be very precise and detailed and should mention whether the rules of public procurement, state aid, environmental protection and equal opportunities have been respected  The cumulative amount of interim payments and the advance may not exceed 90% of maximum amount of ERDF funding.  The final balance is limited to the maximum amount of the final co-financing ERDF after deducting any advance, interim payments– FINAL EXECUTION REPORT / REQUEST FOR THE FINAL PAYMENT – 90 days from the closing date of the contract period of the project. Project Know- Cities Financial Information

10. NATIONAL AUTHORITY SPAIN Partner JOINT TECHNICAL SECRETARIAT VERIFIES TRANSNATIONAL SECRETARIAT– LEAD PARTNER Expenditures must be previously validated by every National Authority (+ Auditor except for Ireland) 2 MONTHS NATIONAL AUTHORITY FRANCE NATIONAL AUTHORITY IRELAND NATIONAL AUTHORITY PORTUGAL NATIONAL AUTHORITY UNITED KINGDOM Partner GATHERS MANAGING AUTHORITY VERIFIES TRANSNATIONAL SECRETARIAT ROLE IN THE CLAIM OF REIMBURSEMENT CIRCUIT Partners carry out Execution Report and enclose paid and certified expenditures. They send all them to the Lead Partner (half-yearly: 21st July / 21st January) CERTIFYING AUTHORITY VERIFIES Reimburses the Lead Partner who will pay to the rest of partners

11. PROJECT LEAD PARTNER BENEFICIARY EXTERNAL/ INTERNAL AUDITOR Fullfills and sends payment claims Declares validated expenditures Sends expenditures done 1 3 Validates expenditures JOINT TECHNICAL SECRETARIAT NATIONAL CORRESPONDANT (DGFC) 2 MANAGING AUTHORITY Checks elegibility of expenditures included in payment claims 4 5 Receives expenditures once validated by Auditor and communicates its approval or, in case, validates expenditure EXPENDITURE VALIDATING PROCESS VALIDACIÓN DE GASTO (SPANISH PARTNERS) CERTIFYING AUTHORITY Reimburses the Lead Partner who will pay to the rest of partners

12. The control of expenditures: organisation  Each of the partners must comply with the system and the procedures established in its Member State  Below, the situation prevailing in March 2009, is schematically presented for each of the Member States  Each partner must contact the National Correspondent to ensure the latest developments or modifications which may occur  Several Member States are still proceeding to the definition of the process, it is important to contact the national authorities for updating information. Project Know- Cities Financial Information

13. Authority responsible :Ministerio de Economía y Hacienda System :Decentralized Choice of the provider :Based on specifications and analysis grid Validation of the provider : Previously validated by the national Authority. No payments will be made until validation has been done by National Authority. Outline of the certification system: Preparation of the execution report including the payment claim by the Beneficiary Check by the external auditor based on the recommendations defined by the national Authority Ministerio de Economía y Hacienda Formal check and consistency of the execution report including the payment claim Analysis of the report and check of the eligibility of the expenditures Proposal for validation Transfer of the document validated to the Spanish beneficiary Other types of checks:On spot checks through a sample methodology List of standard documents at the disposal of the Beneficiary: In preparation Approximate Duration of the overall process :2 months ORGANIZATION AND CONTROL DIAGRAM FOR SPANISH PARTNERS

14. INDICATIVE AND SCHEMATIC ORGANISATION OF CONTROL FOR PORTUGUESE PARTNERS Authority responsible : Instituto Financeiro para o Desenvolvimento Regional (IFDR) System : Decentralized Choice of the provider : Possibility to use an external auditor already within the organisation, with a specific contract for the project or new service e provider contract specific for the project. Validation of the provider : Previously validated by the IFDR based on a specific questionnaire. Outline of the certification system: Preparation, by the partner Beneficiary, of the execution report including the payment claim Exhaustive check by the external auditor based on specifications defined by the national authority IFDR Formal check and consistency of the execution report including the payment claim Analysis of the report and check of the eligibility of the expenditures Proposal for validation Transfer of the document validated to the Spanish beneficiary Other types of checks: On spot checks through a sample methodology List of standard documents at the disposal of the Beneficiary:. Technical specifications for the service provider for external audit. Standard contract for service provider for external audit. Guide lines for external audit of the project expenses. Monthly time sheet for the personal involved in the project implementation. Consolidated list of expenses for payment claim Approximate Duration of the overall process : 2 months

15. Authority responsible : BMW Regional Assembly System : Centralised Choice of the provider : Not applicable Validation of the provider : Not applicable Outline of the certification system: Preparation, by the partner Beneficiary, of the execution report including the payment claim Transmission to the BMW Regional Assembly First Level control Unit Check of the expenses and related evidences through a sample methodology Errors identified are noted and adjusted. The beneficiary is informed of any changes made to the claim by the FLC who corrects the claim. The Beneficiary is not required to re-submit the claim. Issuing the a ≪ Certificate of expenditures” for the regular expenditures Other types of checks: On spot checks through a sample methodology List of standard documents at the disposal of the Beneficiary: National Eligibility Rules along with the relevant Programme Claim forms & corresponding guidance documents. Approximate Duration of the overall process : 1 month INDICATIVE AND SCHEMATIC ORGANISATION OF CONTROL FOR IRISH PARTNERS

16. INDICATIVE AND SCHEMATIC ORGANISATION OF CONTROL FOR FRENCH PARTNERS Authority responsible : Préfecture de la Région Pays de la Loire System : Decentralized Choice of the provider : Based on specifications and analysis grid Validation of the provider : Previously validated by the national Authority. None payment will be made for a beneficiary before the validation of the first level external auditor by the national authority. Outline of the certification system: Preparation of the execution report including the payment claim by the Beneficiary Exhaustive check by the external auditor. Edition of a control report excluding and justifying the expenses rejected. Other types of checks: On spot checks through a sample methodology List of standard documents at the disposal of the Beneficiary: In preparation Approximate Duration of the overall process : 2 months Transmission of the beneficiary report Transmission of the report to the national authority

17. Authority responsible : Communities & Local Government (Corresponsal Nacional) System : De-centralised Choice of the provider : On receiving project approval the First Level Controller will be designated by each UK partner on the basis of a list of approved professional bodies who will carry out First Level Control procedures in line with International Audit Standards. Validation of the provider : First Level Controllers require prior approval of Communities and Local Government in order to be appointed. A First Level Controller approval template should be completed and returned to Communities and Local Government for validation. These can be requested via Communities and Local Government or your National Correspondent. Following agreement this will be formalised through a tripartite letter of agreement, signed by the controller, the project partner and Communities and Local Government. Outline of the certification system: Not yet fully defined Other types of checks: Not yet fully defined List of standard documents at the disposal of the Beneficiary: Not yet fully defined Approximate Duration of the overall process: Not yet fully defined INDICATIVE AND SCHEMATIC ORGANISATION OF CONTROL FOR BRITISH PARTNERS

18. Know-Cities Budget Know-Cities approved form Example Jerez Project Know- Cities Financial Information

19. TRANSNATIONAL SECRETARIAT Jerez Town-Hall. Plaza Compañía, 7 JEREZ Tel.: +34 956 14 98 70 7th-8th  May  2009