1. EaPTC Moldova-Ukraine
Budgetary issues and accounting requirements
Training on Project Management and Implementation
for Grant Beneficiaries and Partners TC Programme MD-UA
EaPTC
Moldova-Ukraine
Cătălina Arghir, EaPTC MA, GIZ
Chisinau, Republic of Moldova 2017

2. Table of content: General financial aspects Setting accounting system
and book keeping
Understanding eligible costs per budget lines and supporting documents.

3. General financial aspects
All payments shall be made from the bank account (in euro and/or national currency) presented in the financial identification form.
All expenditure for the action to be easily identified and traced to and within their accounting and bookkeeping systems
Changes of bank account shall be notified by the beneficiary to MA in 7 days from the date of modification took place.
Dedicated bank account
Standard request for payment, Annex V of the grant contract (attach a copy of the FIF).
MA shall transfer the corresponding amount within 45 days.
The beneficiary / applicant shall transfer the corresponding amounts to the Grant Partners without delays (as specified in Partnership Agreement, 15 days), proportionally to each partner without making any deduction, retention or charges.
Request for payment: first instalment of pre-financing
Joint Decision Making Committee (JDMC)

4. General financial aspects
PraG
“Grants may not, as a rule, finance the entire cost of the action (...) of a beneficiary body.
The Beneficiary supplies evidence of the amount of the co-financing brought either with its own resources or in the form of financial transfers from third parties.”
Co-financing is financial contribution to eligible costs of the Action.
Maximum amount of GRANT is 90% of the total eligible costs of the Action.
The rate of co-financing is 10% and was requested within the Application Form.
Contributions in kind (voluntary unpaid work or allowing the use of premisesare) is not considered actual expenditure and are not eligible costs, may not be treated as co-financing.
Co – financing
Joint Decision Making Committee

5. Co-financing
Co-financing

6. General financial aspects
Sources of co-financing:
The own resources of the Beneficiary and Partners National authorities as some countries automatically complement the EU contribution with a national contribution Other donors such as public administrations or international donors
Co – financing
Joint Decision Making Committee

7. Setting accounting system and book keeping
Accounting IS NOT a list of expenditure and revenue.
An excel file is not an accounting system.
Definition of general accounts by Financial Regulation (Article 134 of EC Regulation 1605/2002). The general accounts shall record, in chronological order using double-entry book-keeping method, all events and operations which affect the economic and financial situation and the assets and liabilities of the institutions.
All accounting entries shall be based on supporting documents, to which they shall refer.
The project accounting has to be kept in the national currency, as the translation to Euro will only be necessary for the financial report to MA.
Grant amount transferred by MA shall be kept in euro and exchange into national currency upon necessity.
What is an accounting?

8. Understanding ineligible costs
Ineligible costs refers to:
Debts and provisions for losses or debts;
Interest owed;
Items already financed in another framework
Purchases of land or buildings, except where necessary for the direct implementation of the action;
Currency exchange losses;
Taxes, including VAT, unless the beneficiary (or the beneficiary’s partners) cannot reclaim them and the applicable regulations do not forbid coverage of taxes; (1)
Loans to third parties;
Fines and penalties.
(1) See article 15.3 of EC Regulation 1638/2006 and, “mutatis mutandis” article 34 of EC Regulation 951/2006

9. Understanding eligible costs
Eligible costs are costs actually incurred by the beneficiary or partners of the grant which meet the following criteria:
Have been incurred during the implementation period (1)
Be indicated in the estimated overall budget of the action,
Be necessary for the implementation of the action,
Be identifiable and verifiable, recorded in the accounting of beneficiary and partners, and backed-up by originals of supporting documents
Be reasonable, justified and comply with the requirements of sound financial management, in particular regarding economy and efficiency
(1) Except for costs relating to final reports, expenditure verification and evaluation of the action.

10. Understanding eligible costs
DIRECT COSTS
CONTINGENCY RESERVE
INDIRECT COSTS (OVERHEADS)
Budget headings 1 to 6
Not exceeding 5% of the direct eligible costs. To be used only with prior authorisation.
Flat-rate funding set at not more than 7% of the total eligible direct costs.
TOTAL ELIGIBLE COSTS

11. Eligible costs per budget lines and supporting documents
The project budget is composed of 4 sheets:
Overall Budget;
Budget – expected distribution per partners and cost categories;
Budget – expected distribution per group of activities –Justification;
Financing sources.

12. 7. Indirect costs / administrative costs
1. Human resources
2. Travel
3. Equipment and supplies
4. Local office
5. Other costs, services
6. Other costs
7. Indirect costs / administrative costs
8. Contingency reserve

13. Chapter 1 – Human Resources
Chapter 1 only includes staff working on employment (labour) contracts. Persons working on services contracts should be considered as experts and included in category 5 (Other costs, services)
1. Human Resources (gross amount) 5
1.1 Technical staff
1.1.1 Project coordinator
Per month
€ 0.00
1.1.2 (please specify)
1.1.3 (please specify) - please add as many rows as you need
1.2 Administrative and support staff
1.2.1 Financial manager
1.2.2 (please specify)
1.2.3 (please specify) - please add as many rows as you need
Subtotal Human Resources
Take into account when calculating the eligible staff costs:
The subcategories used in your budget, should not exceed those;
The unit of time (months, days or hours).

14. Chapter 1 – Human Resources
How can I distinguish between employees and external experts or other consultants?
Employees (to be included under Budget Heading 1: Human resources)
Experts (to be included under Budget Heading 5: Other costs, Services)
Have a working (labour) contract with the Beneficiary or Partners and are usually subject to specific national or organisational rules regarding salary, timetable, holidays, etc.
Have a service contract which is subject to the relevant procurement rules. The specific conditions for the delivery of the service are described in the contract.
Receive a monthly salary supported by salary slips.
Receive fees after the submission of invoices, in accordance with the payment conditions in their contract.
Their social charges are paid by the employer.
Their social charges are paid by themselves.
Usually work in the premises of the employer and use its facilities (telephone, computers, etc.)
Usually work in their own premises, or on-site where the services are to be delivered, and use their own resources (such as computers) which are included in their fee rate and cannot be included as incidental costs in their contracts.
Travel and subsistence costs for project missions can be included under the respective budget lines 1.3 and 2.1 and
Travel and subsistence costs for project missions are included in their contract as incidental costs and included in Budget Heading 5. (budget line 5.9)

15. Chapter 1 – Human Resources Documents to be provided for salaries justification: 1) Employment contract (labour contract) – stating the exact time and sum; 2) Monthly Pay-roll – signed by the project manager; 3) Social charges and other remuneration – related documents 3) Pay-slips - your earnings before and after any deductions; 4) Job description; 5) Time-sheet – specifying the effective time worked for project, activities implemented in the reference period, according to the application form; 6) Proofs of payment – cash book, payment orders, statement of accounts, list with identification of card accounts.

16. Number of hours actual worked
Chapter 1 – Human Resources The eligible cost is the cost of the time devoted to the project; therefore, the timesheet is the key document to ensure that the right amount is included in the accounting, but also that you have the adequate support in case of control.
PROJECT NUMBER:
PROJECT ACRONYM:
Name of employee:
Name of partner institution:
Month & year
October 2010 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Total hours
Unit rate in budget
Months
Total hours in month
168
Time in unit rate
0,17
Monthly rate:
EUR 2.448,86
Total EUR:
EUR 422,72
Date: 31st October 2010
Date: 15th November 2010
Travel to kick-off meeting
Kick-off meeting
Travel from kick-off meeting
Preparation of minutes
Signature of Employee
Signature of Employer
MONTHLY TIMESHEET
Worked hours
on the project
Day
2010/001
Description of tasks
Coordination meeting with other technical staff
Planning and preparing material for kick-off meeting
Preparing material for kick-off meeting
CASE 1 BSB
Alex Alexov
Beneficiary
Category
1.1. Technical staff
Identification data
Number of hours actual worked
Description
- Only paid hours may be
includes (no un-paid extra hours).
- Calculation of cost of the employee includes all taxes (payed by employee and employer).
Signature of Employee
Signature of Employer

17. 2. Travel
2. Travel 6
2.1 Travel
Per travel
€ 0.00
2.2 Per diem 7
Per day
2.3 Other travel expenditures
Subtotal Travel
Cost incurred by the “staff of the Action” are eligible included in the Budget Heading 1: Human resources .
Any flat-rate for the subsistence costs must not exceed the rates set out in the project budget.
Travel and subsistence costs for staff taking part in the Action provided they do not exceed those normally borne by the beneficiars(ies) according to its national rules and regulations, or GIZ (applicable only for Ukrainian beneficiary/co-beneficiaries).

18. 2. Travel Supporting documents for travel and subsistence costs:
Invoice from travel agency, including proof of payment;
Original transportation tickets (plane, train, boat, bus);
Boarding passes;
Meeting or event related documents: agenda, list of participants, materials, pictures, a short report on the visit.
Per diems rates include cost related to accommodation (hotel), meals (or daily allowance) and local transportation (bus, taxi).

19. 3. Equipment and supplies
According to article 14.2, the purchase or rental of equipment and supplies (new or used) is eligible if it is specifically for the purposes of the project. The cost of related services, such as transportation or installation is also eligible. The costs have to correspond to market rates.

20. 3. Equipment and supplies
Supporting documents:
Documents related to the award procedure, including a contract (with TOR) and a purchase order; You have to give evidence of the market rates;
Proof of delivery (deed of acceptance);
Invoice from contractor and proof of payment;
Certificate of origin;
Photographs – visibility requirements.

21. 4. Local office
This category is intended to include the expenditure of any office specifically for the purposes of the project. These costs may cover premises rented especially for the Action, provision utilities, furniture and office equipment, printing, copying, postal services, phone, fax, internet.
Supporting documents:
Invoices from suppliers, including proof of payment;
Documents related the award procedure (TOR, proof publication etc);
Photographs.

22. 5. Other costs, services (subcontracting services)
5. Subcontracted services 10
5.1 External experts (please specify) - please add as many
rows as you need
Per expert
€ 0.00
5.2 Publications, studies, research
Per item
5.3 Costs for expenditure verification
Per service
5.4 Evaluation costs
5.5 Translation, interpreters
Per page/Per day
5.6 Financial services (bank guarantee costs etc.)
5.7 Costs of conferences/seminars
Per event
5.8 Visibility actions 12
Per action
5.9 Other (please specify) - please add as many rows as you
need
Subtotal Subcontracted services
This category includes the subcontracting expenditure and other costs deriving directly from the requirements of the contract.
Have to be clearly identified in the project budget: professional expertise cost, studies, researches, project management experts, cost related verification expenditure, organization of events, seminars, meetings costs of promotion (visibility), financial service costs, etc.

23. 5. Other costs, services (subcontracting services)
Supporting documents:
Documents related award procedure, TOR, bids etc;
Contract signed;
Invoices from service providers, proof of payment;
Proof of delivery of services (deed of acceptance);
Any material published;
Proof of respect the EU and EaPTC visibility rules;
In case of events, all related documents, pictures, budget, presentations, attendance list, contracts, payments, etc.

24. 6. Other costs
This category includes costs that cannot be included in the previous categories, any other costs necessary for implementation of the Action in line of national legislation and Budget of the Action.

25. Indirect costs/ Administrative costs
This category is described in article 14.4 of the General Conditions, intends to cover the administrative overheads incurred by the beneficiary and partners.
They are calculated as a fixed rate of the total amount of direct eligible costs (categories 1 to 6).
The flat rate does not need to be supported by accounting documents to be presented to the MA, but it should be audited and included in all reports. MA can request addition documentation.
It is incompatible with the receipt of an operating grant from EC by the beneficiary or partners, that is, if the beneficiary or partner is receiving a grant to finance its “regular operating costs”, no additional administrative costs can be accepted as eligible, as it would be double funding.

26. Contingency reserve
The contingency reserve can only be used in case of unforeseeable circumstances and with prior approval by MA, in the form of an addendum. The Contingency is set at 5% of Direct Eligible Cost (line 7).
The request for its use has to indicate which categories of expenditure (1 to 6) will need extra resources.
The reallocation will be shown in the financial report and no accounting entries will be found under this category.
Interim financial report:
period (dd/mm/yyyy-dd/mm/yyyy)
Expenditures
Unit
# Units
Unit cost (in
EUR)
Costs
(in EUR)
allowed
reallocation
use of
contingencies
(a)
(b)
(a)*(b)
Budget as per contract/rider
Reallocation and use of

27. Thank you for your attention! Arghir Catalina catalina.arghir@giz.de