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

2. 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
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3. 1. Unit costs for staff costs: A) Reminder
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4. 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.
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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.
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6. Grant application: Join copy of unit costs grid
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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
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8. Grant application: Join copy of checklist with main control points
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9. 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.
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10. Unit costs: Estimated buget (2)
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11. 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.
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12. 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).
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13. Unit costs: Final financial statement (2)
For grant agreements signed as from 2015:
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14. B) Some clarifications concerning the unit costs method
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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.
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16. 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
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17. 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.
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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.
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19. 2. Questions & answers unit costs
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3. What's new 2015?
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Changes in templates
Changes related to the implementation of unit costs (see before).
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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
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Changes in templates
Simplification:
Audit certificate required only for grants for which the total contribution in the form of reimbursement of actual costs is > €.
Amount to be calculated excluding unit costs for staff costs and indirect costs.
Example:
Total eligible costs: €
Unit costs for staff costs: €
Indirect costs: €
Other costs: €
 No audit certificate required
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Changes in templates
Simplification:
Payment request to be transmitted by only
For all grants signed as from 2015
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Any questions?
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26. 4. Main sources of errors (reminders)
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What we have seen:
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28. 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.
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29. 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.
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30. Budget transfers – current rules
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31. 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!
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32. Budget transfers – current rules
Example 3:
Staff costs EUR EUR
Travel costs EUR EUR
Depreciation of Equipment 0
Consumables 0
Subcontracting EUR EUR
Any other direct costs EUR EUR
Indirect costs (30%) EUR EUR
Total eligible costs EUR EUR
Impact on indirect costs.
The maximum amount of the EU contribution cannot be exceeded!
Original budget
Adjusted budget
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33. Budget transfers – current rules
Original budget
Adjusted budget
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34. 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.
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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
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36. 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?
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Any questions?
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5. FPA and MBGA
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39. 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.
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40. 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
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41. 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.
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42. 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.
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43. 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.
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44. 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).
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Budget transfers MBGA
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46. 6. Payment of grants and controls
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47. 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)
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48. 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.
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49. 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.
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7. The case of ONAs
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51. 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.
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Any questions?
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