1. LP Seminar – Madrid – 20-10-2008 EUROPEAN REGIONAL DEVELOPMENT FUND FINANCIAL REPORTING Lead Partner Seminar Madrid, 20 October 2008 Petra Geitner Senior Finance Officer Katja Ecke, Finance Officer

2. 2 LP Seminar – Madrid – 20-10-2008 Content Financial Control Eligibility questions & General Advice

3. 3 LP Seminar – Madrid – 20-10-2008 Financial Control

4. 4 LP Seminar – Madrid – 20-10-2008 REPORTING PROCESS

5. 5 LP Seminar – Madrid – 20-10-2008 Legal basis: Art. 16 of R. 1080/2006: In order to validate expenditure, each Member State shall set up a control system (…) DESIGN OF FIRST LEVEL CONTROL SYSTEM 4 systems possible: 1.Centralised control at MS level by a public administrative body 2.Centralised control at MS level by a private audit firm 3.Decentralised control by controllers selected by the project partner from a central shortlist 4.Decentralised control by internal or external controller proposed by the project partner and approved at national level

6. 6 LP Seminar – Madrid – 20-10-2008 Through Public Administrative body: Belgium (Walloon Region) Czech Republic Estonia Hungary Ireland Luxembourg Latvia Malta Poland Romania Sweden Slovenia Slovakia Through Private Audit firm Lithuania CENTRALISED CONTROL SYSTEMS For more details see: http://www.interreg4c.net/load/Country_ Specific_Control_Requirements.pdf

7. 7 LP Seminar – Madrid – 20-10-2008 Controllers selected in a short list: Austria Bulgaria Norway Portugal Controllers selected by project partners and confirmed at national level Austria (Federal+Land) Belgium (Bruxelles Capitale) Belgium (Flanders) Cyprus Denmark Finland France Germany Poland (for Marshall offices…) Spain The Netherlands United Kingdom DECENTRALISED CONTROL SYSTEMS For more details see: http://www.interreg4c.net/load/Country_ Specific_Control_Requirements.pdf

8. 8 LP Seminar – Madrid – 20-10-2008 THE ROLE OF THE PP CONTROLLER To confirm the expenditure for the PP after having checked The payment date of the costs reported That all necessary documents concerning receipts, payments and activities are correctly recorded to ensure the audit trail The delivery of the co-financed products and services That progress made is reflected in the report The compliance of such expenditure with community rules, programme rules (subsidy contract refering to programme manual + Application form) and national rules on the basis of Accounting documents and project documentation 100% check (sample only if well justified)

9. 9 LP Seminar – Madrid – 20-10-2008 GUIDANCE TO PPs TO PERFORM CONTROLS TO BE PUBLISHED SOON The Programme has issued templates of a Control Report and of a Check List annexed to the Programme Manual to be filled in by the PP’s controller  Programme manual Annex 6 On the basis of these two documents that have to be kept in PP’s files, the PP’s controller issues a Partner control confirmation  Programme manual Annex 5b The Partner control confirmation will be submitted to the LP

10. 10 LP Seminar – Madrid – 20-10-2008 DESIGNATION OF THE PP CONTROLLERS: PARTICULARITIES OF DECENTRALISED SYSTEMS There is a compulsory approbation of the first level control controller by the central approbation body of the Member State for PP (including LP) located in Member States that have opted for a decentralised system This approbation shall be finalised before the end of the first reporting period (31 December for progress report to be submitted on 1 April )

11. 11 LP Seminar – Madrid – 20-10-2008 THE APPROBATION PROCEDURE OF THE PPs CONTROLLERS The PP proposes a controller to the central approbation body of the Member State. A specific checklist is filled in by the PP for this purpose The MS checks the information and assesses the qualification and independence of the controller If OK, the MS issues an approbation certificate to the PP LP submits individual approbation certificates to the JTS when PP reports for the first time or in case of change of controller For each progress report, the LP checks that the name of the controller is the same as the authorised one In case of change of controller, the approbation procedure shall be started again

12. 12 LP Seminar – Madrid – 20-10-2008 THE SPECIFIC ROLE OF THE LP CONTROLLER The role of the LP controller is to confirm the expenditure for the whole partnership and to submit the Progress Report for the whole project to the JTS after having checked that project expenditure is related to the project and correspond to the delivery status of the partner the figures in the progress report coming from the individual partners are correctly summed up on the basis of control confirmations signed off by the PP controller in compliance with the country specific control requirements Note that the LP is also a PP. Therefore the LP controller = the PP controller for the LP

13. 13 LP Seminar – Madrid – 20-10-2008 POINTS OF ATTENTION FOR THE LP The LP reports every six months expenditure paid out during the reporting period in compliance with the information in the Application Form, i.e. the budget by budget line the budget by component the budget by partner the specifications for external expertise + equipment the payment forecast Costs have to be in line with the activities listed in the Application Form Deviations need to be justified in PR or agreed with JTS beforehand The LP provides any clarification on Progress Report where requested by JTS. The payment is made within maximum 4 weeks after approval of the Progress Report

14. 14 LP Seminar – Madrid – 20-10-2008 GUIDANCE TO LP CONTROLLERS TO PERFORM CHECKS TO BE PUBLISHED SOON There is an additional section for LPs to be filled in the template of the Check List annexed to the Programme Manual  Programme manual Annex 6 On the basis of all documents submitted by the PPs and its own documents as a partner, the LP shall issue a Progress Report including the Lead Partner Control Confirmation signed by LP controller  Programme manual Annex 5a

15. 15 LP Seminar – Madrid – 20-10-2008 POINTS OF ATTENTION FOR THE LP The LP sumbits to JTS The Progress Report including the LP’s Control confirmation The PP control confirmations In case of decentralised system where controllers are proposed by the PP, the approbation certificate of Member State’s approbation body when partners report for the first time or when there is a change of controller.

16. 16 LP Seminar – Madrid – 20-10-2008 Eligibility Questions & General Advice

17. 17 LP Seminar – Madrid – 20-10-2008 Eligibility Eligibility period Preparation phase: costs are eligible subject to project approval within limit of EUR 30,000 For first call: between 1 January 2007 and date of submission of AF to JTS (for first call = max.15 January 2008) To be paid out by the end of the first reporting period and to be reported with Progress Report 1 Project implementation phase: costs are eligible if incurred after date of MC approval paid before the end of the reporting period and the finalisation month quoted in the AF

18. 18 LP Seminar – Madrid – 20-10-2008 Eligibility Eligibility of activities outside the EU (Art. 21 of Reg. no.1080/2006) Activities outside the EU / Norway can be eligible to ERDF or Norwegian funding if -contracted and paid by EU or Norwegian partner -for the benefit of the operation -explicitly mentioned and justified in the approved application -within limit of 10% of the operation’s INTERREG IVC budget NB.: Travel costs of EU partners to places outside the EU (if foreseen in the AF) eligible to ERDF outside the 10% rule as part of ‘normal’ project expenditure. 0

19. 19 LP Seminar – Madrid – 20-10-2008 Eligiblity Ineligible costs VAT – if recoverable by whatever means In-kind contributions Bad debt interests, fines, financial penalties, foreign exchange losses Expenditure already supported by other subsidies Revenues – to be deducted from total eligible costs

20. 20 LP Seminar – Madrid – 20-10-2008 General Advice

21. 21 LP Seminar – Madrid – 20-10-2008 Advice Lessons learnt from IIIC Use programme manual as the reference book. Only costs paid by partners officially listed in the AF can be reported in PR. Keep in mind that audits can take place beyond the end of the project. Proper documentation is essential - especially for public procurement, calculation of staff cost + indirect administration costs. Pay particular attention to public procurement rules. Also below European threshold of EUR 206,000, you have to put into competition when you contract goods and services (refer to national + internal rules!). Base your staff cost calculation on hours actually worked + timesheets. Do not artificially inflate your administration costs. The link to project has to be obvious and clear. Costs have to be actual.

22. 22 LP Seminar – Madrid – 20-10-2008 Advice Lessons learnt from IIIC Be coherent in cost allocation to the budget lines + Components Staff Administrationfor personnel employed Travel and Accommodation by partners in AF only! Equipment External Expertise and Services Sub-Projects for mini-programmes only

23. 23 LP Seminar – Madrid – 20-10-2008 Advice Leassons learnt from IIIC Be careful with shared costs Responsible partner has to provide to all partners taking over a share of common costs request for reimbursement all relevant supporting documentation Responsibility of each partner to include share of common costs in own financial report and to obtain confirmation from controller (according to country specific control requirements) Recommendation: limit as much as possible shared costs to budget line “external expertise and services” include procedure in partnership agreement procedure for sharing and reporting costs to be checked with national controllers of each individual partner concerned.

24. 24 LP Seminar – Madrid – 20-10-2008 Advice Measures for an effective reporting process + FLC Ensure good communication between LP/PP, coordinators, financial managers and controllers Include the following points in the partnership agreement Budget by partner by budget line, component Payment forecast by partner Deadlines for reporting Methods / amounts of shared common costs Exchange rate conversion (one method for the whole partnership) Make sure that all documents are available on all levels Application Form Subsidy Contract Partnership Agreement Programme Manual

25. 25 LP Seminar – Madrid – 20-10-2008 Further measures for an effective reporting process + FLC Have available the following documents (on PP level): list of expenditure invoices bank statements procurement documentation: procurement note, terms of reference, offers/quotes, order form, contract documentation of calculations (if only a share was allocated to the project) time sheets, employees’ contracts, pay slips proofs for delivery of services and goods (studies, brochures, newsletters, minutes of meetings, translated letters, participants’ list etc), record of assets control report incl. control checklist (model in Programme Manual) Set up a separate account for project expenditure (or separate costs center in accounting system) Advice

26. 26 LP Seminar – Madrid – 20-10-2008 Support from JTS/MA/CA/MS Programme manual (practical information in grey boxes) Advice from the JTS Standardized control confirmations, control reports and checklist A limited number of quality checks by CA, MA/JTS, MS Training on financial management for financial managers + controllers Conclusion

27. 27 LP Seminar – Madrid – 20-10-2008 Thank you for your attention!