1. Financial Guidelines for Projects funded by Interreg III Planning and Priorities Coordination Division, Office of the Prime Minister

2. Structure of this presentation: Malta and Interreg III Interreg III Management Structures The Reimbursement Process Regulations and Guidelines Preparing claims: Some main categories of cost

3. INTERREG III Malta’s participation in Interreg III

4. Interreg III – A brief overview Interreg III is a Community Initiative which aims to strengthen economic and social cohesion by stimulating interregional co-operation between 2000 and 2006; It is financed by the European Regional Development Fund (ERDF). Interreg III encourages organisations to work with their counterparts in neighbouring regions in order to carry out projects and reach common goals.

5. Malta’s participation in Interreg III  Strand A (Cross Border) – Italia-Malta programme  Strand B (Transnational) – Medocc and Archimed  Strand C (Interregional) – South Zone  Total ERDF funds allocated to Malta under Interreg III: approx €4.7 million. ERDF: Up to 75% co- financing.  Total number of projects with Maltese partners: 53

6. Interreg III Projects with Maltese partners Number of Projects with Maltese partners

7. INTERREG III Management Structures

8. Management structure of Interreg III Programmes Each Interreg III Programme is managed and coordinated by:  A Managing Authority (M.A.) and Paying Authority (P.A) in one member state. Cross border programmes like Italia-Malta may have a counterpart M.A and P.A in each of the participating Member States. PPCD (OPM) and the EU Paying Authority Directorate (MFIN) are the counterpart M.A. and P.A. respectively for the Italia-Malta Programme.  Most programmes also engage a Joint Technical Secretariat which provides expertise and administrative support.  A National Coordinator for Interreg III represents the programme in each participating member state. PPCD is the National Coordinator for Interreg III, Malta.

9. Member States/ National Coordinators (PPCD represents Malta) Steering Committee Responsible for joint selection of projects and monitoring their operations Paying Authority submits payment applications. Receives payments from the Commission. Issues reimbursements to project partners. Joint Technical Secretariat responsible for operational management and administration of the programme. Managing Authority ensures sound financial implementation and compliance with EU regulations; provides evaluation, collects data and reports to European Commission Monitoring Committee Monitors programme and management European Commission Interreg III Programme bodies Joint Technical Secretariat responsible for operational management and administration of the programme. Managing Authority ensures sound financial implementation and compliance with EU regulations; provides evaluation, collects data and reports to European Commission

10. Role of PPCD in Interreg III  National Counterpart Managing Authority for the Interreg IIIA Italia-Malta Programme.  National Coordinator for Interreg IIIB [Archimed, Medocc] and Interreg IIIC Programmes. Aim: To ensure effective coordination of Malta’s participation in Interreg III.

11. INTERREG III The Reimbursement Process

12. Role of the Lead Partner Each project must have a Lead Partner (LP) who is legally responsible for coordinating the project. The LP is also responsible for administration and distribution of project funds and for reporting on their use. The LP maintains contact with management bodies and with each of the other partners.

13. Interreg III: Reimbursement Process Each project partner keeps the accounts for his expenditure. Managing Authority / Joint Technical Secretariat Lead Partner Partner Paying Authority Progress Reports / Audited Financial Reports and Certificates from PPCD / MFIN Reimbursement Progress Report and Audit Certificate

14. Project partners can only obtain ERDF funding on a reimbursement basis. Once a set of payments has been made, partners can submit a claim for reimbursement using the report templates supplied by the Lead Partner and by the National Coordinator for Interreg III Malta (PPCD). The complete claim must then be sent to PPCD for certification before onward transmission to the Lead Partner.

15. Interreg III: Certification Process Maltese Partner EU Affairs Director OPM – PPCD MA Lead Partner Managing Authority/JTS European Commission MFIN - EU Paying Authority (Italia- Malta)

16. Flow of Reimbursement [Note: certain organisations may have a different flow, depending on their status] PPCD Central Bank Account managed by MFIN – EU Paying Authority Lead PartnerEuropean Commission Paying Authority Partner

17. Schedule of projects Interreg III projects must comply with the N+2 rule: that is, all expenses must be disbursed within the stipulated schedule of the project. This rule aims to ensure good spending forecasts, timely procedures and solid projects. All EU funds which remain unspent will be lost to Malta. This is known as ‘decommitment’.

18. Project’s starting point: - Italia-Malta Programme: Date of notification issued by MA to Lead Partners selected for funding. - Archimed and Medocc Programmes: Date of Contract signed by MA and Lead Partner. - Interreg IIIC: Date of approval of project by Steering Committee.

19. INTERREG III Regulations and Guidelines relating to claims for reimbursement

20. ERDF funds are contributed by tax payers in EU member states for the benefit of disadvantaged regions. Project partners are obliged to ensure that they use these funds correctly. It is also important to note that national funds are also being committed to these projects. The 25% national co- financing has to be provided according to what was approved in the project application – i.e. in cash or in kind or a combination of both. PPCD is responsible for ensuring that Malta obtains maximum results from participation in Interreg III. ERDF funds which are not claimed correctly are lost to Malta.

21. Aim of certification and eligibility checks: During the verification/certification process, PPCD carries out a 100 per cent desk-based check on all expenditure. It is also responsible for periodic on-the- spot checks. To ensure that funds are spent correctly and all expenditure is claimed, PPCD requires a certified true copy of documents which prove that each step of every transaction actually took place. Basically, the general rule is the one which applies to all Structural Funds. That is: All amounts claimed must be backed up by receipted invoices.

22. Main Reference Documents 1 EU Regulations: Council Regulation 1260/1999, laying down general provisions on the Structural Funds Council Regulation (EC) 1783/1999 of the European Parliament and of the Council on European Regional Development Fund. Council Regulation 438/01 Management and Control of Structural Funds. Commission Regulation 448/2004 as regards eligiblity of expenditure.

23. Main Reference Documents 2 Maltese National Rules: LN 177/2005, Public Contracts Regulations Employment and Training Services Act, last amended 2005. OPM Circular 34/2004

24. Main Reference Documents 3 Other guidelines [for each Programme]: Interreg III Community Initiative Programme, Programme Complement and Manual. Letter of authorisation from PPCD. Approved application form for project. Letter of Grant / Contract signed by Managing Authority and Lead Partner. PPCD guidelines for Maltese partners.

25. Some issues to remember : A separate bank account should be opened for expenditure on the project to ensure transparency and accessibility during audit process. Follow the central exchange rate set by ERM II: Eur. 1 = LM 0.4293. VAT can only be reimbursed by ERDF if the organisation is not entitled to refunds and if it was included in the approved application form/ letter of grant. VAT status must be clarified with Department of VAT. Revenue must be deducted from the amount claimed.

26. INTERREG III Some main categories of cost

27. Calculating Staff Costs Three main types of staff costs: 1) Internal Staff costs 2) External Staff / External Expertise 3) Voluntary Staff

28. Cost of Auditing An auditor’s certificate is necessary for most claims for reimbursement. The cost of auditing a project can be included in claims for reimbursement if it is included in the approved project application forms / work packages.

29. Internal Staff  Staff members already employed by organisation who dedicate normal working hours to their project. These costs should form part of the 25% national co-financing of a project. Formula: Staff costs = hours worked x hourly rate. Income tax and social security are included, allowances and fringe benefits are excluded. Fixed allowances may only be included if they are mentioned in the staff member’s contract. In this case, a certified true copy of the contract must be submitted with the claim.

30. Claiming internal staff costs Documents to be submitted: 1) Letter of assignment and duties 2) Partner Declaration on Staff Costs 3) Time sheet signed by auditor/financial controller. 4) Contracts if allowances are being claimed 6) Certified true copy of pay slip 7) Clear explanation of hourly rate calculation.

31. External Staff Experts, auditors or other service providers who are specifically contracted or employed to work on project. Financed by 75% ERDF funds. Follow public procurement and employment regulations when selecting external experts or service providers.

32. Claiming external staff costs Documents to be submitted: 1) Contract / Letter of Offer and Letter of Acceptance. 2) Invoices and receipts or pay-slips 3) If value is calculated per hour: Time sheet signed by auditor 4) Clear explanation of hourly rate calculation.

33. Voluntary staff Staff members or experts who provide unpaid research or services for project. Forms part of 25% national cofinancing. Formula: hours worked x value of work provided (as valued by auditor). Rate must be slightly below market value to reflect voluntary nature of the work.

34. Claiming Voluntary staff costs Documents to be submitted: 1) Letter of assignment and list of duties 2) Partner declaration on voluntary staff costs. 3) If value is calculated per hour: Time sheet signed by auditor 4) Clear explanation of hourly rate calculation. 5) Auditor’s evaluation of work carried out.

35. Contracting Refer to Public Contracts: Legal Notice 177/2005. Retain proof of every step of the selection process. Irregularities during the tendering or contracting process may render the project ineligible for funding. Certified true copies of signed contracts must be submitted with claims for reimbursement.

36. Overheads Overheads include rent, electricity, heating, water, cleaning etc. They can be claimed if they were originally included in the approved application form or work packages. Overheads must be calculated on a pro-rata basis (approved methodology by auditor) and be backed up by receipted invoices.

37. Interreg III Thank you for your attention