1. 1 The Project Financial Management Selection 2012

2. 2 The most important documents concerning financial management are: The Draft Financial Manual produced by the European Commission The Agreement with the Commission Directorate – General Justice (Financial Provisions) The Agreement between the promoter and the project partner The Guidelines for Applicants (Financial Provisions) Main Documents

3. 3 General Remarks

4. 4 VAT VAT may be considered an admissible cost ONLY if the institution can demonstrate they are NOT able to recover it. Each partner will therefore have to make a specific declaration on this issue. VAT paid by public bodies is not an eligible cost

5. 5 Expenditures For any cost which is NOT included in the official budget of the project, it is NECESSARY to ask authorisation to the promoter and to the European Commission.

6. 6 Accountancy All cost must be registered in the internal accountancy system of the institution. All transactions in the project implementation period relating to actual expenditure/income under the project must be recorded systematically in the beneficiary accounts, using a numbering system specific to each European project.

7. 7 Documents The Commission may request supporting documents (some or all), such as invoices, contracts of employment, pay slips, receipts, purchase order, etc that the coordinator has used to compile the statement of expenses (including those of co-beneficiaries). Only copies of supporting documents should be sent. All original documents must be kept by the coordinator or co- beneficiaries during five years from the date of final payment.

8. 8 Type of Costs The Project budget is divided into: -Direct Costs: -A - Staff -B- Travel -E- Other direct costs -F - Indirect Costs -Communication costs -Infrastructure costs (rent, electricity etc) -Photocopying -Office supplies -G- Contribution in kind

9. 9 Eligible Expenditures

10. 10 Eligible Costs To be considered as eligible costs, the expenditures should be: –Related to activities involving Justice Programme eligible countries -Made during the project life cycle (1/11/2012 – 31/10/2014) -Directly connected with the carrying out of the approved activities -Reasonable and respect a sound financial management -Actually incurred by the partner and recorded in their accounts -Identifiable and verifiable (i.e. justified with appropriate accounting documents) -Conform to the rules set out in the Manual for Financial Management -Foreseen in the project budget -Comply with the requirements of applicable National tax and social legislation

11. 11 Ineligible Expenditure The following costs are not eligible and therefore should not be included in any of the expenses categories. -Costs related to opening and operating bank accounts -Debt services charges -Exchange losses -Expenditure that is already funded by other Community sources -Excessive expenditure -Cost of buy out option at the end of lease periods -Fines, financial amendments and legal costs. -Travel and subsistence fees for EU officials -Expenditure incurred outside the eligibility period;

12. 12 Managing Expenditure

13. 13 Financial Report In order to justify the project expenditures each partners should fill in the Financial Report Form and enclose the required documents Financial Report Form

14. 14 Staff Cost – Heading A

15. 15 Staff Costs Rules 1/6 These costs can include the following categories of staff: Staff having a permanent contract with the partner Staff having a temporary employment contract with the partner Non-permanent staff may be charged to Staff category if the individual works with a contract or individual sub-contract explicitly linking the person to the project and provided that such practice complies with the relevant national legislation.

16. 16 Staff Costs Rules 2/6 The reported staff members must respect what was planned in the approved budget. For any change in the name of the people to be reported please inform the project promoter that will ask for authorisation the European Commission.

17. 17 Staff Costs Rules 3/6 For public bodies the Staff Costs are eligible only if the employees whose cost is reported, carry out activities that they would not perform if the project concerned was not been undertaken: To demonstrate the above, the costs must be related to: 1) Remuneration for overtime work 2) Costs for staff that need to be replaced by hiring a new employee Other permanent staff cost In all cases Staff of a public organisation will be considered eligible within the limit of the amount necessary to co-finance the project.

18. 18 Staff Costs Rules 4/6 Staff costs should be calculated on the basis of the real hourly cost rate of the employee concerned, multiplied by the number of hours dedicated to the project as from Time Cards. The real hourly cost rate should be calculated dividing the yearly gross cost the employer pays for the employee by the number of working hours of the employee. Gross cost calculation should include all the normal contributions paid by the employee, for example social security, while bonuses, incentives or profit share schemes should be excluded.

19. 19 Staff Costs Rules5/6 Rules 5/6 Staff costs within each partner organisation should NOT EXCEED THE USUAL rates corresponding the usual internal policy on remuneration. Internal policy means the policy that was in place before the implementation of the project and used for all staff members no matter if they work on the EU project or not.

20. 20 S taff costs must be related to the work carried out specifically for the Project. For Public Bodies a declaration is needed so as to state that the Staff costs claimed are related to activities that the institution would not carry out if the project concerned was not undertaken. The proof of payment of overtime work or of employee replacing staff must be provided Staff Costs Rules6/6 Rules 6/6

21. 21 Staff Enclosures 1/9 Staff costs should be justified using: -Document explaining the internal policy on salaries -Employment contracts -Employment Letter related to the project -Detailed description of the method of calculation of the daily cost rate -Table summarising the person cost accounted on the project -Personal Time card -Payslips -Bank statements of payments made Examples: 01 A Staff Costs Enclosures

22. 22 Staff Enclosures 2/9 Document explaining the internal policy on salaries The document, signed by the accounting manager, should outline the internal policy on salaries of the partner institution for all staff members no matter if they work on the EU project or not. Example: 01 B Internal Policy Salaries Example

23. 23 Staff Enclosures 3/9 Employment Contract It is the General Contract that has been signed between the project partner institution and the employee. For non-permanent Staff the contract should explicitly link the person to the project provided. The contract should make specific reference to the project and indicate the tasks of the employee, the duration of the employment, the time allocated to the project and the relevant remuneration rate

24. 24 Staff Enclosures 4/9 Employment Letter related to the project The employment letter should be provided for each permanent employee reported in the Staff category. The specific employment letter should formalise the employee role within the project and the related activities to be carried out. Example: 01 C Employment letter

25. 25 Staff Enclosures 5/9 Detailed description of the method of calculation of the hourly cost rate The description of the method of calculation should be provided for each employee reported in the Staff category. The description should give evidence to the method and related figures with which the hourly cost rate was calculated starting from the yearly cost for the employer. Example: 01 D Description of Method of Calculation

26. 26 Staff Enclosures 6/9 Table summarising the person cost accounted on the project The Table should be provided for each employee reported in the Staff category. The table will give evidence to the figures related to the cost of the employee starting from the issued payslips. Example: 01 E Summary Table

27. 27 Personal Time Card For each employee who has worked on the project the following information should be collected and submitted on a personal Time Card filled in on a monthly basis: - Name of the employee -Role in the project -Daily cost rate paid by the employer for the employee -Amount of time spent on the project by the employee -Reported cost of the employee (daily cost rate x days worked on the project) -Activities carried out for EACH day worked on the project Example: 01 F Time Card Example 01 G Time Card ModelStaff Enclosures 7/9

28. 28 Payslips For each employee who has worked on the project, all the monthly payslips related to the project period must be provided. The figures reported on the payslips must allow to verify the consistency of the calculation of the Daily cost rate. Example: 01 H Payslip ExampleStaff Enclosures 8/9

29. 29 Proof of payments For each employee who has worked on the project the proof of payments (i.e. Bank statements) of the Net earned and of all the social security taxes must be provided. The figures reported on the proof of payments must allow to verify the consistency of the calculation of the Daily cost rate. Staff Enclosures 9/9

30. 30 Staff Enclosures 01 A Staff Costs Enclosures 01 B Internal Policy Salaries Example 01 C Employment letter 01 D Description of Method of Calculation 01 E Summary Table 01 F Time Card Example 01 G Time Card Model 01 H Payslip Example

31. 31 Staff Final Check Before submitting the financial report please check that: -You filled in the Financial Form with a line for each person providing all requested information -Each cost described in the report is supported by the related accountancy documents -For EACH staff member you have enclosed: Document explaining the internal policy on salaries Declaration explaining the calculation of the daily cost rate. calculation of the hourly cost rate, Personal timecard duly filled in and signed; Payslips ; Employment contracts; employment letter related to the project; Bank statements of payments made, Table summarising yearly gross cost used to calculate reported real daily cost. -There is not mixing up between staff costs and subcontracting costs

32. 32 Travel – Heading B

33. 33 Travel 1/5 Travel costs are eligible only if they are directly connected to specific project related activities. Travel costs should be related only to staff (therefore the names of travellers should be consistent with the names included in the “Staff” budget heading). Non staff members should be accounted for under the “Other Costs” or “Subcontracting Costs” budget headings.

34. 34 Travel 2/5 Partners are required to choose the cheapest mean of travel, where this is not the case a full explanation should be provided.

35. 35 Travel 3/5 Expenditures for travel by car are eligible but must be calculated on the basis of the following criteria (whichever is the cheapest): a) The cost of the correspondent rail/bus/plane fare ticket. Only ONE ticket shall be reimbursed regardless of the number of people who travel in the car b) A rate per Km in accordance with the internal rules of the partner concerned up to a maximum of 0,22 euro per km (e.g. including Highway tolls etc.).

36. 36 Travel 4/5 Hire of cars (maximum class B car may be used) or taxi costs are eligible only if there are other influencing factors (e.g. time, excessive luggage, no other transport available etc.). Influencing factors must be described through a specific declaration. In case a taxi is needed it is necessary to mark on the receipt the date and the place of departure and destination. A declaration motivating the use of the Taxi must be produced (e.g. Early departure, heavy luggage etc.)

37. 37 Travel 5/5 Travel costs should be justified using: 1.Detailed Expenditure sheet for each person, each enclosing: -Invoices of Travel Agency -Plane/Train/Bus ticket -For planes: Boarding Card (N.B. Without Boarding cards Plane cost is not eligible) -For car journeys: declaration stating the calculation method with unit rate and number of units, dates and names and activities concerned; -Invoice of Car Rental Company -Taxi receipts (plus declaration motivating the use of the Taxi) 2.Proof that the payments have been made by the partner and are recorded in the accountancy 3.List of participants duly signed with clear identification of the purpose of the trip, dates, name and functions of the participants in the project -N.B. All documents enclosed should be translated into English and converted into Euro (use the official rate of the project)

38. 38 Subsistence 1/9 Subsistence costs include: - Accommodation (hotel invoice) - Meals (breakfast, lunch and dinners. No extras) - Local travels (excluding those to travel from the point of origin to the destination)

39. 39 Subsistence 2/9 Subsistence costs are admissible as long as they: · Are necessary and reasonable · Do not exceed the maximum daily amount per person in the destination country

40. 40 Subsistence 3/9 Reimbursement of subsistence costs may be made on the basis of the internal policy of the Partner organisation, and therefore on the basis either of: - Actual costs (reimbursement of receipts) - Daily Allowance basis N.B. Internal policy means the policy that was in place before the implementation of the project and used for all Travels no matter if they are related to the EU project or not N.B. In both cases, proof of attendance and of overnight accommodation is required Subsistence costs should be related only to staff. Non staff members should be accounted for under the “Other Costs” or “Subcontracting Costs” budget headings.

41. 41 Subsistence 4/9 The system of per diem for reimbursement of subsistence costs can be used only if it can be demonstrated that such a system was officially in place before the grant was awarded. In this case the amount of per diem should follow the normal practice of the organisation and the limit per country set in the Commission’s guide http://ec.europa.eu/europeaid/work/procedures/implemen tation/per_diems/index_en.htm cannot be exceeded http://ec.europa.eu/europeaid/work/procedures/implemen tation/per_diems/index_en.htm

42. 42 Subsistence 5/9 Table published in July 2012 (to be updated in December)

43. 43 Subsistence 6/9 The costs indicated in the tables available at the link indicated in the previous slide include all the costs connected with the country in question. Where there is no overnight stay the costs are reduced by 50%. The maximum number of days that can be claimed is the number of working days + 1.

44. 44 Subsistence 7/9 If a partner hosting a project meeting pays for a social meal, the cost will have to be divided, by the project promoter, among each of the other partners at the interim/final report stage. The rate paid by the hosting partner will be deducted from each of the partners Budget.

45. 45 Subsistence 8/9 Possible examples of not eligible subsistence costs: -Mini bar in the hotel -Snacks and drinks (unless they are part of a main meal) -Bar costs (unless it is for breakfast) -Telephone costs in the hotel

46. 46 Subsistence 9/9 Subsistence costs should be justified using: Detailed Expenditure sheet for each person enclosing:  Declaration for Daily Allowance + Hotel Invoices Or  Reimbursement Sheet enclosing: -Restaurant Invoices -Hotel Invoice -Bus ticket -Taxi receipt  Proof that the payments have been made by the partner and are recorded in the accountancy (Payment in Cash MUST be avoided N.B. All documents enclosed should be translated into English and converted into Euro, (use the official one for the project)

47. 47 Travel and subsistence Final Check Before submitting the financial report please check that: -Each cost described in the report is supported by the related accountancy documents -Each person travelling is enclosed in the staff costs budget line -For EACH staff member you have enclosed a specific expenditure sheet -The subsistence cost per day for each country is below the maximum ceiling also taking into account the 50% off related to the last day of stay. -The subsistence cost ceiling is reduced if the hosting partner covered the cost for the lunch / dinner. -For EACH staff member you have enclosed a specific expenditure sheet including : flight tickets, coarding cards, hotel invoices; restaurants receipts, taxi tickets etc. NB Expenditure sheets for more than one person are not accepted. -All documents enclosed should be translated into English and converted into Euro, specifying the currency conversion rate applied (use the official EU one)

48. 48 Pixel 48 Travel and Subsistence Enclosures 02 A Travel and Subsistence Costs Enclosures 02 B Travel and Subsistence Expenditure Sheet Model 02 C Travel and Subsistence Daily Allowance 02 D Travel Daily Allowance receipt

49. 49 Other Costs – Heading E

50. 50 Other costs 1/5 Other costs which are not included in the previously mentioned categories may also be considered admissible, as long as they: Are necessary for the project activities Are for a reasonable sum of money Are justified with suitable administrative documents Are not included in any other cost category

51. 51 Other costs 2/5 Example of “Other Costs”: -Lunches and Coffee breaks during meetings -Renting of meeting facilities -Printing costs -Experts attending workshops -Translations and Interpreting

52. 52 Other Costs 3/5 In case “Other Costs” refer to subcontracts (e.g. for Conference Catering Services, Interpreters or Translations) please notice that: 1) Any o subcontract during the project, not explicitly mentioned in the initial budget shall be subject to prior written authorisation by the European Commission. 2) The project partner should draw up an agreement with the sub- contractor. The agreement should include the following information: - Type of sub-contract - Start date and end date of the sub-contract - Sum to be paid - Detailed description of the costs - Work programme or phases - Payment procedure (total sum, spread out etc,) - Penalty clauses in the case that the agreement is not respected

53. 53 Other Costs 4/5 The following rules regarding procurement apply to subcontracts with a value: -Less than 5.000 euro can be paid on presentation of invoice -Above 5.000 Euro the beneficiary shall seek competitive tenders from potential contractors in order to prove that the bid offering best value for money was chosen. In doing so, they will observe the principles of transparency and equal treatment of potential contractors

54. 54 Other Costs 5/5 Other costs should be justified using: -Contracts with sub-contractors -Minimum number of offers as result from the call for tenders -Invoices -Proof of Payment (i.e. bank statement)

55. 55 Pixel Other Costs Enclosures 03 A Other Costs Enclosures

56. 56 Indirect Costs – Heading F

57. 57 Indirect Costs These costs include: - Communication costs - Infrastructure costs (rent, electricity etc) - Photocopying - Office supplies The maximum eligible indirect costs is indicated in the project (1061,90 euro per partner) These costs can be justified with a Declaration enclosing the method of calculation.

58. 58 Indirect Costs Enclosures 06 A Indirect Costs Enclosures 06 B Indirect Costs Declaration Model

59. 59 Contribution in kind - Heading G

60. 60 Contribution in Kind Contribution in kind refers to non-cash inputs, such as: - any donation of raw materials (i.e. paper and ink for publication purposes); - unpaid volunteer work by a private, individual or corporate body. Contribution in kind shall not be calculated as actual project expenditure and shall not constitute an eligible cost. If included in the budget the beneficiary undertakes to obtain this contribution. The contribution in kind will be taken into account by the Commission when assessing the activities and level of engagement and commitment of the Applicant and Partners. Provided by: -JMMV, DE -TP, EE -MJ, FI

61. 61 Final Remarks

62. 62 Common Mistakes 1/3 General Issues - Only costs recorded in the internal accountancy system of the project partner institution and paid by the project partner itself are eligible for the project. Costs sustained by an individual or by an institution other than the project partner are not eligible on the project - Each receipt/justifying document giving evidence to the expense must be clearly readable, at least in its main parts (issuer, type of product/service purchased, date and amount paid) - Be careful not to cover main parts of supporting documents with other information (e.g. Boarding Cards with luggage receipt, Invoice with Credit Card payment receipt etc.) - The receipt of a Credit Card or of a Bank transfer alone are not sufficient for justifying an expense

63. 63 Common Mistakes 2/3 Staff Costs - Staff costs must be based on the real hourly cost rate calculated starting form the yearly gross cost for the employer for each staff member. Do not use fixed daily rates that cannot be justified by supporting documents (e.g. payslips, proof of payments etc.) - Time cards must be filled in on a daily basis, giving details of the activities carried out (Avoid writing for example: From 10 to 20 of January: Project management) - Please make reference to the number of days of work foreseen on the official budget of the project and keep under control the consistency between those figures and the days of work you report.

64. 64 Common Mistakes 3/3 Travel Costs - Travel and Subsistence costs supporting documents must always be accompanied by the Expenditure sheet listing all the expenses - The proof of reimbursement of travel costs paid by the project partner to the person travelling must always be enclosed to the report - Boarding Cards are always needed, keep them safely after your flight.

65. 65 Transfer of Grant to the Partners 1/2 1st instalment: equal to 20% of the total funding allocated to the partner, will be transferred within 30 days from the date of receipt by the Contractor of the first instalment of the funding from the Education, Audiovisual and Culture Executive Agency (but only after the Agreement has been signed and received by the Contractor). 2nd instalment: equal to 20% of the total funding allocated to the partner, will be transferred after the submission by the partner of the interim report (including the financial report and activities, exploitation, dissemination and evaluation reports). The second instalment will be transferred after the assessment by the Contractor of the Interim Report that will have been submitted by the partner. Full payment of the above mentioned 2nd instalment will only be made if the Partner demonstrates in the Financial report, and through supporting documents to have spent at least 40% of its total budget. In case the Partner reports and justify less than 40% of the budget, the amount of the 2nd instalment will be reduced accordingly. 3rd instalment: equal to 20% of the total funding allocated to the partner, will be transferred within 30 days from the date of receipt by the Contractor of the official acceptation of the Interim Report by the Education, Audiovisual and Culture Executive Agency.

66. 66 Transfer of Grant to the Partners 2/2 4th instalment: equal to 20% of the total funding allocated to the Partner, will be transferred after the submission by the Partner of the final report (including the financial report and activities, exploitation, dissemination and evaluation reports). The 3rd instalment will be transferred after the assessment by the Contractor of the Final Report that will have been submitted by the Partner. Full payment of 3rd instalment will only be made if the partner has spent at least 100% of its total budget. In case the project partner will report and justify less than 100% of the budget, the amount of the 4th instalment will be reduced accordingly. 5th and final instalment: equal to 20% of the total funding allocated to the partner, will be transferred within 30 days from the date of receipt by the Contractor of the final payment of the funding from the Education, Audiovisual and Culture Executive Agency. The calculation of the 5th and final instalment will be reviewed according to the final assessment of the Education, Audiovisual and Culture Executive Agency of the Final Report, the final total grant being calculated as the 75% of the of the total expenses declared and justified by the Partner in its Financial Report and assessed as eligible by the Education, Audiovisual and Culture Executive Agency. All bank costs for the payment transfers will be charged to the partner.

67. 67 Financial Reports There are two main rules all partners have to follow for the production of the Financial report: A) The Financial report should be made filling in the forms that will be provided by the project coordinator. B) Each expenditure described in financial report should be justified attaching the related proof (e.g. invoice, receipts etc. etc.). Before sending the financial report to the project coordinator, the partner should make sure rules A and B are respected.

68. 68 Financial Reports Example of financial report filled in

69. 69 Thank You for the Attention Questions?