1. Part-financed by the European Union WS 4: Financial issues Joint Technical Secretariat Lead Applicant Seminar Hamburg, 2-4 April 2008

2. 2Lead Applicant Seminar, Hamburg, 2-4 April 2008 AGENDA 1 2 Questions & Answers It’s your turn Financial resources & budget lines Special financial issues & financial control Questions & Answers It’s your turn (45 min.)

3. Part-financed by the European Union WS4: Financial issues – BLOCK 1 Dana Hennings Joint Technical Secretariat Lead Applicant Seminar Hamburg, 2-4 April 2008

4. 4Lead Applicant Seminar, Hamburg, 2-4 April 2008 Content 1)Financial resources 2)Budget lines 3)Questions & Answers 4)It’s your turn

5. 5Lead Applicant Seminar, Hamburg, 2-4 April 2008 Content 1)Financial resources 2)Budget lines 3)Questions & Answers 4)It’s your turn

6. 6Lead Applicant Seminar, Hamburg, 2-4 April 2008 A project’s financial resources TOTAL PROJECT BUDGET ERDF budget ERDF co-financing (50%, 75%, 85%) ERDF partner’s contribution (50%, 25%, 15%) Norwegian budget Norwegian co-financing (50%) Norwegian partner’s contribution (50%) ENPI budget ENPI co-financing (90%) ENPI partner’s contribution (10%)  More details: Working Session 2 “Partnership and work plan”

7. 7Lead Applicant Seminar, Hamburg, 2-4 April 2008 Content 1)Financial resources 2)Budget lines 3)Questions & Answers 4)It’s your turn

8. 8Lead Applicant Seminar, Hamburg, 2-4 April 2008 Budget lines BL1 – Personnel BL2 – External services BL3 – Travel and accommodation BL4 – Equipment and investment BL5 – Other direct costs Budget flexibility rule

9. 9Lead Applicant Seminar, Hamburg, 2-4 April 2008 Budget lines

10. 10Lead Applicant Seminar, Hamburg, 2-4 April 2008 Budget lines BL1 – Personnel BL2 – External services BL3 – Travel and accommodation BL4 – Equipment and investment BL5 – Other direct costs Budget flexibility rule

11. 11Lead Applicant Seminar, Hamburg, 2-4 April 2008 BL1 – Personnel Personnel costs of project staff –Directly employed by project partners listed in the application form –Basis: employment/labour contract –Carrying out project activities –Gross salary + employer’s obligatory contributions NON-ELIGIBLE –Any voluntary remuneration and employer contribution –Administration costs

12. 12Lead Applicant Seminar, Hamburg, 2-4 April 2008 BL1 – Personnel Unpaid voluntary work –Written agreement –Carrying out project activities –No remuneration at all –Limit: project partner’s contribution (10%, 15%, 25%, 50%) NON-ELIGIBLE –Unpaid voluntary work of project partner’s own staff

13. 13Lead Applicant Seminar, Hamburg, 2-4 April 2008 BL1 – Personnel

14. 14Lead Applicant Seminar, Hamburg, 2-4 April 2008 Budget lines BL1 – Personnel BL2 – External services BL3 – Travel and accommodation BL4 – Equipment and investment BL5 – Other direct costs Budget flexibility rule

15. 15Lead Applicant Seminar, Hamburg, 2-4 April 2008 BL2 – External services Expenses paid by project partners to external providers  External = not employed by project partner institutions Basis: –Contracts of work, supply contracts, service contracts –Invoices/requests for reimbursement. Public procurement! NON-ELIGIBLE –Contracting between project partners

16. 16Lead Applicant Seminar, Hamburg, 2-4 April 2008 Be clear and precise!

17. 17Lead Applicant Seminar, Hamburg, 2-4 April 2008 Budget lines BL1 – Personnel BL2 – External services BL3 – Travel and accommodation BL4 – Equipment and investment BL5 – Other direct costs Budget flexibility rule

18. 18Lead Applicant Seminar, Hamburg, 2-4 April 2008 BL3 – Travel and accommodation Travel and accommodation + subsistence allowances Essential for project activities Most economic way of transport Observe national and organisation internal rules! Prior approval of travels outside the programme area and the EU!

19. 19Lead Applicant Seminar, Hamburg, 2-4 April 2008 Budget lines BL1 – Personnel BL2 – External services BL3 – Travel and accommodation BL4 – Equipment and investment BL5 – Other direct costs Budget flexibility rule

20. 20Lead Applicant Seminar, Hamburg, 2-4 April 2008 BL4 – Equipment and investment EQUIPMENT Tool/device to carry out project activities Not used by project target group after completion of activities Depreciation costs only! INVESTMENT Result of project activities Used by project target group after completion of activities Full costs  More details: Plenary session!

21. 21Lead Applicant Seminar, Hamburg, 2-4 April 2008

22. 22Lead Applicant Seminar, Hamburg, 2-4 April 2008

23. 23Lead Applicant Seminar, Hamburg, 2-4 April 2008 BL4 – Equipment and investment Group your equipment!: –Office equipment: day-to-day management –Multimedia equipment: interactive –Measurement, research & laboratory equipment –Others: Please specify!

24. 24Lead Applicant Seminar, Hamburg, 2-4 April 2008 Budget lines BL1 – Personnel BL2 – External services BL3 – Travel and accommodation BL4 – Equipment and investment BL5 – Other direct costs Budget flexibility rule

25. 25Lead Applicant Seminar, Hamburg, 2-4 April 2008 BL5 – Other direct costs ELIGIBLE –Transnational transfer charges and bank charges –Participation fees for external events –Direct office running costs NON-ELIGIBLE –Overheads! –Any general costs allocated on a percentage or pro rata basis –Debit interest and exchange rate losses Other expenses –essential for project implementation –exist because of the project –supported by invoices directly attributable to the project/project staff

26. 26Lead Applicant Seminar, Hamburg, 2-4 April 2008 Budget lines BL1 – Personnel BL2 – External services BL3 – Travel and accommodation BL4 – Equipment and investment BL5 – Other direct costs Budget flexibility rule

27. 27Lead Applicant Seminar, Hamburg, 2-4 April 2008 Budget flexibility rule BL1BL2BL3BL4BL5Total WP1Flexibility WP2Flexibility WPnFlexibility TotalFlexibility Total budget  Reallocated amount (cumulated since project start) ≤ 20% or 40,000 EUR, whichever is higher NOT POSSIBLE –Changes of equipment/investment items –Changes between project partners’ budgets

28. 28Lead Applicant Seminar, Hamburg, 2-4 April 2008 Any questions?

29. 29Lead Applicant Seminar, Hamburg, 2-4 April 2008 It’s your turn

30. Part-financed by the European Union WS4: Financial issues – BLOCK 2 Václav Kaplan Joint Technical Secretariat Lead Applicant Seminar Hamburg, 2-4 April 2008

31. 31Lead Applicant Seminar, Hamburg, 2-4 April 2008 Content 1)Time dimension 2)Horizontal rules 3)Control system 4)Questions & Answers 5)It’s your turn

32. 32Lead Applicant Seminar, Hamburg, 2-4 April 2008 Content 1)Time dimension 2)Horizontal rules 3)Control system 4)Questions & Answers 5)It’s your turn

33. 33Lead Applicant Seminar, Hamburg, 2-4 April 2008 Project phases (1st call) PreparationContractingImplementationClosurePost- project ~ 17 months3 monthssee application form3 months No costs can be reported Limitations in BLs or WPs -> Preparations costs BL 1-3/WP 0 only -> Closure costs WP 1 only Eligible costs can be reported in all BLs and WPs 31/05/2007 MC decision (~ October 2008) 31/12/2025

34. 34Lead Applicant Seminar, Hamburg, 2-4 April 2008 Preparation phase From:1 year before the call closure (31 May 2007) To:MC decision date (expected end October 2008) Only personnel (BL1), external services (BL2) and travel & accommodation (BL3) in the Work Package 0 Max. 50,000 EUR or 2% of the project budget, whichever is lower PPs eligible for ERDF/Norwegian co-financing For approved projects

35. 35Lead Applicant Seminar, Hamburg, 2-4 April 2008 Contracting & Implementation phase Contracting phase: 3 months starting from day after MC decision date Implementation phase: duration 12-36 months according the application form All BLs and WPs in both phases Thematic & management activities

36. 36Lead Applicant Seminar, Hamburg, 2-4 April 2008 Closing phase 3 months after the end of project implementation phase All BLs in WP 1 Costs related to the preparation of the final report/auditing Costs will be reported together with the last reporting period Last date of eligibility = Due date for submission of the final report Post-Project phase No costs eligible

37. 37Lead Applicant Seminar, Hamburg, 2-4 April 2008 Spending plan & De-commitment ERDF information basis for eventual de-commitment Norwegian/ENPI information for assessment only

38. 38Lead Applicant Seminar, Hamburg, 2-4 April 2008 Spending plan & De-commitment Basis for quality assessment Basis for eventual budget cuts in case of significant under-spending SPENDING PLAN MUST BE REALISTIC & LINKED TO WORK PLAN

39. 39Lead Applicant Seminar, Hamburg, 2-4 April 2008 Spending plan & De-commitment Average project spending in IIIB (% of total budget) =>ENABLE QUICK START Year 1Year 2Year 3Year 4Total Planned requests31.0%39.0%30.0%0.0%100.0% Real requests21.0%30.0%32.0%9.0%92.0%

40. 40Lead Applicant Seminar, Hamburg, 2-4 April 2008 Content 1)Time dimension 2)Horizontal rules 3)Control system 4)Questions & Answers 5)It’s your turn

41. 41Lead Applicant Seminar, Hamburg, 2-4 April 2008 “10% Flexibility rule” Costs paid outside EU eligible only if : benefit EU MSs of the programme area do not exceed 10% of the ERDF co-financing are approved by MC (application form, pt. 3.10.2.) or by MA in advance Concerns ERDF funds only Do not confuse it with 20% rule (  covered in WS Partnership)

42. 42Lead Applicant Seminar, Hamburg, 2-4 April 2008 Value Added Tax (VAT) Recoverable VAT is not eligible => Partners who can get VAT refunded/offset by tax authorities have to plan their budgets without VAT IMPORTANT: VAT status of partners must be declared => in the application form & => in the Partner declaration

43. 43Lead Applicant Seminar, Hamburg, 2-4 April 2008 Other financial charges Financial charges e.g. for transnational transactions, bank accounts of project or where required guarantees are eligible Debit interests, exchange rate loses are NOT eligible

44. 44Lead Applicant Seminar, Hamburg, 2-4 April 2008 Revenues & interests generated by projects Revenues Example: Selling of project outputs, conference fees… Interests (and equivalent benefits) generated by ENPI co-financing  reduce the eligible expenditure

45. 45Lead Applicant Seminar, Hamburg, 2-4 April 2008 Cost sharing Pro rata allocation of expenditure to at least 2 partners Plan carefully => Prepare a written agreement on shared costs => Include partner shares in the partner budgets Indicate it in the application form

46. 46Lead Applicant Seminar, Hamburg, 2-4 April 2008 Further points for consideration Total budget - project duration/scope/complexity of activities/partnership Detailed budget (per BL & WP) - Activities Ratio “WP1/total budget” Ratio “equipment/total budget” External services/equipment/investments

47. 47Lead Applicant Seminar, Hamburg, 2-4 April 2008 Content 1)Time dimension 2)Horizontal rules 3)Control system 4)Questions & Answers 5)It’s your turn

48. 48Lead Applicant Seminar, Hamburg, 2-4 April 2008 Control system Other controlsEU and national audit bodies, JTS, MA, CA, AA … Second level audit (selected samples of projects) Audit Authority (AA) & Group of Auditors (GoA)/ ENPI: External auditor First level control (Validation/verification at PP and LP level) ENPI: First level controller to confirmed by MS/MA

49. 49Lead Applicant Seminar, Hamburg, 2-4 April 2008 Country-specific control requirements (ERDF/Norway) Organisation of the control = responsibility of MS/Norway Main types of systems –Centralized system: Estonia, Latvia, Lithuania, Poland, Sweden –Decentralized system: Finland, Germany, Norway –Mixed system: Denmark

50. 50Lead Applicant Seminar, Hamburg, 2-4 April 2008 ENPI control requirements First level controller contracted by the Lead Partner, in exceptional cases by the project partner Selection has to be confirmed by MA Internationally recognized supervisory body for statutory auditing & member of IFAC

51. 51Lead Applicant Seminar, Hamburg, 2-4 April 2008 Do the project partners pay the First Level Controller? GERDKESTFINLTLVNORPLSWE Yes NoYes NoYesNo ERDF: Depends on the national system ENPI: Yes

52. 52Lead Applicant Seminar, Hamburg, 2-4 April 2008 Any questions?

53. 53Lead Applicant Seminar, Hamburg, 2-4 April 2008 It’s your turn

54. 54Lead Applicant Seminar, Hamburg, 2-4 April 2008 Further information Operational programme Programme Manual Programme website (eu.baltic.net) Joint Technical Secretariat

55. Part-financed by the European Union WS4: Financial issues Dana Hennings & Václav Kaplan Financial Managers, Joint Technical Secretariat Phone: +49 381 45 484 5271/-5290 email: dh@eu.baltic.net, vk@eu.baltic.net eu.baltic.net