Financial Rules in FP7 Projects

Transcription

1 FP7 Financial Management and Audits Financial Rules in FP7 Projects Mr. Gabor Kitley Managing Director Europa Media PSC 13 November 29, Budapest Content Basic Facts Forms of financing Eligibility rules Cost model indirect costs Funding limits Certification of costs Risk avoidance Payment modalities 1

2 The EU cares about this! PROJECT BUDGET The EU is not interested in this AT ALL ELIGIBLE COSTS NON-ELIGIBLE COSTS DIRECT COSTS INDIRECT COSTS There is no funded project at the total budget level! Financing under FP7 contracts Indirect Actions aka Projects (costs) Partial reimbursement of eligible costs Based on reporting the actual eligible project expenditures Lump sums Flat-rate type contribution based on project-hours (researcher-year rates) for ICPC countries! Tenders (price) Invoice - Payment 2

3 Eligible costs All eligible costs must be: Actual Incurred during the project s duration Incurred at/by the Beneficiary In accordance with the beneficiary s usual accounting and management principles Recorded in the accounts of the beneficiary Used for the sole purpose of achieving the objectives of the project Non-Eligible costs Non-eligible costs are: The opposite to the previous slide Identifiable indirect taxes, e.g. V.A.T. Duties, Interest owed; Debt and debt service charges, any provisions for future losses or charges Exchange losses Costs declared to another Community project aka double funding Airport taxes (particular case are eligible! as not duty or tax by law) 3

4 Direct / Indirect Costs NO MORE COST MODELS ONLY FC Direct costs (that can be attributed directly to the project) Personnel costs (can also include in-house consultants) Travel costs for personnel working on the project Consumable costs Purchase costs of durable equipment (depreciation) Sub-contracting contracting/third Party Special case: cost for Certificates on Financial Statements (CFS) Indirect costs All costs that cannot be identified as attributed directly to the project (the running costs: electricity, heating, telephone, internet etc, also called overheads ) Direct Costs Personnel Costs Case of employee(s) on the project: No difference between permanent and non-permanent staff All salary-related expenditures (salary, pension contribution, health insurance, etc) can be charged on the project, BUT Actual time must be recorded by an appropriate time-sheets system in order to justify the DIRECT relation between the salary and the project. All productive hours must be measured + sick-leave, holidays, etc. Special case of: tele-working, overtime, sick-leave/maternity leave and PhD. students In-house consultants Self-employed or employed by a third party Six criteria to charge it as personnel (1) the beneficiary contracts to engage a physical person, (2) s/he is supervised by the beneficiary, (3) s/he works in the premises of the beneficiary, (4) his/her results belong to the beneficiary, (5) no significant differences in salaries/payments, (6) timesheets. Otherwise it is Subcontracting! 4

5 Direct Costs Third Parties Third party makes its resources available to the beneficiary Free of charge (e.g. salary of permanent staff at the university) Third party is reimbursed (e.g. (spin-off companies to run/manage projects at universities/ministries) Third party carrying out part of the work Subcontracting Third party linked to the beneficiary like affiliates, EEIG, JRU, groupings Difference subcontractor charges the price (including the profit red flag.), linked third party charges the costs Including meals, transfer, perdiem Both has to identified and justified during the negotiation phase Core part of the project must not be subcontracted The Coordinator s main task must not be subcontracted Awarded according to best value for money, transparency and equal treatment The tasks that is subcontracted should be described the subcontractor itself does not have to be identified Minor tasks may be subcontracted without prior agreement with the EC Direct Costs Other Direct Costs Travel costs and subsistence 2 options: Actual travel costs, meals, transfers and local transport, per-diem based on real expenditures and/or accounting policies Flat-rate reporting of subsistence and accommodation costs Durable equipment Depreciation costs only Special case of leasing and renting Consumables Other costs Directly linked to the project, otherwise indirect costs CFS/CoM/CoAPC costs Always eligible when requested! All of the above are reported as other direct costs no budget breakdown in FormC! 5

6 The 4+1 types of indirect costs calculations For all: (1) Actual overhead NB: (2) simplified method can be used if based on actual costs from the last closed accounting year follows the usual accounting principles and practices direct ineligible costs (VAT, etc...) can be identified and excluded at least allows for the allocation of the overheads at the level of the legal entity to the individual projects by using a fair "driver It does not require previous registration or certification by the Commission Or (3) flat rate of 2% of direct eligible costs minus subcontracting and costs of resources from 3 rd parties not used on the premises of the beneficiary (4) Flat rate of 6% (for funding schemes with RTD) Only for non-profit public bodies, secondary and higher education establishments, research organisations and SMEs that are unable to identify real indirect costs (+1) For CSA schemes only: max. reimbursement of 7% of direct eligible costs minus subcontracting and costs of resources from 3 rd parties not used on the premises of the beneficiary. EC funding rate Key factors for funding rate Activity type Management RTD Demonstration Other Organisation type University, Research Institute, SME, Public body Large organisation Funding scheme Collaborative projects (CP) Coordination and Support Actions (CSA) Network of excellence (NoE) Etc. 6

7 Maximum EC funding rate per activity and project type Maximum reimbursement rates of eligible costs R&D Demonstration Management Training/Dissemin ation/networking /Support/Coordin aton NoE Not available Large 5% or Collaborative 5% * Projects Small Collaborative Projects Specific research for SMEs Coordination and Support Actions 5% or * 5% or * Not available * University, Research Organisation, SME, Public body 5% 5% Management no 7% limit but still Comparison between FP6 FP7 A university point-of-view and the reduced RTD funding. COST (University) Personnel Travel Other Costs TOTAL DIRECT Indirect Cost TOTAL ELIGIBLE COSTS EC Contribution Indirect costs % FP6 (AC) 1, 2, 3, 15, 3, 18, 18, 8, 2% Funding rate FP7 (FC) 1, 2, 3, 15, 9, 24, 18, 6% Funding rate 7

8 University/SME Large Company RTD Demonstration Management / Other RTD Demonstration Management / Other Personnel Other Total Direct Indirect cost-rate 6% 2% Indirect Costs Total Reported expenditures Funding Rate 5% 5% 5% EC Contribution Total expenditures Total EC Contribution Overall funding Rate 79,17% 64,71% (real funding rate) 126,67% 77,65% Certification of costs FP6: Audit certificates FP7: Certificate on Financial Statement (CFS) Certificate on Methodology (CoM) Certificate on Average Personnel Costs (CoAPC) CFS is mandatory for every Beneficiary when requested accumulated funding reaches 375, (except short projects) it must cover the total budgeted costs CFS is not needed if total EC funding of a particular Beneficiary does not reach 375, CoM is optional for selected Beneficiaries when CoM is submitted and accepted, no CFS needs to be submitted during the project, but at the end of it. CoAPC is a methodology to average personnel costs when accepted one can claim average personnel costs instead of actual (But only personnel!!!) Who can provide these certificates? Qualified auditors under the 8th Directive Independent Public bodies, secondary / higher education establishments and research organisations may opt for a competent public officer 8

9 Risk avoidance No more collective financial responsibility! No more bank-guarantee requested! The Guarantee Fund (GF) Establishment of a participant Guarantee Fund to cover risks All beneficiaries must contribute 5% of its total calculated EC contribution Financial interest generated will cover risks (e.g. in case of bankruptcy) Will be reimbursed at the end of the project (1% may be deducted from private entities) Ex-ante financial viability requested limited to coordinators and partners requesting more than 5, Euro EC contribution Receipts and Interests Receipt: any income to the project other than the EC contribution If Total EC contribution + receipts (income) < total eligible costs = No reduction of EC contribution Possible kinds of receipts: Financial transfers or their equivalent to the beneficiary from third parties Contributions in kind from third parties Interest generated on the pre-payment Interest earned from pre-payment (only the Coordinator!) Using separated bank (sub)account(s) are strongly suggested 9

10 Payment modalities Payment modalities Pre-financing there is only one advance payment in FP7: Interim payment/ instalments = Final payment Project with 1 or 2 reporting periods ( Short project ) 6-8% of the total expected EC contribution (up to your PO) - 5% of the total EC contribution Costs justified and accepted by the EC x funding rate interest earned during the reporting period (if any); with regards to the ceiling of 9% of total EC contribution Final payment + the retention (1% ceiling) + the 5% from the GF Project with more than 2 reporting periods ( Long project ) 16% of the average EC contribution per period - 5% of the total EC contribution Thank you for your attention! 1