Flat rate schemes for indirect costs

Transcription

1 ESF Informal Technical Working Group Flat rate schemes for indirect costs Franck SEBERT - Denis BATTA, EMPL.I.1 24 October 2007, Lisboa

2 Indirect costs eligible on the basis of flat rate Article 11(3)(b) of Regulation (EC) 1081/ The following costs shall be expenditure eligible for a contribution from the ESF as defined in paragraph 1 provided that they are incurred in accordance with national rules, including accountancy rules, and under the specific conditions provided for below: ( ) (b) in the case of grants, indirect costs declared on a flat-rate basis, up to 20 % of the direct costs of an operation ( )

3 Eligibility rules determined at national level Art. 56 (4) of Regulation (EC) 1083/2006 The rules on the eligibility of expenditure shall be laid down at national level subject to the exceptions provided for in the specific Regulations for each Fund ( )

4 Situation in the Member States Some Member States were already applying specific rules and / or ceilings to indirect costs (potential source of good practice) Member States declared their intention to make use of this possibility to a variable extent (Commission survey, TWG )

5 Flat rate scheme Main principles (1) - Flat rate for indirect costs = simplification, no obligation - Restricted to grants: if procurement procedure => contract cost = real eligible cost - Declaration of real (and justified) indirect costs still allowed (choice made at a national level) - No European definition of costs (direct / indirect)

6 Flat rate scheme Main principles (2) - Definition of costs at MS level by national law, managing authority or intermediate bodies - Declaring indirect costs on a flat-rate basis must be foreseen when programming the ESF operations - Indirect costs declared on the basis of a flat rate will not be audited by Commission services

7 Flat rate scheme Direct costs - Direct costs: directly related to the operation, the link to the action can be demonstrated - Direct costs = identifiable directly or via allocation (global purchase of paper, pens apportion of invoice to specific course) - Direct costs should be: - Defined by type of operation in the eligibility rules and the subvention agreements - Fully justified and documented (proof of real expenses) - Listed individually or defined with reference to accounting plan (categories of costs)

8 Flat rate scheme Indirect costs - Indirect costs are not directly connected to the project, but linked to the general activities of the organisation, which implements the project (beneficiary) - Indirect costs do not need to be justified: - Amount determined by application of a flat rate < = 20% direct costs - Level of flat rate should be motivated in national rules (objective is not to inflate indirect costs)

9 Flat rate scheme Example Direct costs (1) - Trainers (excluding administrative and management staff): salaries, cost for developing course support material - Trainees: allowances, transport and food costs, examination charges - Childcare - Sundries: course books, raw material, practical tuition, pen, ink - Compensation paid to employers (absence, low productivity of trainees)

10 Flat rate scheme Example Direct costs (2) - Machines / hard- software [leasing or depreciation, art. 11(3)(c) Reg. (EC) 1081/2006] - Classroom rent and related consumptions: electricity, water and heating, if directly apportionable - Global purchase (pens, paper ) => part of invoice attributed to a specific activity

11 Flat rate scheme Example Indirect costs - Amount declared: flat rate applied to direct costs - Indirect costs should not be defined, but criteria are useful to sort between some costs, which can belong to both direct and indirect costs e.g. energy and water supply, telephone, office supplies, publicity, rent - The rate applied should be <= 20% and duly justified with reference to: - Market costs survey - Past experience (notably programming period) - Benchmarking with similar projects / operators etc.

12 Calculation of indirect costs -Total budget accepted = Amount of direct costs = Flat rate chosen by reference to similar operations of the past programming period: 10 % Max. indirect costs = * 10 % = If indirect costs are expected > , real costs regime may be chosen and real expenses justified, as in the previous programming period - Realised: Warning: choice must be made when programming the operations! Direct costs = = fully auditable with all supporting documents Eligible indirect costs: X 10% = = acceptable without further audit, if accepted Total to be claimed to MA =

13 Practice Main trends Definition of direct costs (1) - Identification of specific direct costs (comprehensive) from the national accounting plan, and which are in direct relation to the project, e.g. the teaching staff and the participants - Global definition of eligible direct expenditure only based on categories of the national accountancy plan

14 Practice Main trends Definition of direct costs (2) - Compulsory clear-cut definition of limited categories of direct costs: trainees allowances, costs for trainers (hourly based), internship (practical training) costs All remaining costs considered as indirect costs

15 Practice Main trends - List of eligible indirect costs Definition of indirect costs - Definition of eligible overheads: gross salaries of management staff, costs of third parties involved in administration or management, travel costs for management staff, various indirect costs (e.g. publicity) - Exclusion of overheads not based on effective costs in relation to the execution of the project and not calculated in proportion of a pro rata rule motivated, just and fair

16 Practice Main trends Exclusion of indirect costs F (Ministry for Research): indirect costs rejected due to the high level of risk = > choice of flat rate ( ) will allow a higher declaration of costs

17 Practice Main trends Ceiling applied to indirect costs - 25 % of staff costs (B - Vl) - 5% of direct costs, fully justified (Greek universities) - Reg. (EC) 448/2004, rule n 8: management costs for venture capital and loan funds, limited to 5% of the paid-up capital, on a yearly average (except competitive tender) - Degressive rates (NL): Project costs Indirect costs % % > %

18 Calculation of indirect costs Concrete example (1) Direct costs ( ) 1. Personnel Internal personnel - remuneration Internal personnel - transport Internal personnel - other costs External personnel - remuneration External personnel - subcontract Participants Transport costs Other costs Consumables Non-depreciated gods Depreciated goods Material Leasing Rental costs Rent Maintenance costs Subtotal direct costs ( ): TOTAL ( ): Indirect costs ( ) 5.01 Other personnel costs Documentation Office material Publicity Telephone, postal costs Taxes Insurance Water, gas, electricity Translation Subtotal indirect costs ( ): Direct costs: / * 100 = % To be decided: flat rate = 20 % or real costs

19 Calculation of indirect costs Concrete example (2) Direct costs ( ) 1. Personnel costs Internal personnel remuneration Internal personnel - transport home/work Internal personnel travel costs External personnel remuneration External personnel - travel costs Participants Product development and consumption Non depreciable consumption goods Equipment and immovable goods (depreciation) Publicity Organisation costs (events, seminars) Other costs 0.00 Indirect costs ( ) 5.1 Internal administration, accountancy, management General documentation and publicity for courses Office supplies Telephone, post, fax Taxes and insurance Movable material (depreciation) Immovable goods External accountancy costs Other costs 0.00 Subtotal direct costs ( ): TOTAL ( ): Subtotal indirect costs ( ): Limitation : 25% staff costs ( ) = ( * 25%) Direct costs: / * 100 = % => Flat rate : 13 %

20 Flat rate schemes for indirect costs Thank you for your attention! Any questions?