Tips on Administrative issues and Financial Reporting KOM ANYWHERE Soraya Hidalgo European Projects Office - UPC

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1 Tips on Administrative issues and Financial Reporting Soraya Hidalgo European Projects Office - UPC

2 Outline H2020 Main changes Grant Agreement Structure Financial reporting Elegibility criteriai Do s and Don ts Recommendations Paymenty Schedule and Cash Flow

3 H2020 vs FP7 Main Changes Single reimbursement rate More flexible rules for third parties and subcontracting costs Differentiation between contracts and subcontracts Single 25% flat rate for indirect costs 3 options for productive hours

4 H2020 vs FP7 Main Changes Clearer and simpler obligations on time records More flexibility for average personnel costs Eligibility of non-deductible VAT Less audit burden (2 years auditability)

5 Grant Agreement Structure The Grant Agreement is composed of: Terms and Conditions Annex 1 Description of the action Annex 2 Estimated budget for the action Annex 3 Accession Form Annex 4 Model for the financial statements Annex 5 Model for the certificate on the financial statements Annex 6 Model for the certificate on the methodology! The information that was in FP7 in the Guide to financial issues is now in the Annotated Model Grant Agreement anual/amga/h2020-amga_en.pdf

6 Financial Reporting ELIGIBLE COSTS: generalremarks for actual costs: ü ACTUALLY INCURRED BY THE BENEFICIARY (real and not estimated or budgeted) ü INCURRED DURING THE PROJECT DURATION, with the exception of costs relating to the submission of the periodic report for the last reporting period ü INDICATED IN THE ESTIMATED BUDGET set out in Annex 2 ü in connection with the action as described in Annex 1 and NECESSARY for its implementation; ü IDENTIFIABLE AND VERIFIABLE and IN ACCORDANCE with usual accounting practices of the beneficiary ü RECORDED in the beneficiary s accounts. ü specific conditionsare set out in the Article6. of the Grant Agrement

7 Financial Reporting INELIGIBLE COSTS Ø costs related to return on capital; Ø debt and debt service charges; Ø provisions for future losses or debts; Ø interest owed; Ø doubtful debts; Ø currency exchange losses; Ø bank costs charged by the beneficiary s bank for transfers from the [Commission][Agency]; Ø excessive or reckless expenditure; Ø deductible VAT; Ø costs incurred during suspension of the implementation of the action (see Article 49); à specific conditions are set out in the Article 6. of the Grant Agrement

8 Financial Reporting ELIGIBLE COSTS = DIRECT COSTS+ INDIRECT COSTS Direct Costs: Personnel Costs Other specific direct costs - Travel and subsistence - Equipment (depreciation) - Consumables - Other goods and services Subcontracting Costs attributable directly to the project Indirect Costs= are eligible if they are declared on the basis of the flat-rate of 25% of the eligible direct costs Costs NOT attributable directly to the project, but incurred in direct relationship with direct eligible costs

9 Financial Reporting ü Direct costs requirements:personnel costs ü Hired by the beneficiary in accordance with its national legislation; ü Work under the sole technical supervision and responsibility of the beneficiary; ü Includes "permanent employees and "temporary employees ; ü Personnel costs should reflect the total remuneration: salaries plus social security charges (holiday pay, pension contribution, health insurance, etc.) and other costs included in the remuneration; ü Personnel must be remunerated in accordance with the normal practices of the beneficiary. ( Note: Only the costs of the actual hours worked by the persons directly carrying out work under the project may be charged) The eligible direct personnel costs declared by beneficiaries that are SMEs for their owners not receiving a salary andby beneficiaries that are natural persons not receiving a salaryshall be based on a Marie Curie unit costs (livingallowances) has proved appropriate: Furtherinformation:

10 Person-Month calculation 1PM calendar month productive hours per month = 1 PM Annual productive hours, the beneficiary must use one of the following three options: hours for persons working full time (or corresponding pro-rata for persons not working full time) ( 1720 fixed hours ) 2. the total number of hours worked by the person in the year for the beneficiary ( individual annual productive hours ) 3. the standard number of annual hours generally applied by the beneficiary for its personnel in accordance with its usual cost accounting practices ( standard annual productive hours ).

11 Time recording - Timesheets Time records should include: the title and number of the action, as specified in the GA the beneficiary s full name, as specified in the GA the full name, date and signatureof the person working for the action the number of hours worked for the action in the period covered by the time record; for reasons of assurance and legal certainly it is highly recommended that the number of hours is detailed per day (hours worked for the action in each day) the supervisor s full name and signature a reference to the action tasks or work package described in Annex 1, to easily verify that the work carried out matches thework assigned and the person-months reported to the action a brief description of theactivities carried out, to understand and showwhat work was carried out. Information included in timesheets must match records ofannual and sick leave taken, and work-related travel. A template for time-sheets is provided on the Participant Portal. ( This template is not mandatory. You may use your own model provided that it fulfils the minimum conditions and it contains at least the information detailed above.)!

12 Time recording - Timesheets I work 100% on the project so I don't have to fill in TS, correct? Correct, but pay attention: Did I spend a significant part of my time building up a network with other entities or other laboratories of my company, for future projects? Did I spend time in writing proposals for the next calls? Did I give lectures for the University? Did I travel for other unforeseen activities? What do I have to indicate in the box of the self-declaration requesting an indication of the activities carried out, per workpackage?

13 Time recording - Timesheets Declaration for persons working exclusively on the action: Model available in the AGA (version 19/12/2014)

14 You cannot declare: Time recording - Timesheets Budgeted time (what you indicated for the budget) Estimated time (e.g. person 'guessing' at the end of the year) Time allocation (e.g. x % of the contractual time of the person)! Hours declared to the action must be supported by reliable records and documentation!

15 What you CANNOT declare under personnel costs? ý ý ý Contracts with companies (e.g. temporary work agencies) to provide staff. Natural persons (e.g. consultants) not fulfilling the conditions (hierarchical dependence, premises, similar cost for similar tasks, ownership of results). e.g. working autonomously on the tasks assigned to them Natural persons (e.g. consultants) paid for deliverables rather than for working time! In the cases above the costs may be eligible under 'Other goods and services' or under 'Subcontracting' but never as personnel costs

16 Personnel Costs CFS To keep - pay roll - time sheets - contract - methodology used for productive hours - CV - reports on the activities carried out

17 Direct costs (other direct costs) Travel and subsistence allowance for staff taking part to the project Purchase costs of durable equipment (depreciation cost is charged in each relevant reporting period, even if the equipment is bought before the start of the project) Consumables - only if bought after the start date of the project Certificate on financial statements...

18 Best value for money (subcontracting AND purchase of goods) My subcontractor is a friend: is it a problem? As such not. But you must be in a position to prove that his/her offer represents the best price-quality ratio. The conflict of interests rule requires you to adopt every measure to avoid it (including family and emotional ties). I have named my subcontractor in the Annexes to the G.A.: is it enough? No because you are still deemed to have respected the best value for money. I use the same IT provider since 20 years, with a written framework contract: is it ok? If you use it for you and for us, then ok. However, maybe it is time to look for better prices

19 Establishing systems from the start You must demonstrate 'best value for money' and take measures to avoid 'conflict of interests' in sub-contracting and in Purchase of Goods Regular errors 'Best value' not demonstrated no tender, no counter-offers, no market survey. Participants' own normal practices not applied. No documentation kept. Conflict of interests overriding any competition. You may not under any circumstances sub-contract to a project partner (MGA Article 13)!

20 TRAVEL - CFS Actual travel and related subsistence costs relating to the project may be considered as direct eligible costs, providing they comply with thebeneficiary's usualpractices and are adequately recorded, like any other cost To keep - Boarding pass - Agenda of the meeting -Attendance list - Actual reimbursment: - taxi, hotel, restaurant, bus invoices/tickets - Per diem: - any documents stating the costs incurred (e.g. internal rules )

21 Other direct costs - CFS ü Equipment: purchased for the purposes of carrying out the action, must be determined according to the beneficiary's usual accounting practice. Only depreciation can be charged*%use üconsumable: Any consumables necessary for the implementation of the project may be considered as direct eligible costs if bought after the start date of the project üother costs: organization of events, promotional material To keep - any documents stating the costs incurred (invoices ) - any useful documents expaining the beneficiary s - own procedures used to identify the costs (e.g.depreciation rules, awarding criteria, reports) - Timesheets forequipment to demonstrate its use in the project

22 Costs of other goods and services This budget category covers any goods and services that were purchased for the action (or contributed in-kind against payment), including: costs for consumables and supplies (e.g. raw materials, scientific publications needed for the action, etc.) dissemination costs (including open access during the action) and conference fees for presenting project-related research costs related to intellectual property rights (IPR) (including costs to protect the results or royalties paidfor access rights needed to implement the action) costs for certificates on financial statements (CFS) and certificates on methodology translation costs (if translation is necessary for the action s implementation, is justified, etc.)

23 Controls and audits ]Certificate on the financial statements (drawn up in accordance with Annex 5)): mandatory for final paymentswhen total EU contribution claimed by the beneficiary on the basis of actual costs + unit costs for average personnel EUR According to point Planned use of resources one certificate on the financial statement (Audit certificate) will be require for each participant at the end of the project. Audit costs is eligible under other goods and services category Keep any useful supporting documentation for all costs and for up two years after the date of the final payment. Audits of the Commission limited to two yearsafter the payment of the balance The European Court of Auditors and also the antifraud office, OLAF, can make audits up to five years after the final payment (Financial Regulation, Art. 136). Hence beneficiaries should keep documents forthat longer period)

24 Do s and Don ts Ø Staffworking on the project must keep time records (MGAarticle 18) Ø no time records for researchers working exclusively on the project Ø Keep any useful supporting documentation for all costs and payments for up two years after the date of the final payment. Ø The European Commission audits project participants up to two years after payment of the balance.

25 Do s and Don ts Common errors: Staff working on the project and sick or on holiday or or attending conferences unrelated to the project at the same time Hours claimed cannot be supported Impossible number of hours claimed Cost claim that are not linked to the project and are not necessary for the project. You must demonstrate "best value" in purchasing and sub-contracting (no tender, no offers, no market survey). You may not, under any circumstances, sub-contract to a project partner Don't charge costs incurred before the entry into force of the Grant Agreement

26 Conclusions þ Discipline þ Prudence þ Perseverance þ Reality ý Headache during the weekend! In case of doubt, consult: NCP, EC PO/FO, enquiry service

27 Additional Information Participant Portal At: Horizon 2020 Annotated Grant Agreement Horizon 2020 On-line Manual Questions? Research Enquiry Service

28 Reporting Periods 1 st Reporting Period 2 nd Reporting Period 3 rd Reporting Period 01/06/16 30/11/17 30/11/18 31/08/19 M1 M18 M30 M39

29 Periodic and Final Reporting Main Principles Allways to be delivered by the coordinator 60 days deadline for their delivery No-paper, but through the Participant Portal Financial and Technical reportsare `declarations, thus, no need of justifying docs or similar (but ready in the backoffice).

30 Completion of the Financial Statement (former form-c) Completed at beneficiary level E-signed by the F-SIGN Declaration, but subject to request the justifying docs. Adjustments possible to former periods. Thus, last FS can not be adjusted. FS directly submitted by Beneficiary to the EU, if a correction is needed, it should come through the COOR COOR has not the capacity of rejecting costs, but of not submitting a beneficiary financial statement

31 Completion of the Financial Statement (former form-c) Unit Costs are usable in H2020 for: Staff Costs: SME owners or natural persons without a salary Staff costs based on average personnel costs Specific Unit costs (ie Clinical trials) Calculation by multiplying units, per amount per unit (as indicated in the GA). In case of audit, should be documented: Number of units Actual direct eligible costs to reach the unit cost value (not for SME owners rate)

32 Payment schedule and cash flow

33 Conclusions No big changes compared to FP7 Coherence with usual procedures is a key issue Regulation is somehow simpler, but this does not mean it is simple There is no black and white decision always, but many times is a grey graduation

34 Thank you. Soraya Hidalgo European Projects Office. Technology Transfer Centre