Unit costs methodology 2015 for all grant beneficiaries

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Arline Reeves
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1 Unit costs methodology 2015 for all grant beneficiaries Luxembourg, 12/03/2014 ESTAT Unit A4 Budget, financial management and internal control

2 Content Unit Costs: current situation Why a new approach? Unit costs methodology Timetable 12-Mar-14 2

3 Current situation Burdensome controls related to real costs Unit costs applied since 2010 as an option Room for improvement, in particular as regards the methodology for determining UC 12-Mar-14 3

4 Why moving to Unit Costs for all Easier and faster to estimate and declare costs No need to calculate actually incurred costs per person involved Less risk of error more security Less burden of controls before and after payment focused on time registration of individual staff allocation of staff to category Faster payments Equal treatment of beneficiaries required by FR From 2015: UC as payment scheme for all 12-Mar-14 4

5 UC - Legal framework Previous FR New FR Commission adopts unit costs (rates) established according a common method Commission adopts method applied for the establishment of UC 12-Mar-14 5

6 UC-Legal framework Previous FR New FR Scales valid for max. 2 years (re-assessment at the end) Method (and related unit costs) remain valid for the duration of the ESP 12-Mar-14 6

7 Main features of the UC methodology The new method is compliant with FR ensures equal treatment of all beneficiaries takes into account the beneficiaries specific environment is easy to implement does not generate audit costs is stable over time 12-Mar-14 7

8 New methodology What does not change? Beneficiary-by-beneficiary approach Use of historical data of the beneficiary's accounting system 12-Mar-14 8

9 New methodology What are the major changes? Scope of data included in calculation Staff categories Variables of calculation formula UC = Hourly rates Number of staff Average working days Procedure and schedule Submission and application of UC Updates 12-Mar-14 9

10 Scope of data included in UC calculation Previous New Accounting data only of staff involved in Eurostat projects Accounting data of total staff of the beneficiary 12-Mar-14 10

11 Unit costs per category Previous New Unit costs are calculated for 6 pre-defined staff categories (profiles) Unit costs are calculated on the basis of the levels of the beneficiary s usual salary grid 12-Mar-14 11

12 Unit costs per category Previous UC = averages per 6 profiles - high management - senior statistician - statistician - IT staff - admin staff - interviewers New UC = averages per salary level (clear reference for allocation of all staff) 12-Mar-14 12

13 Example: structure of salary grid with basic salaries Seniority L e v e l 12-Mar

14 Definition of UC Previous New Average man-day rates per staff category Average hourly rate by salary level 12-Mar-14 14

15 Example: UC per level of salary grid Separate grids for: a) Officials b) Contract staff 12-Mar-14 15

16 Calculation of UC per level Previous New FTE calculation included working arrangements and time acutally spent on project annual working days of the administration (average after deductions) Number of staff 12-Mar & Harmonised average of 215 working days for all beneficiaries (corresponding to 8h/day and 1720 h/year)

17 Calculation of UC per level New Average hourly rate per level = Total annual direct personnel costs per level Number of staff per level * 1720 working hours 12-Mar-14 17

18 Example: Average hourly rates per salary level Unit costs (C) = B / A* Mar-14 18

19 Accounting data used for the calculation Previous Last accounting year as reference year (2 last accounting years to be submitted on first application) New Data of last available certified annual accounts 12-Mar-14 19

20 Particular case Social charges: other data used for the calculation Previous Only social charges incurred by the beneficiary and identifiable in its own accounts are eligible New Social charges incurred by other public authorities for the staff of the beneficiary are eligible, if a declaration on the amount paid is provided 12-Mar-14 20

21 Particular case Social charges: other data used for the calculation Employer s social charges paid by another state authority, e.g. by the State Treasury, a Ministry or centrally by an official state agency may be eligible. In order to include these costs in the unit cost calculation, the beneficiary has to provide a declaration by the respective paying authority, stating the type of contribution(s) and the amount(s) paid for the beneficiary s staff during the reference year. 12-Mar-14 21

22 Particular case Social charges: other data used for the calculation Since detailed information per staff and/or salary level is not always available, an average rate is applied to all salary levels. This rate corresponds to the percentage share the overall amount of social contributions paid by other authorities presents with regard to the total of personnel costs incurred by the beneficiary. The corresponding average rate will be added to the unit costs established by the beneficiary on the basis of its accounting (payroll) data 12-Mar-14 22

23 Particular case Example: UC including social charges paid by other 12-Mar-14 23

24 Particular case Example: UC including social charges paid by other Unit costs (C) = A + B 12-Mar-14 24

25 Updates Previous Optional update after 1 year Obligatory update after 2 years (if continuation wanted) New Optional update every year 12-Mar-14

26 Updates - Timing Previous Optional update in Sept/Oct of year n for unit costs applicable in year n+1 New Optional update of unit costs at any time during the year, when the latest certified accounting data become available to the beneficiary 12-Mar-14 26

27 Updates Application Previous New Application (only) after adoption via a Commission Decision Immediate application of submitted updates in grant applications 12-Mar-14 27

28 Submission - correct application of method Previous Submitted scales to be certified by a report of an independent external auditor Analysis of exceptions by Eurostat New Unit costs are submitted with a declaration concerning compliance with the method and a checklist, signed by an authorised representative No audit report 12-Mar-14 28

29 Submission unit costs for 2015 Steps 1. Commission Decision (mid-2014) 2. Calculation of unit costs by beneficiaries and submission to Eurostat before the first grant application in Mar-14 29

30 Submission unit costs for First level checks by Eurostat (completeness) 5. Application in all subsequent grant applications and grant agreements 6. Updates (already) in 2015 possible, if the reference year of the submitted UC was n-2 12-Mar-14 30

31 Main advantages of the new method Unit costs are valid for the duration of the ESP but may be updated annually Average rates by level of salary grid (real environment, easy allocation) No audit report 12-Mar-14 31

32 Timetable By 26 March 2014 Please submit your comments on the new method April/May Assessment of comments and feedback May/June Commission Decision on the new method Once the decision is adopted: Establishment of UC by beneficiaries using their latest certified accounting data Helpdesk for queries Submission of 2015 UC to Eurostat 2015: Application of the unit costs

33 Thank you for your attention! 12-Mar-14 33

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