Brussels, February 2011 ITN Coordinators meeting ITN 2010 Finance and Budget Research Executive Agency Marie Curie host-driven actions
Financial Management of ITN Projects 1. The EU contribution The cost categories The records you need to keep for each category FAQs for each cost category Non-eligible costs Subcontracting 2. The project lifecycle The timing and types of payments throughout your ITN project The Guarantee Fund 3. Financial reporting Rules for reporting Exchange rates Certificates on Financial Statements
The EU Contribution
Maximum EU Financial Contribution Where is it recorded? Article 5 of the Core Grant Agreement Part 10 (Table of costs per year) of Annex 1 Forms A3.3 of the GPF contribution calculated per participant Form A3.2 of the GPF total contribution Can It Change? Amounts are indicative ie costs claimed during the project can be lower maximum EU contribution cannot be increased.
Maximum EU Financial Contribution What are the general rules for the costs? Defined by the cost categories. Basic principles: Grant Agreement Article II.14.1: Actual costs, however People programme includes the possibility of flat rate costs Incurred costs & only during project duration with the exception of costs for final reports, last period reports, certificates on the financial statements when requested at the last period Related to objectives of the project Economic, efficient and effective Recorded in accounts of beneficiary in accordance with the usual accounting rules of the beneficiary Maximum of 40% of the EU contribution to any one country in the network
What does the EU Contribution consist of? Fellows Living allowance (salary) Mobility allowance Travel allowance Career Exploratory allowance Contribution to research and training costs Networking Contribution to networking costs and the organisation of external events as well as costs for executing the project Project Management Costs associated with the ITN project reporting requirements Overheads
What does the EU Contribution consist of? Fellows Living allowance (salary) Cost Category A Mobility allowance Cost Category A Travel allowance Cost Category B Career Exploratory allowance Cost Category C Contribution to research and training costs Cost Category D Networking Contribution to networking costs and the organisation of external events as well as costs of execution of the project Cost Category E Project Management Costs associated with the ITN project reporting requirements Cost Category G Overheads Cost Category H
Eligible expenses for the activities carried out by the host organisations charged to Category E Category F no longer applicable.
Living Allowance Cost Category A For Whom? Fellows recruited to the ITN project Employment Contract or Stipend? Fellows should always be paid with employment contract unless not possible due to national legislation. Stipend should only be used with prior consent of the Project Officer What does it include? Monthly salary for the fellow before any deductions: both employers and employees contributions to social security, pension, taxation, voluntary deductions What about the salary of the coordinator and project manager? This is not eligible in category A, it will be discussed again later in the presentation
How Much? Living Allowance Cost Category A Depends on 3 factors 1. level of experience: Early-stage researcher; Experienced researcher with 4-10 years experience; Experienced researcher with > 10 years experience 2. type of contract : employment contract (Type A) or stipend (Type B) 3. Country Correction Coefficient (in Work Programme 2010 and Annex 1) How is the monthly salary calculated? By multiplying the annual base rate by the correction coefficient and dividing by 12 What are the base rates? Researcher Type Early-stage researcher Experienced researcher 4-10 years Experienced researcher > 10 years Type A ( /year) 36 700 56 400 84 500 Type B ( /year) 18 350 28 200 42 250
Living Allowance Cost Category A Can we pay the fellow less? NO this would be considered a breech of the conditions of the Grant Agreement Can we pay the fellow more? Yes BUT you cannot charge it to the project you must pay it from other funds (e.g. top up to national level) What if the fellow changes level of experience during the project? The fellow is always paid at the level correct for the time of recruitment to the project Can we pay less at the beginning and more at the end to allow for pay increases? Yes this is allowed, however the fellows must receive the full amount owed to them by the end of their time as a Marie Curie fellow It must be clearly stated in the contract with the fellow and also clearly described in the reports We operate on a 13 month pay regime, can we use this for the fellows? Yes, provided the fellow recieves the full amount owed and it is clearly stated in the contract with the fellow and the reports
Living Allowance Cost Category A What records do we need to keep for EU audit purposes? Proof of payment of the salary to the fellow and of the deductions for social security etc Employment contract/agreement with the fellow Evidence that the fellow worked on the project: this can include lab books, conference abstracts, library records, etc Evidence of the eligibility of the fellow Is the fellow obliged to keep timesheets? NO, time sheets are not an obligation for the Marie Curie Fellows. However, if this is required across the institute then the fellow can also be asked to complete them Do we always pay the fellow in Euros? The fellow should be paid in the local currency
Mobility Allowance Cost Category A For Whom? All recruited fellows How Much? Depends on 2 factors Family status of the fellow: Family = persons linked to the researcher by (i) marriage, or (ii) a relationship with equivalent status to a marriage recognised by the national legislation of the country of the host organisation or of the nationality of the researcher; or (iii) dependant children who are actually being maintained by the researcher. Family base rate = 800 per month No family base rate = 500 per month Country Correction Coefficient How is the monthly mobility allowance calculated? By multiplying the base rate by the correction coefficient
Mobility Allowance Cost Category A Is the mobility allowance taxed? It depends on local taxation rules Some institutes operate this as a virtual real cost category. This means that fellows can submit receipts for rent, household bills etc which can be used to grant partial exceptions from tax. What records do we need to keep for EU audit purposes? Same as for living allowance i.e.: Proof of payment of the salary to the fellow and of the deductions for social security etc Employment contract/agreement with the fellow Evidence that the fellow worked on the project: this can include lab books, conference abstracts, library records, etc Evidence of the eligibility of the fellow What if the family status changes during the project? The mobility allowance is calculated for the family status at the time of recruitment to the project
Travel Allowance Cost Category B For Whom? All fellows receiving a mobility allowance How Much? Fixed amount based on the direct distance (in a straight line) between the place of origin and the host institution of the fellow One payment for every period of 12 months or less (i.e. when the first or last period is less than 12 months). What are the fixed amount rates? Distance (km) < 500 500 1 000 1 000 1 500 1 500 2 500 2 500 5 000 5 000 10 000 >10 000 Fixed-amount contribution (EUR) 250 500 750 1 000 1 500 2 000 2 500
Travel Allowance Cost Category B What is the place of origin? the place where the fellows were residing or carrying out their main activity when taking up appointment at the time of recruitment to the project BUT if the fellows have resided or carried out their main activity for less than 12 months in this location immediately prior to this date the location of origin is the capital city of the country of his/her nationality. In case of a researcher holding more than one nationality, the location of origin is the capital city of the country where the researcher was residing for the longest period in the 5 years prior to their appointment. Do we always pay the fellow in Euros? The fellow should be paid in the local currency Can the travel allowance pay for costs of travel to conferences etc? No, it is for the personal use of the fellow
Travel Allowance Cost Category B Is the travel allowance taxed? It depends on local taxation rules Many institutes operate this as a virtual real cost category. This means that fellows can submit receipts for travel which can be used to grant exceptions from tax. The fellow must receive the full amount they are entitled to. What records do we need to keep for EU audit purposes? Same as for living & mobility allowance i.e.: Proof of payment of the salary to the fellow and of the deductions for social security etc Employment contract/agreement with the fellow Evidence that the fellow worked on the project: this can include lab books, conference abstracts, library records, etc Evidence of the eligibility of the fellow
Career Exploratory Allowance Cost Category C For whom? Only for fellows with a stay of at least 12 months How much? Fixed amount of 2 000 paid to the fellow What is it used for? It is for the fellows to use at their own discretion for their career development e.g. to pay travel costs to an interview etc. Can the career exploratory allowance be used to pay for the complementary skills training? NO, this is covered elsewhere If the fellows decide themselves to go on a course not offered as complementary skills training they can pay for it from their career exploratory allowance
Career Exploratory Allowance Cost Category C Is the career exploratory allowance taxed? Like mobility and travel allowances it depends on local taxation rules Institutes can operate this as a virtual real cost category. This means that fellows can submit receipts for travel to interviews etc which can be used to grant exceptions from tax. The fellows must receive the full amount they are entitled to. What records do we need to keep for EU audit purposes? Same as for living, mobility & travel allowances ie: Proof of payment of the salary to the fellow and of the deductions for social security etc; Employment contract/agreement with the fellow; Evidence that the fellow worked on the project When should the career development allowance be paid? As the career development allowance is to help with the next career step it is more useful towards the end of the fellowship, in the last 6 to 12 months. However, if the fellows request it sooner it should be provided to them.
Contribution to the participation expenses of eligible researchers Cost Category D How much? Fixed amount of 300 or 600 per fellow month Is it paid to the fellows? No, it is managed by the host institute but used for the benefit of the fellow What is it used for? It is used to contribute to the costs of the research and training activities: meeting and conference attendance, participation in training actions, research costs etc How is it distributed between the partners? It is allocated during negotiation according to the fellow months but the consortium can agree to distribute it differently, in this case it should be addressed in the consortium agreement
Participation Expenses Cost Category D What records do we need to keep for EU audit purposes? The consortium will need to provide the same evidence as required for categories A-C i.e.: Proof of payment of the salary to the fellow and of the deductions for social security etc Employment contract/agreement with the fellow Evidence that the fellow worked on the project: this can include lab books, conference abstracts, library records, etc Evidence of the eligibility of the fellow
Participation Expenses Cost Category D What if we don t use as many fellow months as foreseen? The fixed rate applies to the implemented fellow months Can we spend more at the beginning of the project? YES, the amount is applied per project, and does not need to be spent in the same timeframe as the fellow months Can we transfer funds from other categories into D? Yes BUT you will only be reimbursed at the maximum allowed per fellow month, therefore this is only possible if you deliver more fellow months than negotiated. Can we transfer funds from category D into other categories? Yes BUT only into categories A-C. You cannot transfer funds from category D into categories E-H
Contribution to the research/training/transfer of knowledge programme expenses - Cost Category E - How much? Fixed amount of 1200 per fellow month What is it used for? It is used for the costs of performing the project: Publication of vacant positions, costs of secondments Internal joint training actions, teaching materials Co-ordination between participants including network meetings Organisation of conferences, workshops and events How is it distributed between the partners? It is allocated during negotiation according to the fellow months but the consortium can agree to distribute it differently, in this case it should be addressed in the consortium agreement
Research/Training/ToK Cost Category E What records do we need to keep for EU audit purposes? For the purposes of the Grant Agreement, you do not need to keep detailed records of what the money was used for However, please check with your institution to ensure you keep sufficient records to comply with the accounting rules of your institution as they will normally require more records than that required by the Grant Agreement In the case of an audit by the EU, the consortium will need to provide the same evidence as required for categories A-C i.e.: Proof of payment of the salary to the fellow and of the deductions for social security etc Employment contract/agreement with the fellow Evidence that the fellow worked on the project: this can include lab books, conference abstracts, library records, etc Evidence of the eligibility of the fellow
Research/Training/ToK Cost Category E What if we don t use as many fellow months as foreseen? The fixed rate of 1200 applies to the implemented fellow months, therefore the maximum allowable for category E, by the end of the project, is the total number of fellow months delivered x 1200 Can we spend more at the beginning of the project? YES, the amount is applied per project, and does not need to be spent in the same timeframe as the fellow months How does the REA control the allowance? In the case of a doubt the REA can perform a technical audit. This means we will look for evidence that the activities took place including lab books, meeting minutes, conference proceedings, secondment reports etc.
Management activities (including audit certification) - Cost Category G - How much? Amount specified and agreed during negotiation up to 7% of the total EU contribution What is it used for? Costs associated with the preparation of the reports and other documents required by the REA: Declarations of conformity, progress reports, mid-term report, periodic reports and final report Certificate on financial statements (CFS) Consortium agreement Salary of a person recruited to manage the project This can include the coordinators salary for the time spent on the management of the project only, i.e. time taken to write the reports, organise recruitment etc. The person for whom the salary is charged must keep timesheets It does not cover costs of coordination of research and technological development activities
Management Cost Category G What records do we need to keep for EU audit purposes? This is a real cost category therefore you need to keep full evidence: All receipts of expenditure Full timesheets for personnel costs The receipts & timesheets do not need to be provided to the REA with the reports, however the periodic report must give an explanation of the breakdown of costs charged to cost category G Do we need to spend the money evenly over the lifetime of the project? NO, the amount is applied per project, and does not need to be spent in the same timeframe as the fellow months. How is it distributed between the partners? That is a decision of the consortium, normally the coordinator retains a larger share of the management costs. The distribution should be addressed in the consortium agreement What if our total project costs are less than planned? The 7% rate applies to the total accepted costs at the end of the project.
Contribution to overheads Cost Category H How much? Amount up to 10% of the total direct costs of the period. This excludes costs of subcontractors and the costs of the resources made available by third parties which are not used in the premises of the beneficiary Redistribution during negotiation is made on the base of 10% per partner, however this is an internal decision among partners (consortium agreement) What records do we need to keep for EU audit purposes? None, beneficiaries do not report on the use of the overheads, only on the amount claimed. Do we need to spend the money evenly over the lifetime of the project? YES, the amount is applied per period, and must be proportional to the costs claimed for the reporting period. Calculation during negotiation is made on the base of 10% per partner, however the redistribution is an internal decision among partners (consortium agreement) How is it distributed between the partners? That is a decision of the consortium and should be addressed in the consortium agreement
Tuition Fees Are tuition fees eligible costs? Yes tuition fees for Early Stage Researchers are eligible costs Who should pay the tuition fees? The consortium should pay the tuition fees The fees should not be charged to the fellow What cost category can they be charged to? The fees do not belong to one category alone, they are spread over several cost categories Mainly category E and H, a small amount in category D If we pay tuition fees can we still charge other training costs to the project? Yes, of course other training costs are eligible. There must be no double funding, ie. costs covered by tuition fees should not be charged twice See the note on tuition fees on the How to Manage My Project page of the website
Subcontracting Is subcontracting allowed? Yes, if foreseen in Annex 1 of the Grant Agreement (except for minor tasks, e.g. printing of leaflets) What can be subcontracted? Only non-core tasks Many tasks of the coordinator cannot be subcontracted See Article II.2.3 What procedures do we need to follow? You need to follow the rules of your institution In addition the choice of subcontractor must be transparent, on the basis of equal treatment and represent best value for money. Why do we need to record all subcontracting costs? Subcontracting costs do not generate overheads (cat H) therefore must be recorded separately to ensure correct calculation of Cat H
Parental and Maternity Leave Can a fellow take maternity or parental leave? Yes, in accordance with the national legislation Are the costs of the leave eligible? When mandatory under national law What costs can we claim? Only compulsory and non-recoverable costs under the applicable national law are reimbursed by the Commission, under request and submission of pertinent documents together with the final reports at the end of the project. Will the EU contribution automatically be increased by that amount? Typically in host-driven actions by the end of the project the total amount of costs claimed are less than the maximum EU contribution therefore no increase is necessary.
Summary Categories A, B, C paid to the fellows Category D managed by the host institute but used for the benefit of the fellow s Categories E, G, H used by the host institution for the project
Non-eligible costs Identifiable taxes, including VAT Duties Interest owed Provisions for possible future losses/charges Exchange losses, etc Costs reimbursed in respect of any other EU project Debt and debt service charges Excessive or reckless expenditure
The Project Lifecycle
Financial Issues During Project Life Cycle Contract Signature Interim Report (after the 2 first years) Final Report Project duration: 4 years Prefinancing Interim Payment Final Payment
Maximum Payments TOTAL EU CONTRIBUTON = 100% Project duration Prefinancing = 65% 60% for project 5% for Guarantee fund Interim Payment = 25% After final payment Final Payment = 10% Guarantee Fund restitution = 5%
Prefinancing How Much? 65% of total EU Contribution 60% of total EU contribution consortium 5% of total EU contribution Guarantee Fund Do we need to submit documents to claim it? No, the payment is made automatically within 45 days of the deadline in the core Grant Agreement Either start date or date of signature by both parties Who owns the prefinancing? The EU, prefinancing remains the property of the EU until the final payment is made
Prefinancing How is it distrubuted among the partners? That is a decision of the consortium and should be addressed in the consortium agreement What is the Guarantee Fund? A fund developed to manage the risk associated with the non-recovery of sums owed to the EU, eg in the case of a partner going bankrupt The contributions are invested and the interest gained provides the funds Managed by the European Investment Bank Contribution is reimbursed to the consortium at the end of the project "restitution" Restitution amount can, in some circumstances, be corrected to allow for losses in the guarantee fund Only applicable to a very small number of beneficiaries (see Article II.19.5) Correction is capped
Interim Payment How Much? Up to 25% of total EU Contribution Based on costs claimed in the periodic report Is a reimbursement of accepted costs Do we need to submit documents to claim it? Yes, the payment is made based upon the information in the submitted periodic report and cost claim forms Who owns the interim payment? The consortium, this payment is as a payment based on the costs incurred. Who receives the interim payment? The payment is made to the coordinator who distributes it among the consortium members.
Some Examples Project total value = 1.000.000 Prefinancing paid = 650.000 Coordinator receives 600.000 Guarantee Fund receives 50.000 Submits Period 1 cost claim for 400.000 Maximum amount payable for interim period = 250.000 i.e. 25% of EU contribution Balance remaining payable = 100.000 i.e. 10% of EU contribution Submits Period 1 cost claim for 150.000 Maximum amount payable for interim period = 150.000 i.e. amount claimed Balance remaining payable = 200.000
Final Payment How Much? The balance of the money owed to the consortium based on the final accepted costs Do we need to submit documents to claim it? Yes, the payment is made based upon the information in the submitted periodic report and cost claim forms What if our final costs are higher than foreseen in the project? The payment is capped at the negotiated EU contribution and any amounts exceeding this will not be reimbursed. Who receives the final payment? The payment is made to the coordinator who distributes it among the consortium members. Do we need to submit documents to receive the Guarantee Fund restitution? No, this is initiated automatically by the REA when processing the final payment
Financial reporting
Reporting Requirements How do we submit our cost claims? Each beneficiary submits a financial statement, Form C, using the dedicated online tool FORCE (Form C Editor) the electronic reports must be printed and signed and transmitted to the REA via the coordinator When do we submit financial reports? With the periodic reports after year 2 and the end of the project Who needs to submit a report? Each beneficiary submits their financial statement to the coordinator who then transmits all to the REA. In addition the coordinator submits the following: a summary financial report after receipt of the final payment, a funding distribution report
Certificates on Financial Statements (CFS) What is a Certificate on Financial Statements? This is a certificate provided by an external auditor or competent person to certify that the costs claimed in the financial statements are in accordance with relevant legal and financial provisions of the FP7 model grant agreement When is a CFS required? A CFS is only required when the uncertified costs claimed to date, including costs in previous reporting periods, are 375,000 Does the coordinator have to submit a CFS for the amount of prefinancing received? No, the coordinator only reports on the actual costs spent by that institution. What if a beneficiary submits a CFS for an amount less than 375,000 In this case the costs of the CFS are not eligible and cannot be charged to the Grant Agreement. How do we pay for the CFS? It is an eligible expense in Cat G. If an external auditor is used it is subcontracting.
Certificates on Financial Statements (CFS) For example Partner 1 Costs claimed period 1: 200.000 CFS not required Costs claimed period 2: 200.000 total uncertified costs claimed = period 1 + period 2 = 400.000 CFS required Partner 2 Costs claimed period 1: 400.000 CFS required Costs claimed period 2: 300.000 total uncertified costs claimed = period 2 only no CFS required as uncertified amount < 375.000
Interest Earned Are we allowed to earn interest on our prefinancing? Yes, however the amount of interest earned prior to distribution of the pre-financing must be reported in the financial statement It is not allowed to make a profit on EU prefinancing therefore this amount can be deducted from the payments made Are we allowed to earn interest on our interim payments? Interim Payments are not the property of the EU, they are the property of the beneficiary. Therefore the interest earned, if any, is also the property of the beneficiary and does not need to be reported to the REA. Are interest bearing bank accounts compulsory? Yes, except in duly justified cases with the prior agreement of the REA.
Financial Statements How do we access FORCE? Via the Participant Portal: http://ec.europa.eu/research/participants/portal The coordinator manages the access rights of the beneficiaries Do we submit a financial statement for each fellow? No, you submit one per beneficiary My institute is a UMR, how do we submit third party cost claims? Third parties submit a Third Party Form C in FORCE, this is submitted via the beneficiary to which they are assigned in the Grant Agreement. What does FORM-C look like?
Most costs are entered in the first row Subcontracting costs are entered in the 3rd row Overheads are entered here Costs are entered here Any profits made (eg on events) are entered here Any interest generated is entered here This is not applicable for ITN leave blank Information on the CFS is entered here This is where the electronic signature is entered
Exchange Rates Can we report our costs in local currency? No, all costs must be in Euro What exchange rates do we use? The European Central Bank rates on either: The date the costs were incurred or The first day of the month following the end of the reporting period e.g. project start date 15/04/2010, period 1 ends 14/04/2012, exchange rate is that of 01/05/2012 A benificiary should use only one exchange rate rule for all costs in that period The rule being used must be clearly stated in the periodic report Where do we find the European Central Bank rates? On their website: http://www.ecb.int/home/html/index.en.html
Where to find more Information
More Information Grant Agreement In particular Annexes II and III Marie Curie website http://ec.europa.eu/mariecurieactions How to manage my project page Help? Your questions answered page Includes link to National Contact Points Documents Work programme Guide for Applicants Financial Regulations and financial guidelines
Thank you for your attention! www.ec.europa.eu/mariecurieactions