Financial management of the project, tools and reporting

(1)

Financial management of the project,

tools and reporting

Lead Partner Seminar – 4th Call for Proposals Budapest, Hungary – 11 December 2012

SEE Joint Technical Secretariat

(2)

• Financial management of the project

• Reporting eligible project expenditure

• Reporting procedures: reporting system and tools

Financial management of the project,

tools and reporting

(3)

Financial management of the project

Beáta Marczis

(4)



projects approved in the 3rd and 4th call for proposals

= „IPA integrated phase” of the SEE Programme

Lead partner principle

• One single subsidy contract is concluded per project,

meaning that the Lead Partner signs the subsidy contract on behalf of the IPA-I Partners as well

• The lead partner shall be responsible for the financial aspects of IPA funds as well

Financial management of the project

(5)

Financial management of the project

 Financial management in the IPA integrated phase (3rd & 4th call):

ERDF financial management procedures are followed!

The Lead partner is

• responsible to collect and summarise the validated expenditure of each ERDF partner and IPA-I PPs

• responsible for submitting the Application for Reimbursement for the whole project to the JTS: ERDF PPs and IPA-I PPs

• receiving the ERDF contribution and IPA contribution

• transferring the relevant ERDF contribution and IPA contribution to its project partners

(6)

Financial

management

of the project

LP prepares Progress report and Application for Reimbursement

and submits to the JTS LP

ERDF PP1 ERDF PP 2 IPA PP 1

Lead Partner (LP) verifies that the expenditures presented has been

validated by the controllers

Joint Technical Secretariat

Verification of Progress reports and Application for reimbursement + Declarations of the Controllers

Financial Transfer Unit Reimbursement of Community

contribution to the LP

Project Partners collect documentation proving their expenditures, and get them validated according to the national control system

Expenditures validated at national level by the Controllers

LP transfers Community contribution to Project Partners Initiation of the reimbursement

process by submitting the verified AfRs to the FTU

ERDF and IPA payment

IPA PP 2

LP Deadline:

3 months from the end of the reporting

period!

Approval + reimbursement

procedure cc. 3-4 months !

(7)

1. Validation of project expenditure

• Validation of expenditure means the output of the verification process performed by the controllers at national level for each ERDF Project partner and IPA-I project partner involved in the project.

• Only validated expenditure can be reported by the Project partners to the Lead partner.

• Only validated expenditure can be reported by the Lead Partner to the JTS!

Financial management procedures

(8)

Main steps of the validation of expenditure

1. Each PP as well as the LP has to submit its expenditure relevant for a reporting period for validation to the designated Controller in its MS/PS, each PP responsible separately for having its expenditure validated!

• Designated Controllers: check the information at the Programme’s website

• Standard and obligatory document to report expenditure to the Controller: Partner Report

• ERDF Partner Report and IPA Partner Report – 2 reporting templates!

• SEE Control Checklist: minimum requirements for documentary evidence

Financial management procedures

(9)

2. The Controller verifies the expenditure submitted by the PP/LP. After verification, the Controller issues the Declaration on validation of expenditure (standard and obligatory form)

3. Each PP has to submit the declaration on validation of expenditure to the LP.

4. The LP is responsible to verify that the expenditure of its PP is validated by the designated Controller for the SEE Programme. The Controller of the LP is responsible only for the validation of the LP’s expenditure.

5. Original declarations on validation of expenditure of the PPs have to be submitted by the LP to the JTS together with the Application for reimbursement.

Financial management procedures

(10)

Timeframe for verification of expenditure

Financial management procedures

30 days Preparation and submission of

the Progress report and Application for Reimbursement for the whole project by the Lead partner to the JTS

Verification of expenditure by the Controller and issuing Declaration on validation on expenditure

60 days Preparation and submission of

Partner Report by the Project Partner to the Controller

3 months from the end of each reporting period Verification process

(11)

Use of Euro

• Declaration on validation of expenditure to be issued in EUR

• Application for reimbursement to be submitted in EUR

• Reimbursement of ERDF contribution and IPA contribution in EUR

• only one method is accepted to exchange currency to EUR

• the monthly accounting exchange rate of the Commission in force in the last month of the reporting period

• regulated in the Subsidy Contract, obligatory to use

• exchange rate risk borne by the PP

Financial management procedures

(12)

2. Submission of Application for Reimbursement (AfR)

1. Lead Partner can request the reimbursement of ERDF contribution and IPA contribution by submitting an Application for Reimbursement to the JTS together with the Progress Report

2. Application for Reimbursement shall contain only validated expenditure and shall be supported by the declarations on validation of expenditure

3. Application for Reimbursement is automatically generated on the Front Office surface of the IMIS 2007-2013, when the progress report is fully completed

Financial management procedures

(13)

LPs responsibilities & verifications before submission of the Application for reimbursement (AfR)

• the expenditure declared by the PPs has been incurred only for the Project purposes and corresponds to the activities of the approved AF;

• the expenditure declared by the PPs and included in the AfR had been validated by the designated controllers at national level;

• All declaration on validation of expenditure presented in the AfR are attached in original paper version officially signed by the designated controllers;

• The expenditure declared in the AfR has not been included in any other previous AfR;

• The information included in the AfR, the related Progress Report and its Annexes are true and correct.

Financial management procedures

(14)

Further rules to the submission of the AfR

• In case the declarations on validation of expenditure are not received from each project partner for a given reporting period, the LP shall submit the application for reimbursement on the basis of the declarations on validation of expenditure available for the reporting deadline.

• The expenditure of the project partners not validated for the given reporting period within the deadline can be requested only for the following reporting deadline to the reporting period concerned.

• To be submitted within 15 days after the electronic submission:

• Application for reimbursement: 2 originals signed and stamped

• Declarations on validation: 1 original signed and stamped

Financial management procedures

(15)

3. Reimbursement of ERDF and IPA Funds to the LP

• LP submits the Progress Report and the Application for Reimbursement to the JTS for the deadlines given in the Subsidy Contract.

• JTS verifies and approves the Progress Report and Application for Reimbursement.

• After verification process by the JTS, reimbursement of ERDF and IPA contribution will be authorised by the Certifying Authority.

• Reimbursement of ERDF and IPA contribution to the EUR bank account of the LP indicated in the Subsidy contract.

• LP responsible to transfer the ERDF and IPA contribution of each project partner

• Bank statements on the project bank account have to be presented to the JTS with each Application for Reimbursement.

Financial management procedures

(16)

Financial management procedures

4. General principles in the IPA integrated phase

• The application for reimbursement for ERDF and for IPA can not be submitted by the LP separately by funds

• The application for reimbursement for ERDF and for IPA can not be approved by the JTS separately by funds

• The ERDF and IPA contributions might be transferred separately by the Financial Transfer Unit, in case:

• the requests of funds for ERDF and IPA are not authorized at the same time by the Certifying Authority, or

• the balance of the programme single bank account for the ERDF or IPA funding is not covering the amount to be reimbursed

(17)

5. Timeframe of reimbursement of ERDF funds

Financial management procedures

Reporting period (6 months)

Progress report + AfR (max. 3 months)

Verification by JTS

cc. 2 months)

Payment CA+ FTU (cc. 1 month)

(18)

6. Financial progress and decommitment of the project

• Spending forecasts are set in the Subsidy Contract

• LP has the possibility to deviate: real spending can be lower or higher than originally planned for a given reporting period

• To be considered: in case of under-spending compared to the spending forecasts, the MA is entitled to decommit the project by reducing the original project budget and the corresponding ERDF / IPA contribution

• In case of decommittment at programme level, MC may decide on the decommitment of the projects on case by case basis

• The LP can request amendment of the spending forecasts only in relation to substantial changes in the project affecting the project budget

Financial management procedures

(19)

7. Last advices

• The liquidity of the programme – therefore the fluency of payments to the projects – depends on the spending and the reported expenditure of the projects !

• Submit Application for Reimbursement for each reporting period!

• First reporting period:

• obligation by the subsidy contract: Art. 12. f)

• opportunity to learn the reporting

• report at least preparation costs, expenditure related to the starting up of the project, e.g. kick off event, communication plan, staff costs, etc.

• Keep deadlines of reporting!

• Progress report and Application for Reimbursement submitted in time and complete = earlier payment of Community contribution to the project!

Financial management

procedures

(20)

Thank you for your attention!

(21)

Reporting eligible project expenditure

Niko Finka

(22)

Sound financial management of the project is

based on the eligibility of expenditure!

1. Expenditure has to be eligible according to the eligibility rules of the SEE Programme

• Be aware of the eligibility rules!

• In case of question: PPs consult national controller and/or LP contacts JTS

2. Eligibility of expenditure has to be proved!

• Documentary evidence submitted to the Controller

• On the spot: evidence of the expenditure is available

Reporting eligible project

expenditure

(23)

• Documents

• Eligibility in time

• Special types of expenditure

• Expenditure per Budget lines

• Compliance with EU policies and other horizontal rules

• Ineligible expenditure

• Revenues

Reporting eligible project

expenditure

(24)

Documents

• EC Regulations + national legislation

• SEE Programme Manual: part of the Application package

• SEE Implementation Manual v4.0

• Subsidy Contract

• SEE Control Guidelines + SEE Control Checklist: main requirements at programme level

• National eligibility rules: more detailed, can be stricter than programme’s rules!

Reporting eligible project

expenditure

(25)

Eligibility in time

• Starting date of the eligibility of expenditure: approval date of the projects (for most of the projects 28^th September 2012, however some of the projects will be approved later so the starting day may be different)

exception: preparation costs

 Expenditure incurred by IPA-I partners will be eligible according to the same rules under condition that the Financing Agreement is signed by the IPA Partner State of the given partner before the date of approval of the project by the Monitoring Committee. Otherwise, starting date of eligibility of expenditure for IPA-I Partners will be the date of signature of the Financing Agreement by the IPA Partner State of the given partner.

Reporting eligible project

expenditure

(26)

Eligibility in time

 Financing agreement signatures:

1. Montenegro- September 3, 2012

2. Republic of Serbia - September 7, 2012 3. Republic of Croatia – October 31, 2012

Reporting eligible project

expenditure

(27)

Eligibility in time

• Eligibility of expenditure between the approval date and the starting date of the project: restricted only to certain necessary administrative procedures for the contracting, i.e. travel and accommodation costs related to conditions clearing and participation at the Lead Partner seminar

• End date of the eligibility of project expenditure: end date of the project

Only exception: Costs incurred in the last reporting period and control costs related to the Final Progress Report have to be paid within 60 days from the project end date at the latest.

Reporting eligible project

expenditure

(28)

Preparation costs

 ERDF Partners: incurred between 1^st January 2007 and day before approval day of the project (27^th September 2012 or later depending on the project)

 IPA-I Partners: incurred between the date of signature of the FA by the IPA Partner State of the given partner and day before approval day of the project (27^th September 2012 or later depending on the project)

Reporting eligible project

expenditure

(29)

Preparation costs

• up to the amount approved in the AF (WP0)

• only for the activities presented in the approved AF

• only for the PPs planned in the approved AF

• restricted to budget lines staff costs, travel costs, external expertise

• paid until the end date of the 1st reporting period: 31st March 2013

• to be reported in the first Progress Report or at the latest in the 2nd progress report (Article 4.8 of the Subsidy contract)

Reporting eligible project

expenditure

(30)

Expenditure according to 10% flexibility rule

• “10%” activities mentioned in the approved AF

• up to the amount planned in the ERDF PP’s budget of the approved AF

• expenditure directly incurred and paid by the ERDF PP

Reporting eligible project

expenditure

(31)

Expenditure according to 10% flexibility rule

Additionally for 10% Associated Strategic Partner

• expenditure only for the benefit of the 10% partners indicated in the AF

• expenditure related to eligible budget lines for 10% rule (travel and accommodation, external expertise and services)

• ERDF PP should respect the public procurement rules at national level

• Specific rules set by the Partnership Agreement

Reporting eligible project

expenditure

(32)

Expenditure according to 20% flexibility rule

1. Associated Strategic Partner: 20% ASP

• The expenditure of an 20% Associated Strategic Partner is included in the project budget of one ERDF “sponsoring partner” from the SEE Programme area

• expenditure is verified by the controller of the “sponsoring”

ERDF partner

• Only travel and accommodation costs are eligible

Reporting eligible project

expenditure

(33)

Expenditure according to 20% flexibility rule

2. 20% ERDF Partners

• The partner from the EU territory but outside the

programme area participates directly to the project with a separate budget.

• The same eligibility rules apply for the 20% ERDF partners as for the ERDF partners located in the Programme area.

Reporting eligible project

expenditure

(34)

Expenditure according to 20% flexibility rule

• The same budget lines are eligible for the 20% ERDF partners.

• The expenditure of the 20% ERDF partner is verified by its controller outside the SEE Programme area

• Preconditions: relevance of the 20%, MoU signed

between the MS of the 20% PP and the SEE Programme

Reporting eligible project

expenditure

(35)

Staff costs

• Costs of the personnel for project management and/or tasks for project activities

• Staff directly employed by regular working contract or similar type of contract according to national rules

• „civil servants” if allowed by national legislation and contractual basis is in line with national eligibility rules!

• clear assignment to the project: main tasks within the project described in the contract/job description

Reporting eligible project

expenditure

(36)

Staff costs

• Proof on working time spent on the project: timesheets

• Calculation of staff costs: according to national guidance, if no other requirement: SEE Control Guidelines

• Fringe benefits, rewards over the monthly salaries are not eligible

• Overtime, 13th-14th month’s extra salary included in the regular contract: proportionally allocated to the project and if allowed by national eligibility rules!

Reporting eligible project

expenditure

(37)

Overheads

• “Flat rate” basis up to 8% of staff costs (excluding preparation costs)

• „Real costs” basis up to 20% of staff costs: justified by invoices, supporting documents!

» Office rental fee, electricity, heating, water and other services related to the maintenance of the office (e.g. cleaning);

» Phone, fax, internet, postal costs, courier;

» Stationery, printing, copying;

» Indirect staff costs or services supporting directly the project implementation and proportionally allocated to the project:

administrative staff, book-keeping/accounting, salary administration, IT support.

Reporting eligible project

expenditure

(38)

Travel and accommodation

• only travelling costs of the project staff

• costs directly related to the project

• travels within the eligible area

• cost-efficiency for means of transport and accommodation

• per diems according to national rules of the PP

• travelling costs of external experts shall be included in the service contracts and budgeted under the external

expertise and services budget line;

Reporting eligible project

expenditure

(39)

External expertise and services

• the selection of the external experts shall comply:

 ERDF Partners: with the relevant National Public Procurement Law in force

 IPA-I Partners: with the provisions of Annex IV to the

PRAG standard grant contract (PRAG templates should be used)

Reporting eligible project

expenditure

(40)

External expertise and services

• PPs of the same project cannot be contracted as an external expert or a sub-contractor

• additional contracts of external expertise nature signed with own staff of the PP institution:

– transparent selection /public procurement procedures – same person already charged under staff costs can not be

contracted under external expertise

• respect information and publicity requirements of the SEE Programme

Reporting eligible project

expenditure

(41)

Equipments

• equipment is foreseen in the approved AF

• used exclusively for the project implementation

• suppliers should be selected:

Reporting eligible project

expenditure

(42)

Equipments

• full purchase price: in case the total economic life and

depreciation period are shorter than or equal to the project duration

• in all other cases only depreciation costs or purchase price proportionally reduced

• calculation of the depreciation costs according to national rules!

Reporting eligible project

expenditure

(43)

Small scale investments

• only expenditure of the small scale investments explicitly described in the approved AF

• Costs of purchase of land are not eligible for financing from ERDF and IPA funds within the projects.

• changes have to be approved by the programme management bodies in each case

Reporting eligible project

expenditure

(44)

Small scale investments

• The contractors of investments should be selected:

• small scale investments implemented in reality

• used only for the project purposes

• publicity requirements of the SEE Programme respected

• requirements on durability of operations (e.g. ownership) respected

Reporting eligible project

expenditure

(45)

Financial charges and guarantee costs

• charges for transnational financial transactions

• bank charges for opening and administering the account or accounts where the implementation of a project requires a separate account or accounts to be opened

• the cost of guarantees provided by a bank or other financial institution to the extent to which the guarantees are required by national or

Community legislation

• legal consultancy fees, notary fees if they are directly linked to the project and are necessary for its implementation.

• Any other types of financial charges are ineligible

Reporting eligible project

expenditure

(46)

Compliance with EU policies and other rules

• The principle of cost efficiency and transparency

• Public Procurement

• State Aid

• Information and publicity requirements

• Environment protection

• Equal opportunities

• Expenditure by public authorities

• Double financing

Reporting eligible project

expenditure

(47)

Ineligible expenditure

• list of ineligible expenditure in the SEE Programme Manual

• and all those expenditure which do not fulfil the eligibility criteria according to the common eligibility rules of the SEE Programme and to national eligibility rules whichever is

stricter

• not the same for ERDF and IPA

Reporting eligible project

expenditure

(48)

Revenues

• Only the cash in-flows directly paid by users for the goods and/or services provided by the project has to be considered as project generated revenues, such as charges borne directly by users for the use of infrastructure, sale or rent of land or buildings, or payments for services

• Net revenues has to be deducted by the Controllers from the eligible expenditure reported by the PP

• Calculation method has to be provided by the PP to report the net revenues

• Revenues not reported: corresponding ERDF and IPA amount will be reclaimed

Reporting eligible project

expenditure

(49)

Thank you for your attention!

jts@southeast-europe.net

finka@southeast-europe.net

(50)

Reporting procedures:

reporting system and tools

Antonios Melas

(51)

Content

• Reporting system

– Obligation of a project

– Reporting periods + deadlines

– Required documents for submission

• Overview of IMIS reporting tool

– Sheets to fill in

• Financial Report part (“live” presentation in IMIS)

• Activity report part (slides)

(52)

Reporting obligation of a

project

Contractual obligation

Lead Partner

– reports to SEE JTS

– Progress Report – overall project with focus on ERDF+IPA project part

Project Partner

– expected to help LP preparing Progress Report – Partner Report – partner level

(53)

Reporting tools

Progress Report

– Prepared and submitted online in SEE - IMIS 2007-2013 – Together with Application for Reimbursement

– Each LP accesses “SEE Front Office” with individual username and password

– User’s FO Guidelines (version 4.0) shall be considered

Partner Report

– MS Excel basis

– Reporting tool between PP and LP

– Tool for Declaration on validation of PP expenditures

(54)

Periods and deadlines

• 6-month periods (an exceptional 3-month period will be applied)

• Starting from final approval by MC (date of the endorsement of the outcomes of the conditions’ clearing exercise) – 28 September 2012

• Deadlines:

– 3 months following end of a period (online submission) – + 15 days (for paper original version)

1^st January 2015 July 2014 – September 2014

1^st October 2014 January 2014 – June 2014

1^st April 2014 July 2013 – December 2013

1^st October 2013 April 2013 – June 2013

1^st July 2013 28 September 2012 – March 2013

Deadlines Periods

(55)

First and Final

Progress Report

First Progress Report

– Must include preparatory activities and costs (WP0)

Final Progress Report

– To be submitted within 3 months after project end date – Together with last Application for Reimbursement

Reporting period for Final Progress Report

– Depends on the project end date / reporting period specified for each project separately

(56)

Submission of Progress Report

X Project communication plan

(with first Progress Report)

X Project deliverables, outputs (English)

X Bank confirmation for transfers of LP to

PPs of reimbursed amounts

(attachment - scan of original document)

+ 1 signed, original document Declaration on validation of expenditure

(attachment - scans of original documents)

+ 2 signed, original documents Application for reimbursement

X Progress Report

Original document Online - SEE Front Office

(57)

Checking the

Progress Reports

The scope of checking reports

– actual implementation and expenditures coherent with planned activities and budget

– activities justify reported and claimed expenditures – expenditures are in line with the nature of the project

• Progress Report (PR) and Application for Reimbursement (AfR) checked by JTS within 30 days

• Written notification (E-mail) in case some problem(s) detected

– If Corrective DoVs requested by JTS: 30 days deadline – In all other cases: 10 days deadline

• Status of PR and AfR can be checked on the Front Office of the IMIS 2007-2013 system

(58)

Reporting in IMIS 2007-2013

Access and functions

(59)

Sheets to fill in

Sheets to fill in:

-Activity report -Financial report -Attachments

(60)

Activity report

• Main data

• Summary of project activities

• Activities per work packages

• Implementation of Grant contracts (in case of ENPI PPs in the project)

• Indicators

(61)

Main data

Requested info:

• Overview of PPs’ activities and

expenditures

• Possible estimated delay

• Administrative changes

(62)

Summary of the project activities

(63)

Summary of the project activities

Summary of project activities (from start)

• Summary of the overall project implementation from the start of the project till the end of the latest reporting period

• Coherent and comprehensive, easy-to-read, self-explanatory, without referring to other parts of the report

• Summary written for external readers (possibility to be published on the SEE Programme website)

(64)

Summary of the project activities

Operation of the partnership

• Contribution of the different project partners to the implementation of the project

• Possible partnership issues (non-active partner, change of partner etc.). Include the reasons behind the issue, likely consequences, as well as mitigation and preventative steps taken

(65)

Summary of the project activities

Project implementation timeframe

• Is the implementation in line with the timeframe planned in the AF? (e.g. which parts of the project are, or may be in the future in delay)

• Effects of any time plan drift (how does it affects the overall implementation)

• Reasons and the proposed solutions to ensure future and effective timely implementation

(66)

Summary of the project activities

Spending target

• Description of alignment with the spending target defined in the Subsidy Contract

• In case of any deviation explain why this has occurred along with an estimation of when the project will be able to catch up

• Include any foreseen further problems affecting the spending plans

Other issues

• Comment on other issues etc. that are not addressed in any other section of the progress report can be described in this section

(67)

Activities per work packages

• Selection of the WP for which activities have been implemented and need to be reported

(68)

Activities per work packages

• Activities

• Outputs and results

(69)

Activities

• Relevant status

• Description of the activity

• Location of the activity

• Deviation and justification

(70)

Implementation of ENPI Grant

contract

ENPI PP1 –can Ukraine

(71)

Implementation of ENPI Grant

contract

View data:

• Grant contract signed

• Total budget

• Date of signature

• End date of the grant contract

(72)

Activities and role of ENPI partners

Activities

• All actions carried out by the specific ENPI PP in the given period should be briefly summarised in relation to the respective WPs, activities, outputs and results of the project.

• The description should provide evidence that the implemented activities are in line with the planned ones

Role

• The specific role and contribution of the ENPI PP to the

activities, outputs and results of the overall project should be highlighted,

• Clarification of the role of each partner, in case the respective Grant Contract involves more than one ENPI PP from the same country