Administration of payment claim Magda Kariņa

1. Administration of payment claim Magda Kariņa Central Finance and Contracting Agency, Senior Expert, Programme Management and Supervision Department 01.- 02.02.2012

2. Payment claim • Payment claim template is approved by the Cabinet of Ministers as Annex to the national Regulation on  EU funds project budget planning, payment and expenditure declaration management • Beneficiaries fill in the payment claim information using an empty template • Payment claim and supporting documents to CFCA can be submitted: • paper form (physical submission, mail) • submission via fax, • electronic submission (signed and scanned documentation in digital storage or signed and scanned documentation via e-mail- only signed with safe electonic signature )

3. Payment claim’s confirmation • Performed after verification of expenditure supporting documents • Important: • Expenditure supporting documentation – selection or 100% check • Checklist

4. ProcessFrom submission till confirmation - 20 wd

5. Payment claim’s confirmation in CFCA • Verification of the payment claim and supporting documents • If necessary, perform supporting document selection • Fill out the checklist • It has been developed in each institution based on MA defined principles of division of verification checks between the desk checks and on the spot checks (main principles are in MA guidelines)

6. What expenditure supporting documents must be presented with payment claim? • Current progress report of the project – has been received and reviewed • Copies of • Bank account printouts, Accounts • Consignment bills • Product and service contracts, changes of it, if made • Approved construction project and construction permission • Certificate of acceptance • Decree, working-time balance, certifications etc. • Others, if necessary • Beneficiary present copies of documents. Originals are checked during checks on the spot • Documents about the procurement for the Project are checked during progress report check

7. Expenditure supporting document selection (1) • To confirm payment claim, not always we check expenditure supporting documentation 100% : • First and final payment claim – 100% check; for intermediate payment claim may be applied a sample check • The goal of sampling is to use an objective and independent method to determine the amount and number of transactions for detailed verification • The sample of supporting documents is selected basing on the acceptable error rate

8. Expenditure supporting document selection (2) • To define the acceptable error rate, first expenditure must be divided in following groups: • Reimbursement • Travel and business travel costs • Administrative costs (rent, electricity, maintenance and telecommunications services and other expenses) • Expenses related to procurements and contract documents, including expenditure on procurement below the thresholds

9. Expenditure supporting document selection (3) • The error rate is determined for each expenditure group = irregularities + expenses about which beneficiary didn’t submit acceptable supporting documentation against approved claimed and eligible funding for each expenditure group • The identified errors in each expenditure groups are classified as: • Low error rate (A) - the level of errors in the group ≤ 3% • Average error rate (B) - 3%< error rate in the group ≤ 5% • High error rate (C) - the error rate in the group > 5% • According to the error rate in each group we determine amount of transactions which we must verify in the next payment claim: • Low error rate (A) – at least 10% of the particular group in the reporting period • Average error rate (B) - at least 50% of the particular group in the reporting period • High error rate (C) - 100% of the particular group in the reporting period

10. Expenditure supporting document selection (4) • To ensure equal opportunities for every random object to get in the overall sample for low and medium error level, the selection is made in MS Excel : • Prepare a list of payments / employees • Determine the total amount of the costs in each group included in the payment claim • Apply random testing according to our previously set error rate and calculate starting point using the formula • = ROUND(RAND()*(N-1) +1;0), where "N" is the number of payment / employees • Calculate the step - the inverse percent of the minimum amount of test: 10% - one in ten; 50% - every second • You have to check every tenth or every second until it reaches the required amount

11. Payment claim’s confirmation checklist in CFCA (1) • Formal check • Are the files/forms complete? • There is no missing documents? • Are documents signed by the person entitled to do so? • Is beneficiary/ project/ payment claim/bank account identification correct?

12. Payment claim’s confirmation checklist in CFCA (2) • Application is correct • Tables are arithmetically correct? • The total eligible expenditure and its breakdown by financial sources specified within table is equal to the information provided within the summary of the eligible expenses? • Expenses presented within the tables corresponds to the approved eligible costs of respective activity? • All expenditure has been settled during the project, except in those cases, which are set by the activity's Regulations issued by the Cabinet of Ministers? • PC does not include charges, which are: • related to the incompliance with conditions of agreement of project implementation or, • related to the incompliance with activity's Regulations issued by the Cabinet of Ministers • previously detected as not eligible

13. Payment claim’s confirmation checklist in CFCA (3) • Expenditure is real • Eligible expenditure claimed within current payment claim complies with submitted supporting documentation? • Payments within payment claim are actually paid out and they have appropriate supporting documentation, which complies with the agreement? • Products and services are delivered – information about fixed assets is correct, if replaced, they fully meets the project's initial targets and provides the fulfillment of planned results of the project?

14. Payment claim’s confirmation checklist in CFCA (4) • Grant contract specifications are respected • Is claim without roundings, miscalculations? • Is budget not overrun? • Are budget lines respected? • Are Indicators and goals achieved (final payment)? • EU fund beneficiary has carried out procurement for the Project purposes according to the requirements of laws and normative acts of Latvian Republic

15. Payment claim’s confirmation checklist in CFCA (5) • There is an indication whether the revenue has been generated during the Project implementation • Information about VAT report is correct? • Check of the progress report – if there are deficiency, it doesn’t affect the payment claim • Information from IS about major errors detected during checks on the spot visits does not impact refunding of the PC (if applicable)

16. Payment claim’s confirmation checklist in CFCA (6) • The check of supporting documents (copies) of expenses included within PC have been submitted and verified for the following cost items: • Reward, including the employer's social insurance contributions (SIC) • Business trip expenses, including travel expenses • Transport costs (the cost for fuel, public transport, vehicle rent or transport services) • Telecommunications and Internet costs • Stationery costs • Room rental and maintenance costs (heating, electricity, management services, water supply) • Expenditure for the purchase of office equipment, in order to support administrative activities of the project • Publicity and representation expenses • Insurance costs • Expenses for equipment, supplies and technology • Costs for construction of buildings, structures, infrastructure and real estate purchase costs • Other expenses, if applicable

17. Amendment • Project manager can manually correct insignificant mistakes in beneficiaries payment claim • Also beneficiary can send in amendments – only few pages or all the payment claim (if the last one occur – the first payment claim is asked to be revoked)

18. Challenges for improvement of payment claim process • To introduce the possibility for beneficiary to enter the payment claim directly in MIS (using the electronic signature) • To enhance usage of sampling in payment claim verification process

19. Thank you!