The Legal Framework for expenditure verifications carried out by the Controller/Auditor

1. Verifications related to the awarded contracts under the framework of the Joint Operational Programme Black Sea Basin, financial checks for projects under implementation Bucharest – 31/7/2013

2. The Legal Framework for expenditure verifications carried out by the Controller/Auditor • Grant Application Form • Grant Contract • Community and National Legislation in force

3. Recommendations - Supporting documents dossier 1/2 Supporting documents dossier submitted to the Controller/Auditor shallfulfill the following criteria: -a single copy, and -OPIS included, -documents attached are in certified copies, certified in original “according with the original document”, -Beneficiaries/Partners shall endorse the originals of invoices inserting: the project MIS-ETC code and Title, the amount paid and requested from the total invoice, mentioning “[……] RON / BGN / EUR / or any currency requested under the framework of the Joint Operational Programme Black Sea Basin, subsequent the copies are included into the dossier.

4. Recommendations-Supportingdocumentsdossier 2/2 • CD included with the followings: • -Annex VI_ Financial report • -Annex VI_ Narrative report • -Procurementdossiers PDF version • -Screenshotsfromtheeventsorganised • -Layouts, demos andphotos of thepromotionalmaterials (banner, flag, brochures, pens, folders, etc.) • The documents will be ranked by budget lines and delimited by folder separators.

5. Budget structure - categories of costs 1. HR - cost of staff assigned to the Action, 2. Travel- travel and subsistence costs, 3. Equipment - costs for equipment and supplies, 4. Office – costs for office (rented) 5. Subcontracted services 6. Other - any other cost necessary for the implementation of the Action 8. Contingency - reserve not exceeding 2% of the subtotal direct eligible costs 10. Administrative - indirect costs to cover the administrative overheads incurred *** #7 and #9 are in fact subtotals;

6. General rules of eligibility • In order to be eligible expenditures shall meet the following criteria: • expenses must be incurred, paid, certified and declared by the Beneficiary / Partner during the implementation of the Action, in compliance with the grant contract, • must be allocated in the project budget already approved, Annex B to the grant contract, • must be identifiable and verifiable, in particular being recorded in the accounting system of the Beneficiary/Partner. As an exception, the costs allocated to the final report are eligible under condition of commitment during the implementation of the Action, payment can be made subsequent to the end date of the implementation prior to the expenditure verification request; i.e.. Expenditure verification carried out by the auditor / project evaluation (if any).

7. Conversia in euro All expenses incurred and paid by the Beneficiaries/Partners in a currency other than EURO must be exchanged and reported in EURO at the InforEuro average rate covered by the reporting period. Monthly InforEuro exchange rates are available athttp://ec.europa.eu/budget/inforeuro Bear in mind When drafting the Financial Report_Annex VI to the grant contract, Beneficiary/ Partner shall use the same exchange rate for all the expenses incurred and covered by the reporting period. In case the contract is signed on the 30th of the month, Implementation of the Action begin on the next day following the signature, in particular the respective monthly exchange rate will be taken into consideration even though NO expenditures were incurred.!!

8. VAT VAT will be considered as eligible costs, as long as the Beneficiary / Partner proves that cannot reclaim them. Beneficiary / Partners will be required to submit a Self-declaration on the accuracy of the VAT declared, also related to the activities performed, then It will be completed and included in the supporting document dossier.

9. Supporting documents requested per Cost categories • Cost of staff assigned to the Action, salaries and related contributions • Decision / administrative form related, appointment within the project team, order / decision (for civil servants), • Individual contract for project assignment, working time, • Costs included: basic gross salary / basic rate, permanent bonuses and deductions, both employer and employee contributions to the state budget, • Working time will not exceed the conventional working time allowed (8hrs), also permanent bonuses and contributions will be paid for factual time allocated to the project; • Overtime spent for the project, and any annual leave in accordance with the provisions of the scheme will be considered as ineligible costs.

10. Supporting documents requested per Cost categories • Supporting documents for the staff assigned to the Action: • Decisions / administrative forms of assignment within the project team • Individual contract of employment, order / decision • Job descriptions • Timesheets; • Payroll and calculation sheets • Payment orders and bank account statements • Any document proving the payments made

11. Supporting documents requested per Cost categories • Travel expenses 1/3 • Eligible expenses for travel included the following costs: transport, accommodation, per-diem/daily allowance in accordance with the respective legislation in force, visas and medical insurance, • Travel expenses are related to personnel involved in the project and those who are not under contract of employment but involved in the project activities, • In order to provide transport and accommodation the Beneficiary / Partner should apply for the most economically advantageous method, in compliance with national legislation in force.

12. Supporting documents requested per Cost categories "Per-diem" - covers the accommodation costs, meals and local transport from/to the place of mission and various expenses. Public authorities and institutions, also subordinated units, under their authority or coordination will apply the conditions and limits applicable to the public institutions for the staff involved in the project activities. Legal entities other than public authorities shall follow national legislation in force, however, not exceeding the maximum ceilings published by the European Commission at the moment of signing the grant contract, rates available on the website: www.ec.europa.eu/europeaid/work/procedures/index_en.htm Therefore, irrespective of the legal status of Beneficiary/Partner, the per-diem may not exceed the value actually paid by the organization.

13. Supporting documents requested per Cost categories Travel expenses 3/3 Supporting document for Travel expenses: • Note/any document for approving the travel, invitation and agenda,• Travel order and balance travel expenses on return,• Transport documents: invoices, tickets, boarding passes, train tickets and bus fuel bills, parking tickets, vignettes,• Accommodation documents: invoices,• Other documents: travel insurance, visa documents,• Payment documents: orders, bank account statements, payment orders, receipts and tax vouchers, cashbook.

14. Supporting documents requested per Cost categories Equipment - costs for equipment and supplies The expenditure incurred by way of purchasing equipment and supplies new and used (rental) are considered eligible being specified in the grant contract/grant application form, The acquisition has been done with the rules laid down in the grant contract, also legislation in force, Supporting documents for costs of equipment, Tender documents, contract, invoices and receiving documents, Documents proving compliance with the rule of origin, payment documents: orders and bank account statement, receipts and cashbook.

15. Supporting documents requested per Cost categories • Office costs 1/3 • The followingcosts are included: • rent for premises where the project activities have been implemented, specially for the purpose of the Action, and specified in the grant application form, • providing utilities: water, sanitation, electricity, gas corresponding to offices used for project activities, • costs of consumables and supplies necessary for the project, copying and photocopying, postal and courier services, telephone, fax, internet.

16. Supporting documents requested per Cost categories Office costs 2/3 All direct costs are justified through the contracts and invoices. Expenses must be directly and exclusively assigned to the project in order to be eligible under this budget heading. In case the expenses are not exclusively allocated to the action, shall be calculated on a pro-rata basis also reported under the chapter 10. "Administrative".

17. Supporting documents requested per Cost categories • Office costs 3/3 • Supportingdocuments: • Contracts • Invoices • Other documents: tracking roadmap, fuel bills, notes; • Payment documents: • Paying orders and bank account statement, • Receipts and • Cashbook /internal bookkeeping

18. Subcontracted services 1/2 The followingcosts are included: Costs for professional expertise needed for drafting studies and research. Costs for external experts, assistants, financial managers etc., in case the Beneficiary / Partner do not have expertise and qualified personnel to implement the activities as described in the grant application form. Costs for expenditure verifications according to the Annex VII_TOR; Supporting documents requested per Cost categories

19. Supporting documents requested per Cost categories Subcontracted services 1/2 • Costs allocated to the events, seminars, meetings, working groups, awarness campaign, catering services being justified through the list of participants, hiring locations and equipment needed for that event, printed materials, interpretation services, • Promotion costs: producing brochures, publishing articles in newspapers, press releases, web page design and hosting, and other publications that are not linked to specific events, • Costs for project evaluation, • Project partners cannot be contracted as external experts being paid to perform project activities.

20. Supporting documents: Procurement documentations, Contracts, Invoices, Documents proving the organization of meetings: invitations, agenda, minutes, list of participants etc Tangible results of services: studies, publications etc Payment documents : orders and bank account statements, receipts and cashbook. Supporting documents requested per Cost categories

21. Supporting documents requested per Cost categories Other Costs Any other cost necessary costs, expenditures that cannot be allocated under another budget line as needed for the implementation of the Action.

22. Supporting documents requested per Cost categories Administrative costs A fixed percentage not exceeding 7% of the total amount of direct eligible costs of the Action to cover the administrative overheads incurred : office, postal services, communications, utilities, office supplies only if they are needed for the Action and have not been reported under another budget line. However, once the flat-rate has been fixed in the grant contract, it does not need to be supported by accounting documents.

23. Checking on the spot On site visits will be made on a sample basis risk for the interim progress report, and before the final report (if appropriate).

24. Expenditureverification report (Expenditure verification report - Annex 3A to the Annex VII_TOR) After verification is carried out, an expenditure verification report will be issued (Expenditure verification report – Annex 3A of the TOR_Annex VII to the Grant Contract) that will include all factual findings and exceptions (ineligible expenditures) identified during verifications, being filled in accordance with the instructions provided in Annex VII_TOR. Expenditure verification report signed and stamped shall be submitted to the Beneficiaries / Partners being in two originals, pursuing the deadline already set.

25. Expenditureverification report Expenditure verification report - Annex 3B to the Annex VII TOR) The consolidated expenditure verification report will be issued by following the aforementioned steps needed for issuing the individual interim report. Controllers will be checking the expenditure verification reports provided by the Partners, accuracy, compilation, amounts reported at the project level etc.

26. Consolidated Report Documents to be sumitted The following documents shall be enclosed and submitted to the controller for issuing the consolidated report: • Annex VI_Narrative report -consolidat • Anexa VI_Financial Report– consolidat • Anexa 3A_Individual Report bythe Beneficiar • Anexa 3A_Individual Report bythePartner • Anexa VII_TOR for theconsolidated report requested