FINANCIAL REQUIREMENTS

1. WELCOME! FINANCIAL REQUIREMENTS What project promoters cannot ignore about INTERREG IVB NWE project management

2. Financial Requirements The Basics General considerations: the big picture • EU regulations in general, notably General Regulation 1083/2006. This includes equal opportunities and non discrimination (art.16), sustainable development (art.17). • Regulation (EC) 1080/2006 • Public procurement rules • State aid You should also be aware of your national legislation as well as national laws from your partners’ countries.

3. Financial Requirements The Basics Table of contents • The Lead Partner Principle • The Partnership Agreement • The Audit Trail • Eligibility of Expenditure • Project Modifications • The Payment Procedure

4. Financial Requirements The Basics • The Lead Partner Principle

5. Financial Requirements The Basics The Lead Partner Principle (LPP) Compulsory For the 2007-2013 programming period Compulsory implementation for the 2007-2013 programming period (article 20 of ERDF Regulation (EC) 1080/2006) The LPP requires one project partner to step up as the administratively responsible partner on behalf of the whole partnership. The Lead Partner is the administrative link between the programme and the project (flow of information and fund). As such, they bear responsibility for ensuring the project’s implementation. However, each partner bears full responsibility for their own actions => a Partnership Agreement becomes mandatory.

6. Financial Requirements The Basics The Lead Partner Principle (LPP) Compulsory For the 2007-2013 programming period Devolved legal and financial responsibility; The LP • drafts the Partnership Agreement, setting mutual rights, obligations and duties among project partners. • ensures that expenditure is eligible, even if partners remain liable for their own actions and related expenditure • is responsible for reporting and other administrative actions • to the JTS • distributes ERDF to partners

7. Lead Partner Principle Partnership Agreement Overall responsibility Responsibility for Project Management Contact with JTS • Signature of Subsidy Contract • Transfer of received ERDF funds to partners • Organisation of audit of all expenditure Submission of progress reports, payment claims, audit reports, project modifications… on project implementation: content of the project + finance management Financial Requirements The Basics The Lead Partner Principle (LPP)

8. Financial Requirements The Basics The Lead Partner Principle (LPP):Implementation stage Compulsory For the 2007-2013 programming period • Joint implementation: activities must be carried out and coordinated by all partners. • Reporting and monitoring: jointly, timely, activities + expenditure. Progress reports make a link with the application and the payment claim. • First Level Control and Control regulations: national rules apply • Payments: the principles of post-reimbursement, the time lag between expenditure and reimbursement and the grant rate must be clear. • Irregularities / recoveries: prevention is better than cure • Decommitment issues: information plays a vital role!

9. Financial Requirements The Basics The Lead Partner Principle (LPP):closure & assessment Compulsory For the 2007-2013 programming period • Final report & First Level Control: the LP must make sure from the beginning of the project that duties and requirements for the completion of the project are clear to all partners. • Eligibility: the LP should make sure that the partners are aware of deadlines and procedures for the closure, forward all eligible expenditure in due course and know the filing requirements. • Assessment: projects are strongly recommended to assess how successful the project has been in terms of processes, level • of cooperation and quality of management.

10. Financial Requirements The Basics • The Partnership Agreement

11. Financial Requirements The Basics The Partnership Agreement:recommended clauses(1) Does your partnership agreement address all these points? Compulsory For the 2007-2013 programming period • Common project objectives; • Duration of the Agreement - from the day all partners sign until the LP discharges its obligations towards the MA (years after project closure!); • Role and responsibilities of the LP; • Roles and responsibilities of the project partners; • Detailed information on project activities - the project work plan; • Organisational structure of the partnership - steering group?; • Deadlines and penalties for non-compliance;

12. Financial Requirements The Basics The Partnership Agreement:recommended clauses(2) Does your partnership agreement address all these points? Compulsory For the 2007-2013 programming period • Cooperation with third parties - ultimate responsibility remains within the partnership; third parties need to be selected according to public • procurement rules; • Definition of eligible expenditure; • Monitoring, reporting and evaluation requirements to be fulfilled by the LP and other partners; • Financial control and audit requirements; • Communication and publicity requirements; • Dissemination of project outcomes - issue of intellectual property rights;

13. Financial Requirements The Basics The Partnership Agreement:recommended clauses(3) • No commercial use and full public access to project results • Confidentiality Agreement inside the partnership; • Dispute settlement and changes in the partnership; • Reimbursement to the LP in case of non-completion of obligations; • Working language; • Applicable national legislation and optional clauses of 'force majeure'; • Concluding provisions on how to make changes to the Partnership • Agreement. Compulsory For the 2007-2013 programming period

14. Financial Requirements The Basics • The audit trail

15. Financial Requirements The Basics Audit trail:organise your controls • Internal controls at partner and project level • Ensure smooth implementation: know what you’ve done and where you’re going, content-wise and financially. Always have a good overview! • First Level Controls • Controls at project level, prior to the submission of payment claims. • All partners will be controlled independently in their own countries • (art. 16 (EC) 1080/2006) • Other controls • Second level controls (art. 16 (EC) 1828/2006), DG Regio and Member States audits, Certifying Authority audits, Quality controls, etc… • Every partner in every project will be controlled several times and by different bodies during the project’s lifetime. Save time and money with an efficient organisation!

16. Approval of project at PSC The Basics Partners from MS with a decentralised First Level Control system The JTS informs the involved MS approbation bodies of the partners’ contact details The JTS informs the involved MS control bodies of the partners’ contact details The involved MS approbation bodies contact the relevant partners and inform them of their FLC procedure (form to be filled in and signed by partner and controller, timeframe and deadlines) The involved MS approbation bodies contact the relevant partners and inform them of their FLC procedure (shortlist of approved controllers, timeframe and deadlines). The involved MS control bodies contact the relevant partners and inform them of their FLC procedure (name and contact details of controller, timeframe and deadlines, necessary documents, etc.). The partners send the information back to their MS approbation body The partners send the information back to the MS approbation body The MS assesses the provided information and checks if all criteria are fulfilled. The partner’s controller qualifications are satisfying The partner’s controller qualifications are not satisfying The MS approbation body sends a certificate that confirms the controller to the partner (JTS in copy) Financial Requirements Partners from MS with a centralised First Level Control system First Level Controls

17. Financial Requirements The Basics Audit trail:First Level Control • The First Level Control checks the expenditure declaration included in each payment claim. The expenditure must be real, actually incurred, supported by documents of probative value and eligible. • Real: the good or service exists and can be shown. • Actually incurred: expenditure was paid out. Invoices can only be included if they have been paid in full by a partner => advances are not eligible. • Supported by documents of probative value: a receipt, an invoice or a document that has an accounting value is compulsory. • Eligible: in line with EU and national rules, direct demonstrable connection with the Application Form, incurred in the lifetime of the project as set in the Subsidy Contract

18. Financial Requirements The Basics Audit trail:First Level Control Case study: the finance manager bought a car and includes its cost in the payment claim. Is it eligible? Is it real? the good or service exists and can be shown. Is it actually incurred? expenditure was paid out. Is it supported by documents of probative value? There is a receipt Is it eligible? in line with EU and national rules, direct demonstrable connection with the Application Form, incurred in the lifetime of the project as set in the Subsidy Contract

19. Financial Requirements The Basics Poll: first level control Who has already declared their first level controllers? Who has received an answer from the approbation bodies? Was any proposal rejected?

20. Financial Requirements The Basics Audit trail:other controls • Site visits • One Finance and one Project Development Officer will spend roughly one day to check the management of the project, the audit trail and the deliverables. • Second Level Control • Audits organised at Programme level on a yearly sample and carried out by an external audit firm, under supervision of the national auditors. • Certifying Authority’s quality controls • The Certifying Authority will perform punctual audits, on demand. • Commission and Member States checks • The Commission, in cooperation with the Member States, can perform on-the-spot checks with a minimum of one day’s notice.

21. Financial Requirements The Basics • Eligibility of expenditure

22. Financial Requirements The Basics Eligibility of expenditure: eligibility period Start date: All costs are eligible one year prior to the closure of the call for proposals as long as the actions are not completed before that date. End date: The end date indicated in the Application Form is the date by which the final report should be submitted to the Secretariat. Any expenditure (including costs linked to the project closure) incurred, invoiced or paid after the official project end date is ineligible.

23. Financial Requirements The Basics Eligibility of expenditure: Partner staff Staff costs are the costs of the actual time worked by the persons directly carrying out the work under the project and directly employed by the partners. All staff costs must be based on real costs, supported by proper documentation (payslips and timesheets) and calculated on the following basis: Remuneration costs (taken from payroll) = total gross remuneration + employer’s portion of social charges. Remuneration costs must be calculated individually for each employee and must be based on the monthly payslip. Working time must be recorded (eg. timesheets) throughout the duration of the action. The records should be certified at least once a month. Estimates of hours/days worked are not acceptable. Overhead costs cannot be added to staff costs (to be included under "Administration costs“).

24. Financial Requirements The Basics Eligibility of expenditure: External Experts & Consultants Work done by independent consultants must be essential to the project and reasonably priced. Costs must be paid on the basis of contracts and against invoices. The recommended maximum rate for a senior consultant is €800 per day (excluding VAT). Costs above this amount must be justified in full by applicants. It is the Partner’s responsibility to ensure that public procurement rules are respected and that contracts are awarded at normal market prices. Travel and accommodation expenses for external experts should be recorded under the external experts budget line. Exceptions: specific actions such as website development or communications should be recorded under the "Publicity" budget line; all audit related costs are recorded under the “Audit/First level control" budget line.

25. Financial Requirements The Basics Eligibility of expenditure: travel costs Travel costs and related subsistence allowances for project staff are eligible under certain rules. All tickets, invoices and receipts must be kept by partners so that their eligibility can be checked and audited. Costs must be directly related to, and essential for, the effective delivery of the project and cover economy class travel on public transport. Additional costs for business or first class travel are not eligible. Recommendation for maximum daily subsistence allowances are based on the Commission subsistence allowances paid to experts on assignments requiring an overnight stay. The recommendations given for each Member State are maximum figures in line with EC per diem rates and include breakfast, two main meals and local transportation. Daily subsistence allowances where an overnight stay is not required are not eligible. In this case, it is expected that only meal costs will be charged to the project. Expenses for individuals other than staff should be included under the appropriate budget line (external expert, audit, communication).

26. Financial Requirements The Basics Eligibility of expenditure: meetings & seminars Costs related to the organisation of meetings and events (renting of premises and equipment, meals, etc), participation in meetings and seminars related specifically to the project are eligible under this budget line. Related travel costs and external expert costs must not be claimed under this budget line (external expert, audit, communication).

27. Financial Requirements The Basics Eligibility of expenditure: publicity Expenditure with the main aim ofpromoting the projectshould be part of this cost category. This includes website, promotional material and printed publications. Public procurement rulesmust be observed in selecting company or individual who will carry out the assignment.

28. Financial Requirements The Basics Eligibility of expenditure: equipment Durable equipment charged to the project must be essential for the delivery of the project and used for that purpose. A clear distinction must be made between what is included in the investment budget line (where the total cost is eligible) and the equipment budget line (where depreciation should be the rule). The depreciation should be made in accordance with the internal accounting rules of the partners and generally accepted for items of the same kind. Only the portion of the equipment's depreciation corresponding to the duration of the project and the rate of actual use for the purpose of the project may be taken into account. Once the eligible amount is determined, it must be claimed in full at once upon purchase of the equipment. Goods purchased before the start of the project can be claimed at a depreciated rate as long as they have not previously been financed by any other source.

29. Financial Requirements The Basics Eligibility of expenditure: investments All eligible expenditure must be fully described in the approved Application Form.

30. Financial Requirements The Basics Eligibility of expenditure: administration costs Administration costs include items such as office rent, maintenance and furniture, electricity, heating, water, insurances, telephone, fax, internet, stationary and other administrative structure costs. Under the IVB NWE Programme, administration costs are limited to a maximum 10% of the total eligible budget at project level and 20% of the staff costs at partner level. When claiming administration costs, partners have 2 options: Direct costs: partners directly claim, cost item per cost item. Paid invoices are the underlying proof of expenditure. Indirect costs or overheads: partners must use the calculation of the total overheads of their organisation and a distribution key related to the partner staff involved in the project. This must be properly documented and periodically reviewed.

31. Financial Requirements The Basics Eligibility of expenditure: revenue The Lead Partner must keep separate accounts for the project so that all expenditure (costs) and all revenue (receipts) can be posted and audited, and detailed summary reports drawn up. All revenue generated from sales, rentals, subscriptions, fees or other equivalent sources must be reported and must be deducted from the eligible costs. A separate budget line for revenue is included in the Application Form and the payment claim. In case of a revenue-generating projects, the current value of the net revenue from the investment must be estimated over a specific reference period. Where it is not possible to estimate the revenue in advance, the revenue generated within 5 years following project closure must be reported (article 55 of EU regulation No 1083/2006).

32. Financial Requirements The Basics Eligibility of expenditure: expenditure outside eligible area For partners from the NWE area, any expenditure incurred outside the eligible area (for example, costs of a meeting or conference held outside the area) must be justified in full and a clear need for the expenditure to be incurred outside the area must be demonstrated. Projects must get formal approval from the Secretariat before incurring expenditure outside of the NWE area.

33. Financial Requirements The Basics Eligibility of expenditure: in-kind contributions This consists of the provision of land or real estate, equipment or raw materials, research or professional work or unpaid voluntary work provided free of charge to the partners. Staff paid by the partner organisation is not contribution in kind. All contributions should be costed using either an accepted market value for materials or goods, or notional salary for individual’s time. In-kind contribution can only be included in Payment Claims if it was included in the approved Application Form attached to the Subsidy Contract.

34. Financial Requirements The Basics Eligibility of expenditure: ineligible costs • (non-exhaustive list) • National banking charges • VAT unless it is genuinely and definitively borne by the final beneficiary • Fines, financial penalties and expenditure on legal disputes • Interest on debt • Decommissioning of nuclear power stations • Housing • Exchange rate loss (or gain) • Further Information: • General Regulation (EC) No 1083/2006 - article 56 • ERDF Regulation (EC) No 1080/2006 - articles 7 and 13 • Implementation Regulation (EC) No 1828/2006 - articles 48-53

35. Financial Requirements The Basics Eligibility of expenditure: preparation costs • Costs related to project development and application are eligible if: • The activities show a direct, demonstrable connection to the development of the project. • Costs were incurred up to one year prior to the closure date of the call. • They may include staff, external experts, travel and subsistence, meetings, publicity. • Preparations costs must be claimed all at once in a Payment Claim (usually the first or second one) • They are subject to a ceiling of €100,000 total eligible cost • (max €50,000 ERDF).

36. Financial Requirements The Basics Eligibility of expenditure: coordination costs Costs related to coordination and the management of the project must be recorded under the partner who will incur the expenditure. Partners can contribute financially to the coordination costs but this should not be mentioned neither in the budget, nor in the Payment Claim. "Coordination costs" is not a specific budget line, but is assimilated to a "work package". A special column for coordination costs is included in the Application Form.

37. Financial Requirements The Basics • Project modifications

38. Financial Requirements The Basics Project modifications The project’s implementation plan and budget are approved as part of the Application Form. During the lifetime of a project, you may wish to amend the partnership, change the budget line split, modify the envisaged project implementation or the project end date. Theses changes are allowed 3 times in total, no later than 6 months before the end date of the project and only upon formal request and approval by the Secretariat or the Programme’s Steering Committee – depending on the significance of the changes. The “request for changes” form must be used. The Secretariat should be notified of minor changes as soon as possible by official letter from the Lead Partner. This would be, for example, a change of bank account, a new contact person, a change of address, etc.

39. Financial Requirements The Basics Project changes: budget/finances Budget Line Modifications (BLM) Projects can be overspent by a maximum of 20% on an individual budget line. Increases of more than 20% on individual budget lines must be submitted and duly justified to the Secretariat using the request for changes form. The project will receive formal approval from the Secretariat if appropriate. Other financial changes Ex: a reduction of grant rate at partner level or a decrease in the overall budget -> use the request for changes form. Note: it is not possible to increase the project’s total ERDF amount.

40. Financial Requirements The Basics Project changes: activities/output The approved Application Form details the project content and management structure, as well as the expected results, outputs and impacts, and concrete deliverables of the Project. In some cases (the drop-out of a partner, unexpected results preventing the project from further advancing in the direction originally planned, unforeseen administrative delays, etc.), projects may notice that they cannot successfully implement all actions of the approved Application Form and / or that they wish to implement other or additional actions. The Lead Partner must inform the Secretariat about those changes and use the request for changes form. Depending on their significance, approval might be given by the Secretariat or the Programme’s Steering Committee.

41. Financial Requirements The Basics • Payment procedure

42. Financial Requirements The Basics Payment procedure

43. Financial Requirements The Basics Payment procedure: some rules • Payment will be made only if both the Progress Report and Payment Claims are deemed acceptable. • Payment Claims and Progress Reports must be filled out in English, submitted together, twice a year (end of April and end of October). • “First come, first served” applies. Plan your cash flow as the reimbursement can take from one month to several months. • A maximum of 85% of the ERDF project budget can be paid • before the submission of the final claim.

44. Financial Requirements The Basics Payment procedure: how to speed up the process? • Check that both the Payment Claim and the Progress Report are correct before you submit them. They must bear all the required dates and signatures and be supported by a full set of verification sheets and annexes. • Fill in the comment sections as much as possible. • Answer the JTS queries as soon and as accurately as possible. • Circulate the assessment report to all partners and find ways to implement the recommendations for improvement that will be listed. • Be proactive and communicate with the JTS: inform us of any delay or project modification since these may have substantial consequences.

45. Financial Requirements The Basics Payment procedure Financial reporting uses the Payment Claim Template. Note that a new template will be sent to you after each payment (data is cumulated), in an MS-Excel format. There is a worksheet per partner and each partner worksheet feeds the project claim sheet. There are formulas and links in the document: be careful when handling it. Any “damaged” files will be rejected for administrative reasons (upload in our programme monitoring system). All controller declarations must be filled in and signed. Verification sheets of expenditure must be fully completed and annexed to the Payment Claim.

46. Financial Requirements The Basics Payment procedure VoE The payment claim template and verification sheets of expenditure Let’s start with the VoE!