Financial management of ERC grants in Horizon 2020

1. Financial management of ERC grants in Horizon 2020 Julius Ursu, EC Compliance Officer, Finance Office - Research Finance 11 February 2015

2. Overview • Financial principles • What is new in H2020? • Granting process • Reporting and payments • Types of costs • Common errors (FP7) • Best practice • Audits and document retention

3. Financial principles (I) To be considered eligible, the costs must be: • Actually incurred (not estimated, budgeted, notional). ‘When actual costs are not available at the time of establishment of the financial statement, the closest possible estimate may be declared in conformity with the accounting principles of the beneficiary. However, these estimates should be adjusted when the actual costs are available.’ • Incurred by the beneficiary. ‘Supporting documents proving occurrence, the bookkeeping and the payment must be kept by the beneficiary.’ • Incurred during the duration of the project.

4. Financial principles (II) To be considered eligible, the costs must be: • Determined according to the usual accounting and management principles and practices of the beneficiary. However, the beneficiary must adjust its usual accounting and management practices if they are not in line with the FP7/H2020 rules. • Used for the sole purpose of the project under the principles of economy, efficiency and effectiveness. • Recorded in the accounts of the beneficiary. Exemptions exist for certain cases involving third parties. • Annex I (Description of the Action) should include a general description of costs. Some types of costs (such as subcontracts) must be clearly identified in the estimated budget of the project.

5. What is new in H2020? • Shorter time to grant • Wider use of IT tools and faster processing of all exchanges with the ERC • Description of the Action (DoA) replaces DoW • Less audits and audit Certificates (≥ €325,000 at the end of the project) • Hourly rate from the last available closed Financial Year • Non-deductible VAT becomes an eligible cost • Sub-contracting may also cover research tasks • Indirect costs: 25% instead of 20% (FP7) • The 'Declaration of Honour'. This declaration ensures that the Host Institution (HI) complies with the rules. • Open Access – research publications must be made open access.

6. Granting process • Award, grant agreement and amendments to the grant agreement; • Grant agreement (GA) enters into force on the day when the last party signs (usually the EC/Agency signs last); • The ERC General Model Grant Agreement (‘ERC General MGA’) is used for the following ERC grants: − ERC Starting Grants (StG) − ERC Consolidator Grants (CoG) − ERC Advanced Grants (AdG) − ERC Synergy Grants (SyG). • The ERC General MGA is not used for ERC PoC and ERC low value grants; • The GA is signed between the Agency and the beneficiary/(-ies). The PI must sign a supplementary agreement (SA) with its host institution where s/he also takes on a series of rights and obligations (article 32 of the GA).

7. Reporting and payments • Reimbursement of expenses up to a maximum 100% of direct eligible costs + flat rate 25% overheads (except on subcontracts). • Pre-financing paid as from signature of the Grant Agreement of which a part (5% of total grant) is blocked on a Guarantee Fund • Interim payments made upon approval of 18 months financial reports up to 90% of the maximum contribution (balance released at the final payment only). • Final payment made upon approval of the final scientific and financial reports. • For a 5-year project 4 financial reports and 4 financial statements (form C) submitted by the Host Institution in consultation with the PI (3 x 18 months plus 1 x 6 months) • 2 scientific reports submitted by the PI • 1 Certificate on the Financial Statement (CFS) at the eof the project

8. Types of costs • Direct personnel costs (100%) To include: PI, Senior staff, Post docs, Students, Other staff, Staff seconded by a third party. • Direct costs of sub-contracting (100%) • Other direct costs (100%) - Recruitment costs - Travel & subsistence - Equipment - Other goods and services (e.g. audit costs, purchase of scientific publications – books, manuscripts, articles, IP costs, costs related to membership fees, storage and maintenance - Capitalised and operating costs of large research infrastructure • Overheads/Indirect costs (25%) Of eligible direct costs.

9. Participant portal

10. Common errors (FP7) • Lack of original documents if required; • Certificate on the Financial Statement (CFS) missing when threshold ≥ €375,000 and incorrect template used; • In the Breakdown of Direct Costs table: • Equipment depreciation not indicated or incorrect; • Incorrect employment period; • Productive time identical to actual man/hours when staff is not working 100% on the project; • Wrong budget categories. • Lack of visibility of EC funding – ensure compliance with EC publicity rules.

11. Best practice • Verify completeness of the Financial Report and Scientific Report before submitting it; • Don't forget CFS; • Respect submission deadlines • Use updated templates; • Fill in budget tables (breakdown of direct costs + budget • follow-up table); • Justify and explain any deviation from DoW/DoA, in particular new cost categories or budget transfers; • If changes relate to sub-contracting always check with ERCEA for advice (an amendment might be needed).

12. Audits and document retention Audits in H2020: • Common Audit Service will take over H2020 audits; • Will serve all the bodies of the Research family; • Audit Strategy focussed on risk & fraud prevention; • Audits limited to 2 years after final payment; • Project documents to be retained up to 5 years after the final payment. • Adhere to the UoW document retention policy.

13. Useful links • http://erc.europa.eu/ • http://ec.europa.eu/research/participants/portal/desktop/en/home.html • http://ec.europa.eu/research/participants/portal/desktop/en/funding/reference_docs.html#h2020-grants-manual-amga

14. E-mail at UoW: Julius.Ursu@warwick.ac.uk E-mail at ERCEA: ERC-SC-REPORTS@ec.europa.eu (scientific reporting)ERC-OPEN-ACCESS@ec.europa.eu (open access)ERC-C2-PI-HELPDESK@ec.europa.eu (PI helpdesk)