3 rd NWE Lead Partner Seminar

1. 3rd NWE Lead Partner Seminar 10th April 2003 in Lille FINANCIAL REQUIREMENTS

2. FINANCIAL REQUIREMENTS Content: I Project Management and Payment II The Payment Claim III Eligibility of Expenditure IV Audit Requirements V Project Modification Procedure VI General Considerations

3. I Project Management and Payment Lessons from Interreg IIC NWMA: • Poor coordination between partners → delayed or partial implementation of Action Plan • Difficult for LP to collect invoices of all partners → delayed submission of Payment Claims → delayed ERDF payment • Lead Partner not able to audit partner expenditure fully  ineligible expenditure

4. Basis for Project Management Structure Joint Convention Lead Partner Principle Responsibility for Project Management Signing of Grant Offer Letter; Transfer of received ERDF grant to other project partners; Organisation of audit of entire project expenditure; Contact to JTS Submission of Activity Reports, Payment Claims, Audit Reports, project modifications Overall responsibility for project implementation (content + finance) 4

5. Reporting to the Programme Secretariat Submission of Payment Claims and Activity Reports: by 30th June and by 31st December each year • Decentralised / centralised bookkeeping system determines delays for centralisation of partner information • Separate project bank account for receipt and distribution of ERDF assistance • Preparation costs can be claimed as soon as GOL is signed 5

6. Project Payment Procedure Payment Claim Flow Money Flow JTS Assesses the Activity Report and the Payment Claim received Prepares the payment request to the Paying Authority Member States National Authority (or the JTS by delegation) authorises the payment Paying Authority Programme Bank Account Payment Claim Project Lead Partner Submits an Activity Report and a Payment Claim every 6 months Reimburses the other project partners according to their expenditure Project Partner Project Partner

7. II The Payment Claim Form The Payment Claim Form shows all eligible expenditure incurred by each partner per budget line during the most recent, six-month long, reporting period

8. Payment Claim Form Maximum ERDF Grant Rates

9. Payment Claim Form Budget Lines Preparation Costs Partner Staff External Experts and Consultants Travel and Accommodation Equipment Investment General Costs

10. III Eligibility of Expenditure Reference Documents Commission Regulation (EC) 1685/2000 Rule 11.4 (Expenditure by Public Administrations) Guidelines for Project Promoters Project Audit Guidelines

11. Eligibility of Expenditure Expenditure actually paid out is the basis for assessing eligibility under the INTERREG IIIB NWE Programme. This means expenditure directly linked to the approved budget and supported by receipted invoices or documents of equivalent probative value. Invoices can only be included in a payment claim when they have been paid in full by one of the project partners.

12. Eligibility of Expenditure Preparation Costs • must show direct demonstrable connection with project development • cannot include expenditure incurred more than one year prior to the date of the first submission of the application Contributions in Kind • subject to restrictive conditions • staff time is not eligible as a contribution in kind

13. Eligibility of Expenditure Staff Costs • must be supported by timesheets for part-time staff • eligible providing they do not arise from the statutory responsibilities of the public authority or the public authority’s day-to-day management, monitoring and control tasks Indicative Rates • external experts and consultants • travel costs • daily subsistence allowances

14. Eligibility of Expenditure VAT • only eligible if not reclaimed at any stage Expenditure incurred outside the NWE area • eligible for public partners located outside area as long as results of project benefit the eligible (NWE) area • must be justified in full even if partners located within NWE area

15. IV Audit Requirements Project Audit Guidelines give clear instructions • To LP: what to expect in terms of audit • To project auditors: in terms of work to be performed

16. Why are projects audited? Legal obligation : EC regulation N° 438/2001 Verification of the sound management of the project To ensure proper use of funds To certify that expenditure incurred is legal and correct 16

17. What kind of audit to expect ? • Compulsory audits: • Management and Control Systems Audit • Payment Claim audit • Possible complementary audits: • Member State controls at the Secretariat’s request • Member State sample checks (5% checks) • European Commission checks 17

18. Management and Control Systems Audit • Aim: to ensure that the project as a whole • has systems in place for the management and control of ERDF funding • and that those systems operate effectively and consistently at all levels • When: at the beginning of the project • By whom: an external auditor appointed by the JTS or by Secretariat staff • Audit costs: covered by the Secretariat 18

19. Management and Control Systems Audit • Partners’ responsibility: to establish effective project monitoring and financial systems • The audit trail should provide a clear description of the flows of the project’s financial management: • Processes • Bodies and persons responsible • Documents created • Data system used • Controls in place • Archiving 19

20. Management and Control Systems Audit • Checks to be performed by the auditor: • Verification of the documented audit trail (including the content of the Joint Convention and of other agreements) • Verification of the book-keeping system established • Test the system: trace a representative number of invoices through the trail 20

21. Payment Claim Audit • Aim: to check and certify the eligibility of expenditure included in each payment claim • When: with each Payment Claim submitted to the Secretariat (twice a year) • By whom: • interim payment claims: internal or external auditor • final payment claim: external auditor • Audit costs: covered by the project’s budget 21

22. Payment Claim Audit • Partners’ responsibility: • to ensure that grant is not claimed from the Lead Partner or the Secretariat until payment for eligible expenditure has been made • to keep separate accounts for the project • Lead Partner must receive originals (or certified copies) of all supporting documents relating to partners accounts 22

23. Payment Claim Audit • Checks to be performed by the auditor: • Verification of expenditure declaration - related to the project - eligibility - actually incurred - not claimed before - supported by appropriate documents • Grant rates • Exchange rates • Competition policy • Public procurement 23

24. V Project Modification Procedure • Agreement with JTS, possible submission of revised parts of AF • Budget Line Modification (+/- 20%, 2x during project lifetime) • Extension of project duration B) Submission of revised Application Form with approval of NA (LP country) and JTS In case of considerable changes (case by case basis) Examples: Modification of the total budget, partner drop-out

25. Project Modification Procedure • Submission of revised Application Form with approval of PSC In case of major changes (case by case basis) Examples: • Increase of ERDF funding • Significant changes in project content 25

26. VI General Considerations 1) EU Legislation Examples: - Regulation (EC) N° 1685/2000 of 28 July 2000 (eligibility of expenditure) - Regulation (EC) N° 438/2001 of 2 March 2001 (management and control systems for assistance granted under the Structural Funds) 2) Public Procurement Consider when realising investments or hiring consultants and experts -European Community rules and national legislation European Directive: contracts worth more than €200,000

27. General Considerations 3) State Aid “Any form of aid that is provided directly by the state or indirectly through state resources, to an undertaking or group of undertakings.” (Community rules on State Aid limit the support which may be provided from public funding to assist projects in the commercial sector.) 4) N+2 rule of automatic decommitment of unused resources(Council Regulation 1260/1999) on Programme Level 27

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