3rd NWE Lead Partner Seminar

FINANCIAL REQUIREMENTS

10th April 2003 in Lille

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

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

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Basis for Project Management Structure

Joint Convention

Lead Partner Principle

Overall responsibility for project implementation (content + finance)

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

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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

Project Payment Procedure

Paying Authority

Programme Bank Account

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

Payment Claim

Project Lead Partner

Submits an Activity Report and a Payment Claim every 6 months

Reimburses the other project partners according to their expenditureProject Partner Project Partner

Payment Claim Flow

Money Flow

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

Payment Claim Form

Maximum ERDF Grant Rates

Objective 1Non-

Objective 1

In general 75% 50%

Investment in infrastructure generating substantial net revenue

40% 25%

Investment in firms 35% 15%

Payment Claim Form

Budget Lines

Preparation Costs

Partner Staff

External Experts and Consultants

Travel and Accommodation

Equipment

Investment

General Costs

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

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.

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

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

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

IV Audit Requirements

Project Audit Guidelinesgive clear instructions

• To LP: what to expect in terms of audit• To project auditors: in terms of work to

be performed

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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

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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

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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

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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

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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

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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

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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

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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

V Project Modification Procedure

A) 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

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Project Modification Procedure

C) 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

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

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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

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