FP7 Financial Issues (March 2007)

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06 December 2002 Ingrid Zwoch, NCP-LifeSciences, Germany

Training Session

CPN-YAS-PRD

Financial Issues

Ingrid Zwoch

National Contact PointLifesciences

Tel. +49 (0)228 3821 690 Fax +49 (0)228 3821 [email protected]


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Where would you find information on costs

Rules for Participation

Financial Guidelines (not yet published)

Core grant agreement Standard with specifics of project

Annex I Technical tasks - the “project”

Annex II General Conditions of the contract




Financing: costs

New principles:

1 - No more cost categories 2 – To be eligible costs must be :

actual, economic and necessary for the project incurred during the duration of the project (exception: costs

of the final reports) recorded in the accounts (or third parties)

and must exclude indirect taxes, duties, interests, costs reimbursed in respect of another Community project, and not give rise to profit

3 - Presented in Annex I

Eg of potential eligible costs: pg 144 FP6 financial guidelines




Financing: Costs

Eligible Costs Non-Eligible Costs




Eligible Costs

Typical Direct Costs

personnel (salaries and related costs) durable equipment (depreciation) consumables travel and subsistence other project specific costs




Eligible Costs

Direct Costs

identified by the beneficiary in accordance with its accounting system, and can be attributed directly to the project

personnel costs – actual hours worked (hired by the beneficiary in accordance with its national legislation – be under the sole supervision of the latter – and be remunerated in accordance with the normal practices of the beneficiary)




Eligible Costs

Typical Indirect Costs (Overhead)

depreciation of buildings depreciation of equipment / infrastructure maintaining buildings administration (institution) cleaning heating electricity…..water….




Eligible Costs

Indirect Costs

which cannot be identified by the beneficiary as beeing directly attributed to the project but which can be identified and justified by its accounting system as being incurred in direct relationship with the eligible direct costs attributed to the project

- Real indirect costs (certified methodology)- Flat rate (20 % / 60 %)

in all grant agreements of the beneficiary




Non-Eligible Costs

identifiable indirect taxes (incl. VAT) duties interest owed provisions for future losses or charges exchange losses, cost related to return on capital costs declared or incurred or reimbursed in respect of another Community project debt and debt service charges excessive or reckless expenditure




Accounting Principle

Book Keeping System is proving thedirect and indirect costs - de facto (in Euro)

Calculating and proving the direct costs (in Euro) and calculating the indirect costs as a flat rate (percentage of the direct costs – excl. subcontracts)




Indirect Costs as a Flat Rate

Typically – those who choose the “flat-rate-version” may charge 20 % of the direct costs – excluding subcontracts

Exceptions for public research institutions and SMEs:

- Calculating and proving the direct costs (in Euro)- Calculating the indirect costs as a flat rate

- up to 60 % of the direct costs (subcontracts excluded)




Community Contribution

Overhead Rate accepted is dependent on thetype of funding scheme

Collaborative Project Network of Excellence Specific Support Action / Coordination Action (max. 7 % of direct costs excluding subcontracts)




Maximum Community Contribution

Is dependent on the type of activity

Research Demonstration Training Management Networking specific support activities and….





Is dependent on the type of institution

public+SME / others

Research 75 % / 50 % Demonstration 50 % / 50 % Training 100 % / 100 % Management Consortium 100 % / 100 % other specific activities 100 % / 100 %





Is dependent on the type of participation

Partner Subcontractor (receives 100 % from the Partner with whom he has concluded the subcontract)




Subcontracting

Contractors shall ensure that the work to be performed can be carried out by them.

Exception: where it is necessary to subcontract certain elements of the work, this should be clearly identified in Annex I.

Minor services may be subcontracted: which do not represent core elements of the projectwhich cannot be directly assumed by contractorswhere necessary for the implementation of the project




Financing: receipts

Three kinds of receipts must be taken into consideration in order to avoid any possibility of profit:

Financial transfers or their equivalent to the contractor from third parties ;

Contributions in kind from third parties;

Income generated by the project.

In the first two cases (financial transfers or contributions in kind), these endowments are considered as receipts of the project if the third party has provided them specifically to be used in the project.

FP6 Financial Guidelines p. 66




Financing: audit certificates

each contractor shall provide an audit certificate

prepared and certified by an external auditor (for

public bodies - competent public officer)

to transform a pre-financing into a payment

Based on the reporting periodicity of the contract

(Art. 7.2)

Audit certificate costs have to be claimed as

management costs in subcontracting




Reporting periodicity

Reports and deliverables (pg 88 FP6 financial guidelines)

The consortium will submit the following reports to the Commission:

(within 45 days after the end of each reporting period) a periodic activity report a periodic management report a report on the financial distribution between contractors any other report required by Annexes to Contract an audit certificate (certification of costs incurred in

corresponding period) + Form C




Reports Submission

Reports must be provided both electronically and

- the originals - by registered mail with acknowledgement of

receipt (fifth paragraph of article II.7 of Annex II (General conditions) to the FP6 model contract)

The date of arrival of the originals is deemed to be

the official date of reception.




Payment modalities

Pre-financing (start)

Periodic payment

Periodic pre-financing (based on the applicable

reporting periodicity)

The Community financial contribution is paid to

the coordinator : the consortium decides on its

allocation between the contractors (consortium

agreement)




Exchange Rates

Losses have to be covered by the participant

concerned

Check for specifications

Account for Euro

Travel

FP7 Financial Issues (March 2007)