WE-Mentor Enterprising women in European Research mentoring India/Israel/Romania/Turkey Financial...

WE-Mentor Enterprising women in European Research

mentoring India/Israel/Romania/Turkey

Financial and administrative aspects in

FP7.



GENERAL PRINCIPLESFORMS OF GRANTS

• Reimbursement of eligible costs

• Flat rates: a percentage for indirect costs or scales of unit costs

• Lump sum amounts

• Combination

COST REPORTING MODELS ELIMINATED

• Participants charge direct (and indirect) costs

• For indirect costs flat rate is an option

• For certain participants indirect costs can be calculated using a simplified method to be established in the grant agreement

CO-FINANCING, NO PROFIT



ELIGIBILITY FOR FUNDING

TYPE OF ORGANIZATIONS ELIGIBLE FOR EU FINANCIAL CONTRIBUTION:

1. Legal entities from MS and AC or created under Community law (and JRC) 2. International European interest organisations3. Legal entities established in international cooperation partner countries

(ICPC)

and

International organisations, third countries other than ICPC, if provided for in SP or WP; or essential for carrying out action; or provision for funding is provided for in a bilateral agreement between Community and the third country



FP 7 - 3 TYPE OF EU GRANTS

• Reimbursement of eligible costs

• Flat rates: a percentage for indirect costs or scales of unit costs

• Lump sum amounts

• Combination



MAXIMUM FUNDING RATES

Research and technological activities: – 50% of eligible costs except for:▫ Public bodies: – 75%▫ Secondary and higher education establishments: – 75%▫ Research organisations (non-profit): – 75%▫ SMEs: – 75%

Demonstration activities: – 50% of eligible costs

Other activities: – 100% including e.g. Management Frontier research actions – 100% Coordination and support actions – 100% Training and career development of researchers actions – 100%



REIMBURSEMENT OF ELIGIBLE COSTS

Most funding schemes particularly at beginning of FP7 will use reimbursement of eligible costs

DIRECT COSTS Eligible costs:

actual; incurred during the project; determined according to usual accounting and management

principles/practices; used solely to achieve project objectives; consistent with principles of economy, efficiency and

effectiveness; recorded in accounts (or the accounts of third parties); exclusive of non-eligible costs



REIMBURSEMENT OF ELIGIBLE COSTS

DIRECT COSTS NON-ELIGIBLE COSTS:

o indirect taxes including:o value added tax, o duties, o interest owed, o provisions for possible future losses or charges, o exchange losses, o cost related to return on capital, o costs declared or incurred, or reimbursed in respect of another

Community project, o debt and debt service charges, o excessive or reckless expenditure, and o any other cost that does not meet the conditions referred to in points.



MAIN COST CATEGORIES

Expenses included in the budget of research project are usually grouped in the following categories:

Personnel; Travel and subsistence; Equipment; Consumables; Other costs; Subcontracting; Indirect cost.

To be eligible cost must allocated only when and for the portion used to implement the project activities.

Expenses should be calculated in close approximation with real cost.



PERSONNEL COSTS

Technical and administrative staff assigned to the project (including Junior and Senior researchers)

– To be directly hired by the beneficiary in accordance with national legislation,

– To be work under the sole technical supervision and responsibility of the latter, and

– be remunerated in accordance with the normal practices of the participant.

To for Universities using AC in FP6: permanent staff can be considered;

administrative management only for management costs;

salary: gross amount, including social contribution;



TRAVEL AND SUBSISTENCE

Travel cost related to project meetings, technical meetings, exchangemissions, conference, workshop etc.

travel cost include: flight, hotel, restaurants, local transport; the number of events should be identified, as well as the possible location

(national, European, International)



EQUIPMENT

Equipment consist of PC, machines, tools necessary for performing specific tasks of the project;

Equipment can be charged to the project only for the value of the depreciation during the project life and only for the % pf allocation to the project;

Depreciation is calculated according to the accountant procedures used in the country.

IMPORTANT: a common fault is to allocate the whole value of the equipment during the budget preparation.

to calculate the amount of the equipment:• value of the equipment • period of depreciation (according to the national legislation)• period of use within the project;• % of allocation of the equipment to the project.



CONSUMABLES AND OTHER COSTS

CONSUMABLES: Material to be used to perform the experiments or specific activities of the

project; Software necessary for the implementation of the activities; No generic expenses (such as paper and generic per office) to be

included in Indirect costs;

OTHER COST: All other direct cost related to the project and not included in the above

mentioned categories (admission fees for events, cost for organizing seminars, workshops, meetings, including costs for the rooms, catering, dissemination material, etc.)



SUBCONTRACTING

• A subcontractor is a third party having an agreement on business conditions with one or more participants, in order to carry out part of the work of the project without the direct supervision of the participant

– subcontracts may only cover the execution of a limited part of the project;

– recourse to the award of subcontracts must be duly justified in Part B

– Any subcontract, the costs of which are to be claimed as an eligible cost, must be awarded according to the principles of best value for money (best price-quality ratio), transparency and equal treatment.

Subcontract = estimation of the value of the subcontract (best value for money)



INDIRECT COSTSIndirect eligible costs = costs which are not attributable directly to the action,

but which have been incurred in direct relationship with the direct eligible costs attributed to the action

• participant may opt for a flat-rate of its total direct eligible costs, excluding its direct eligible costs for subcontracting.

• flat rates will be based on a close approximation of the real indirect costs concerned, in accordance with the Financial Regulation and its Implementing Rules.

The participant shall apply the method chosen in all grant agreements under the Seventh Framework Programme.



INDIRECT COSTS

Four different methods to quantify indirect costs in FP7:

• A) REAL INDIRECT COST: for all participants who are able to quantify the real indirect cost. Simplified approach must be based on actual costs derived from the financial accounts of the period in question;

– Identification of the real % of overheads (usually based on personnel)• B) FLAT RATE OF 20%: for all participants it is possible to use this approach

(the same than FCF in FP6)– Indirect costs = 20% of direct cost excluding subcontract;

• C) FLAT RATE OF 60%: only for no profit public bodies, secondary and higher education establishments, and research organisations and SMEs, unable to quantify real indirect costs

– Indirect costs = 60% of direct costs excluding subcontract

• For ICPC country Lamp sum. Procedure to be defined



METHOD OF CALCULATING INDIRECT COSTS

REAL INDIRECT COSTS

• A participant may use a simplified method of calculation of its full indirect eligible cost at the level of its legal entity if it is in accordance with its usual accounting and management principles and practices.

• Use of such a method is only acceptable where the lack of analytical accounting or the legal requirement to use a form of cash-based accounting prevents detailed cost allocation.

• The simplified approach must be based on actual costs derived from the financial accounts of the period in question.




FLAT RATE OF 20%

• A participant may opt for a flat-rate of 20% of its total direct eligible costs, excluding its direct eligible costs for subcontracting and the costs of reimbursement of resources made available by third parties which are not used on the premises of the participant.

• All participant may apply for this method




FLAT-RATE OF 60%

• Non-profit public bodies, secondary and higher education establishments, and research organisations and SMEs, which are unable to identify with certainty their real indirect costs for the project, for funding schemes which include research and technological development and demonstration activities may opt for

– a flat-rate of 60% of the total direct eligible costs excluding costs for subcontracting and the costs of reimbursement of resources made available by third parties which are not used on the premises of the participant.

• If these participants change their status during the life of the project, this flat rate shall be applicable up to the moment they lose their status.



FINANCIAL AND ADMINISTRATIVE ASPECTS IN FP7



USE OF LUMP-SUM AND FLAT RATE FINANCING SCHEMES

• Greater use of lump sum or flat rate financing in future for certain actions whose characteristics and objectives permit (e.g. possibly some Coordination and Support actions, and some Marie Curie schemes)

• Lump sums are established by the Financial Regulation and implementing rules – per category/per beneficiary

• Lump sum and/or flat rate financing (scale of unit costs) could be used for the whole action, or;

• A specific lump sum is identified for Networks of Excellence (NoEs) (unless otherwise provided for in WP),

• Flat-rates/lump sums for certain costs can be combined with reimbursement of eligible costs;



SPECIAL LUMP-SUM FOR NETWORKS OF EXCELLENCE

• For Networks of Excellence, a special lump sum is proposed in the Rules [if this form of financing is indicated in the work programme]

• The lump sum would be € 23,500 per researcher per year (with update every two years)

• Payments based on assessment of progress in implementing the joint programme of activity (measured by indicators of integration)



IDENTIFICATION OF DIRECT AND INDIRECT COSTS PER ACTIVITY

Direct and indirect cost identified above should be split in

• costs for R&D activities;• costs for demonstration activities;• costs for management activities;• cost for other activities (e.g. training)

Identify specific WPs/Tasks for each activity in the workplan; In FP7 no more limit of 7% for management costs.



EC CONTRIBUTION

The requested EC contribution will be determined by applying the upper funding limits indicated per activity and per participant to the costs listed above:

• Research and technological development = 50% or 75%*

• Demonstration activities = 50%

• Management activities = 100%

• Other activities = 100%

(*) no profit public bodies, secondary and higher education establishments, and research organisations and SMEs



REPORTING AND AUDIT OF ELIGIBLE COSTS

– Periodic reports regarding eligible costs, financial interest yielded by pre-financing, and receipts in relation with the indirect action concerned…

…and, where appropriate, certified by an audit certificate, in accordance with the Financial Regulation.

– The existence of co-financing in relation with the concerned action to be reported and, where appropriate, certified at the end of the action.

– Audit certificates shall not be required for indirect actions entirely reimbursed by means of lump sums or flat rates.

– In the case of public bodies, research organisations, and higher education establishments, an audit certificate by a competent public officer.



MAIN CHANGES BETWEEN FP6 AND FP7

• The Abolishment of Cost Models • Overhead Rates • No AC model on Universities • 75% funding for SMEs for R&D activities• “Financial Collective Responsibility” is replaced by a “Mechanism to cover

financial loss”;• Different “Forms of Grant” could be used together in a given project;• Partner's total claim of less than €25,000 may not require an Audit;

• Audit mandatory when total claimed reaches €325,000;



TERMINOLOGY CHANGES

• INCO becomes ICPC (International Cooperation Partner Countries);• “Instruments” become “Funding Schemes”;• The separate “Coordination Actions” and “Support Actions” are

grouped together to become “Coordination and Support Actions” (CSA);

• “Financial Guidelines” become “Financial Rules”;• “Model Contract” becomes “Model Grant Agreement”• Under Eligible Costs, the word “Necessary” is replaced with “Used

solely to achieve Project Objectives”



THANK YOU!

Alberto SciutoInnova S.p.A.Via Giacomo Peroni, 38600131- Rome, ItalyTel. +39 06 40040358Fax +39 06 [email protected]

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