WFGuidelines for implementation

Financial management

12 February 2010, DelftKick-off meeting

Content

1. Partners’ budget (overview, approach,

templates)

2. Sub-division of budget per budget lines

3. Eligibility (rules, period, requirements)

4. First level control

5. Reporting procedure

6. Payment procedure

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1. Budget overview

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1.8 Project budget (in EUR) (based on the partner budget described in Section 5)

                                  Amount

  ERDF Funding 2 043 171,33 €

  National Public Co-financing 616 290,00 €

  Total budget eligible to ERDF 2 659 461,33 €

  Norwegian Funding 70 375,00 €

  Norwegian Co-financing 70 375,00 €

  Total Budget 140 750,00 €

  INTERREG IVC BUDGET 2 800 211,33 €

  Other funding 10 000,00 €

  TOTAL BUDGET 2 810 211,33 €

1. Budget overview

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Preparation activities

CP1 CP2 CP3 CP4 CP5 TOTAL per budget line

Management and coordination

Communication and dissemination

Exchange of experiences dedicated to the identification and analysis of good practices

EUR %

Staff

0,00 225 357,83 170 920,00 785 056,25 0,00 0,001 181

334,08 42,19Administration 0,00 6 400,00 800,00 5 000,00 0,00 0,00 12 200,00 0,44Travel and accommodation

8 081,00 43 600,00 155 200,00 250 150,00 0,00 0,00 457 031,00 16,32External expertise and services 21

919,00 242 113,75 343 831,50 541 782,00 0,00 0,001 149

646,25 41,06Equipment 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00Sub-projects 0,00 0,00 0,00 0,00

TOTAL per CP

EUR30

000,00 517 471,58 670 751,50 1 581 988,25 0,00 0,002 800

211,33 100

% 1,07 % 18,48 % 23,95 % 56,50 % 100

1. Budget overviewBudget is a plan >< BUT! implementation is always

changing slightlyApplication phase: initial budget development Start-up phase: conditions of approval set by the

JTS >> modification of detailed budget as well

> budgets per PP by CP, budget lines and reporting periods sent to PPs (and discussed individually if needed)

1. Budget overviewspending forecast - part of the Subsidy Contract (in

a yearly breakdown) > has to be adhered to and taken seriously!

Taken very seriously by the JTS > this is what has to be fulfilled and will be checked strictly

>> underspending is „the most serious crime” > decommitment rule >> may result in loss of funding

1. General characteristics of financial managementTime frame: 4-5 years from Application phase till project

closureStrict regulations on Programme levelVarious country specific requirements and their (frequent)

changesPrefinancing is needed from all PPs – can be as long as12

months!Fluctuation of staff on PPs levelBIG CHALLENGE BUT GREAT EXPERIENCE

For future financial planningFor future project implementation

1. Financial planning - monitoringIn order to ensure a sound financial

management for the project:PPs are requested to provide (bi-)monthly

internal reports to the LP (simple template provided by LP – check in Annex of the Handbook) on preceding spendings and a forecast for the following month(s)

Based on this data > the LP is capable to follow & monitor the project’s actual financial status, to compare it with the AF & to propose measures in case of serious deviations

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1. Budget flexibilityPossible deviations & reallocations are laid

down in the INTERREG IVC Programme Manual and the Subsidy Contract:

Changes in budget lines, CP budgets and PP budgets are possible – as long as the maximum amount of funding (ERDF + Norwegian) awarded is not exceeded

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1. Budget flexibility10% or 20,000 EUR flexibility:budget lines OR CP budgets OR PP budgetscan be exceeded by - 10%- OR 20,000 EUR of the respective budget line OR CP budget OR

PP budget – whichever is greater

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1. Budget flexibilityBudget line Original

amount in AF

Maximum possible overspending on this line

Explanation

Administration costs

50,000 EUR 20,000 EUR As 10 % of the original amount (i.e. EUR 5,000) is smaller than 20,000 this budget line can be exceeded by a maximum of EUR 20,000.

Staff costs 500,000 EUR

50,000 EUR As 10 % of the original budget(i.e. EUR 50,000) is higher than 20,000, this budget line can be exceeded by EUR 50,000

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1. Budget flexibilityThe 20% budget modification: - Only once during the project and only in duly

justified cases- Only upon prior approval from the JTS/MA- a reallocation can be made between budget

lines, CPs and PPs up to 20% of the total budget = the increase to budget line / CP / PP’s budget can be maximum 20% of the total budget for each change

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1. Budget flexibilityComponent

Original amount in AF

New amount after budget reallocation

Explanation

CP1 250,000 EUR 410,000 EUR

This component can be increased by a maximum of EUR 160,000 (=20% of the Total)

CP2 500,000 EUR 310,000 EUR

Component underspent whichallows reallocation to other CPs

CP3 50,000 EUR 80,000 EUR

This component can be increasedby a maximum of EUR160,000 (=20% of the Total)

Total 800,000 EUR 800,000 EUR

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2. Budget by budget lines

Staff costsAdministration costsTravel and accommodationExternal expertise & servicesEquipment

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2. Staff costsDefinition: personnel costs of employed staff (including

salary, tax, employer’s contribution for social secrurity, but not including voluntary contributions )- people beeing already on pay-roll or ad-hoc staff recruited and directly employed for the project by partner organisations

Calculation rules: on the basis of the actual salary rate stated in the regular employment contracts, pay-roll figures

Important administration rule: staff involved in and payed from the project needs to have job description including tasks related to WF project

Appears in all CPs – depending on the activities carried out and reported

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2. Administration costsDefinition:all direct general costs (costs

deriving exclusively from the project) and indirect general costs (overheads related to the project’s activities, based on real costs and calculated on a pro data basis)

Administration costs items:

stationary, photocopying, mailing, office rent, telephone, internet, heating, electricity, bank charges etc.

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2. Travel and accommodationDefinition: travel and accomodation costs and

allowances of partners’ staff related to their participation in meetings, visits etc.

External experts’ travel costs are budgeted under „external expertise” budget line!

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2. External expertise & services Definition: Costs paid to external service

providers on the basis of contracts and against invoices

Budget for external expertise: under the specific CPs in the budget line „External expertise” (see for details justification part in AF budget)

Only budgeted external expertise can be procured (public procurement applies!)

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2. EquipmentDefinition: purchase of equipment necessary

for the project

Public procurement rules have to be respected

Has not been planned for WF! (details should have been given in AF)

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2. Supporting documentationStaff costs: timesheets, internal monthly salary

statements, work contracts, position descriptions, statement on calculation method, bank transfer of payment of salary and related social charges

Administration costs: utilities, renting invoice/contract, possible calculation methods: staff number / sq meter / working hours, statement on calculation method

Travel & Accommodation: tickets, boarding cards, travel diary, internal documentation linked to travel (e.g. travel permit, other official statements)

External expertise: procurement documentation, contract/order form, delivery statements, invoice, bank transfer certificate, tangible output of delivery of the service (study, brochure, etc.)

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3. Eligibility rules

Only eligible expenditures meeting the following criteria can be funded under the INTERREG IVC Programme:Expenditure must be linked & related to the

respective partner budget and project activity (AF, progress report)

Only paid invoices can be claimedAll expenditure must be supported by evidence

(invoices to the partner’s name, accounting documents, etc)

Expenditures incurred and paid within the project’s implementation period (from start to end date fixed in Subsidy Contract)

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3. Eligibility periodPreparation phase: until 31.01.2009

Costs must relate exclusively to preparation activities and must be claimed in first progress report (staff, travel, external)

eligibility period start: 05.11.2009 (decision of MC)

Project implementation phase: 01.01.2010- 31.12.2012

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3. General eligibility requirementsDouble funding is not allowedVAT is not eligible unless it is definitely borne by

the partner and it is not recoverable by the partner >> if eligible cost for the PP >> the PP’s budget

is gross!Charges for international transactions (bank costs)

are eligible (mostly affects LP)Interest on debt, fines, financial penalties, foreign

exchange losses etc. are not eligible

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3. Specific country related Eligibility RequirementsPPs must be familiar with national rules

relevant to their projectIf national standards are more demanding

than EU rules, the stronger must be appliedPPs are advised to consult their first level

controller to get familiar with specific requirements to be met as soon as possible

Public procurement rules must be respected

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3. Public procurementNational regulations apply (may be stronger than

programme requirements!)Fundamental principles to keep in mind:

Be familiar with national public procurement regulations and/or involve a public procurement expert if needed

Be aware of the length of time needed for public procurement procedures (plan it when preparing your own implementation plans)

Ensure transparency of the whole public procurement process – full documentation (has to be available for financial control & audit purposes)

Content of procured activity (TOR) must be fully in line with activities in the AF.

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3. Expenditure reporting is possible if:

Calculations are based on actual costsCosts are borne by the PP organisationExpenditure has been paid out ( debited

from the partner’s bank account – date of payment)

Expenditure is directly linked to the project partner’s budget

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4. First Level Control (FLC)Each partner’s partner level reports have to be

verified by the respective FLC body (centralized or decentralized)

Aim: to control that costs co-financed under the INTERREG IVC Programme are in line with legal and financial provisions of the Subsidy Contract and with the relevant national laws

The role of FLC: administrative, financial and eligibility check of the project’s implementation on partner level

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4. First Level ControlCentralized systems

HungaryLatviaPolandSwedenNorthern Ireland

Decentralized systemsThe NetherlandsUKFinlandFrance ItalySpainNorway

4. First Level Control – basic tasks for PPsIdentify, contact ASAP and keep in continuous

contact with your FLC – in case of decentralized systems: start the approbation procedure ASAP

Read and follow the regulations released (and modified) by your FLC

Have personal consultations before the submission of each Partner Report (but definitely before the 1st one!)

Fulfil the reporting and clarification requirements of your FLC always without delay

5. Progress Reporting: procedure (1)

Reporting periods: calendar half-years (1 January- 30 June AND 1 July – 31 December)

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5. Progress Reporting: procedure (2)

STEP 1: Partner level reportssubmitted by all PPs to their first level

controllersValidation processOutput: 16 control confirmations in each

reporting period

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5. Progress Reporting: procedure (2)

STEP 2: Progress report PPs send an internal PP Progress Report (=simplified

template) to the LP to provide them data for preparing the joint Progress Report

PPs send their control confirmations in original to LP within max 15 days before deadline of the Progress Report submission

LP submits the joint Progress Report to its FLC for counterchecking

LP submits the Progress Report to the JTSLP – if needed, with the involvement of PPs – fulfils

clarifications requirements of the JTS

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5. Reporting: documents to be submitted (3)

Documents to be submitted together with the Progress Report by the LP:

Original copies of all PPs’ control confirmations (released by FLC)

Bank statements confirming the transfer of the reimbursed ERDF funds transferred from LP to PPs (from the 2nd report onwards)

3 copies of each project communication material (brochure, newsletters etc.)

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6. Payment procedure

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