111

EU Funding Workshop

Intermediate Body Training

Basic principles and requirements

222

EU Competitiveness Programme

• €306m ERDF • Intervention rate 50%

• 4 Priorities– P1 Competitiveness and Innovation– P2 Enterprise and Entrepreneurship– P3 Improving accessibility– P4 Technical assistance

331 3

Financial Flow

100% Public Expenditure

Eligible Expenditure input to EU Database

Claim Submitted to EC

50% of Eligible Expenditure Received from EC

EU receipt reimbursed

444

How is the Programme Managed?

• Managing Public Money NI

• DFP Guidance (Audit and Financial Management

Division)

• EU Regulations and Guidance

• Programme Documents & Guidance

Guiding principle – ‘Strictest Rules Apply’

PlayersAudit Authority DETI Audit – Jackie Connolly

Managing Authority DETI EU Support Unit – Maeve Hamilton

Certifying Authority DETI Accountability – David Conliffe

Intermediate Bodies DETI / Invest NI / NITBDARDDSD – to be formalisedDRD – to be formalised

666

Managing Authority Role

• Programme Development• Overall Programme Management

– High level approval of activity – Guidance and Operating manual– N+2– Claim initiation– Evaluation

• Negotiating Programme changes with EC• Reporting on Progress• Closure

777

Certifying Authority Role

• Validity and accuracy of claims

• Certification of claims

• Submission of claims to the Commission

• Accounting for and disbursing EU receipts

• Irregularity and recovery monitoring

888

Audit Authority Role

• Audit Strategy

• System Audits

• Audits of Operations

• Annual Control Report and Opinion

• Closure Declaration

999

IB Role• Selection of operations• Appraisal• Award of funding• Monitoring• Verifying operations and expenditure• Financial accountability• Reporting• Publicising• Maintaining the database• Safeguarding the audit trail

• Defined in the Memorandum of Understanding

101010

Key Issues

• Eligibility of Activity and Expenditure

• Audit Trail

• Procurement

• Publicity

111111

Eligible Activity

Must contribute to the delivery of the relevant Programme

Objectives

121212

Ineligible Activity

• Displacement of similar existing activities

• Building and renovation of housing

• Agriculture, Fisheries and Forestry

• Local social welfare facilities

• EC Sectoral Restrictions (shipbuilding etc)

131313

Ensuring Activity is Eligible

• Selection Criteria • Selection Panels• Appraisal• Casework Committees• Approval Bodies• Letters of Offer/Contracts• Monitoring and reporting against terms

and conditions

141414

Eligible Expenditure Principles

• Against approved project activity

• Directly attributable to the project

• Relates to Northern Ireland

• Actually incurred and paid by the final beneficiary

between 1 Jan 2007 and 31 Dec 2015

151515

Eligible Costs for Capital

• Purchase and/or development of Land

• Purchase or development of Real Estate

• Preliminary Expenditure

• Professional Fees

• Purchase/lease of plant and equipment

1616

Eligible Staff Costs

• Basic Salary• Statutory Contributions• Pension Contributions• Training Costs• Recruitment Costs• Non-statutory Sick/Maternity Pay• Holiday Pay• Commission• Shift allowance • Taxable Benefits

Must be defined in T&Cs of employment

Private companies only

171717

Part-time Staff Costs

• Time Records

• How is the hourly rate calculated?

181818

Daily/Hourly Rate Calculation

Basis Example

Actual salary for claim period (ERNI, pension and additional taxable contracted costs elements)

£5,000

Contracted working days per week 5

Multiply by period covered by claim e.g. 13 weeks 65

Subtract contracted leave pro rata for claim period (e.g. 20 days/4 = 5)

60

Subtract contracted statutory holidays pro rata for claim period (e.g. 10 days/4 = 2.5)

57.5

Gives daily rate of £5,000/57.5 = £86.96

Divide by contracted daily hours (e.g. £86.96/8 hours = £10.87

191919

T&S

• Mileage• Accommodation • Meals• Air/rail/bus/other travel

202020

Other Eligible Costs

• Hospitality• Professional/Consultancy Fees• Accommodation• Consumables• Marketing/Promotion• Other (insurance, depreciation, maintenance

etc)

212121

Ineligible Expenditure – Common Errors

• Payment against scale or unit costs

• Notional costs

• Time records incomplete or missing for part-time staff

• Recoverable VAT

• Missing or incomplete audit trail

• Expenditure outside Programme/LoO period

222222

Ineligible Expenditure – some of the rest

• Bank charges or fees on accounts

• Mandatory training under statutory provision

• Fines, financial penalties and litigation costs

• Dividends

• Set up/contribution to private pension schemes

23

Management Verification

23

24

Who conducts Management Verification?

• Finance staff

• Programme managers

• Technical staff

• Grant inspectors

• Managing Authority

Intermediate Body

24

252525

Management Verification

Can encompass:

–Claim checks

–Contract monitoring

–Project Visits

–Board Meetings/Project Launches

–Formal Article 13 on-site verification

262626

Management Verification – Key Issues

• Timing

• Frequency

• Nature

• Keeping adequate records

• Database entries

27

Audit Trail

27

282828

What is the Audit Trail

The comprehensive set of documents which provide a

complete history of a project and provide evidence that proper procedures were applied and

outcomes achieved.

292929

Audit Trail Documents

• Application forms• Selection/Appraisal records• Contract/Letter of Offer• Management and control records• Payment records• Monitoring reports• Closure documents

303030

Audit trail – How long, in what format and where?

• Period – 2022

• Format

• Location

313131

Payment Audit Trail

• May differ depending on the nature of the expenditure but in general will include:– Proof of commissioning of the

goods/service– Proof of receipt of the goods/service– Proof of payment

323232

Personnel Costs

• Contract of Employment

• Payroll records

• Time records

• Breakdown of contributions (statutory and

any company specific elements)

• Proof of Payment

333333

Equipment/Consumables

• Invoices

• Lease/rental agreements

• User logs

• Procurement documentation as appropriate

• Proof of payment

• Asset Register

343434

Contract Expenditure

• Procurement documentation & the contract

• Monitoring/management documentation

• Invoice and evidence of any 3rd party

costs included on a real cost basis

• Proof of payment

353535

Travel and Subsistence

• Claim form signed, dated and approved

• Receipts/invoices

• Supporting evidence of the event

• Proof of payment

363636

Payment Audit Trail

• Indirect Costs/Overheads

– Invoices

–Accounting records

–Apportionment data

–Proof of payment

37

Procurement

37

38

Procurement – Public v Private

• Rules apply to Public Bodies

• VFM for private companies

• Reasonableness test for private companies

If in doubt refer to CPD

38

393939

Common Procurement issues

• Not adhering to threshold requirements

• Insufficient advertising

• Evaluation criteria in ToR not used in assessment

• Extensions to contract

• Incomplete supporting documentation / audit trail

• Payments not in line with agreed payment schedule

• Activity not verified in line with contract terms

• 3rd Party costs not appropriately verified

• Unapproved single tender actions

40

Publicity

40

414141

Publicity

• Letters of Offer / contract documents• Brochures / leaflets• Invitations• Advertisements• Web-pages• Promotional items• Billboards & Plaques• Publications and press releases• Presentations• Conferences/exhibitions/training/events

424242

Publicity – general principles

• Logo and strap line• Front of material• Equal prominence• Readable• Proportionate and appropriate

434343

Consequences of non-compliance

Activity 100% of expenditure on the activity

Expenditure 100% of the error value

Audit trail Up to 100%

Publicity Up to 10% of the total grant

Tendering Dependent on the nature of non-compliance anything from 5% to 100% of contract value.

444444

Ensuring Compliance

• Strong risk awareness and management

• Strong financial controls

• Training and Documentation

• Early stage education of funding recipients

• Verification activity

454545

Guidance and Assistance

www.eucompni.gov.uk

www.eucompni.gov.uk/resource-library/guidance