LIFE NATKick off & platform meeting

LATVIA 2006

Aneta Gajda, Financial DesksEC DG ENV – LIFE Unit

Common Provisions (CP)

Financial Forms

General hints for financial reporting

Standard Audit Report

COMMON PROVISIONS (CP) SHORT OVERVIEW

CP - a binding document New from 2005 (before – SAP)

CP - determines beneficiary’s and partner’s rights and obligations for the duration of the project (+ 5 years after)

CP define: Project actors (1) Beneficiary (Art 4):

Solely legally and financially responsible and receives the EU-contribution

Not allowed to act as sub-contractor or supplier to other partners

Single point of contact for the Commission

Notify a Copy of any agreements Beneficiary-partners (Art 4.7 )

Partner (s) (Art 5):

Contributes to one or several of the tasks and to the costs incurred

Not allowed to act as sub-contractor to the beneficiary or other partners

No direct reporting to the Commission

Art 4.6 & 5.3 Analytical accounting (cost centre accounting) New from 2005

CP define: Project actors (2) Co-financer (s) (Art 7):

Contributes with financial resources to the project

Does not benefit from the Community contribution

Is not required to be directly involved in the project

Subcontractor (s) (Art 6):

Provides external services + specific tasks of a fixed duration

Shall not be a partner

Clear reference to the LIFE-project shall be included in the invoices/order form

Art 6.4 : Public tenders obligatory for public beneficiary/partner Competitive tenders for private beneficiary/partners New from

2005

CP Define: Mechanism of LIFE financial support (Art 20)

The Grant Agreement foresees a maximum amount of contribution and a maximum percentage of funding to the eligible costs

The final amount of the contribution is determined by applying the percentage defined in the contract to the eligible cost incurred but with the limit of maximum amount as specified in the contract

CP define: Eligible costs (Art 21.1 -21.12)

Provided for in the provisional budget/ Directly necessary for the project

Incurred during the lifetime of the project:

- Legal obligation to pay (the cost) has been contracted after the project start and before the end date

- Execution of corresponding action starts after the project start and is completed before the end date

- Full payment before submission of final reports

Exception:Costs for independent audit can be executed after project end date – but must be terminated, invoiced and fully paid before submission of final report, and auditor is given the assignment before the project ends

CP define: Ineligible costs (Art 22)

Some examples:

Exchange rate losses Debtors interest/interest on borrowed capital Services in kind (e.g. voluntary work) Licence or patent fees related to the protection

of intellectual property right

CP define: Payments (Art 23)

The First pre-financing payment (40%)

The Second pre-financing payment (30%) at least 150% of the first pre-financing used New from 2005 (other conditions for the projects of 2004 and earlier)

The Balance final payment

FINANCIAL FORMS

Where to find the model of financial forms:

http://ec.europa.eu/environment/life/toolbox/financial_sheet.htm

Statement of expenditure

To be delivered:

Project consolidated statement of expenditure, completed and signed by beneficiary

Participant statement of expenditure, completed and signed by each participant

Personnel costs (Art 21.2) (1) Relate to costs of employees – not to costs of

consultants etc. (external assistance)

Service contracts with individuals – obligatory

conditions: work at beneficiary’s/partner’s premises, under his

supervision and complies with the relevant national legislation (New from 2005)

Costs of civil servants/public employees -- only if work not standard activity -- for staff already working to be covered by the own contribution (New from 2005)

Actual (annual) gross salary or wages plus obligatory social charges, borne by the employer and not included in the salary, e.g. contributions to pension, sickness and unemployment schemes

Personnel costs (Art 21.2) (2)Actual time devoted to the project: to be registered by means of time sheets

which should be established timely,

signed by the staff member

and certified by the responsible project manager

Monitoring of personnel costs: Model - monthly time-sheet

http://ec.europa.eu/environment/life/toolbox/timesheet.htm

Travel costs (Art 21.3) Shall be charged in accordance with the internal

rules of the participant

Travel outside EU and not already envisaged in the proposal - Require prior approval of the Commission

Should in general relate to persons accounted for under “personnel costs” (travel costs of consultants should be part of their service contract/fees)

External assistance costs (Art 21.4)

External assistance costs may not represent more than 35% of the total eligible costs unless explicitly foreseen in the project

Relate to the purchase of services, not of goods

ATTENTION: such costs must be directly and exclusively attributed to the LIFE project

NOT: costs of independent audit – explicitly attributed to “other costs”

NOT: costs related to leasing/purchase of durable goods or consumables (attribute to those cost categories)

Durable goods (Art 21.5 to Art 21.7)

Relate to expenditure on purchase, manufacture or lease of equipment/infrastructure

(placed on the inventory of durable goods, treated as capital expenditure, purchased or leased at normal market costs)

Purchased within project duration BUT not at the last days of the project duration

Durable goods: Depreciation of expenditure on durable goods – beneficiary/partners apply own rules

BUT ceilings: infrastructure 25%, equipment 50% prototypes 100%

Durable goods (Art 21.7)

For LIFE-Nature projects, the cost incurred for durable goods by public authorities or non-governmental/non-profit organisations intrinsically connected with implementation of the project, explicitly envisaged and used to a significant degree within its duration shall be considered eligible in full. Such eligibility shall be subject to the beneficiary and partners undertaking to continue to assign these goods definitively to nature conservation activities beyond the end of the project co-financed under LIFE-Nature.

Consumable material (Art 21.10) Relate to the purchase, manufacture, repair or

use of any material, goods or equipment which:

- are not on the inventory of durable goods,

- are not treated as capital expenditure,

- are specifically related to implementation of the project.

General consumables/supplies will be charged to the “overheads” cost category.

Other costs (Art 21.11) Relate to costs not falling within another

defined cost category

Examples: costs for bank guarantee (covering the project period + 6 months), costs of independent audit

Other examples: bank fees for money transfers, inscription fees

Overheads (Art 21.12)

indirect costs – not include costs assigned to another budget heading; needed to employ/ manage/ accommodate/ support personnel working on the project

flat rate funding of 7% of the total amount of eligible direct costs New from 2005

GENERAL HINTS FOR

FINANCIAL REPORTING

Study carefully the Common Provisions (CP) and « re-read » them whenever a problem of administrative-financial nature occurs

Distribute the CP to all project partners and make sure that CP are applied by them

Oblige your partners to forward their project accounting data to you regularly.

Keep the project accounting up-to-date, including regular update of the financial forms

Introduce all data requested, i.e. complete all “cells” of the financial forms, or explain why they remain “empty”

Describe with sufficient detail the types of purchased services/goods and their link with the work programme or action

Keep all appropriate supporting documentation for all expenditure and income – including copies of the partners’ supporting documentation

Supporting documentation - Examples: e.g. purchase orders, invoices, payment proofs, public tendering documents

for personnel: monthly salary slips, presence/time sheets, calculation of social charges if not included in salary

VAT:

For VAT charges to be considered eligible the beneficiary must provide a declaration from the relevant national authorities that it and/or its partners must pay and may not recover the VAT for the assets and services required for the project.

Currency of the reports: only the Euro (€), Art. 25.4 Payments made in different currencies: use the exchange rate applied by the European Central Bank on the first day of the month in which the financial report is presented to the Commission

Where to find:

http://ec.europa.eu/budget/inforeuro/index.cfm

INDEPENDENT AUDIT

New from 2005

Maximum amount of grant ≥ € 500.000

pre-financing (s) > € 750.000

Final payment request > € 150.000

External/Independent Auditor’s Report

• Find a model of the standard audit report at:

http://ec.europa.eu/environment/life/toolbox/standardaudit.htm

Thank you for your attention !