lp seminar – madrid – 20-10-2008 european regional development fund financial reporting lead...

LP Seminar – Madrid – 20-10-2008

EUROPEAN REGIONALDEVELOPMENT FUND

FINANCIAL REPORTING

Lead Partner Seminar

Madrid, 20 October 2008

Petra Geitner Senior Finance Officer

Katja Ecke, Finance Officer

2 LP Seminar – Madrid – 20-10-2008

Content

Financial Control

Eligibility questions & General Advice


Financial Control


REPORTING PROCESS


Legal basis: Art. 16 of R. 1080/2006:

In order to validate expenditure, each Member State shall set up a control system (…)

DESIGN OF FIRST LEVEL CONTROL SYSTEM

4 systems possible:1. Centralised control at MS level by a public administrative body

2. Centralised control at MS level by a private audit firm

3. Decentralised control by controllers selected by the project partner from a

central shortlist

4. Decentralised control by internal or external controller proposed by the project

partner and approved at national level


Through Public Administrative body:

•Belgium (Walloon Region)

•Czech Republic

•Estonia

•Hungary

•Ireland

•Luxembourg

•Latvia

•Malta

•Poland

•Romania

•Sweden

•Slovenia

•Slovakia

Through Private Audit firm

•Lithuania

CENTRALISED CONTROL SYSTEMS

For more details see:http://www.interreg4c.net/load/Country_Specific_Control_Requirements.pdf


Controllers selected in a short list:

•Austria

•Bulgaria

•Norway

•Portugal

Controllers selected by project partners and confirmed at national level•Austria (Federal+Land)

•Belgium (Bruxelles Capitale)

•Belgium (Flanders)

•Cyprus

•Denmark

•Finland

•France

•Germany

•Poland (for Marshall offices…)

•Spain

•The Netherlands

•United Kingdom

DECENTRALISED CONTROL SYSTEMS

For more details see:http://www.interreg4c.net/load/Country_Specific_Control_Requirements.pdf


THE ROLE OF THE PP CONTROLLER

To confirm the expenditure for the PP

• after having checked

The payment date of the costs reported

That all necessary documents concerning receipts, payments and activities

are correctly recorded to ensure the audit trail

The delivery of the co-financed products and services

That progress made is reflected in the report

The compliance of such expenditure with community rules, programme rules

(subsidy contract refering to programme manual + Application form) and national

rules

• on the basis of

Accounting documents and project documentation

100% check (sample only if well justified)


GUIDANCE TO PPs TO PERFORM CONTROLS

TO BE PUBLISHED SOON

The Programme has issued templates of a Control Report and of a Check List annexed to the Programme Manual to be filled in by the PP’s controller

Programme manual Annex 6

On the basis of these two documents that have to be kept in PP’s files, the PP’s controller issues a Partner control confirmation

Programme manual Annex 5b

The Partner control confirmation will be submitted to the LP


DESIGNATION OF THE PP CONTROLLERS: PARTICULARITIES OF DECENTRALISED SYSTEMS

There is a compulsory approbation of the first level control controller by the central approbation body of the Member State for PP (including LP) located in Member States that have opted for a decentralised system

This approbation shall be finalised before the end of the first reporting period (31 December for progress report to be submitted on 1 April )


THE APPROBATION PROCEDURE OF THE PPs CONTROLLERS

The PP proposes a controller to the central approbation body of the Member State. A specific checklist is filled in by the PP for this purpose

The MS checks the information and assesses the qualification and independence of the controller

If OK, the MS issues an approbation certificate to the PP

LP submits individual approbation certificates to the JTS when PP reports for the first time or in case of change of controller

For each progress report, the LP checks that the name of the controller is the same as the authorised one

In case of change of controller, the approbation procedure shall be started again


THE SPECIFIC ROLE OF THE LP CONTROLLERThe role of the LP controller is to confirm the expenditure for the whole partnership and to submit the Progress Report for the whole project to the JTS

• after having checked that project expenditure is related to the project and correspond to the

delivery status of the partner

the figures in the progress report coming from the individual partners

are correctly summed up

• on the basis of

control confirmations signed off by the PP controller in compliance with

the country specific control requirements

Note that the LP is also a PP. Therefore the LP controller = the PP controller for the LP


POINTS OF ATTENTION FOR THE LP The LP reports every six months expenditure paid out during the reporting

period in compliance with the information in the Application Form, i.e.

the budget by budget line

the budget by component

the budget by partner

the specifications for external expertise + equipment

the payment forecast

Costs have to be in line with the activities listed in the Application Form

Deviations need to be justified in PR or agreed with JTS beforehand

The LP provides any clarification on Progress Report where requested by JTS. The payment is made within maximum 4 weeks after approval of the Progress Report


GUIDANCE TO LP CONTROLLERS TO PERFORM CHECKS

TO BE PUBLISHED SOON

There is an additional section for LPs to be filled in the template of the Check List annexed to the Programme Manual

Programme manual Annex 6

On the basis of all documents submitted by the PPs and its own documents as a partner, the LP shall issue a Progress Report including the Lead Partner Control Confirmation signed by LP controller

Programme manual Annex 5a


POINTS OF ATTENTION FOR THE LP

The LP sumbits to JTS

The Progress Report including the LP’s Control confirmation

The PP control confirmations

In case of decentralised system where controllers are proposed by the PP, the approbation certificate of Member State’s approbation body when partners report for the first time or when there is a change of controller.


Eligibility Questions & General Advice


EligibilityEligibility

Eligibility period

Preparation phase: costs are eligible

subject to project approval

within limit of EUR 30,000

For first call: between 1 January 2007 and date of submission of

AF to JTS (for first call = max.15 January 2008)

To be paid out by the end of the first reporting period and to be

reported with Progress Report 1

Project implementation phase: costs are eligible if

incurred after date of MC approval

paid before the end of the reporting period and the finalisation

month quoted in the AF


EligibilityEligibility

Eligibility of activities outside the EU (Art. 21 of Reg. no.1080/2006)

Activities outside the EU / Norway can be eligible to ERDF or

Norwegian funding if

- contracted and paid by EU or Norwegian partner

- for the benefit of the operation

- explicitly mentioned and justified in the approved application

- within limit of 10% of the operation’s INTERREG IVC budget

NB.: Travel costs of EU partners to places outside the EU (if

foreseen in the AF) eligible to ERDF outside the 10% rule as part of

‘normal’ project expenditure.

0


EligiblityEligiblity

Ineligible costs

VAT – if recoverable by whatever means

In-kind contributions

Bad debt interests, fines, financial penalties, foreign exchange losses

Expenditure already supported by other subsidies

Revenues – to be deducted from total eligible costs


General Advice


AdviceAdvice

Lessons learnt from IIIC Use programme manual as the reference book.

Only costs paid by partners officially listed in the AF can be reported in PR.

Keep in mind that audits can take place beyond the end of the project. Proper documentation is essential - especially for public procurement, calculation of staff cost + indirect administration costs.

Pay particular attention to public procurement rules. Also below European threshold of EUR 206,000, you have to put into competition when you contract goods and services (refer to national + internal rules!).

Base your staff cost calculation on hours actually worked + timesheets.

Do not artificially inflate your administration costs. The link to project has to be obvious and clear. Costs have to be actual.


AdviceAdvice

Lessons learnt from IIIC

Be coherent in cost allocation to the budget lines + Components

Staff

Administration for personnel employed

Travel and Accommodation by partners in AF only!

Equipment

External Expertise and Services

Sub-Projects for mini-programmes only


AdviceAdvice

Leassons learnt from IIIC

Be careful with shared costs Responsible partner has to provide to all partners taking over a

share of common costs

request for reimbursement

all relevant supporting documentation Responsibility of each partner to include share of common costs

in own financial report and to obtain confirmation from controller (according to country specific control requirements)

Recommendation:

limit as much as possible shared costs to budget line “external expertise and services”

include procedure in partnership agreement

procedure for sharing and reporting costs to be checked with national controllers of each individual partner concerned.


AdviceAdvice

Measures for an effective reporting process + FLC

Ensure good communication between LP/PP, coordinators, financial managers and controllers

Include the following points in the partnership agreement Budget by partner by budget line, component

Payment forecast by partner

Deadlines for reporting

Methods / amounts of shared common costs

Exchange rate conversion (one method for the whole partnership)

Make sure that all documents are available on all levels Application Form

Subsidy Contract

Partnership Agreement

Programme Manual


Further measures for an effective reporting process + FLCHave available the following documents (on PP level):

list of expenditure invoices bank statements procurement documentation: procurement note, terms of reference,

offers/quotes, order form, contract documentation of calculations (if only a share was allocated to the

project) time sheets, employees’ contracts, pay slips proofs for delivery of services and goods (studies, brochures,

newsletters, minutes of meetings, translated letters, participants’ list etc), record of assets

control report incl. control checklist (model in Programme Manual)

Set up a separate account for project expenditure (or separate costs center in accounting system)

AdviceAdvice


Support from JTS/MA/CA/MS

Programme manual (practical information in grey boxes)

Advice from the JTS

Standardized control confirmations, control reports and checklist

A limited number of quality checks by CA, MA/JTS, MS

Training on financial management for financial managers +

controllers

ConclusionConclusion


Thank you for your attention!

lp seminar – madrid – 20-10-2008 european regional development fund financial reporting lead...

Documents

lp seminar madrid

lp slide

financial control slide

level control controller

control report

level control system

national level slide

control system design