WF Guidelines for implementation Financial management 12 February

WF Guidelines for implementation Financial management 12 February 2010, Delft Kick-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 2

1. Budget overview 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 € 3

1. Budget overview Preparatio CP 1 n activities CP 2 Management and coordination CP 3 CP 4 CP 5 Communicati Exchange of on and experiences dedicated dissemination to the identification and analysis of good practices TOTAL per budget line EUR % Staff 0, 00 External expertise and services Equipment 785 056, 25 0, 00 1 181 334, 08 42, 19 0, 00 6 400, 00 800, 00 5 000, 00 12 200, 00 0, 44 8 081, 00 43 600, 00 155 200, 00 250 150, 00 457 031, 00 16, 32 21 919, 00 242 113, 75 343 831, 50 541 782, 00 0, 00 1 149 646, 25 41, 06 0, 00 0, 00 Travel and accommodation 170 920, 00 Administration 225 357, 83 0, 00 0, 00 2 800 211, 33 Sub-projects TOTAL per CP EUR 30 000, 00 517 471, 58 670 751, 50 1 581 988, 25 % 1, 07 % 18, 48 % 23, 95 % 56, 50 % 100 4

1. Budget overview Budget is a plan >< BUT! implementation is always changing slightly Application 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 overview spending 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 management Time frame: 4 -5 years from Application phase till project closure Strict regulations on Programme level Various country specific requirements and their (frequent) changes Prefinancing is needed from all PPs – can be as long as 12 months! Fluctuation of staff on PPs level BIG CHALLENGE BUT GREAT EXPERIENCE For future financial planning For future project implementation

1. Financial planning - monitoring In 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 8

1. Budget flexibility Possible 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 9

1. Budget flexibility 10% or 20, 000 EUR flexibility: budget lines OR CP budgets OR PP budgets can be exceeded by - 10% - OR 20, 000 EUR of the respective budget line OR CP budget OR PP budget – whichever is greater 10

1. Budget flexibility Budget line Original Maximum amount in AF possible overspendin g 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 11

1. Budget flexibility The 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 12

1. Budget flexibility Component Original amount in AF New amount after budget reallocation Explanation CP 1 250, 000 EUR 410, 000 EUR This component can be increased by a maximum of EUR 160, 000 (=20% of the Total) CP 2 500, 000 EUR 310, 000 EUR Component underspent which allows reallocation to other CPs CP 3 50, 000 EUR 80, 000 EUR Total 800, 000 EUR This component can be increased by a maximum of EUR 160, 000 (=20% of the Total) 13

2. Budget by budget lines Staff costs Administration costs Travel and accommodation External expertise & services Equipment 14

2. Staff costs Definition: 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 15

2. Administration costs Definition: 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. 16

2. Travel and accommodation Definition: 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! 17

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!) 18

2. Equipment Definition: 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) 19

2. Supporting documentation Staff 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. ) 20

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 claimed All 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) 21

3. Eligibility period Preparation 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. 201031. 12. 2012 22

3. General eligibility requirements Double funding is not allowed VAT 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 23

3. Specific country related Eligibility Requirements PPs must be familiar with national rules relevant to their project If national standards are more demanding than EU rules, the stronger must be applied PPs 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 24

3. Public procurement National 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. 25

3. Expenditure reporting is possible if: Calculations are based on actual costs Costs are borne by the PP organisation Expenditure has been paid out ( debited from the partner’s bank account – date of payment) Expenditure is directly linked to the project partner’s budget 26

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 27

4. First Level Control Centralized systems Decentralized systems Hungary The Netherlands Latvia UK Poland Finland Sweden France Northern Ireland Italy Spain Norway

4. First Level Control – basic tasks for PPs Identify, 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 1 st 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) Reporting period (6 months) Submission of the PR by LP (max. 3 months) Checking of the PR by JTS (max. 2 months) Payment procedure CA (cc. 1 month) 30

5. Progress Reporting: procedure (2) STEP 1: Partner level reports submitted by all PPs to their first level controllers Validation process Output: 16 control confirmations in each reporting period 31

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 JTS LP – if needed, with the involvement of PPs – fulfils clarifications requirements of the JTS 32

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 2 nd report onwards) 3 copies of each project communication material (brochure, newsletters etc. ) 33

6. Payment procedure 1 2 3 4 5 • LP prepares Progress Report • Verification by LP’s FLC • Submission to JTS • JTS verification of Progress Report (including clarification requests if needed) • JTS approval • Reimbursement of ERDF Contribution to LP • LP receives ERDF contribution • LP transfers ERDF contribution to project partners 34

Thank you for your attention!