The European Research Council

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Nov 10, 2013 (3 years and 11 months ago)

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The European Research Council


INFORMATION SESSION FOR PRINCIPAL INVESTIGATORS

Domenico USAI

ERC Executive Agency

Unit C2


Grant Implementation


Financial Reporting


Jerusalem, 10 December 2012

Established by the European Commission



2

AGENDA

I.
Introduction

II.
What can be financed?

III.
Payment types

IV.
Financial reporting

V.
Audit management & implementation

Established by the European Commission


In charge of the
financial management and implementation

of the Grant Agreements as of the signature until Final Payment;


Service

Provider

to

Host

Institutions

and

Principal

Investigators
;


Focal Point for all questions related to the Grants’ follow up

(legal, managerial and financial, amendments to the Grant Agreements).

Introduction


Unit C2 in ERCEA

Unit C1

Grant
preparation

Unit C2

Grant
implementation

Unit C3

Audit

Scientific and Ethical
Department

Established by the European Commission



4

AGENDA

I.
Introduction

II.
What can be financed?


Direct costs


Indirect costs

III.
Payment types

IV.
Financial reporting

V.
Audit management & implementation

Established by the European Commission



5


Up to
100% of total eligible direct costs
of the research;



Plus a
flat
-
rate of 20%
of the total eligible direct costs financing
the indirect costs;



Subcontracting

costs AND
Costs of resources made available
by third parties which are not used on the premises of the host
institution

are excluded from the calculation of the indirect costs




Max EU contribution cannot be exceeded !


What can be financed?

Established by the European Commission



6


Direct costs are all those eligible costs which can be attributed
directly to the project

and


are identified by the beneficiary as such, in accordance with its
accounting principles and its usual internal rules
.


(Art. II.15.1
-

Annex II
-

General Conditions to the ERC Grant Agreement)




Personnel costs



Equipment



Consumables



Travel



Publications



Subcontracting


Eligibility of costs


Direct costs

Established by the European Commission



7


Personnel costs

-
Only the costs of the actual hours worked by the
persons directly
carrying out work under the project

may be charged.

-
These persons must:


be directly hired by the beneficiary in accordance with its national legislation;


work under the sole technical supervision and responsibility of the
beneficiary;


be remunerated in accordance with the normal practices of the beneficiary.

-
Costs related to
parental leave

for persons who are directly carrying out
the project are eligible costs, in proportion to the time dedicated to the
project provided that they are mandatory under national law.

Eligibility of costs


Direct costs

(1)

Established by the European Commission



8


Equipment costs

-
Determined according to the
beneficiary's usual accounting practice
and must apply the usual
depreciation system
for durable equipment.

-
Depreciation is charged in each relevant periodic report.

-
Only the portion of the equipment used on the project may be
charged. The amount of use (percentage used and time) must be
auditable.

Eligibility of costs


Direct costs

(2)

Established by the European Commission



9


Consumables & Supplies

-
Must be identifiable and assigned to the project.





Publications costs

-
Must be identifiable and assigned to the project.


Eligibility of costs


Direct costs

(3)

Established by the European Commission



10


Travel and subsistence allowances

-
comply with the beneficiary's usual practices and are adequately
recorded, like any other cost;

-
needed for the work in the project or for activities related to it
(e.g.
presentation of a paper explaining the results of the project in a conference)
;

-
limited to the necessity for the project

(
any extension of the travel for other professional or private reasons is not an
eligible cost)
;


Travel expenses of experts
(persons participating on punctual basis in
the project)
are not travel costs

but may be considered direct eligible
costs, provided the participation of those experts is duly foreseen in
Annex I.

Eligibility of costs


Direct costs

(4)

Established by the European Commission



11


Subcontracting costs

-
may only cover the execution of a
limited part of the project
;

-
must be
duly justified in Annex I

having regard to the nature of the
project and what is necessary for its implementation;

-
may not affect the rights and obligations of the beneficiary regarding
background and foreground;

-
Annex I must indicate the tasks to be subcontracted and an estimation
of the costs.


Eligibility of costs


Direct costs

(5)

Established by the European Commission



12


Flat
-
rate
of 20%
of the total direct eligible costs,
excluding

subcontracting costs and the costs
of resources made available
by third parties which are not used on the premises of the
beneficiary.


Covers
all those eligible costs which cannot be identified by the
beneficiary as being directly attributed to the
project

-
e.g. costs connected with infrastructures, water/gas/electricity, maintenance,
insurance, supplies and petty office equipment, communication and
connection costs, postage, etc.

-
e.g
. costs connected with horizontal services such as administrative and
financial management, human resources, training, legal advice,
documentation,
etc
)


Eligibility of costs


Indirect costs

Established by the European Commission



13

AGENDA

I.
Introduction

II.
What can be financed?

III.
Payment types


one single
Pre
-
financing


several

Interim payments


one
Final payment

IV.
Financial reporting

V.
Audit management & implementation

Established by the European Commission

Financial n
°
1

Financial n
°
2

Financial n
°
3

Fin.4

Pre
-
Financing

Payment types


Pre
-
financing


~ 40% of total EU contribution


Usually
paid within 10 days
from the ERCEA signature of GA

(in case of fixed starting date not before 45 days)


5%

of the overall EU contribution is
transferred

by the ERC

to
the Guarantee Fund
;


remains property of the EU
until the final payment;


interests yielded have to be reported
with each Financial Report
(only on the pre
-
financing amount)
.

Established by the European Commission

Financial n
°
1

Financial n
°
2

Financial n
°
3

Fin.4

Payment types


Interim payments


Reimbursement of accepted eligible costs incurred by

the beneficiary during the reporting periods (Art.4 of GA);


On the basis of an approved Financial Report (FR) which
includes a statement of expenses (Form C + Annex IV);


Total amount of «
Pre
-
financing + All interim payments
»

is
limited to 90% of the maximum EU contribution
.

Interim Payments

Established by the European Commission

Financial n
°
1

Financial n
°
2

Financial n
°
3

Fin.4

Payment types


Final payment


Difference between total eligible costs minus the amounts
already paid;


Transferred after the approval of the Final Reports

(Scientific
and

Financial);


Release of the Guarantee Fund as part of Final Payment.

Final Payment

The total final payment is however
limited

to the

maximum Union contribution (Article 5 of GA)

Established by the European Commission



17

AGENDA

I.
Introduction

II.
What can be financed?

III.
Payment types

IV.
Financial reporting


Timing of reports


Documents to be submitted


New reporting modalities

V.
Audit management & implementation

Established by the European Commission

End of
Reporting
Period

Advance notice letter

(templates)

Deadline for
submission

Assessment of the reports

Payment due within 105 days

(complete set of documents)

15 days

Submission of deliverables
within 60 days


Templates sent
15

days before end of reporting period;


Submission of deliverables within
60

days after end of reporting
period;


Payment due within
105

days after the reception of
complete set
of acceptable

documents by the ERCEA.

Timing to report


Interim payments

Established by the European Commission

Timing to report


Final payment


Submission of deliverables (
Final Financial Management
Report

and

Scientific Report
) due within
60 days
after the
end of the project;


Final payment is based on approval of
both

the scientific
and financial reports;


Final payment is due within
105
days after the reception of
complete set of acceptable
documents by the ERCEA.

Established by the European Commission



Declaration of honour by the HI


Description of
project management
and

project achievements



prepared by HI in consultation with PI



Prepared via the Participant portal


Original document


Stamped and signed by HI
and

by PI

Financial Report (FR)

Financial reports


Documents to submit

Established by the European Commission



Project management
:


Description of expenses of the period compared to the budget
originally foreseen in Annex I and their link to the project


Explanation of any “
over/under
-
consumption
” in comparison to
the budget foreseen

(tasks of the various team members, the equipment used,

details of travel, consumables, other direct costs, …)


Explanation on any proposition of budget reallocation

(see “
budget follow up table
”)

Financial Report (FR)

Financial reports


Documents to submit

Established by the European Commission



Project achievements
:


Global overview of the project's implementation for the period
(no more than ½ page)


Elaborate on the problems (including delay, cancellation,
postponement of activities/work tasks) which have incurred and
how they have been addressed (if applicable)


Provide a list of publications, papers, etc.

Financial Report (FR)

Financial reports


Documents to submit

Established by the European Commission




Electronic form to be submitted
through the participant portal:


Personnel costs


Subcontracting


Other direct costs


Flat rate (20%) of indirect costs


Interests yielded on pre
-
financing


Signed and stamped (original)


Cost of Certificate on Financial
Statements

Annex IV


Financial Statement (Form C)

Financial reports


Documents to submit

Established by the European Commission



Same amounts as in Annex IV;


Personnel costs per person;


Same costs categories as in
DoW

(equipment, consumables, travel, …)


Depreciation of equipment;


Subcontracting costs;


Third Parties’ costs.

Breakdown of direct costs

Financial reports


Documents to submit

Established by the European Commission



Same costs categories as in
DoW


Update the column with real costs
incurred
(previous period(s) if any)


Fill in the other columns re
-
modulating
the remaining budget according to the
needs of the project

(Total should be equal to max EU
contribution)


Explain relevant deviations (over or
under spending) in Section 1 "project
management" of the FR

Budget follow
-
up table

Financial reports


Documents to submit

Established by the European Commission


Compulsory when cumulative costs claimed are ≥ 375.000



Example:

Accepted costs in
1
st

period:

200.000




no CFS needed



Accepted costs in
2
nd

period:

185.000




CFS needed




(200.000


+ 185.000


=
385.000




375.000

)


Template to be used by the Auditors is available at:
http://erc.europa.eu/sites/default/files/document/file/erc_grant%20agreement_annex5_a.pdf



Simplification:



If an audit is carried out by the Commission's external audit services

(or the external auditors hired by the Commission), the obligation for

the audit certificate for this period is waived.



counter is re
-
set excluding the audited amount

(a CFS is still obligatory for the subsequent costs when the amount claimed is ≥ 375.000

)

Certificate on Financial Statement (CFS)

Financial reports


Documents to submit

Established by the European Commission

Financial reports


Special case (1)

Multi
-
beneficiary project
(Special Clause 30)


a separate Financial Statement from each beneficiary;


a Summary Financial Report (submitted by the HI);


a Certificate on the Financial Statements (CFS)

for each beneficiary when the cumulative amount of the
financial contribution claimed is ≥ 375.000

.

Established by the European Commission

Third Parties
(Special Clause 10)


a separate Financial Statement from each beneficiary

and from each third party
;


a Summary Financial Report (submitted by the HI);


The threshold of 375.000


for the submission of a Certificate
on the Financial Statements (CFS) applies to each third party
independently of the EU contribution of the beneficiary.

Financial reports


Special case (2)

Established by the European Commission

In "
My Projects
", select "
Financial Report
" and "
Form C
"

Financial reports


New reporting modalities



t
o be filled in as usual in FORCE

Established by the European Commission

Financial reports


New reporting modalities

Under "
Financial Report
", select the report type and the period

Established by the European Commission

Financial reports


New reporting modalities

Under "
Financial Report
", complete the FR electronically


Fill in all the bullet points of the Financial Report

-
Declaration

of
Honour

-
Project management

-
Project
achievements


Attach

the Annexes:

-
Breakdown of direct
costs

(
using

the Adobe
form
)

-
Budget
follow

up table (
using

the Adobe
form
)

-
CFS (if
required
)


Upload

the publications



Click on "
submit
"


Print

the Financial Report and the
Attachments


Sign

and
send

the original documents to the ERCEA

Established by the European Commission



32

AGENDA

I.
Introduction

II.
What can be financed?

III.
Payment types

IV.
Financial reporting

V.
Audit management & implementation

Established by the European Commission



33


Why audit?

-
Tax payers' money

-
Grant Agreement = justification of means, not outputs


Check eligibility of costs claimed (legality & regularity)

-
Advice function

-
Safeguard

-
FP7 versus FP6: 'light' reporting → ex post controls carry more weight



Audit management & implementation

Established by the European Commission



34


Types of audit



'Financial audits'

-
Carried

out
directly

by the ERCEA
auditors

-
"Joint audits" (ERCEA/
Other

research

DG's

; ERCEA/Court of
Auditors
)

-
Carried

out by "
External

audit
firms
"



'Technical audits'

-
Technical

audit

-
Technical

review

Audit management & implementation

Established by the European Commission



35


Personnel costs

-
People not directly employed nor paid by the beneficiary

-
Time sheets absent, incomplete or not signed

-
Bonus payments applied to ERC grant holders only



Accounting systems

-
Costs reported in project accounts only

-
Usual accounting or management principles and practices not applied

Audit management & implementation

Common
errors

(1)

Established by the European Commission



36


Other

-
Outside eligibility period

-
Not budgeted nor clearly explained in the Description of Work

-
No appropriate supporting documents

-
Excessive costs and uneconomical expenditure (e.g. Travel)

-
Costs considered ineligible under
Own accounting procedures

but claimed from ERC

-
Absence of detailed calculation of direct costs (e.g. Internal invoices)

-
Incorrect conversion rates

-
VAT included

-
Not relevant to the project (hospitality/entertainment costs)

Audit management & implementation

Common
errors

(2)

Established by the European Commission


Centralised mailbox:

ERC
-
C2@ec.europa.eu



Access to the Participant Portal:

http://ec.europa.eu/research/participants/portal



Practical user guide to fill in the Financial Report

ftp://ftp.cordis.europa.eu/pub/fp7/docs/sesam
-
umd
-
que
-
fp7
-
v2_en.pdf



Practical user guide to fill in the Financial
Statement (Form C)

ftp://ftp.cordis.europa.eu/pub/fp7/docs/presentation
-
force_en.pdf

Useful links

Established by the European Commission



38

AGENDA

I.
Introduction

II.
What can be financed?

III.
Payment types

IV.
Financial reporting

V.
Audit management & implementation

VI.
Questions & Answers