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Preparing for project closure
1. Introduction
This information sheet outlines the steps organisations should take to prepare for closing
down an EU funded project, including documents management, retention and archiving.
Lead project sponsor’s i.e. organisations that have an offer of grant directly from the
Welsh European Funding Office (WEFO) are legally accountable for the project and are
responsible for the successful completion of activities. They must submit all relevant
closure documentation to WEFO, which includes the final claim (financial and indicator);
final project report; project evaluation and final audit/accountant’s report, which must be
submitted within three months of the Financial Completion Date.
Project partners or delivery agents are accountable for successfully delivering and
closing their proportion of the project, in line with a contractual or service level
agreement, which should set out the lead project sponsor’s requirements in relation to
project closure and document retention. In fulfilling these requirements, delivery agents
are contributing towards the audit trail and closure report for the full project.
2.
The role of closure in project management
Project closure is a key step in the life cycle of a project and should be considered and
planned for carefully. It will form part of the exit strategy for the project, which will have
been set out in the business plan/contract.
All delivery activity should have finished prior to the project end date in order to allow
sufficient time to collect financial and indicator data for the final claim, which must
subsequently be audited.
Closure should be considered at the outset of any project, when deciding the systems
and processes that will need to be put in place to capture the relevant information and
data that must be monitored and reported throughout the lifetime and at the end of the
project. Risks and logs of issues affecting the day-to-day running of the project will also
provide invaluable information on lessons learnt for the purposes of evaluation and
planning of any future projects.
Best Practice Guidance is available on the WEFO website.
3.
Financial closure
WEFO will retain 10% of the Structural Funds grant until the project has been completed
to WEFO’s satisfaction and a satisfactory final claim form and audit/accountant’s report
have been submitted within three months of the project end date. Only expenditure
which has been incurred and defrayed (paid out) by the project end date may be included
in the final claim (the only exception is the final audit/accountant’s report fee).All
expenditure must be incurred and defrayed before 31 December 2015; any expenditure
defrayed after this date will not be eligible to be funded.
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Project lead sponsors may pass on the financial retention requirement to their partners or
delivery agents.
4.
Roles and responsibilities: project sponsors and partners/contractors
The contractual requirement for adequate document retention is passed in the first
instance to the lead project sponsor via the WEFO grant offer letter. This means that
grant funds could be recovered by WEFO/ or the European Commission if the
requirements are not met by any organisation holding records for the project.
However, in practice a number of other bodies may be involved in managing or delivering
a project and may therefore be creating and holding project records e.g.
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Joint sponsors;
Delivery partners (procured or non-procured);
Procured contractors also providing match-funding support; and
Employers of ESF participants.
Lead sponsors must therefore consider how the document management and retention
requirements will be met by all these organisations, including any contractual/ legal
liabilities relating to any subsequent repayment of grant funds to WEFO/EC. It is for the
lead project sponsor to decide on the method and formality of how they convey document
management expectations to its partners.
5.
Document management
Project sponsors are responsible for maintaining adequate project records, and for
making them available as required to WEFO and auditors. Failure to provide supporting
documentation may result in claw back of grant funding.
EC legislation requires WEFO to ensure that documents are stored until three years
following the final payment from the European Commission to the Programme. The
current estimate is for documents to be stored until at least 2024, but the project sponsor
must retain all documents until WEFO advises otherwise. This date will be notified on
the WEFO website.
The responsibility for document retention rests with the lead project sponsor as the
accountable body. Records may be archived by the lead sponsor or by the project
partners, as long as they are deemed secure.
Projects must therefore have in place a document management policy which sets out:
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Storage instructions
Location of documents (particularly important where activity has been procured)
Systems for retrieval of documents from a third party contractor
Retention dates i.e. until at least 2024, and documents may only be destroyed
when WEFO advises it is safe to do so
Projects are required to produce authoritative records that support the declared
expenditure contained within the claims. Projects must ensure that information contains
the following four characteristics of an ‘authoritative record’: authentic; reliable; integrity;
useability.
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EC Regulations state that supporting documents must be either originals (paper) or
versions certified to be in conformity with the original when held on commonly accepted
‘data carriers’. WEFO has set out five options for document retention:
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Originals (paper)
Paper copy (photocopy of original paper document)
Electronic versions (of an original document) ie scanned or digitised
Original (electronic records and documents that have never been a paper original)
Paper version of electronic records/ documents
6.
Document retention and retrieval
Organisations should have a document retention policy, which sets out the process for
retaining documents which may be stored over and above the existing requirements that
your organisation may have in place. See Appendix 1 for an example document
retention policy for a European Structural Funds project.
The EC offers a range of document retention options, however, the lengthy retention
period means that it is important for Project Manager’s to carefully consider the practical
issues and risks, such as:
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Technological obsolescence/ digital continuity (new hardware, new software, loss
of staff expertise to operate legacy systems);
Physical damage and deterioration over time;
Exposure to loss or theft;
Ability to transfer records to another organisation if an organisation ceases to exist
(time limited entities, corporate failure etc.); and
Personnel continuity (will new staff members be able to access records efficiently
if former project staff have left the team or organisation?).
The inability to retrieve documents, or to produce them in an authentic and reliable form,
will mean that the grant funds become ineligible and would need to be repaid. Records
must be indexed, filed, and stored to enable efficient retrieval at relatively short notice at
any time until 2024 (or beyond). To illustrate the importance of this, European auditors
only need to provide 10 working days notice to audit project records.
7.
Electronic record keeping
In order to effectively manage documents that have been created/transmitted/filed in
electronic version only e.g. e-mails, word processing files, spreadsheet files, database
records, and electronic invoices received from suppliers, electronic data interchange etc,
the EC requires computer systems to meet accepted security standards to ensure that
the records held comply with national legal requirements and can be relied on for audit
purposes.
There is no universally ‘accepted’ or mandatory security standard in the UK and
therefore each organisation can decide on the appropriate security arrangements for
their computer systems.
Despite the absence of a single accepted security standard, the intention of the EC
Regulation must still be followed i.e. computer systems must be sufficiently secure so as
to protect the authenticity of the records (and demonstrate this if necessary) and be
relied on for audit purposes and/ or UK legal requirements. For further details, see
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Annex E of WEFO’s guidance on document retention.
8. Archiving
The project archive should include key records and documents relating to your project
activity; if records are kept on different media, in other locations, the archive should
indicate where the records are located and how they may be accessed for future
inspection.
Some practical considerations for archiving include:
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Internal and external options – space required, costs incurred, security, staff
resources to set up and maintain;
Format of storage – electronic, hard copy, access to originals;
Ease of retrieval – for audit and inspection purposes
Compatibility with organisation’s retention systems - duration of retention, access
to originals etc.
Examples of documents to be kept include:
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Your business plan, documenting any changes to the project;
Correspondence with WEFO or your project lead sponsor;
Your offer of grant/contract letter;
Claims
Financial records
Audit reports and details of any support and aftercare provided
Evidence of actual and/or in-kind match funding
Apportionment methodology
Timesheets
Procurement records
Project management records (e.g. governance arrangements, minutes of
meetings etc)
Beneficiary records
Staff records (including staff recruitment and job descriptions)
Publicity and cross-cutting themes information
State Aid
The project lead sponsor is responsible for establishing and maintaining an inventory of
all assets with a value greater than £5000, whether owned by the project or a third party.
See Appendix 2: WEFO’s checklist for document retention.
An organised approach to archiving should include an inventory of records, which sets
out:
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The title of the record and location
Who owns the record and any shared owners
Relationship of this record with others eg keep time sheets with staff diaries and
expenses claims to evidence the link between activities and costs;
Dates
Audit trail / version history
Retention schedule and disposal decisions
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Access to records
Physical composition of records e.g. hard copy, software
For electronic records – dates of migration, file up-dates, currency of digital
signatures etc
9.
Audit
Records must be available for inspection by auditors and WEFO for a period of up to
three years following the final payment by the European Commission to the Programme.
If selected for audit or inspection, Project Managers should advise WEFO/ auditors of the
location of records so that arrangements can be put in place to visit the appropriate
location or transfer the records to another location for inspection.
Audit trails will need to contain sufficient and necessary information to provide evidence
of the authenticity of stored documents, including details of any changes to them. Click
here to see the check list of documents required by the European Funds Audit Team.
10. Further information
WEFO has published guidance on Preparing for Project Closure: Best Practice Guide as
well as Retention and Management of Documents for projects in receipt of Structural
Fund support to ensure compliance with European regulations.
11.
Who to contact for assistance
Third sector organisations seeking advice on project closure are advised to contact
WCVA’s third sector European team (3-SET) by e-mailing 3SET@wcva.org.uk or
contacting WCVA’s Helpdesk on 0800 2888 329.
WCVA Helpdesk / Lein Gymorth 0800 2888 329 | help@wcva.org.uk | www.wcva.org.uk
facebook.com/walescva | twitter.com/walescva
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Appendix 1
[INSERT ORGANISATION
LOGO]
Example
Document retention policy for European
Structural Funds projects
1. This policy relates to the retention of documentation in relation to project activity that
is funded through the European Structural Funds 2007-2013 (European Regional
Development Fund / European Social Fund). It will be updated periodically to reflect
any changes in European Regulations, which currently state that:
“For a period of three years….following the payment by the Commission of the final
balance in respect of any assistance, the responsible authorities shall keep available
for the Commission all the supporting documents (either the originals or versions
certified to be in conformity with the originals on commonly accepted data carriers)
regarding expenditure and checks on the assistance concerned.”
2. In line with European regulations the length of time required to retain documents is
not a definitive date. However guidelines published by the Welsh European Funding
Office suggest a destruction date of no earlier than 2025.
3. All documentation should be retained relating to European funded projects in-line with
the above statements. No documents should be destroyed without the following:
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A notification from the Welsh European Funding Office (WEFO) that the final
payment has been received from the European Commission
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An official letter from the Welsh European Funding Office (WEFO) or project lead
sponsor approving the destruction of project documentation
4. For the purpose of this policy, project documentation includes paper originals and
those stored electronically, and includes but is not limited to, the following;
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Financial records
Beneficiary records
Policy documents
Projects procedures
Evaluations
Staff records
Procurement/tendering records
Project documents
Project activity
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Publicity
Cross-cutting themes
Method of storage for archived projects
5. Once a project has been closed and the final payment has been received from the
Welsh European Funding Office or the project lead sponsor, all project documentation
must be archived in the appropriate boxes and the contents of each box recorded on
the archive spreadsheet.
6. Each box should be labelled (on all fours sides) with the following information;
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Box number
Project name
Project number
Brief description of contents e.g. beneficiary information, finance etc
Possible destruction date
The destruction date should only be used for review purposes only. No documents
should be destroyed based on this date unless all criteria in section 5 have been met.
Review date: [INSERT]
Appendix 2
Management and Retention of Records
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ANNEX B - What records should be retained?
As a minimum, the following must be retained:
• Financial records: e.g. receipted invoices, payments, bank statements, credit card
statements, evidence of match funding, staff time-sheets, salary records, bank records
and other supporting accounting documentation to identify all incurred and paid-out
expenditure claimed on a project. Apportionment methodologies and calculations,
including WEFO approval correspondence where appropriate, for costs covering more
than one project, indirect costs, and outputs/ indicators. Records related to revenue/
income generated from project activities must also be retained;
• Publicity: evidence of the activity undertaken to publicise ERDF/ ESF support and comply
with regulatory requirements e.g. plaques, press cuttings, press releases,
advertisements, photographs and marketing materials;
• Applications and payment claims: copies of these, together with all working papers
relating to their compilation e.g. progress reports and transaction lists that must
accompany claims;
• Contracts: full evidence of any tendering exercise e.g. bidding process, selection criteria,
justification for the appointment of the successful contractor and sector to which
successful contractor relates, exchanges of correspondence offering and accepting
contracts, tender report, details of tenders, sources of match funding as a result of a
procurement exercise;
• Project activity: effective recording systems for tracking and evaluating progress of
projects i.e. details of outputs achieved, beneficiary application forms/ eligibility;
• Records of project/ management/ board meetings and their decisions relating to the
project;
• Details of support and aftercare provided to approved projects;
• All related paperwork and files in respect of approved projects i.e. all correspondence
generated from the acceptance of an application for appraisal, through to approval and
post approval; and
• Simplified cost options: full audit trail of expenditure/ documentation used to establish the
methodology.
The above list is only a guide to requirements and is not exhaustive. Project sponsors and
partners are responsible for ensuring that they retain all the necessary documentation.
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