European Regional Development Fund (ERDF) Programme 2007 - 2013 Project Monitoring Guidance Introduction This document is intended to provide guidance on requirements, process and types of evidence needed to kept and presented during a Project Engagement Visit (PEV), Progress and Verification Visit (PAV/Article 13 Visit), Article 16 Visit and other audits that a project will have conducted on it. It should be used in conjunction with the ‘Guide to Applying for Funding and Running an ERDF Project’, the information in the project Offer Letter, and in the ERDF Prospectus. The organisation named on the Offer Letter has the responsibility to ensure that every aspect of the project is run properly and in accordance with ERDF regulations. The requirements for managing an ERDF project can be onerous, this guidance is not meant to be exhaustive or prescriptive, and it provides some basic help and information to deliver a successful project. It should be used as a tool to help all those involved in the project think about how to: o Implement good practice o Set up systems which are easy to use o Keep a close eye on how the project is delivering o Ensure the project does not store up any problems further down the line. There are pitfalls to avoid, and this guidance has tried to set out what some of those might be based on the experience of previous ERDF Programmes. ERDF Monitoring Guidance Updated August 2011 1 Index Introduction Index Page 1 2/3 1. Management Structure 1.1 Document Retention 1.2 Project Files 1.3 European / National Statutory Requirements 1.4 Equal Opportunities 1.5 Fair Employment 1.6 Health & Safety 1.7 Legitimacy of Operation 1.8 Managing Partnerships Page 4/5 5/6 7 7 7 7 7 7/8 2. Financial Systems and Records 2.1 Expenditure Audit Trail & Financial Processes 2.2 Defrayment 2.3 Match Funding 2.4 VAT Details Page 8 9 9 10 3. Verification of Expenditure and Income 3.1 Project Costs 3.2 Eligible and ineligible expenditure 3.3 Eligible Capital Costs 3.4 Eligible Revenue Costs Staff Time Sheets 3.5 Non Eligible Costs (Capital and Revenue) 3.6 Apportionment and Depreciation 3.6.1 The 20 Year Ruling 3.7 Inventory of assets 3.8 Change of use, disposal and charging of assets Page 10 10 10 11 11/12 12 13 13 13/14 14 4. Physical Progress – Delivery of Outputs and Results 4.1 Evidencing performance indicators 4.2 Data Collection, Calculation and Reporting 4.3 Progress monitoring Reports Page 14 15 15 5. Compliance 5.1 Publicity 5.1.1 Capital Projects: Billboards 5.1.2 Capital Projects: Permanent Plaques 5.1.3 Revenue Projects: Poster & Plaques 5.1.4 Information & Communication Material 5.1.5 Events 5.2 Tendering and Procurement 5.2.1 Guidance 5.2.2 EU Procurement Thresholds 5.2.3 Responsible Procurement 5.2.4 Supporting Evidence 5.3 State Aid 5.3.1 Definition of an SME Page 15 15 15 16 16 16 17 17 17/18 18 18 18 18/19 ERDF Monitoring Guidance Updated August 2011 2 5.3.2 De-Minimis 5.3.3 Block Exemptions 5.4 Revenue Generating Projects Page 19 19/20 20 6. Cross Cutting Themes 6.1 Environmental Sustainability 6.1.1 Carbon Calculator 6.1.2 Green Travel Plan 6.1.3 Sustainable Procurement Plan 6.1.4 Sustainable Buildings Policy 6.2 Equality and Diversity 6.3 Data Protection Page 20 21 21 21 22 22 22/23 7. Monitoring and Audits 7.1 Project Monitoring 7.2 What is a Monitoring System? 7.3 European Programmes Executive Monitoring Requirements 7.4 Project Engagement Visit (PEV) 7.5 Progress and Verification Visit (PAV) Article 13Visit 7.6 Article 16 Visit 7.7 Other Visits 7.8 Essential Criteria to Monitoring Visits 7.9 Irregularities 7.10 Material Changes 7.11 N+2 7.12 Start and End Dates 7.13 Common Mistakes Page 23 23/24 24 24/25 25 25 25/26 26 26 26/27 27/28 28 28 8. Supplementary 8.1 Who’s who 8.2 References 9. Annexes Annex 1. Time Sheet - Example of an ERDF Project Timesheet Annex 2. Depreciation Methodologies Straight line method of depreciation Reducing balance method of depreciation Annex 3. Inventory of Assets - Example of a Project Asset Register Annex 4. SME Definitions 4.1 Example Letter for SME Block Exemption 4.2 Example Letter for SME De-Minimis 4.3 SME Registration Form 4.4 ERDF SME Checklist Annex 5. De-Minimis - Example of a De-Minimis Return Form Annex 6. Carbon Calculator Examples of Evidence Annex 7. Common Mistakes Annex 8. A13 PAV Visit Procurement Evidence Checklist ERDF Monitoring Guidance Updated August 2011 29 29 Page 30 31 32 33 34 35/36 37 38 39 40/41 42/43 3 1. Management Structure It is a requirement that the project has management and delivery personnel structures in place. That organisation charts and job descriptions clearly show a person’s involvement with an ERDF project. The project must have Management Information Systems (MI) in place to assist delivery of the project and should include, minutes of meetings held relating to the project, monitoring reports, time sheets for staff working part time on the project, databases, spread sheets or an off the shelf electronic client management system. It is essential that all delivery partners are fully aware that they are subject to and must follow all European Commission (EC) rules and regulation as set out in the offer letter and will be subject to a full examination of their documentation, systems and processes as part of the Article 13 checks. 1.1 Document Retention An essential requirement of European funding is keeping correct and up to date project records. Failure to demonstrate that there is accurate evidence of the project, its outputs and activities may result in the project having to repay part or the entire grant. Final responsibility for this rests with the organisation named on the Offer Letter, who must ensure that any project partners and sub-contractors also comply with these rules. There should be a document retention policy clearly stating how and for how long the project will store ERDF documentation. The project must keep original copies of all documents/invoices which show a complete audit trail for every aspect of the project, from application, staff recruitment and marketing, to outputs, finances and evaluations. Project Name: Project No.: THIS IS A EUROPEAN REGIONAL DEVELOPMENT FUNDED PROJECT FILE TO BE RETAINED UNTIL AT LEAST 31ST DECEMBER 2025 PLEASE DO NOT DESTROY WITHOUT FIRST RECEIVING CONFIRMATION FROM THE NORTH WEST DEVELOPMENT AGENCY THAT THE 2007-2013PROGRAMME HAS OFFICIALLY CLOSED These documents should be comprehensive, reliable and accessible, and must be kept until at least three years after the UK receives its final payment from the EC. This means that the project will have to keep all documentation relating to the project until at least 31st December 2025. PROJECT PART-FINANCED by the EUROPEAN UNION It would be advisable to put a label similar to the one (above) on all project files. At the end of a project, if records/documents are archived there must be someone who knows where they are and how to retrieve them. There is always the possibility of unforeseen impacts on the project, such as staff leaving, the project should have procedures in place that ensure that new staff can access the documentation and understand how and what the project is supposed to deliver and its ERDF Monitoring Guidance Updated August 2011 4 progress to date. There should be a chronological record, or history, of project delivery and how decisions about the project were reached. Documents which exist solely in electronic form can also be stored. Checks will be made to ensure that the versions held comply with national legal requirements and can be relied on for audit purpose. Where documents exist in electronic form only, the computer systems used must meet accepted security standards of COBIT, (Control Objectives for Information and Related Technology), which can also be relied on for audit purpose. Ref: ERDF User Manual – Chapter 2 Eligibility Rules – 1.3 page 3 As a minimum, all expenditure relating to the project, down to the smallest transaction, must be recorded and all financial transactions must be clearly traceable through the projects financial accounting system. Output records will vary according to the nature of the project (see Section 4, below). Below is a list of records the project must keep – this list is not exhaustive and the project will be expected to retain any other evidence relating to the project: o ERDF application forms (i.e. Eol, Concept & D&A Forms) and all correspondence from contract negotiations o The signed Offer Letter o Tenders, contracts and procurement documentation o Planning consents, where applicable o Records of any project income o Reports relating to the project, and minutes of meetings where the project was discussed o Documentation relating to any changes made to the project during delivery o Staff costs o Receipts and invoices o Recruitment evidence o Evidence of auditable, accountable match funding o Evidence of expenditure, including proof that funds left the project bank account within the correct period o Records of beneficiaries and the steps taken to ensure their eligibility o Compliance with equal opportunities and environmental sustainability requirements o Proof of performance indicators delivered – how, where, when, who etc. o Publicity materials, including photos of billboards for future reference – with the ERDF logo o Details of partnerships, including SLAs o Records of businesses supported, for state aid purposes, and records of support received by business if you are exempting them from state aid under De Minimis o The project’s state aid notification, where applicable o Auditors’ statements o Annual reports and project evaluations o Details of monitoring procedures 1.2 Project Files It is advisable to set up separate project files to ensure the all records are easily retrievable during a monitoring visit/audit, to help manage the project and to comply with ERDF requirements. Below is a suggested format of how the project could structure its Project Files: ERDF Monitoring Guidance Updated August 2011 5 ERDF Monitoring Guidance Updated August 2011 6 Management & Administration Project Activity: Application forms Offer letter and revised offer letters (if appropriate) Project work plans Evidence of recruitment process (if applicable) Policy documents: Equal opportunities Fair employment Health & Safety Document retention (detailing how and for how long project files will be kept) Minutes of meetings/reports: Minutes of all meetings relating to the project Minutes of all partnership meetings (if applicable) Progress reports Financial Finance reporting: Policies & procedures Authorisation limits Management accounts Financial reports VAT registration details Evidence of cost centres / cost codes Original invoices & receipts Equipment/Machinery etc: Asset register Invoices (originals) Receipts (originals) Land Acquisition: Land valuations Receipts for land on accounts summary Site Preparation/building/construction: Tender reports from project QS Valuations from contractor QS Payment records Contractor tipping notes (if appropriate) Delivery of Outputs & Results Beneficiary records: Beneficiary files Beneficiary feedback / evaluation forms Monitoring spreadsheets MI / Activity reports Survey reports Letters from SME’s detailing employment/sales Before & after photographs for environmental enhancements, land serviced Procurement: Procurement policy Tenders Quotes OJEU notices (if applicable) Management structure: Organisation chart (highlighting project personnel) Job descriptions (all those involved in the project) HR records Valid insurance certificates: Employer’s liability* Public liability* Buildings & contents* *Originals wherever possible or copies signed as copy of the original (see 1.1) Staff Costs: Payroll records A copy of pay slips (if possible/appropriate) BACS/Bank statements* Management accounts *Originals wherever possible or copies signed as copy of the original (see 1.1) Depreciation: Depreciation policy Depreciation methodology / calculation Site investigation: Specialist reports Consultant invoices Environmental impact assessments / studies Overheads: Working papers for apportionment methodology / calculations Cost codes Management accounts Staff time sheets signed and authorised Publicity: All press cuttings/articles/brochures/flyers relating to the project Pictures of billboards (if applicable) Stationary with Logos State Aid: De minimis – details of any public financial assistance received in the past 3 years Details of aid received Details of Block Exemptions /specially approved schemes Letters to Beneficiaries confirming aid type & amount received from the project Cross Cutting Themes: Details of themes covered i.e. Environmental Sustainability, Green Travel Plan, Sustainable Procurement Plan, Sustainable Buildings Policy, Equality & Diversity, Equal Opportunities policy If there is any doubt as to what to keep or for how long, seek advice. ERDF Monitoring Guidance Updated August 2011 7 Ref: www.erdfnw.co.uk - Guide to Applying for Funding & Running an ERDF Project. 1.3 European & National Statutory Requirements. It is a requirement to have procedures/policies in place in place relating to Equal Opportunities, Fair Employment and Health & Safety. 1.4 Equal Opportunities The aim of the Equal Opportunities policy should be to ensure that the organisation is committed to valuing diversity by promoting and implementing equality of opportunity in all activities across the whole spectrum of its business. This commitment should be underpinned by the relevant legislation which includes: o Equal Pay Act 1970 (amended by Equal Pay regulations 1983) o Rehabilitation of Offenders Act 1974 o Sex Discrimination Act 1975 (amended 1986; Gender Reassignment Regulations 1999) o Race Relations Act 1976 (Race Relations Act Amendment Bill) o Disability Discrimination Act 1995 o Protection from Harassment Act 1997 o Human Rights Act 1998. 1.5 Fair Employment The organisation should be committed to the promotion of equality of opportunity in employment and the elimination of discrimination or harassment on the basis of marital status, ethnicity, religious and political belief. The project must be able to demonstrate a fair recruitment process and provide evidence of job adverts, interview notes and job offer / acceptance letters. 1.6 Health & Safety The organisation should be firmly committed to achieving and maintaining high standards of health and safety. All employees carry a legal obligation to take reasonable care for their own health and safety and for that of others who may be affected by their acts and omissions. As well as including their colleagues, this duty also extends to the care of contractors, visitors and members of the public. 1.7 Legitimacy of Operation The organisation must be able to demonstrate the legitimacy of its operation by providing evidence of employer’s and public liability insurance, building & contents insurance (copies of valid certificates) and whether the organisation is VAT registered (VAT registration number). 1.8 Managing Partnerships The Offer Letter recipient is the organisation that is accountable for the ERDF grant, and is therefore responsible for ensuring that project partners are aware of the ERDF Offer Letter conditions, monitoring and audit processes and requirements, are able to provide the necessary information at the correct time for each claim and are keeping detailed ERDF Monitoring Guidance Updated August 2011 8 financial records and information to support progress and outputs detailed on the claim forms. Is it essential that, from the very outset: o All partners are clear on their roles and responsibilities o All partners have a budget which includes the match funding they have agreed to bring to the project o All partners are clear about what they have agreed to deliver in terms of outputs, results and impacts and the timescales for these o There is an agreed record keeping system, monitoring and reporting timetable in place, and structures to ensure things are done correctly and on time o All partners are aware of what records are to be kept and are trained in both financial and general record keeping for European Structural Funds, and know exactly what the expectations are o Partners’ records are monitored by the accountable organisation on a regular basis. o All partner meetings are minuted/recorded This information should be formalised in a Contract or Service Level Agreement (SLA). Also arrangements should be consider for: o How and when information will be reported o Who will report the information to whom o How progress, general issues and problems will be communicated between the partners and the accountable organisation o How you will co-ordinate the work of the partners o How partners will be made aware of ERDF requirements o What tools will be made available for managing the partnership budget Projects run the risk of getting into difficulties if they cannot ensure partners comply with these requirements. It will be the responsibility of the grant recipient, not any partners, to provide information, problems with partners will not be accepted as an as excuses for non delivery or the late submission of claims. If claw back is initiated, funds will be taken from the grant recipient, not any partners, even if the problem is their fault! Ref: www.mcisproject.co.uk/documents.php - Communities & Local Government ERDF User Manual. Ref: www.erdfnw.co.uk - Guide to Applying for Funding & Running an ERDF Project. 2. Financial Systems and Records 2.1 Expenditure Audit Trail & Financial Processes The project should maintain accounting records that allow easy identification of the project and any grant income and expenditure to the project. Whenever possible the project should have a separate bank account from the parent organisation or as a minimum, separate cost centres or cost codes should be used for each project. The project should have an organised system for filing original numbered invoices and receipts which can be easily retrievable and preferable specific to the project. There should be a clear segregation of duties relating to the appropriate authorisations for bank accounts and delegated duties, who checks and signs claims and who monitors and ERDF Monitoring Guidance Updated August 2011 9 controls project expenditure. The project should ensure that there is either a simple cash book system, a manual double entry system or computerised system for managing the project finances. The project should also produce regular meaningful financial reports. 2.2 Defrayment Under ERDF, eligible expenditure within a grant claim has to have been incurred and payment made by the applicant for it to have been defrayed, i.e. defrayal occurs at the point when the funds leave the payer’s bank account. Where one applicant takes the lead and has a number of partners supporting the delivery of the project, defrayment by the partners is sufficient; it is not necessary for the lead partner (applicant) to have defrayed the expenditure as well, as long as they are named within the D&A and the ERDF offer letter. If they are not, the expenditure must be defrayed by the lead partner (applicant) before it is deemed eligible. If a partner is not identified at appraisal / contracting stage, a change control would need to be submitted detailing the reasons why the inclusion/change of Partner was required, the level of eligible expenditure the partner would be incurring etc. This would be reviewed by EPE / PRG and a decision made. If approved, a contract variation would be issued, and only when the contract variation is signed off by both parties can defrayment by the new partner be eligible. It is also important to note that Article 20 of Reg 1080/2006 requires the lead beneficiary to check the expenditure has actually been incurred and spent on the agreed project activities by partners. It takes the risk and is supposed to ensure that the other partners will assume responsibility for any financial irregularities. Therefore the lead applicant (partner) needs to ensure effective systems and processes are in place to verify partner expenditure has been defrayed and that some form of contract is in place between the lead partner and other partners to ensure they are responsible for any financial irregularities they make. 2.3 Match Funding The projects match funding should have been confirmed prior to receipt of the Offer Letter. If there are any changes to the nature of the match, in terms of amounts, or where the match is coming from, the project should notify the NWDA Contract Manager (CM) as this is considered to be a material change to your project. The project must spend the match and the ERDF according to the grant rate. So, if the project has a grant rate of 50%, when the project submits a claim it must be able to show that half the costs incurred have been covered by ERDF and half by the match. If the project fails to do this, and to prove how it has kept track of the match, this will be picked up at audit and the project could be penalised. Ref: www.erdfnw.co.uk - Guide to Applying for Funding & Running an ERDF Project. ERDF Monitoring Guidance Updated August 2011 10 2.4 VAT Details If the organisation is VAT registered, it must provided evidence in the form of its VAT registration number. If VAT is included in the project costs the organisation must have conformation that VAT cannot be recovered and give the rationale as to why it cannot be recovered. Ref: www.mcisproject.co.uk/documents.php - Communities & Local Government ERDF User Manual, Chapter 2: Eligibility Rules Section 2.1 & Chapter 6: Financial Management. 3. Verification of Expenditure and Income 3.1 Project Costs The project must be able to demonstrate how project costs have been recorded, how they have been calculated and included in the claim and that there is a clear audit trail. This relates to cost for staff, plant/machinery and equipment, depreciation, land acquisition, site investigation/preparation/building and construction and other costs such as consumables/fees/rents, revenue and income. 3.2 Eligible and Ineligible Expenditure Different types of projects have different eligible costs. Make sure the project only claims for items and activities which are eligible for the Priority Axis under which it is being delivered. Below are some examples of eligible and ineligible costs for capital and revenue projects. Please note that this list is not exhaustive, but is intended to give a guide as to what can be included. Claiming ineligible items may result in the project being investigated and having funding withdrawn. Contributions in-kind are ineligible for ERDF, except in cases where a clear independent valuation can be made, such as the donation of a building or land. 3.3 Eligible Capital Costs o Purchasing land. Costs must not be more than 10% of your total project cost unless it is an environmental project o Purchasing buildings o Site investigation o Site preparation o Building and construction. This covers all works to land and to the fabric of a building but does not include decorative items such as artwork o Plant, machinery and equipment with an asset life of more than one year o Retention, as long as this is paid within the lifetime of the project o Security Provision. This must be to ensure the success of the wider project and cannot include CCTV in town centres or as a stand alone initiative o Signage, which must acknowledge the project’s ERDF contribution ERDF Monitoring Guidance Updated August 2011 11 3.4 Eligible Revenue Costs o o o o o o o Salary costs of staff who are directly involved in the project’s delivery *(see timesheets) Recruitment and training of delivery staff Travel and subsistence of delivery staff External consultancy support, for example specialist business advisors Marketing and publicity Overheads in accordance with specific guidance Equipment with an asset life of less than one year and costing less than £2.5k For overheads on projects in the Higher Education Sector the 2008 HEI Guidelines apply: Ref: www.mcisproject.co.uk/documents.php - Communities & Local Government ERDF User Manual, Chapter 2: Eligibility Rules Section 2.3 Overheads in the Higher Education Sector in England Staff Timesheets* The only instance where a timesheet is not required is when an employee is employed 100% on an ERDF project and only then where a job description evidences that there work is 100% based on ERDF eligible activity. The timesheet should only be used for staff who are not 100% employed on ERDF projects. Timesheets should be completed on a daily basis and should record the persons name and period covered, along with project number and title, a description of all ERDF and non-ERDF activity. Holidays and sickness should be recorded as non-ERDF activity as this is the only way that salaried staff hours can be correctly calculated. The timesheet must be signed by the person as evidence that it has been filled in accurately and then passed to the agreed supervisor or line manager for verification. If the organisation uses Microsoft Outlook, it is acceptable to use ‘Calendar’ to record the time worked on ERDF project as long as all the above information (information that’s on the timesheet) is recorded on Calendar and it is signed and counter signed as a true record. ERDF Monitoring Guidance Updated August 2011 12 Staff Declaration: I declare that the details provided are true and accurate record Signature: Joe Bloggs Print Name: Joe Bloggs Date: 12/01/09 Position: Project Manager Supervisory conformation: The above record is true to the best of my knowledge Signature: L Manns Print Name: Larry Manns Date: 12/01/09 Position: Line Manager Ref: Annex2 - Example of an ERDF Project Timesheet. Ref: www.erdfnw.co.uk Guidance Guide to Applying for Funding & Running an ERDF Project. 3.5 Non Eligible Costs (Capital and Revenue) o Loan Charges o Moveable infrastructure such as cars and office equipment, except when a) related to projects involving research and development or the delivery of vocational training, e.g. computer equipment, teaching equipment and machinery for skills enhancement/delivery, and b) essential fixtures and fittings directly related to the sole purpose of a project as agreed in the offer letter o Recoverable VAT o Any costs spent outside the eligible project period, including site acquisition costs o Any costs spent before the project start date given in the Offer Letter o Costs related to research or studies carried out in respect of the project before its official start date o Service charges or interest arising on financial leases and hire purchase arrangements o Costs resulting in the deferral of payments to creditors o Legal costs in respect of litigation o Costs involved in winding up a company o Payments into private pension schemes or payments for unfunded pensions o Bad debts o Gifts and donations o Repair costs (maintenance costs to the item) o Compensation for loss of office (e.g. councillor losing his/her public office position) o Costs of works being carried out as a statutory requirement o Notional expenditure including overheads allocated or apportioned at rates materially in excess of those used for any similar work carried out by the applicant o Payments for activity of a political nature o Depreciation or impairment of assets purchased with ERDF or any public funds o Provisions o Contingencies and contingent liabilities o Dividends o Payments for unfair dismissal o Entertainments o Statutory fines and penalties o Criminal fines and damages o Profit made by the applicant (unexpected income) o Costs incurred by organisations in relocating personnel displaced by the refurbishment or conversion of a building for ERDF use o Discounted sales of equipment o Discounted provision of services or advice (e.g. solicitors’ accountants’ or SME staff time) o Provision of volunteers’ time If there are any questions on specific costs, please contact your NWDA CM. ERDF Monitoring Guidance Updated August 2011 13 Ref: www.mcisproject.co.uk/documents.php - Communities & Local Government ERDF User Manual, Chapter 2: Eligibility Rules Section 2.1. Ref: www.erdfnw.co.uk - Guide to Applying for Funding & Running an ERDF Project 3.6 Apportionment and Depreciation The apportionment methodology used to calculate the costs of project staff and overheads will be agreed with your NWDA CM during contract negotiations. This will then form a condition of the Offer Letter. It must be ensured that consistency is applied to the approved methodology across the entire duration of the project. Depreciation is permitted on items which you already own – not those purchased with ERDF funding. When calculating depreciation it must be in line with the delivery organisation’s accounting policy; if the delivery organisation does not have one, then there are several methods for calculating depreciation (see Annex 3). ERDF claims must be based on the real costs of the equipment. It is important that ERDF requirements are adhered to if they differ from the organisation’s policy. For example, buildings are usually depreciated over 20/25 years and equipment over 5 years. An asset life of less than 1 year is unusual, even IT equipment is usually no less than 3 years. There may be a need for the organisation to justify anything less than 1 year and then to consider whether it would have been more reasonable / cost effective for the organisation to have leased the equipment instead. (See also section 5.5) 3.6.1 The 20 Year Ruling for Capital Projects The project that includes the construction/refurbishment of a building must provide details of the planned usage for next 20 years, a copy of lease or written commitment from landlord that they are committed to providing the usage for the next 20 years along with a 20 year cash flow. It should be understood that offer letters are issued on this expectation. If it is anticipated that the lifespan will be shorter, it would need to be clearly stated in the grant offer letter and documentation to support the reasons why are held on file. 3.7 Inventory of assets As per the Standard Terms and Conditions: “Fixed Asset” means any asset that consists of land and/or buildings, plant, machinery or other thing that is, or is to be, fixed to any land and which is to be acquired, developed, enhanced, constructed and/or installed as part of the Project. "Major Asset" means an Asset which is not a Fixed Asset but has a value as at the date of the Funding Agreement (or date of acquisition if the acquisition is funded by this Grant) of at least £5,000.00. For all fixed assets and any other assets with a value over £2,500 which have been either bought, built or improved using ERDF grant the project must set up and maintain an inventory, which includes, for each asset, the following: o The date of purchase o Description of the asset o The price paid net of recoverable VAT o Amount of ERDF grant paid ERDF Monitoring Guidance Updated August 2011 14 o Location of the asset and the title deeds (if applicable) o Serial or identification numbers o The name and address of any person to whom a disposal is made o Date of disposal o The deprecation method agreed at the contract stage o The date and proceeds (net of VAT) of any disposal (consent is required in relation to any disposal other than a disposal which was planned for and formed part of the original application) Ref: Annex 4 - An example of a Project Asset Register. 3.8 Change of use, disposal and charging of assets The project is not normally permitted to use any asset for any purpose other than its approved use throughout its useful economic life. If the project does wish to change its use, or stop using it altogether, it must get prior written consent from your CM which may be subject to conditions including repayment of grant. When requesting any changes to the use of an asset it should include an explanation on how this will not prevent the project achieving the agreed objectives. If the project wants to dispose of an asset during the project’s lifetime it will be necessary, after getting consent from your NWDA CM, for the NWDA to execute a Deed of Covenant. The project should dispose of the asset on the open market, on normal market terms. If the project does not get approval from the CM it will be required to pay back the proceeds of the sale. 4. Physical Progress – Delivery of Outputs and Results 4.1 Evidencing Outputs and Results Each output and result is different in terms of its definition and how it can be delivered. For example, if you safeguard jobs you must break down the total into equalities groups, and demonstrate that the job was at risk before your project intervened. It is extremely important that the project not only understands what each output means, but also how it will be expected to evidence it. Not collecting the right evidence could mean that, even if the project has met its targets, these outputs will not be counted and the project could be seen to be underachieving. In extreme cases this can lead to claw back of grant. Everyone involved in delivering the project must understand what the evidence requirements are, and that the right evidence is collected for the output being claimed at the time. Claiming 100 SMEs supported, then having to go back over a 3 year project to get signatures and letters of support from them all would be extremely difficult! During contract negotiations the project will have received information on the evidence it will need to provide on performance indicators. This includes guidance on the importance of the Programme’s two (environmental sustainability and equality and diversity) Cross Cutting Themes (CCTs), (see section 6). ERDF Monitoring Guidance Updated August 2011 15 4.2 Data Collection, Calculation and Reporting Are the appropriate output definitions understood and in use? Is all the necessary output data being collected? What systems are being used to collect data? Are they robust? What verification evidence is being collected? Is it acceptable in relation to types of evidence and authenticity? How is this information being stored? Is it easily accessible for checking? Who completes and checks the Output Monitoring Return? Is it the appropriate people? o Are returns submitted on time with the appropriate information? o o o o o o o o 4.3 Progress Monitoring Reports Projects are required to provide a Progress Monitoring Reports with each claim. The project must also provide a Progress Monitoring Reports even if a £0 claim is made. This is in order to comply with CLG requirements. Ref: nwda.co.uk/extranet – 2009 Output Definitions SP & ERDF.doc. Ref: www.mcisproject.co.uk/documents.php - Communities & Local Government ERDF User Manual, Chapter 11: Indicators. Ref: www.erdfnw.co.uk - Guide to Applying for Funding & Running an ERDF Project. 5. Compliance 5.1 Publicity All projects must publicise the fact that they are funded by ERDF. There are strict requirements the project must adhere to, depending on the nature of the project, or risk claw back of grant. These are detailed as follows: 5.1.1 Capital Projects: Billboards The project should put up a billboard if the project is an infrastructure project whose public contribution exceeds €500,000 the size of the sign must be appropriate to the scale of the site, the project should ensure that the ERDF logo covers at least 25% of the billboard and that the text (This project has been part-funded by the European Union) is at least the same size as any other logos or text used on the billboard. Billboards should remain in place for at least six months after the project has finished, and then be replaced by a permanent plaque. The project should make sure it has photographs or other evidence for the billboard so that in the event of an audit once the project is completed, there is evidence to demonstrate that it did erect a billboard. 5.1.2 Capital Projects: Permanent Plaques If a project has received an ERDF grant of more than €500,000 and consists of the purchase of a physical object or the financing of infrastructure or construction then a permanent plaque, that is visible and of significant size, has to be put up no later than 6 months after the completion of the project. Again at least 25% of the plaque must be ERDF Monitoring Guidance Updated August 2011 16 dedicated to the Northwest ERDF logo with text (This project has been part-funded by the European Union). 5.1.3 Revenue Projects: Posters and plaques In order to inform beneficiaries and the general public of the role played by ERDF in a project, the project must display a poster or plaque at the project or the project premises. Again at least 25% of the plaque must be dedicated to the Northwest ERDF logo with text (This project has been part-funded by the European Union). 5.1.4 Information and Communication Material All press releases related to ERDF funded projects must be approved by the NWDA’s PR team and must include: o The Northwest ERDF logo o A description paragraph about ERDF in the Northwest o A quote from an ERDF spokesperson A project can also publicise through items such as booklets, leaflets, newsletters. These should include a clear indication of the fact that the project has received an ERDF grant, (This project has been part-funded by the European Union) and must include the Northwest ERDF logo. In the case of websites and other electronic means of communicating about the project, the same rules apply. The Logo must appear in a prominent position on any materials relating to ERDF funded projects and activities. The logo must be positioned in its own clear space, standing apart from other images and text. The minimum reproduction size for the logo is 50mm. The Northwest ERDF logo should be published in full colour whenever possible using black, Pantone Reflex Blue and Pantone Yellow. It can be reproduced in single colour using black or Pantone Reflex Blue. It can also be produced in black and white when full colour is not an option. 5.1.5 Events If events are organised events relating to an ERDF funded project such as conferences, seminars, fairs and exhibitions, the funding recipient must: o o o o o Notify the NWDA Marketing Department in advance Include the Northwest ERDF logo and text on all pre and post event materials Invite a relevant ERDF spokesperson to speak at the event Verbally acknowledge the support of ERDF funding during the event Display an ERDF exhibition stand (if appropriate) The NWDA will distribute ERDF plaques to projects on request. A copy of the Branding & Publicity Requirements document is available form the NWDA via your CM or from the NWDA ERDF website. Ref: www.erdfnw.co.uk - Guide to Applying for Funding & Running an ERDF Project. ERDF Monitoring Guidance Updated August 2011 17 5.2 Tendering and Procurement It is the applicant’s responsibility to ensure Public Procurement rules are followed and to provide the appropriate evidence at audit. If in doubt, please seek legal advice. 5.2.1 Guidance Please be aware that the principles of transparency, openness, fairness, equal treatment, proportionality must be adhered to at all times; this applies also to all procurement below the EU threshold (Commission interpretative Communication re contract awards not or not fully subject to the provisions of the Public Procurement Directive (2006/C179/02)) All procurement of works equipment goods and services shall be based on value for money and in accordance with all relevant law including EU Procurement Directives if applicable. ERDF grants will be suspended, withdrawn and/or reclaimed from projects if it is found subsequently that the procurement rules have not been observed. The Grantee will not split purchases to fall below the thresholds set out in this clause nor extend or vary existing contracts so that the total value of the contract for its duration exceeds these thresholds. 5.2.2 EU Procurement Thresholds The table below sets out EU thresholds above which the grantee is required to advertise the contract in the Official Journal of the European Union (known as OJEU). Bids for contracts must be assessed on an objective basis and contract awards should be published in the OJEU. The Current EU Procurement thresholds are: Supplies Services Works £156,442 £156,442 £3,927,260 (€193,000) (€193,000) (€4,845,000) The above thresholds which came into force on 1 January 2010 are subject to change by the EU (approximately every 2 years). For purchases below these thresholds, EU rules state that competition and appropriate advertising must still take place. Any purchase to be made which is above these thresholds (the figure used within NWDA for goods and services is £156K for ease of use) must be publicly advertised in the Official Journal of the European Union (OJEU). Advertising in OJEU for this value of contract is a legal requirement of the European Union and it means that suppliers based anywhere in Europe are able to tender for goods, services or works within another European Union country. Ref: EU Procurement Thresholds: www.ogc.gov.uk/procurement_policy_and_application_of_eu_rules_eu_procurement_thresholds_.asp 5.2.3 Responsible Procurement In procuring goods, services or works, the grantee is responsible and accountable for achieving value for money (VfM). In addition, the grantee is urged to seek continuous improvements in Value for Money. VfM is best achieved by competition. Competition ERDF Monitoring Guidance Updated August 2011 18 promotes economy, efficiency and effectiveness in public expenditure and contributes to the competitiveness of suppliers. 5.2.4 Supporting Evidence It is a requirement of the Programme that all of the documents relating to procurement such as evidence of tenders and any letters offering contract along with documents showing how decisions were made and by whom are retained and are available for inspection during management, monitoring and verification visits/audits. Please see Annex 8 Article 13 Progress and Verification Visit Procurement Evidence Checklist Ref: www.erdfnw.co.uk - Guide to Applying for Funding & Running an ERDF Project 5.3 State Aid The grantee should be aware if the project is operating under State Aid and what the requirements are. State Aid is aid that is considered to distort the competition between companies and pose a threat to the operation of the internal market. European Community rules on State Aid apply limits to the level of help the public sector can give to industry. Examples of State Aid include direct grants, subsidised loans or where there are benefits to companies from subsidised business support schemes (e.g. reduced cost business consultancy, subsidised rents, training). This is a very complex area and detailed guidance should be obtained. 5.3.1 Definition of a Small to Medium Enterprise (SME) SMEs are generally defined by the EC as Independent enterprises that are not more than 25% is owned by another company/group that have fewer than 250 employees and an annual turnover not exceeding €50 (£34 million) or a balance-sheet total not exceeding €43 (£29 million) these figures will vary due to the interest rate, please check. (For exchange rates, please see 8.2 references). The 25% threshold in terms of ‘independence’ may be varied in certain circumstances, which tend to be based upon the level of control exercised over the company. In general the consolidation rules in FRS 2 (Financial Reporting Standards issued by Accounting Standards Board) are to be followed. The following points should be noted: 1. You will need to examine two most recently filed annual accounts immediately preceding the date of the grant. The SME must satisfy the criteria in at least one of those years. This ensures that the grant itself does not breach the SME limits 2. If the enterprise is a start up, then management accounts will suffice 3. Where aid is provided in instalments, the SME criteria should be checked in accordance with 1 above every time an instalment is paid, as that could qualify as a severable contract. 4. In consolidating the results of a group, no account is taken of group members who are not enterprises, i.e. not involved in the market (e.g. core charitable or some types of core social enterprise activity) If there is any doubt in deciding whether a project is an SME or not, contact the North West Development Agency (NWDA) Legal Team – jane.worthington@nwda.co.uk ERDF Monitoring Guidance Updated August 2011 19 It is the responsibility of the Applicant to gather all information on SMEs. If there is any change to a projects SME status, the project must notify the NWDA immediately using the SME Declaration Form, failure to do so will result in clawback of grant. Any outputs achieved prior to the change in status can be claimed but the SME becomes ineligible for further support once no longer classified as an SME. Ref: www.erdfnw.co.uk -Guide to Applying for Funding & Running an ERDF Project. Ref: Annex 5 - SME Definition and Templates. 5.3.2 De-Minimis A value below which a cost is not to be taken into consideration, for example there is a de minimis level under which State Aid to companies does not have to be reported to the EC. For projects where De minimis is applicable, a return will need to be completed on an annual basis. It is advisable that where a project assists companies over extended periods (businesses, clubs etc) they ask the company for a declaration every six months. The total amount of aid that may be granted to any one undertaking under the De Minimis Regulation is €200,000 in the period 1.1.2009 to 31.12.2010. De minimis declarations must be recorded in both pounds sterling (£) and Euros (€). For further guidance on state aid and de minimis issues please refer to: www.nwda.co.uk/extranet (username “state” password “aid). Ref: Annex 6 - Example of a De-minimis Return Form. 5.3.3 Block Exemptions Block Exemptions are Commission Regulations which set out the circumstances where certain aid can be granted without prior Commission approval. Where an aid measure complies with the conditions set out in a Block Exemption Regulation only a summary information sheet must be submitted to the Commission when the aid is granted. The Block Exemptions also contain additional annual reporting conditions. Covered by the Block Exemption Regulations are: o o o o o o o Small and medium-sized enterprises Aid for training Aid for employment Services of General Economic Interest (SGEI) Revenue Projects Capital Projects Cross Cutting Themes If is applicable, the project must specify what block exemption it falls under. The project will also need to complete annual returns to NWDA on what aid, and amounts that have been given. 5.4 Revenue Generating Projects ERDF Monitoring Guidance Updated August 2011 20 In accordance with Article 55 of EC General Regulation 1083/2006, the definition of a revenue generating project is any operation involving an investment in infrastructure the use of which is subject to charges borne directly by users, or any operation involving the sale or rent of land or buildings or any other provision of services against payment. The Commission has further reiterated that while projects which generate revenue may be supported by ERDF, any anticipated revenue should be deducted from the eligible expenditure at the time of the offer of grant. The ERDF grant should be based on eligible expenditure alone, excluding anticipated revenue. If it is not possible to calculate the anticipated revenue, the revenue to be generated within five years of the completion of the project should be deducted from the eligible expenditure. Further guidance is being developed relating to this. If the project falls within this category of activity the European Programme Secretariat will advise what extra information will be needed in support of an application. 6. Cross Cutting Themes (CCTs) During contract negotiations the project will have received information on the evidence it will need to provide on performance indicators. This includes guidance on the importance of the Programme’s two (environmental sustainability and equality and diversity) CCTs. The project may have agreed CCT targets during contract negotiations. It must ensure that it monitors progress against these CCTs and collects data to support their achievement. The project will be expected to demonstrate that it has actively sought to meet the CCT targets and must provide all relevant evidence. 6.1 Environmental Sustainability This theme is central to ensuring that any potential negative environmental impacts of the Programme are minimised, or mitigated, and that positive impacts are maximised. Key messages of the theme are to improve: o energy efficiency and related carbon mitigation measures o air and water quality o protection of the local environment (green spaces, biodiversity, quality of life) o resource efficiency to minimise waste and encourage recycling o sustainable transport; and o sustainable construction 6.1.1 Carbon Calculator There is a requirement for all projects to complete the Carbon Calculator which should reflect the projects significant carbon impacts and cover issues to do with Energy, Waste, Water and Transport. The carbon calculator will need to be completed on a quarterly or six-monthly basis to monitor the actual impact of the project and retained as part of the audit trail. The actual carbon impact (tonnes of CO2) should be reported within the progress monitoring report. The Carbon Calculator is available as an on-line tool at: http://www.nwdacarboncalculator.com ERDF Monitoring Guidance Updated August 2011 21 Your project sponsor\development manger will have set your project up on the system. When you have been added on to the system you will receive an automated email giving you a password. Details of how to log on and complete the calculator are available on the login page or contact NWDA’s Mark Joslyn for further help and support. Examples of evidence to back up the carbon calculator would be mileage claims, waste transfer notes, utility bills all of which should be stated on the evidence sheet within the calculator and retained as part of the audit trail. Ref: Annex 7 - Carbon Calculator, examples of evidence. Ref: On-line Carbon Calculator http://www.nwdacarboncalculator.com 6.1.2 Green Travel Plan All projects are required to provide a green travel plan for the project by the first quarter claim. There is no stated format for green travel plans but it should provide measurable actions with timescales that can be reported. For capital projects the plan should cover how the completed site will have in place green travel plan measures such as cycle paths, incorporated additional bus routes, improved public transport facilities and centralised logistics. For revenue projects it should focus on how the project will influence businesses and initiatives it engages with to incorporate green travel i.e. running events and workshops at locations with good public transport access. There will be a requirement as part of the quarter 4 claim and final claim/evaluation to set out how the green travel actions originally stated have been implemented and what has been achieved. 6.1.3 Sustainable Procurement Plan All projects are required to provide a Sustainable Procurement Plan, which as with the Green Travel Plan should provide a series of concise actions on how the project will minimise its environmental impacts and influence the organisations and businesses the project may be working through and with. Sustainable procurement can cover a wide range of issues, for e.g. switching to less hazardous materials, increasing the recycled content of materials, more energy efficient plants and methods, and ensuring materials are purchased from ethical sources. The project should ensure that it provides specific examples of how it will ensure sustainable procurement is embedded into the project and that it can be evidenced (e.g. a supplier’s certification). 6.1.4 Sustainable Buildings Policy All construction projects over £500,000 and major refurbishments are required to meet the targets set in the Buildings Policy. Ref: nwda.co.uk/extranet – Sustainable Buildings Guidance Note or ask your NWDA CM 6.2 Equality and Diversity ERDF Monitoring Guidance Updated August 2011 22 The guiding principle of this theme is that all policies, programmes and projects should be designed, developed and monitored with the diversity of the region in mind, and should proactively tackle barriers to economic participation and success. Key messages of the theme are to ensure that all potential projects: o are designed and delivered in a way that promotes equality and diversity with specific indicators and measurable targets set o recognise the business case for promoting equality and diversity, not only in terms of social and economic impact, but also how it can help to increase the number of businesses reflect current and likely future changes in legislation o make equality and diversity integral to the project throughout its life cycle o take responsibility for having access to expertise and resources designed to further the Programme's equality objectives o have robust monitoring and evaluation processes that include assessing the Programme's key Equality and Diversity objectives All potential projects will be evaluated via the appraisal process to determine the perceived benefit to the region against both the Action Area objectives and consistency with the messages of the cross cutting themes. Projects will be supported that can demonstrate they have taken all practicable measures to embed the cross cutting themes. Ref: www.erdfnw.co.uk - Guide to Applying for Funding & Running an ERDF Project. 6.3 Data Protection Data Protection Act 1998 The Data Protection Act governs the use of personal information by businesses and other organisations. There is a need to comply with the act if an organisation uses personal information as part of its business, for example, because the organisation holds customer details or details on employees. Personal information is information about a living individual who is identified or who is identifiable. It includes information such as a name and address, bank details, and opinions expressed about an individual. If an organisation is processing personal information covered by the Act it must comply with the data protection principles. These require that personal information is: o Processed fairly and lawfully o Processed for one or more specified and lawful purposes, and not further processed in any way that is incompatible with the original purpose o Adequate, relevant and not excessive o Accurate and, where necessary, kept up to date o Kept for no longer than is necessary for the purpose for which it is being used o Processed in line with an individual's rights o Kept secure with appropriate technical and organisational measures taken to protect the information ERDF Monitoring Guidance Updated August 2011 23 o Not transferred outside the European Economic Area (the European Union member states plus Norway, Iceland and Liechtenstein) unless there is adequate protection for the personal information being transferred Ref: nwda.co.uk/extranet – 2009 Output Definitions SP & ERDF.doc. Ref: Office of Public Sector Information - www.opsi.gov.uk/acts/acts1998/ukpga_19980029_en_1 7. Monitoring and Audits 7.1 Project Monitoring Project monitoring will be carried out to ensure the project is progressing as it should be. It cannot be stressed enough how important it is to set up monitoring systems before the project stars and ensure that they are suitable for the project. Effective monitoring will allow: o Assess performance and gauge progress o Keep control – in order to keep the project on profile you must make efforts to control delivery o Identify strengths and weaknesses o Compile interim progress reports o Measure actual results against targets and act in the event of any shortfalls or problems o Learn from the project, which will help with planning and management o Prove you did what you claim to have done o Keep to the approved application o Know when you need to inform your NWDA CM of any material changes o Communicate effectively within your organisation and between partners It is vital that all delivery staff and partners, fully understand what the project aims to do and how, and that delivery meets all NWDA requirements. All delivery staff and partners should be aware of this and know how to use your monitoring system from the outset. 7.2 What is a Monitoring System? Monitoring is an essential and integral part of the lifespan of the project. Effective monitoring will help to keep the project on course and ensure that it delivers its planned outputs/objectives. This is important in assisting the NWDA and the region to achieve their goals. The Monitoring and Evaluation plan (M&E plan) is a contractual document and should be used to detail the requirements for monitoring and evaluation agreed between the NWDA and the delivery partner to avoid any misunderstanding of what the role is of each party and their responsibilities. It should detail the agreed objectives of the project, baselines, outputs and results/outcomes and projected spend as well as the level and type of information to be provided and to what timescales. Any agreed changes to the project should be reflected within the M&E plan. The project should set up a system to record the data that provides information for claims, interim and final reports and project evaluation. It should include documentation ERDF Monitoring Guidance Updated August 2011 24 supporting the appraisal and approval of the project in order to demonstrate the need for the project, and its aims and objectives. Keep all conference programmes, participants/beneficiary details, materials and reports. Ensure that accurate time records are compiled of staff working on the project, detailing their activity and contribution to the project. The project will need to maintain spreadsheets and schedules detailing project expenditure and income. These are the basis of the financial claims made to NWDA. The costs incurred in the delivery of ERDF, or charged to ERDF indirectly, must be identifiable, so a separate cost code is recommended. Claims must be linked to the main financial records in order to provide the audit trail, and be backed up by original source documentation (invoices, travel expense claims, and remittance notes for income). The project should design non-financial records in such a way that they collect all relevant data required to prove activity took place and that it was eligible activity. These records must have supporting information to show when and how the information was gathered and should link to other documents such as registration forms. Original source documentation and working papers must support all final claims or final reports. The project should also maintain and regularly update a project risk register. A common-sense approach that tries to keep structures as simple as possible is usually the most productive. A good idea is to have separate files and cost centres that keep together all areas of project activity enabling easy access to expenditure details without mixing up budgets, invoices etc. from different parts of the organisation or from different projects an organisation may be running. This is particularly important where an organisation has more than one project which receives European Union (EU) funds, as these must be kept entirely separate. Ref: nwda.co.uk/extranet – 2009 Output Definitions SP & ERDF.doc. 7.3 European Programmes Executive Monitoring Requirements Your NWDA CM will be an organisations point of contact at the NWDA. Your CM will monitor projects through the processing of quarterly claims and through project visits, discussing any issues that arise from these with those delivering the project. 7.4 Article 13 - Project Engagement Visit (PEV) The key purpose of a PEV visit is preventative; it should identify any problems, make suggestions for improvement in order to prevent reoccurrence and improve delivery. Your NWDA CM will conduct a Project Engagement Visit (PEV) ideally within the first three months of a project to ensure familiarity with the procedures for managing an ERDF grant. This visit is to give your CM the opportunity to get to know those delivering the project and make an assessment of the project’s possible monitoring needs. This is the key opportunity to ensure that those who are responsible for delivering the project understand the terms of the Offer Letter and the results that are expected from them. It is also the point at which NWDA can ensure that the project appreciates the full extent of ERDF financial controls and other key aspects of project management in line with NWDA requirements. ERDF Monitoring Guidance Updated August 2011 25 This is a good time for those delivering the project to ask any questions and raise any issues as dealing with issues at this point could prevent them becoming bigger problems later on. 7.5 Article 13 Visits - Progress And Verification Visit (PAV) A member of the NWDA Quality Assurance Team will conduct one or more in-depth Article 13 monitoring visit(s) during the lifetime of the project. An Article 13 Visit (of Commission Regulation (EC) No 1828/2006) will verify the project’s declared expenditure, that the project’s products or services have been delivered in accordance with the Offer Letter, that claims are correct and that the project’s operations and expenditure comply with European Commission (EC) and national rules. An Article 13 monitoring visit is not an audit or inspection check. During the visit claimed expenditure and outputs will be verified to source documentation. Inspection will also verify compliance with other requirements for example publicity and public procurement. Irregularities found during an Article 13 visits may not result in the funds being deducted from the ERDF grant but this dependant upon the severity of the irregularity. Projects may be subject to various other audits including: 7.6 Article 16 Visit The Department for Communities and Local Government (CLG) is required to audit at least 5% of Programme-level expenditure each year. Every year a number of projects will be selected for an in-depth Article 16 inspection. Article 16 (of Commission Regulation (EC) No 1828/2006) refers to the audit of a sample of projects. Article 16 audits are undertaken on a sample basis on a risk based assessment and will be conducted by Internal Audit Service (IAS) from CLG. This audit can last for several days. It is likely that there will be some level of duplication between Article 13 and 16 visits but Article 16 visits will take into consideration any Article 13 visits that have taken place when determining the scope of the visit and vice versa. It is important to note that irregularities found during an Article 16 visit will result in funds being recovered directly from the ERDF grant as no opportunity will be given to rectify the matter. 7.7 Other Visits There is also the possibility that the project will be audited by the European Commission or the European Court of Auditors, both of whom pick a sample of projects for scrutiny. This will cover all aspects of the project. The project will also have internal and or external auditors of its own. As part of the Funding Agreement, the majority of projects will be expected to complete an annual audit and a final audit gaining and audit certificate before the final claim can be paid A statement of grant expenditure is required for Local Authority and Health Authority projects receiving £100,000 or more over the project lifetime. An Independent Consultants report is required for projects receiving more than £50.000 in the projects lifetime. ERDF Monitoring Guidance Updated August 2011 26 7.8 Essential Criteria to Monitoring Visits It is essential that key members of staff involved in the project are available during any Article 13 PEV and PAV visits and the 16 Monitoring Visit or any other audits carried out on the project. These should be the project manager; person(s) responsible for general record keeping of the project; person(s) responsible for the activity of the project; person(s) responsible for the financial record-keeping of the project. If the project has delivery partners, it will be the recipient of the offer letter as the lead applicant, who is responsible for having documentation relevant to the delivery partners available, should it be required for monitoring or inspection purposes. It is essential that management control systems provide a sufficient audit trail. Ref: www.mcisproject.co.uk/documents.php - Communities & Local Government ERDF User Manual, Chapter 4: Monitoring Assurance Framework. Ref: www.erdfnw.co.uk - Guide to Applying for Funding & Running an ERDF Project 7.9 Irregularities The EC definition of an irregularity as given in EC Regulation 1083/20061 is “any infringement of a provision of Community Law resulting from an act or omission by an economic operator, which has, or would have, the effect of prejudicing the general budget of the Communities by charging an unjustified item of expenditure to the general budget”. Action will be taken to follow up and correct any irregularity in a timely manner and steps will be taken to ensure the irregularity is not repeated. If an irregularity is identified funds will be recovered and deducted from the Total ERDF Grant Allocation. Ref: www.mcisproject.co.uk/documents.php - Communities & Local Government ERDF User Manual, Chapter 5: Irregularities. 7.10 Material changes From time to time the project may need to alter or adapt based on issues arising during monitoring, or due to changing circumstances. The project may need to vire money from one expenditure category to another or reprofile its output indicators, or there may be a change to the projects match funding profile. Some changes may be small. Others, however, might be classed as ‘material.’ Where any change to a project is required it is essential that those delivering the project inform your CM and get their approval before implementing the change. This is because the Offer Letter is a contract between those delivering the project and the NWDA, and any changes to that contract must be notified and agreed in writing. As long as the changes are reasonable, the project is still delivering eligible activity and it still represents value for money, obtaining approval for changes should not usually a problem. However, if the project goes ahead and make a change without getting prior agreement, the project risks losing the ERDF grant for the entire project. If the project implements any changes that have not been agreed by NWDA, it might also be committing a financial irregularity that has to be notified to the European Commission. There is no guarantee that a “retrospective” change will be agreed, and this could result in the project losing some, or even its entire, ERDF grant. ERDF Monitoring Guidance Updated August 2011 27 Examples of material changes include: o o o o o o o o o o o o o o Change of project ownership, control or final beneficiaries Change to the nature or purpose of the project Change of expenditure category Virement of more than 10% of category cost between individual categories of expenditure Virement of any costs between capital and revenue costs Change in the agreed expenditure for fees, management, administration or purchase of land Any change in the agreed annual expenditure profile for the project Project as a whole, involving a reduction of more than 10% of the forecast expenditure in any year Any change involving a reduction in the amount or proportion of public sector funding for the project Any change in the agreed annual profile for the quantifiable targets involving a reduction of more than 10% in the agreed targets for any year Virement of more than 10% of project financing between funding sources (not including ERDF grant as this may not be vired) Change of more than 20% to quantifiable targets Any change to the expected physical or financial completion dates If irregularities or fraud are detected or suspected Please note that this list is not exhaustive, if unsure always check with the NWDA first. 7.11 N+2 N+2 is a European Commission requirement set out in Article 93.1 that states that the annual budget allocations that is approved in an Operational Plan’s financial table must be spent within two years of the year for which they were allocated. Therefore, ERDF budget allocated in the financial tables for the year 2007 has to be spent and a claim submitted to the Commission by the end of 2009, funds committed for 2008 have to be spent and claimed by 2010 and so on. The project may not be able to roll forward spend from year to year within the project lifetime. Delays in project spend could mean that NWDA misses its annual N+2 spend target set by the European Commission, leading to funds being taken away from the Programme by the Commission. For example, if a project is worth £300,000 and has profiled to spend £150,000 in year one and it only spends £100,000, the project may lose the £50,000 it failed to spend, rather than being allowed to carry it over into year two. It is important that the project notifies your NWDA CM of any potential changes to its funding profile at the earliest opportunity. The project will need to be able to make a strong case for rolling forward any funds. Ref: www.erdfnw.co.uk - Guide to Applying for Funding & Running an ERDF Project. 7.12 Start and End Dates There are a number of different dates to consider. ERDF Monitoring Guidance Updated August 2011 28 Key Milestones and Payment Dates/Intervals Milestones ERDF Format: Date/Month/Year – DD/MM/YYYY NB: If no precise date inserted default of month end will be used Start Date Project Activities Completion Date (the date when the Grant Single Programme If dates same as ERDF leave blank DD/MM/YYYY Recipient finishes input into Project Activities) Financial Completion Date – Last date for the Grant Recipient to submit its Final Grant Claim to the Agency (usually 3 months after completion of Activity End Date) Final Payment Date – The last date that the Agency will make a payment to the Grant Recipient (i.e. after the Audit report and usually 3 months after the Financial End Date above) Practical Completion of the Targets (Results) This is the final evaluation of the Project to ascertain GVA etc and when MCIS is closed. Key milestones – list here the rigid milestones that are critical to happen by key dates; other milestones are referred to by reference to the M&E plan 7.13 Common Mistakes There are a number of mistakes projects make, which can result in grant being withdrawn. Please see Annex 8. 8. Supplementary 8.1 Who’s who The Northwest Development Agency (NWDA) is the Intermediate Body for the 200720013 Programme. The NWDA Quality Assurance department will be responsible for carrying out the Progress and Verification Visit (PAV – Article 13). The Contract Manager (CM) is your main contact at the NWDA. The Department for Communities and Local Government (CLG) are the Certifying Authority for the 2007-20013 Programme and will be responsible for carrying out the Article 16 Monitoring Visits. 8.2 References: Guide to Applying for Funding & Running an ERDF Project - www.erdfnw.co.uk (Click on News, Events & Resources – ERDF Branding, Publicity and Guidance) ERDF Branding & Publicity Requirements – NWDA Marketing Department www.nwda.co.uk Latest NWDA application forms and supporting guidance – www.nwda.co.uk/extranet ERDF Monitoring Guidance Updated August 2011 29 (User name: Single, Password: Prog) For NWDA staff, please refer to the toolkit on the intranet. For Euro Exchange Rates please go to: http://ec.europa.eu/budget/inforeuro/index.cfm?fuseaction=currency_historique&c urrency=72&Language=en For EU Procurement Thresholds please go to: www.ogc.gov.uk/procurement_policy_and_application_of_eu_rules_eu_procurement_th resholds_.asp ERDF Monitoring Guidance Updated August 2011 30 9. Annexes Annex 1 - Example of an ERDF Time Sheet Period Covered: From Name: Date Project Number Project Name To Describe Activity Time spent onNon- eligible Total Time ERDF activity ERDF time Per Day (hh:mm) (hh:mm) (hh:mm) Staff Declaration: I declare that the details provided are a true and accurate record Signed: Print name: Date: Position: Supervisory Conformation: I declare the above record is true to the best of my knowledge Signed: Print name: Date: Position: (See section 3.4) ERDF Monitoring Guidance Updated August 2011 31 Annex 2 – Depreciation Methodologies Straight line method of depreciation The straight line method of depreciation is calculated by dividing the cost of the asset (minus any residual value) by the length of time over which it will depreciate. For straightline depreciation, it is normally expected that the minimum number of years over which an item can be depreciated is three years. This method of depreciation results in a fixed rate of depreciation which is the same amount in the first year as it is in the last. The formula is: Original cost – residual value Length of depreciation x use Example o The ERDF project uses a computer that was bought a year ago for £5,000 o It is being depreciated over three years and at the end of that time it is expected to have a residual value of £500 o The project uses the computer for two days a week over twenty six weeks. NB: Three years is 156 weeks The straight line depreciation calculation is: £5,000 - £500 156 wks 28.85 x 2/5 (2 days out of 5) x 26 wks use x 0.4 x 26 = £300 per annum chargeable to the ERDF project. Reducing balance method of depreciation The reducing-balance method of depreciation is calculated by applying a fixed percentage to the written down value of the asset. In the year in which the asset is purchased the percentage is applied to the original cost. In successive periods the percentage is applied to the assets written down value. This method of depreciation results in a different rate of depreciation for each year. (See section 3.6) ERDF Monitoring Guidance Updated August 2011 32 Annex 3 – Example of an ERDF Asset Register Project Number: Project Name: Date Purchased Description of Asset Serial / ID Number Location of Asset (Operating Partner) Location of Title Deeds Amount of NWDA Grant Paid Total Cost VAT Recoverable (y/n) Date of Disposal Sale Proceeds (Net of VAT) Depreciation Comments Declaration: I declare that the details provided are a true and accurate record Signed: Date: Print name: Position: NB. Best set up as a Excel Spreadsheet (See section3.9) ERDF Monitoring Guidance Updated August 2011 33 Annex 4.1 Date SME Name and Address: Dear Name of Project: Value of General Block Exemption Support This letter is provided to confirm the value of the support recently provided to your company by the [ ] project, under the activity description shown below. This assistance was provided under Article [___] of the General block exemption Reg 800/2008 OJL 214/3 of 9.8.2008 This is not an invoice for your contribution, but is intended only as confirmation that firstly you have received the support shown and secondly that your records could evidence that you have paid your contribution, particularly if payment was made to a third party. If you happen to be visited by auditors or monitoring officers verifying activity on your project you would be expected to have this information recorded and available. Description of the support you received Date of support Provider Total Value Your contribution (e.g. at least 50% of the total value if using Art 26 and 27 reg 800/2008) I confirm that the above information is correct and have taken a copy of this form for our records. Name: Signature: Position: Date: Yours sincerely Project Manager (See section 3.12) ERDF Monitoring Guidance Updated August 2011 34 Annex 4.2 Date SME Name and Address: Dear Name of Project: Value of SME De- minimis Support under Regulation 1998/2006 OJL 379 of 28.12.2006 This letter is provided to confirm the value of the support recently provided to your company by the [ ] project, under the activity description shown below. This project is funded under the de-minimis aid scheme. Therefore the value of support that you have received from this project (shown below) will count towards your de-minimis ceiling (EU 200k per undertaking (individual companies, businesses or groups) in any 3 consecutive tax years including the one in currency) and you will need to keep a records of this information. You will also be required to declare this support if you receive any further de-minimis support within the next 3 tax year period. Our records show the following, please confirm that you could evidence that you have received the support shown. If you happen to be visited by auditors or monitoring officers verifying activity on our project you would be expected to have this information recorded and available. Description of the support you received (you only need to declare aid provided specifically as de minimis in the past) Date of support Provider Total Value (£) I confirm that the above information is correct and have taken a copy of this form for our records. Name: Signature: Position: Date: Yours sincerely Project Manager (See section3.12) ERDF Monitoring Guidance Updated August 2011 35 Annex 4.3 - SME Registration Form As part of the management and monitoring of your project, information should be collected from the SMEs benefiting from the project activity. The information provided is intended for use by Northwest Regional Development Agency and will be shared with auditors as required. This form is for the assisted SME to complete and return to the project manager. As a public body, Northwest Regional Development Agency is subject to the provision of Freedom of Information Act 2000 and any information that you provide to the Agency is potentially subject to a Freedom of Information request. Name of SME: Main Contact: Are you: Address: Male Position: □ Female □ Postcode: Telephone Number: Email: Date trading started: How would you best describe the activities of the company? How many people does the company employ? Micro - less than 10 employees Small - less than 50 employees □ □ □ Medium - less than 250 employees It is a requirement that you meet either the annual turnover or balance sheet requirements for one of the most recent two years preceding the date of the grant award. What is the Annual Turnover for the SME? Micro - less than or equal to EUR 2 million () Small - less than or equal to EUR 10 million () Medium - less than or equal to EUR 50 million () □ □ □ What is the Annual balance sheet total? Micro - less than or equal to EUR 2 million () Small - less than or equal to EUR 10 million () Medium - less than or equal to EUR 43 million () ERDF Monitoring Guidance Updated August 2011 □ □ □ 36 Annex 4.3 - SME Registration Form Continued Does any other organisation own more than one quarter of your company? □ No If yes please provide details: □ Yes It is a requirement that the SME declares any de-minimis support received in any three tax year rolling period. Have you received any de minimis support in the last three years? □ No If yes please provide details: Name of Provider Yes Date of payment □ Brief reason for payment Amount (£) I understand that my business (or any group it is a member of) may only receive de-minimis subsidised support to the value of 200,000 euros under the de-minimis block exemption, from any public agency within a three year rolling period. The three year cumulation works like this. For a grant award to the beneficiary dated 31.12.2008 you would need to cumulate only aid granted expressly as de minimis from 06.04.2006, as that is the tax year, including the one in which the grant is given, which is 3 years past. Please supply evidence of your company’s: □ □ Equal opportunity and diversity policy Environmental sustainability policy Does the project take account the need to imbed spatial cohesion □ Declaration: I understand that this project is supported by ERDF and declare that the details given on this form are true to the best of my knowledge: Signed: Position within company: Date: (See section 3.12) ERDF Monitoring Guidance Updated August 2011 37 Annex 4.4 ERDF SME Process Checklist As part of the record keeping for your project you should keep a project file for each beneficiary, it is expected that this would show initial contact through eligibility to support provided and evaluation. This form should be included in the file and used to check the evidence you have to support your activity. Name of SME: Main Contact: Description Telephone: Type of evidence Person Responsible Date Completed Do you have evidence of beneficiary eligibility Have you given advice on cross-cutting themes How have you established the most suitable type of assistance Have you established the baseline position for jobs & turnover Have you recorded results achieved at: 6 months 12 months 18 months Has the SME signed State Aid declaration Have you sent the notification of support received (nature and value) to SME Have evaluation forms been completed (See section 3.12) ERDF Monitoring Guidance Updated August 2011 38 Annex 5 – Example of an ERDF De-Minimis Return DE MINIMIS STATE AID DECLARATION We declare that we have looked at all our funding agreements and related documents for the past three years and confirm that: No state resources were provided to us expressly as de minimis/under Reg 1998/2006 (de minimis) in the past three years OR The following amounts were received by us expressly as de minimis in the past three years: Payer Amount Date Limit is E 500,000 until 31.12.10 (Translates at £450,000) Name: .......................................................................................................... Signed …………………………………………. Date ……………………………. Position ………………………………………………… If you require any assistance in completing this declaration, please contact Jane Worthington, NWDA on 01925 402240 or see the De Minimis Guide in www.nwda.co.uk/extranet username “state” password “aid”. (See section 5.3.1) ERDF Monitoring Guidance Updated August 2011 39 Annex 6 - Carbon Calculator Examples of Evidence Section/ measure Evidence 1. Energy Coal, Diesel, Fuel Oil, Liquid Petroleum Gas( LPG) Electricity, Gas, CHP On site Renewable Delivery notes & Invoices Utility Bills Type of renewable and annual production in KWH/ rating, evidence of ROC’s (Renewable Obligation Certificate), visually see the device 2. Waste All waste Materials Recovery Facility (MRF), Composting, Energy from Waste (EfW) Plant, Anaerobic Digestion, Recycling, Transfer Station Waste Transfer Notes ( legally needed for all waste to be transferred has to be kept) Infrastructure & Construction – Site Waste management – legal requirement since April 1 2008 for all projects over £300k. Provides detail of what waste will be produced and where it will go. Copy of contract with the company e.g. recycling company or Energy from Waste plant. 3. Water Water Used Water disposed of Utility Bill, meter reading, Extraction licence, Bore Hole meter reading Water in is often the same as water out, Discharge Licence 4. Travel By Fuel USE – Diesel, Gas, LPG Personnel transport - cars Public transport Freight 5.Building projects SBEM 6.ENWORKS Resource Toolkit Enworks Toolkit 7 Specific GHG reduction project Fuel delivery notes to site, fuel invoices, hours worked by machines against manufactures fuel consumption rate per hour Expense claims Expenses claims, financial transactions, minutes from meetings of attendance Tacho Graphs, Invoices from haulage company, Site Waste Management Plans – distance where waste will be transferred to for recycling or disposal, therefore distance travelled can be demonstrated. SBEM calculation – required as part of building regs. Copy of Toolkit and evidence of support from ENWORKS e.g. letter Seek advice from the Environment & Energy team if none of the above are applicable (See section 6.1.1) ERDF Monitoring Guidance Updated August 2011 40 Annex 7. Common Mistakes Outlined below are some of the common mistakes projects make, and which can result in grant being withdrawn. Here is what the project should avoid: o Claiming grant for expenditure which hasn’t actually left your bank account. It must have been spent, and cleared your account, before you claim it back o Not realising that you can only claim in arrears, not in advance, and having problems with cash flow as a result o Claiming expenditure that happened before your project start date o Double funding – mixing up two (or more) sources of EU funds o Failing to keep adequate timesheets. You must be able to demonstrate how staff have been engaged in delivering your project, particularly if they are part time or are providing time as match funding o Accidentally claiming for the same thing twice, or more than 100% of a person’s time. This can be avoided by keeping accurate timesheets and beneficiary records, and monitoring your project effectively o Failing to keep originals of documents and not keeping documents for long enough. Get these organised in your audit file and keep it for a minimum of three years after the UK has received its final payment for the programme from the EC, not when your project has finished o Losing invoices and receipts o Not informing NWDA of material changes to the project and having them agreed before you claim. This could result in grant being withheld or withdrawn o Not noticing that there have been any material changes to the project, a prime example of bad project management! o Claiming for ineligible items or for items that were not in the approved bid o Claiming for ineligible beneficiaries o Not undertaking proper monitoring of your project or collecting information often enough. Make sure that the person monitoring the project has a copy of the Offer Letter o Trying to “reconstitute” records and timesheets because systems weren’t in place soon enough, or because people didn’t follow procedures o Partners and sub-contractors failing to supply the accountable body with information. Get the contracts between everyone involved on the project drawn up before you start and agree how and when it will be collected ERDF Monitoring Guidance Updated August 2011 41 Annex 7. Continued o Not making sure that everyone involved is aware of EU funding requirements and that they keep adequate records o Using incorrect methods of apportionment. These should be agreed with your CM during contract negotiations then applied consistently throughout the life of your project o Using notional costs in the place of actual costs o Providing inadequate publicity and failing to put ERDF logos on materials – you must follow the Branding Guidelines o Trying to cut corners and ending up with more work as a result o Misunderstanding the difference between in kind and cash match funding. Make sure you do the preparatory work, and get match agreed (and understood) with all parties prior to the project starting o Failing to keep records tidy and keeping associated orders, invoices, claims, etc. together o Not ensuring that the person responsible for delivering the project is fully briefed and understands exactly what the project is supposed to deliver. Make sure that your finance director, communications manager and all staff who may be working on the project know about the project before you start asking them to get involved or deliver for you o Not ensuring there is a clear separation of roles. Those who authorise claims for a project must be different from those who drew up the claim, (claims should be checked by one officer and authorised by another) o Not having senior management buy-in from the start o Not communicating about your project across your organisation, and involving everyone who will be part of the project in its design and planning o Failing to understand output definitions and how they should be evidenced o Not undertaking adequate research into your beneficiaries and not understanding your target group and how to access them as a result ERDF Monitoring Guidance Updated August 2011 42 Annex 8. Article 13 Progress and Verification Visit Procurement Evidence Checklist It is a requirement of the Programme that all of the documents relating to procurement such as evidence of tenders and any letters offering contract along with documents showing how decisions were made and by whom are retained and are available for inspection at PAV visit. Please be aware that the principles of transparency, openness, fairness, equal treatment, proportionality must be adhered to at all times; this applies also to all procurement below the EU threshold (Commission interpretative Communication re contract awards not or not fully subject to the provisions of the Public Procurement Directive (2006/C179/02)) While this is not an exhaustive list, please use the checklist below to ensure you have all appropriate documentation ready at the time of the PAV visit (tick appropriate box(s) indicating your evidence). It is advised you have separate tender / procurement files for each of the procurements made: For purchases up to £2,500 (verbal quote acceptable) A record of who quoted Dates of the quotes Value for money consideration For purchases between £2,500 and £10,000 A record of who was invited to quote A copy of the quotes Letter to applicant who was successful Letters to applicants who was unsuccessful Followed principles of proportionality and transparency For purchases between £10,000 and £156,442 Route of procurement to decide following the EU principles for procurement Tender brief List of tender applicants/quotes Advertising already from £10,000 onwards required; low values advertisement on website sufficient Tender proposals Proof of all tenders arrived within deadline Scoring matrix’s (signed & dated by scoring panel) Details of any presentations Proof of standstill period Letter to applicant who was successful Letters to applicants who was unsuccessful ERDF Monitoring Guidance Updated August 2011 43 Annex 8. Continued For any procurement above the Current EU Procurement thresholds, currently: Supplies - £156,442 (€193,000) Services - £156,442 (€193,000) Works - £3,927,260 (€4,845,000) Tender brief OJEU Notice Pre Qualification Questionnaires (PQQ) Selection process 1 – invitation to tender Tender proposals Selection process 2 - Scoring matrix’s (signed & dated by scoring panel) Details of any presentations Letter to applicant who was successful Letters to applicants who was unsuccessful Standstill period It is the applicant’s responsibility to ensure Public Procurement rules are followed and to provide the appropriate evidence at audit. If in doubt, please seek legal advice. For further procurement guidance please see: European & UK Procurement Regulations http://www.ojec.com/Directives.aspx Office of Government Commerce http://www.ogc.gov.uk/contactus.asp Please do not use single ‘Tender Actions’. There are only very limited occasions where they are permitted. ERDF Monitoring Guidance Updated August 2011 44