Changes in the EU Financial
Regulation and the Common
Provisions (Financial issues)
Question and answer session
Østersund, Sweden September 2013
Tommy Sejersen
Platform meeting
Consequences for LIFE+ Common Provisions
1. Additional clause for running 2011 projects regarding
interests on pre-financing (formerly art. 24)
-> No need to report them as interest on PF to EC
anymore but still considered as income
2. Modifications introduced to LIFE+ 2012 Common
Provisions which were already published with 2012 call
for proposals
-> Link to revised version and explanatory note sent with
question letters
3.
Further modifications introduced in LIFE+ 2013 Common
Provisions
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Platform meeting
Document published with the 2012 call on the LIFE website: Main changes in the Common Provisions 2012 (rev. Feb. 2013)
(as compared to the text included in the Application Guides)
Art 6.6 – introduces obligation for beneficiaries to inform the Commission of any activity by third parties that is
likely to have a significant negative impact on the sites/species targeted in the project, and if appropriate to take
measures to persuade third parties to refrain from such activities.
Art 8.4. introduces stipulation that requirements of transparency and possibility of audit apply also to subcontractors
Art 18 – clarification of article on termination of the grant agreement
Art 19 – clarification that confidentially obligations last for 5 years beyond the closing date of the project
Art 23.6 – introduces stipulation that claims for payments of the beneficiaries against the Commission may not be
assigned to third parties.
Art 24.1 – clarification on the start date for eligibility of costs
Art 24.2 – clarification on the calculation of personnel costs and introductions of certain exceptions to time
registration obligations
Old article 24.6 – removed; no obligation to report or repay interest on pre-financing
Art 28 – payment deadlines (by the Commission) are shortened
Art 28.5 – clarifications concerning the payment suspension procedure
Art 30.2 – introduces possibility to submit auditor's certification as justification for VAT non-recoverability
Art. 32.13 – introduces stipulation that the right of access and assistance described in the rest of article 32 also apply
to the Court of Auditors and OLAF.
This list is not complete. Please refer to the full text for a comprehensive picture of the changes that have been introduced.
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Platform meeting
Modifications in Part I of the Common Provisions
2012 (legal and administrative provisions) (1/4)
- References to the numbering of articles (partially new
numbering)
- Art. 5.5 Each AB must contribute financially to the project and
may (formerly shall) benefit from the financial contribution of
EC
- Art. 6 Common obligations for CB and ABs
• New art. 6.6 for NAT and BIO projects: communicate to EC
activity by third parties likely to have negative impact on
sites/species and, if appropriate, take measures to prevent
third parties from such activities
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Platform meeting
Modifications in Part I of the Common Provisions
2012 (legal and administrative provisions) (2/4)
- Art. 8 Subcontractors
• Art. 8.1 has been reformulated by merging old art. 8.1 and
8.2 and reflecting a part of old art. 8.4. It contains the
provision to award contract to lowest offer or offer with
best value for money and to avoid conflict of interest in
doing so.
• New art. 8.4 c) with references to art. 10, 11, 19 and 32 of
CP: Civil Liability, Conflict of Interest, Confidentiality and
Audit by the EU Institutions now also applicable to subcontractors.
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Platform meeting
Modifications in Part I of the Common Provisions
2012 (legal and administrative provisions) (3/4)
Conflict of interest (economic, "family") Art 8,1 & 11:
• Seperate legal identity
• Related companies (being in controle of or being controled)
• Staff members
• Demonstrate best value for money
• Same legal identity (Departments) Article 26
• Excluding profit and overheads
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Platform meeting
Modifications in Part I of the Common Provisions
2012 (legal and administrative provisions) (4/4)
- Art. 19 Confidentiality
• Confidentiality obligations last for 5 years (before no time
limit was given)
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Platform meeting
Modifications in Part II of the Common Provisions
2012 (financial provisions) (1/6)
- Art. 23 "Union financial contribution" (formerly Art. 24)
• Old art. 24.6 and 24.7 have been deleted: no more need
for specific bank account to identify funds paid by the
Commission. No more recovery of interest yielded by
beneficiaries on pre-financings (as of 2011 call).
• Obligation to report interest as income dissapear from
2012-projects
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Platform meeting
Modifications in Part II of the Common Provisions
2012 (financial provisions) (2/6)
- Art. 24 "Eligible costs" (formerly Art. 25)
• Art. 24.1 "legal obligation to pay was contracted after the
start date of the project or after the signature of the grant
agreement by the EC in case this takes place before the
project start date" (formerly it was only related to the
signature of the grant agreement)
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Platform meeting
Modifications in Part II of the Common Provisions
2012 (financial provisions) (3/6)
Provisions on personnel costs/time registration in Art 24,2 have been
elaborated:
•
Clarification how to calculate the hourly rates
•
Service contracts are now called "contracts with natural persons" and
conditions have been specified
•
Use of 1720 hours/year by default if reliable time registration system not
available
•
Letter of secondment or contractual document for full time project staff
(instead of time registration)
•
Civil servants: clarification on definition and need of contractual document/
letter of secondment stressed
•
Exceptions to time registration (less than 2 days of work in project/month)
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Platform meeting
Modifications in Part II of the Common Provisions
2012 (financial provisions) (4/6)
• Art 28 Payment deadlines (by the Commission) are shortened
by 15 days
• "Suspension periods" has been clarified further
• "Interest paid by the EC on late payments" has
clarified further
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been
Platform meeting
Modifications in Part II of the Common Provisions
2012 (financial provisions) (5/6)
-
Art. 29 (formerly art. 30) "Statement of expenditure and
income" is now called "Financial statement"
•
Art. 29.1 "Financial statement": the EC requirements
have been clarified further (new guidelines)
•
Art. 29.5 "Use of the Euro"
The exchange rate for beneficiaries effecting purchases
from non Euro countries has been specified.
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Platform meeting
Modifications in Part II of the Common Provisions
2012 (financial provisions) (6/6)
- Art. 30 "Value added tax" (formerly art. 31)
• In case a beneficiary cannot provide a VAT certificate
emitted by the responsible authority, the possibility has
been introduced to provide an auditor's certification as
justification for VAT non-recoveribility. This justification
will be inserted in the independent financial audit, to be
provided by the beneficiary at the end of the project.
- Art. 32 "Audit by the EU Institutions" (formerly art. 33)
• In art. 32.8 not only the European Anti-Fraud Office
(OLAF) but also the Court of Auditors are given the right
of access and assistance.
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Platform meeting
Modifications in Part I of the Common Provisions 2013
(legal and administrative provisions)(1/2)
-
Art. 4 Coordinating beneficiary not solely legally and
financially responsible to the EC anymore but
•
Is the only intermediary for all communications between
beneficiaries and EC,
•
Provides EC with information related to any changes in legal,
financial, technical, organisational or ownership situation of any
of the beneficiaries
•
Monitors the actions as per grant agreement (GA),
…/…
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Platform meeting
Modifications in Part I of the Common Provisions 2013
(legal and administrative provisions)(2/2)
•
Establishes payment requests and provides the EC with all the
necessary reports,
•
Is sole recipient of payments on behalf of all beneficiaries,
•
Ensures that all appropriate payments are made to the other
beneficiaries in accordance with the agreements concluded with ABs,
•
Provides necessary documents in the event of checks and audits.
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Platform meeting
Modifications in Part II of the Common Provisions 2013
(financial provisions)(1/5)
- Art. 23.4 New definition of "profit" rule:
Profit = surplus of the receipts over the eligible costs of the action
Reminder: Before, profit was entirely deducted from the amount to be
paid, now it is shared between the EC and the beneficiary/ies, at the
rate of the co-financing.
Two types of receipts:
i) income generated by the action
ii) financial contributions specifically assigned by co-financiers to
financing of eligible costs of the action reimbursed by the EC
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Platform meeting
Modifications in Part II of the Common Provisions 2013
(financial provisions)(2/5)
receipts not to be taken into account for verification
produces profit for the beneficiaries:
whether grant
i) financial contributions used by beneficiaries to cover costs
other than the eligible costs under the GA
ii) unused part of financial contributions which is not due to
the donors at the end of the implementation period
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Platform meeting
Modifications in Part II of the Common Provisions 2013
(financial provisions)(3/5)
Example (only rare cases):
ELIGIBLE COSTS
(consolidated eligible costs
approved by the EC)
PROFIT
Not deducted entirely but
on the basis of the cofinancing rate of the grant
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RECEIPTS
• EU contribution
• INCOME from the
action
• OTHER financial
contributions
specifically assigned to
the eligible costs
Platform meeting
Modifications in Part II of the Common Provisions 2013
(financial provisions)(3/5)
Example (most cases):
RECEIPTS
• EU contribution
• INCOME from the action
• OTHER financial
contributions specifically
assigned to the eligible
costs
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ELIGIBLE COSTS
(consolidated eligible
costs approved by the
EC)
Platform meeting
Modifications in Part II of the Common Provisions 2013
(financial provisions)(5/5)
- Art. 30 Value added tax
• VAT is eligible except for
•
taxed activities or excempt activities, both with right of
deduction
•
Activities engaged in as a public authority by the
beneficiary where it is a State, regional or local
government authority or another body governed by
public law
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Platform meeting
Other financial issues
2% rule:
The European Court of Auditors report in 2003 on the
LIFE II in paragraph 48 set out that the LIFE "administrative
provisions should be amended in such a way as to exclude the
possibility of financing the salaries of public servants, including
cases where public bodies are involved in carrying out projects…"
Temporary staff:
If the staff member of the project is hired on the first day of the project, and his/her contract does not
mention the end date, but he/she quits the job on the last day of the project - is that considered temporary
or permanent position?
Key issue – contract mentions the project?
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Platform meeting
Other financial issues
Use of travel logs:
• Proof the use of the car for the project.
• Apportion costs between activities.
• Short term rent of cars – probably no
• Reimbursement of use of private car – probably no IF
AGRESSO identify each travel to the project
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Platform meeting
Other financial issues
Clear reference on the invoice:
• It is defined to be LIFEXX NAT/YY/000ZZZ – ACRONYM
• At the end of the day the costs have to be linked to the LIFE
project
• Number or acronym
• Project code
• Anything that links the invoice to the project area
• etc
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Platform meeting
Other financial issues
Equipment or consumables:
• Just because items are depreciated 100% in the year of
purchase does not mean it is not equipment.
• Residual value
• Stationarry, "off-the-shelf" product (held in stock)
• Available in the cupboard or should it be ordered
• Examples in the guidelines are clear
•
•
Equipment: laptop computer’, ‘database software (off-the-shelf or developed under subcontract)’, ‘measurement equipment’, ‘mowing machine’, etc
Consumables: materials for experiments, animal feeding stocks, materials for dissemination,
repair of durable goods given that this is not capitalised and that they are purchased for the
project or used 100% for the project, etc.
• For nature projects follow the classification of the budget.
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Platform meeting
Other financial issues
Simplify reporting:
Avoid the registration of low value invoices.
Annex copies of log books
Group invoices.
Description allow for assessing the
eligibility/relation to the project
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Platform meeting
Other financial issues
Tender rules (1/3):
How to document the selection process.
When no selection or written procedure is carried out for
direct contract
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Platform meeting
Other financial issues
Tender rules (2/3):
Anslået værdi ekskl. Moms
DKK 0 – 99.999
Fremgangsmåde ved indgåelse af varekøbsaftale
Ingen formkrav.
Men vær opmærksom på benyttelsen af kontrakt - særligt betalingsbetingelser, kontraktens genstand,
mangler, levering og opsigelse.
MIU råder til at gøre brug af Miljøministeriets standardkontrakt og at markedsprisen kendes. Hvis
markedsprisen ikke kendes, da råder MIU til at spørge minimum to leverandører.
Er du i tvivl da kontakt MIU.
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Platform meeting
Other financial issues
Tender rules (3/3):
Anslået værdi ekskl. Moms
Fremgangsmåde ved indgåelse af varekøbsaftale
DKK 100.000 – 499.999
Der indhentes minimum to skriftlige tilbud, såfremt det økonomisk og
administrativt kan svare sig. Hvis der ikke indhentes minimum to skriftlige tilbud, da skal der
udarbejdes referatark på sagen med indhold af økonomisk og/eller administrativ begrundelse. Der er
ved disse opgaver ligeledes krav om skriftlighed og institutionen følger denne fremgangsmåde:
1. Indhente minimum to skriftlige tilbud (frit valg ang. hvem der rettes henvendelse til). Hvis det ikke
økonomisk og/eller administrativt kan svare sig, da kan punkt 1 afviges. Begrundelse skrives i
referatarket på sagen.
2. Referatark på sagen med oplysninger om forventet kontraktsum mv.
3. Udarbejde en skriftlig opgavebeskrivelse med oplysninger om behov, ønsker mv. Ved udvælgelse
skal der være ligebehandling og gennemsigtighed i processen.
4. Indgå en skriftlig aftale (gerne Miljøministeriets kontraktskabelon)
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Platform meeting
Other financial issues
Foot note on model timesheet:
"INSTRUCTIONS
·
For any days during the month that you did not work enter the appropriate Absence Code, i.e. sickness, holiday, recuperation of overtime, etc.
·
Enter the hours you worked for the Life project each day. If you work for more than one Life project be careful to enter the hours against the
correct project.
·
Enter the hours you worked on other (i.e. non-Life) activities.
·
After the last entry of the month, sign it and date it and pass it on to your line manager/supervisor for validation.
·
Please ensure the timesheet is signed and dated by both yourself and your line manager/supervisor within the first two weeks after the month
the timesheet relates to"
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Platform meeting
Other financial issues
The happy FDO:
Pay quickly, no ineligible costs, no additional information
• Reply on previous questions in a structured way
• Address the key issue, which is often the eligibility of the
costs
• Provide the requested documents
• Provide sufficient explanations to understand the documents.
Focus on the relevant invormation
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Platform meeting
Other financial issues
Issues to consider at the beginning of projects (1/3):
Establish project codes in the analytical accounting system(s).
Establish project codes in the time registration system.
Establish a time registration system.
A short description of the time registration system, i.e. the
registration and submission routines for the employees and
the validation procedure for the supervisor/line manager.
Public body permanent staff must be specifically seconded to
the project, i.e. ensure that such instructions are issued.
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Platform meeting
Other financial issues
Issues to consider at the beginning of projects (2/3):
Public beneficiaries should get familiar with the applicable
tender rules, i.e. when competitive price offers are and are
not requested. Get familiar with what kind of documentation
can be requested. Keep a short description of these rules in
the project files.
Other types of beneficiaries should observe the requirement of
competitive price offers for contracts above 125.000 € and the
necessity to be able to provide written evidence of this
procedure. I should be stressed that below this threshold best
value for money still apply.
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Platform meeting
Other financial issues
Issues to consider at the beginning of projects (3/3):
Download the financial report and the CP and distribute it to
your ABs if applicable.
Provide all requested information. Add but not delete columns
Establish reporting routines for the ABs.
Ensure that supporting documents are retained in 5 years.
Obtain a declaration from the national tax authorities
certifying with regard to VAT, if applicable and keep this
certificate in the project file.
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Platform meeting
Other financial issues
Issues to consider during the project period (1/2):
No blank cells.
Sufficiently detailed description to facilitate the assessment of the
eligibility of the costs.
Classify the costs according to the budget. In case the budget does
not give decisive guidance consult the CP.
In case it appear that durable goods are classified in other cost
categories than durable goods, you should contact the Monitor.
Check that invoicing among beneficiaries, between their departments
or between related companies does not take place.
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Platform meeting
Other financial issues
Issues to consider during the project period (2/2):
You should monitor the costs and compare them to the budget on a
regular basis. If you have ABs it is therefore important that they
send their updated financial report to you on a regular basis.
Time worked for the project should be registered per day.
There should be a clear reference to the project on the invoice in the
format LIFEXX NAT, ENV or INF/AB/000123.
Costs incurred by co-financiers or members of the cooperate groups
not listed as ABs are not eligible. This apply in particular for projects
where the holding company are CB in a project and where member
companies of the same company group carry out the technical
implementation of the project.
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Platform meeting
Thank you !
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Platform meeting