eu-bureau of the bmbf pt-dlr königswinterer str. 550-554 53227 bonn germany phone: +49 228 / 38...
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EU-Bureau of the BMBFPT-DLRKönigswinterer Str. 550-55453227 BonnGermany
Phone: +49 228 / 38 21-630Fax: +49 228 / 38 21-649
Financial Rules of the 7th Research Framework
Programme
Nicole SchröderINCO-NET MIRA
- Training Seminar for Palestine Information Point in Cyprus
Content
• Project Funding • Reimbursement of costs• Eligible Costs• Financial Management• Funding Limits• Budget Calculation• Grant Negotiation• Grant Agreement and Consortium
Agreement
General
• Topmost principle: no profit (Annex II.18.3)
• Total amount of payment by the Commission shall not exceed in any circumstances the amount of the contribution (Annex II.18.4)
• Calculating the budget in accordance with the usual accounting and management principles and practices of the beneficiary (Annex II.14.1.d)
Remark
• All themes open to third countries in FP7• institutions
– can be consortium members in most projects – however: without receiving funds by the commission
unless funding is in a specific call explicity announced or
unless participation is essential for carrying out a project (industrialised countries funded only if indispensable for the project)
• have to calculate the person months and costs according to their usual accounting and management principles
• input should be identified in Annex I • estimated budget will be included as part of the total
costs of the project (but not as part of the EC contribution)
Pre-Financing
• Contribution shall be paid to the coordinator• Coordinator passes the
contribution on to the partners (Annex II.2)
– in accordance with • Grant Agreement • decisions taken by the consortium
–without unjustified delay
Upper Funding Limits
• Contribution shall be determined by applying the upper funding limits per activity (Annex II.18)
• Activities:– Research and technological development activities
(RTD) incl. innovation related activities• Creating new knowledge, new technology and products
– Demonstration activities • Designed to prove the viability of new technologies
(prototypes)
– Other activities• Dissemination, networking, intellectual property, • Management activities• Training activities
Upper Funding Limits
• Research & Development: max. 50% except:
– Non-profit public bodies, secondary and higher education establishments; research organisations (non-profit): max. 75%
– Small and Medium Enterprise (SME) max. 75%
• Demonstration activities: max. 50%
• Coordination and support actions: max. 100%
• Other Activities: max. 100%
Grant Agreement, (Annex II.16)
Actual (real and not estimated) cost
Incurred during the duration of the project (exception: costs relating to final reports)
have been indicated in the estimated overall budget annexed to Annex I
Recorded in the accounts of the benficiary
Determined according to the usual accounting and management principles and practices of the beneficiary
Used for the sole purpose of achieving the objectives of the project
Principles of economy, efficiency and effectiveness
Identifiable indirect taxes including value added tax (airport taxes may be not real taxes but a fee for a service and therefore may be eligible)
Duties
Interest owed
Provisions for possible future losses or charges
Exchange losses, cost related to return on capital
Costs declared or incured, or reimbursed in respect to another Community project
Debt and debt service charges
Excessive or reckless expenditure
Positive definition Negative definition
Eligible Costs
Eligible Costs – Direct Costs
Direct costs (Annex II.15.1)
• can be attributed directly to the project• in accordance with the accounting principles
and the usual internal rules of the beneficiary• direct costs:
– personnel costs• only costs of actual hours worked by the persons directly
carrying out the work may be charged
– travel costs– consumables– equipment
Grant Agreement (Annex II.15.1)
Eligible Costs – Indirect Costs
Indirect costsalso called Overhead • cannot be identified as being directly attributed to
the project• incurred in direct relationship with the eligible
direct costs• can be identified and justified by the accounting
system as being incurred• may not include any eligible direct costs • examples for indirect costs:
– renting or depreciation of buildings, water/gas/electricity, office equipment, communication and postage
– horizontal services such as administrative managementGrant Agreement (Annex II.15.2)
Eligible Costs – Indirect Costs
• Indirect costs may be identified according to one of the following methods:– Based on actual indirect costs
• Beneficiaries which have an analytical accounting system• Use of simplified method of calculation is acceptable,
where organisation does not have an accounting system with detailed cost allocation
– Beneficiaries may opt for a flat rate of 20% • of its total direct eligible costs• excluding subcontracting and recources made availabe
by third parties
Eligible Costs – Indirect Costs
– Some beneficiaries may opt for a flat rate of 60%• of its total direct eligible costs, excluding subcontracting and
resources made availabe by third parties• as non-profit public bodies, secondary and higher education
establishments, research organisations and SME‘s• if they are unable to identify with certainty their real indirect
costs • when participating in collaborative project or network of
excellence • called special transition flat rate, because it may be reduced
under calls closing after 31 December 2009
– Exception: coordination and support actions• Indirect costs may reach a maximum of 7% of total direct eligible
costs– excluding subcontracting and recources made availabe by third
parties
Budget Calculation (an example)
SME as partner in a large research project
Activity Direct Costs
Percentage for Indirect Costs
Indirect Costs
Total Direct + Indirect Costs
Funding Rate
EU Contribution
Research 250.000 60% 150.000 400.000 75% 300.000
Subcontract
20.000 ----- ------ 20.000 15.000
Management
100.000 60% 60.000 160.000 100% 160.000
Dissemination
10.000 60% 6.000 16.000 16.000
Total 380.000
216.000
596.000 491.000
Eligible Costs - Lump sums for ICPC
• Lump sums for International Cooperation Partner Countries (ICPC)– Palestinia is an ICPC– ICPC – Countries got the option being reimbursed on
the basis of eligible costs or may opt for lump sums– Lump sum contribution is definded per country
income group in the „list of ICPC economies“Economy contribution
(€/researcher/year) low income 8 000 €
lower middle income 9 800 €upper middle income 20 700 €
– Upper funding limits has to be applied– Lump sum is deemed to cover all costs
Guide to Financial Issues, p. 59 ff
Eligible Costs - Lump sums for ICPC
Example: a university is participant in a small collaborative project, duration 3 years, with 4 reseachers full time and 1 researcher part time working on the project
Palestina - lower middle income countryonly carries out RTD-activities=> country income group :
lower middle income 9 800 € / researcher / year
=> contribution:9 800 EUR*4.5*3*0.75 = 99 225 €
(Income group)*(researcher-years)*(duration)*(reimbursement rate)=contribution
incl. personnel, travel, equipment, consumables, subcontracts, indirect costs
• Reporting incl. Financial
reporting
• Audits
• Facing the Irregularities
• All reports and deliverables shall be delivered by the coordinator ( Annex II.2.3)
• Periodic reports, including financial statements of each benefiaciary
• final report and final financial statement
Reporting duty according to Annex II.4
Reporting
• Periodic reports to be submitted by coordinator 60 days after end of period:– overview of progress of the work, including a publishable
summary report,– use of the resources and – Financial Statement (Form C)
• Final reports to be submitted by coordinator 60 days after end of project:– publishable summary report, conclusions and
socioeconomic impact,– covering wider societal implications and a plan on use and
dissemination of foreground
Reporting
• Commission has 105 days to evaluate and execute the corresponding payment – No tacit approval of reports
• After reception Commission may:– Approve– Suspend the time-limit requesting
revision/completion– Reject them giving justification, possible
termination
– Suspend the payment
(Financial Guide)
ICPC beneficiaries with a reimbursement on the basis of
lump sums:
• only have to report on the time devoted to the project and not on the costs incurred
• will include the financial Form C and the number of actual hours worked by the researchers on the project
–beneficiary will keep a record of time (e.g. timesheets)
Reports for ICPC
Direct Costs- Personal Cost
Beispiel eines timesheets
Reports - Financial Statement (Form C)
30000050000200000300000
0
850000637500
200000
1000018000
0
4800024000
2000020002000024000
0
6600066000
0000
0
00
34000052000230000342000
0
964000727500727500
Certification
Certificate on financial statement (Audit Certificate):
• shall be submitted when the amount of the contribution claimed by a beneficiary equals or exceeds 375 000 €, when cumulated with all previous payments (except for project of 2 years or less: CFS submitted at the end)
• shall certify that the costs meet the conditions required by the Grant Agreement
• does not need to be submitted for beneficiaries paid on the basis of lump sum
• if a certification on the methodology is provided only one financial statement is required at the end
(Annex II.4.4., Version 06.02.07)Certificates on the Financial Statements Form D – Annex VII• Certificate has to be submitted when the amount of the
grant claimed by one beneficiary is equal or superior to 375.000 EUR, cumulated by all previous payments
Duration of one partner with four reporting periods
300.000 € 450.000 €
Financial report, certificate on the financial statement
300.000 € 150.000 € 150.000 € 150.000 €
600.000 €
Financial report, no certificate on the financial statement
Pre-financing
Sum of prefinancing 750.000 €
Final payment
Certificate on the Financial Statements
Liability
The Financial Responsibility of each beneficiary shall be limited to its own debts (II.20)
• Participants implement the work jointly and severally towards the Community and carry out work of a defaulting partner unless the Commission relieves them of that obligation (not = FP6 financial collective responsibility)
• Commission to assess risk of default and establishes a Guarantee Fonds, a mechanism to cover financial loss (i.e. to replace financial collective responsibility in FP 6)
• If implementation of the project is impossible or participants fail to implement it, the Commission shall ensure its termination
•
P
Liability – Guarantee Fonds
P1- failing
Beneficiary
UNI P K
1% of the
Financial Contribution5 % interests
COM
of the Financial Contribution (Pre-financing)
5%
Amount due to the COM
Recovery
Recovery Order against the failing beneficiary issued by the COM to the benefit of the Fonds
Audits
• Commission has the right to carry out technical and financial audits of EU-projects during project implementation and up to five years after the completion of the project
• Audits can be carried out by – Specialised commission staff or OLAF– Subcontractors of the commission– European Court of auditors
• Audits are usually carried out on the basis of a random sample (institutions with several EU-projects will be audited sooner or later)
• Audits will be carried out on the basis of a specific audit programme carrying out certain tests
Audits
Technical Audits:• The aim of a technical audit is to assess the work carried
out under the project over a certain period, by evaluating the project reports and relevant deliverables:
– fulfillment of the project work plan and the related deliverables;
– resources planned and utilized in relation to the achieved progress, in a manner consistent with the principles of economy, efficiency and effectiveness;
– the management procedures and methods of the project;– the beneficiaries’ contributions and integration within the
project;– the expected potential impact in economic, competition and
social terms, and the– beneficiaries' plan for the use and dissemination of
foreground.
Audits
Financial Audits: • Financial audits may cover financial, systemic and other aspects
(such as accounting and management principles) relating to the proper execution of the grant agreement
• Participants shall keep the originals or, in exceptional cases, duly authenticated copies – including electronic copies - of all documents relating to the grant agreement for up to five years after the project
• Auditors must have access to the beneficiary's offices, to its computer data, to its accounting data and to all the information needed to carry out those audits, including information on individual salaries of persons involved in the project
• The Commission shall take all appropriate measures, including the issuing of recovery orders regarding all or part of the payments made by it and the application of any applicable sanction
Consequences of Irregularities
• Repayment of unjustified EU-contribution including interest
owned
– Will be deduced by GD-Budget from next payment of the
Commission independent from programme and project
• In case of apparent systematic irregularities appear (VAT
generally not deducted, use of wrong degression rate,
wrong hourly rates for labour costs):
– Commission can decide to audit additional projects
• In severel cases: financial penalties and temporary
exclusion from further EU-projects of the whole institution
Consequences of Irregularities
• Participants making false declarations or have
seriously failed to meet their obligations under the
grant agreement shall be liable to financial
penalties of between 2% and 10% of their EU-grant
• The rate may be increased to 4% - 20% in the event
of a repeated offence within five years following the
first infringement
• In this case, beneficiaries shall be excluded from all
Community grants for a maximum of two years
Irregularities
Frequent Irregularities:• VAT not deducted
• Missing time sheets for personell costs
• Calculation of personell costs with average hourly rates
• Purchase of equipment before project start
• Purchase of equipment not necessary for project implementation (or:purchase not the best solution)
• Degression rate not justified
• Unjustified travel costs
• Indirect costs contain elements not relevant for project
Information
• Information on research programmesand projects: http://cordis.europa.eu/
• EU research: http://ec.europa.eu/research
• Seventh Framework Programme: http://ec.europa.eu/research/fp7
• RTD info magazine: http://ec.europa.eu/research/rtdinfo/
• Information requests: http://ec.europa.eu/research/enquiries/
Sources of Information
NCPs (exist in each country for each programme)• http://cordis.europa.eu/fp7/ncp_en.html
Internet
• Kommission: www.cordis.europa.eu
• Europa-Server: www.europa.eu
• German Portal to FRP: www.forschungsrahmenprogramm.de
• EU-Büro des BMBF: www.eubuero.de
EU-Bureau Contact
For further information, please contact
Nicole SchröderTel: +49 228 3821-658
Marita Düsterhöft-Lange Tel: +49 228 3821-652
EU-Bureau of the BMBFwww.eubuero.de
www.forschungsrahmenprogramm.de