joint technical secretariat [email protected] project budget planing 19 january 2010, saldus...

Joint technical [email protected]

Project budget planing

19 January 2010, Saldus21 January 2010, Līvāni

Latvia–Lithuania Cross Border Cooperation Programme 2007–2013

WORKSHOP “How to prepare good application?”

Principles, general rules

Eligibility of expenditure

Budget lines

Non eligible costs

Revenue

Costs sharing

Changes in the project budget

Common mistakes in AF

Budget planning

2

Content

Programme Document

Programme Manual

Subsidy Contract

Relevant EU and national legislation including

National Eligibility Rules

Guidelines for First Level Controllers (FLC)

FLC guidelines for PP and LP

Which ever rule is stricter - applies!

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Eligibility: Legal Framework

Sound Financial Management Council Regulation no 1605/2002 of 25 June 2002

The principle of efficiency is concerned with the best relationship between resources employed and results achieved

The principle of effectiveness is concerned with attaining the specific objectives set and achieving the intended results

The principle of economy requires that the resources used by the institution for the pursuit of its activities shall be made available in due time, in appropriate quantity and quality and at the best price

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Main Principles

5

General Rules Applicable to Project Budget:

Avoiding Corruption and Conflict of Interest

No Double Financing

Ownership of Project Results

Public Benefit

No Sub-Contracting Between PPs

6

Eligibility of Expenditure

Costs are definitively born by the LP or PP and would not have

arisen without the project

Expenditure has actually been paid out

Expenditure is considered to be paid when the amount is

debited from the partner institution’s bank account

In case of shared costs the expenditure is considered paid

when the payment was made by the implementing partner

Project costs are proved by delivery of works, services or

supplies (at least partial delivery

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Eligibility of Expenditure

Expenditure is directly linked to the Project

Expenditure is reported under the correct BL and WP

Expenditure is reported in the same Reporting Period as it was

paid

The reported expenditure must not exceed approved eligible

Project budget

Exspenditure in BL4, BL6, BL7,BL8 should be indicated and not

exceed limits set in AF

BL1 Personnel

BL2 Direct Administration costs

BL3 Indirect Administration costs

BL4 External Services

BL5 Travel and Accommodation

BL6 Equipment and Infrastructure

BL7 In Kind costs

BL8 Preparation costs

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Budget Lines

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BL1: Personnel costsIncludes:

Salaries, wages

Employment taxes, social security

Health insurance and pension contributions

of the staff directly engaged in the project and employed by the Partner institution on

the basis of an employment/ labor contract Requirements:

The actual salary rate has to be applied!

Costs must be certified on the basis of job agreements, decrees, time

sheets, record of tasks carried out

Not eligible: Daily work of staff members, which would be carried out regardless of the project

implementation

BL1: Personnel costs

Hourly rate calculation

( www.latlit.eu 1 līmeņa kontrole/LV LT territoriālās Sadarbības Programma /

stundas likmes kalkulācija)

Full time

Part time

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BL1: Personnel costs/ LV

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BL2:Direct Administration costs

Directly linked to the project and fulfilling the following conditions:

Essential for the project’s implementation and would not have been incurred if the project had not been carried out

If possible, consumables to be reported as project expenditure should be purchased separately from other office consumables

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BL3: Indirect Administration costs

(Overhead costs)- share of regular monthly payments for rent, electricity,heating, depreciation costs and other similar costs directlyrelated to project activities and calculated pro rata accordingto justified and clear method

Usually the share calculation is based on:

The working time of staff members

Office space used for the project

indirect Administrative costs can be up to 5 % of the totaleligible project budget

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The cost of depreciation of equipment, for which there is a direct

link with the project is eligible expenditure, provided that:

national or Community grants have not contributed towards

the purchase of such equipment

the depreciation is calculated in accordance with the relevant

accountancy rules

Purchase of office furniture, computers and other office

equipment cannot be placed here. They have to be placed under

the BL6 “Equipment and Infrastructure”

Administration costs of the external experts must be included in

the costs listed under the BL 4 “External Services”

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BL4: External Services Expenses paid by PP to external providers

Basis: supply contracts, service contracts, enterprise

agreements, invoices

Costs are reasonable according to the standard rates in the

country where the contracting Partner is located; average

market rates resulting from public procurement procedures

apply

Only expertise specified in the Application Form

Quality of produced outputs is to be ensured

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BL5: Travel and Accommodation

Travel and accommodation costs of employees of the project partner

institutions and related to their participation in project meetings,

seminars or events

Travel costs are eligible only if they are directly related to and essential

for the effective delivery of the project

The most economic or reasonable way of transport must be used

Despite the PP legal status (NGOs) the subsistence allowances rates as

well as accommodation costs must not exceed the set limits for the

public authorities under national regulations

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BL5: Travel and Accommodation

The travel and accommodation costs of external experts participating in

project activities have to be budgeted under BL4 “External Services”

The following costs are not eligible:

costs exceeding national limits (e.g. rate per room per night); unless

justification is provided and allowed according to the national legislation

travels in the first or business class, unless it is clearly proved that there was

no other option or that this was the most economic/less expensive option

(documentation on the justification is required)

use of car or taxi if public transport is available, unless duly justified

(documentation on the justification is required)

daily travels of project personnel from home to office and back

BL1 Personnel






BL7 In Kind costs


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Budget linesTravel costs:

External expertisePersonnel

Guests

Administration costs:

PersonnalExternal expertise

BL1 Personnel






BL7 In Kind costs


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BL6: Equipment and Infrastructure

Public procurement rules must be followed

Investments should be aimed at public use and their

ownership and the way of use cannot be changed

5years after the project has been finalized

Only investments specified in the Application Form

Quality of produced outputs is to be ensured

Recommendations:• Justify need of investments for the project • Specification of investments: sufficient details versus flexibility• Describe cross-border benefit of investments • Describe who and how will maintain the infrastructure

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BL6: Equipment and Infrastructure

In case the project plans to install the infrastructure, the

relevant PP has to be the owner of the land and/ or have the

building rights on the land

If project plan construction or renovation works one copy of a

full set of documents required under the national building laws

must be submitted to the JTS together with the AF (P.M. 5.2)

If costs under this budget line exceed EUR 50,000 the LP has

to submit a Feasibility study (P.M. 5.2)

PP should not forget to plan costs which is required by law in

order to, but are not part of construction contract (building

supervisor, permits etc.)

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BL7: InKind

Only unpaid voluntary work is eligible.(work that is done on a voluntary basis for which the person does not receive any remuneration from whatever source)

minimum monthly or hourly official national net salary level

is followed when calculating the value of in-kind

contribution.

essential to the project and based on a written agreement

Limited to up 15%, of partners budget.

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BL8:Preparation Costs Only preparation of technical documentation for the project is

eligible Feasibility study; Investment project, Technical project; Environmental impact assessment; Permits for

building Translation of technical documents and Application Form are

eligible.

Preparation costs are eligible if the payments are made not

earlier than 24 months before the JMSC decision.

Up to 5% of the total eligible project budget but no more than 50.000 EUR

Preparation costs have to follow the rules applicable to the BL “External Expertise” as well as all rules on eligibility of costs.

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Examples of Non-eligible Costs

VAT, other taxes and charges, if these are legally recoverable Luxury goods and services, presents Costs already supported by a European or other international or

national grant Staff costs arising from the statutory responsibilities of the public

authority, which would be carried out regardless of the project implementation

Payments for political or religious activities Fines, financial penalties and expenses of litigation Cost-sharing method, when the LP is withholding a certain

amount of PP expenditure after receiving payment from CA

See full list in Programme Manual, Chapter 9.6

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Revenue

If a project generates revenue, for example, through

services, conference participation fees, sales of brochures

or books, it must be deducted from eligible costs

Project revenue generated up to 5 years after closure must

be recorded/reported and reduced from the eligible costs

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10% & 20% RulesNo more than 20% of the Programme total

eligible public funds will be granted to

project partners from Kaunas region

Up to a limit of 10% of the Programme’s

budget may be used outside the

Programme area and the European

Community

Rules apply on Programme level not on

Project level

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Cost Sharing

Division of certain project costs among project partners according to transparent and equitable method

Implementing partner Paying partners

Detailed information – Programme Manual 8.4 and FLC Guidelines

De-commitment The MA has rights to withhold ERDF co-financing if it has not been

spent in time and if Programme is subject to decommitment procedure by EC

Projects having the under-spending rate of more than 20 % can be subject to the de-commitment procedure

Plan vs reality(INTERREG IIIB)

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Changes in the Project Types of changes:

Budget reallocation Project can reallocate the budget between the budget lines

and/or work packages up to 30 % of the total eligible project budget

As a rule, Project changes can be requested only once during the project implementation

Change of project activities and/or outputs; Prolongation of project duration

Change of Project Partners

All minor changes (e.g. changes in contact information, minor rescheduling of activities, small budget implementation plan deviations) can be reported as ‘deviations’ in Progress Reports

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Project starting date

June July August September October November

2010

Max p

err

iod

for

clari

fica

tions

Sc

is s

end t

o L

P

LP s

ent

signed S

C

wit

h P

art

ners

hip

agre

em

ent

wit

h

annex 2

to JTS

Max 2 weeks Max 1 month after SC signing

18d.

Project starting date

30

Reporting periods

6 months reporting periods

July 1 – December 31 January 1- June 30

The first and the last periods can be longer or shorter

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Reporting

0

Sta

rt

months

LP

PPPP

1 period

6

2 period

FLCFLC

FLCFLC

<=

10

w

ork

ing

d

ays

Partner report

Confirmation<

= 1

mon

th

FLCFLC

Progres report

9

>=

10

w

ork

ing

d

ays

Max 3 months

JTS

3 w

eeks

15

3 period

Check

Max 6 months

CA

JTS-Joint technical secretariatFLC –First level controlCA Certifying authority

Audit and Control

First Level Control (FLC): 100% of expenditures.FLC guidelines - publicly available

Audit: on a sample basis.

Other Possible Checks:

– European Commission’s audit services; – European Court of Auditors;– JTS/ Managing Authority;– Certifying Authority.

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Common mistakes in AF (1)

Planned costs are not specified, only lump sums are mentioned and cost breakdown is not provided

Justification is not provided for planned costs (e.g. purchase of video projector). Project Applicant has to explain purpose of this purchase and justify the necessity of this purchase for the Project implementation

If division of budget between PP is not balanced , LP should provide justification for such a division

First Level Control costs are not planned for Partners from Lithuania or insufficient amount is planned (normally it should be in the range of 3-4% of Partners’ from Lithuania planned budget)

Planned expenditures related to implementation of activities taking place in adjacent region and outside the EU territory and Programme area are not indicated in relevant table of worksheet “V. Project budget”

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Common mistakes in AF (2)

Amounts indicated in the Application Form are not matching the amounts indicated in supporting documents (Technical Documents and/or Feasibility Study)

“Maximum budget allowed” principle was used

Staff costs are not specified and remuneration rates for staff members are not indicated

Technical documentation should always include total costs estimation in cases when planned investments consist of several parts

Projects did not plan PP budget division to BL (it is not asked in AF). After project approval problems arise

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Budget planning(1)

Plan: Activities and purchases Work Packages All costs

Each planned cost has to be ascribted to:– Project partner– Reporting period– Work package– Budget line

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Budget planning tools