Guide to Financial Issues relating to FP7 Indirect Actions - KoWi

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The organisations need a fair "key" or "driver" to distribute these costs from the "pool" of indirect costs into the different projects and activities. Different allocation methodologies are acceptable as long as they are in line with the general accounting policy of the beneficiary (i.e. allocation of indirect costs to the project via personnel, either as a percentage of personnel costs or a fixed hourly rate) and they are fair and reliable and not an unsubstantiated estimation. No subjective or arbitrary keys can be accepted. This method is the same as that of the previous FC model. Where another cost driver not based on personnel is used, the result of the application of this cost driver must not exceed the total amount of indirect costs to be allocated. Simplified method The simplified method is a modality of the actual indirect costs calculation, and is a way of declaring indirect costs which applies to organisations which do not aggregate their indirect costs at a detailed level (centre, department), but can aggregate their indirect costs at the level of the legal entity. It is a system that can be used if the organisation does not have an accounting system with a detailed cost allocation. This simplified method has to be in accordance with their usual accounting and management principles and practices; it does not involve necessarily the introduction of a new method just for FP7 purposes. Beneficiaries are allowed to use it, provided this simplified approach is based on actual costs derived from the financial accounts of the last closed accounting year. Therefore, beneficiaries using the simplified method shall not submit an adjustment covering the difference between the indirect costs derived from the accounts of the last closed financial year and the indirect costs derived from the financial accounts of the project period. Beneficiaries should be in a position to justify and reconcile the results with the accounting records and be able to demonstrate in case of an audit that the indirect costs are fairly allocated to the research activity/projects. Minimal requirements of a simplified method: Although each legal entity will use its own system, the minimum requirements for it to be considered a simplified method for FP7 purposes are the following; • Firstly, the system must allow the beneficiary to identify and remove its direct ineligible costs (VAT, etc...) • Secondly, it must at least allow for the allocation of the overheads at the level of the legal entity to the individual projects by using a fair "driver" (e.g. total productive hours). In this case, it is clear that if the overheads taken into account are all those of the beneficiary (not distinguished by activities), the driver used for the calculation of the relevant rate (e.g. total productive hours) will include all the activities of the beneficiary (i.e. total hours including not only hours specifically for research, demonstration, etc.). In this case, also the beneficiary should be able to justify both the total amount of the overheads and the total amount of productive hours. Example: building where both research and teaching activities are performed. Both the overheads generated by the research and the teaching activities are aggregated into a common pool by the accounting system of the beneficiary, obtaining (after applying an adequate cost driver), a single overheads rate. 70
• The system applied and the costs declared according to it should follow the normal accounting principles and practices of the beneficiary. Therefore, if the system used by a beneficiary is more "refined" than the "minimum" requirements mentioned above, it is that system which should be used when declaring costs: Example: if a beneficiary's accounting system distinguishes between different overheads rates according to the type of activity (research, teaching...), then the overheads declared in an FP7 ECGA should follow this practice and refer only to the concerned activities (research, demonstration...) Does the simplified method need to be certified by the Commission? The simplified method does not require previous registration or certification by the Commission. Consequently, there is no specific certification of the simplified method used by a beneficiary. The beneficiary has the responsibility to ensure that the simplified method used is compliant with the requirements. However, the certification on the methodology - described in Article II.4 of ECGA – may cover the methodology of calculation of indirect costs (including the simplified method) for those beneficiaries who are allowed to use the certification on the methodology. When a Certificate on the Financial Statement is submitted the auditor will describe the (simplified) accounting system certifying these points. It is important to remember that this option refers to the possibility for a beneficiary to use a simplified method of declaring indirect costs. There is therefore no "standard model" - only different simplified methods used by beneficiaries complying with the requirements mentioned above. Examples of the simplified method: An organisation is working on three projects and has identified EUR 10,000 as eligible overall overheads of the organisation (electricity, administrative tasks, supply, equipment, etc.) For the division of the overheads between the three projects, the organisation uses a simplified method based on the key driver personnel: overheads are distributed according to a fixed hourly rate. [Example 1: allocation via hourly rate]: Overheads of the organisation: 10,000 Worked hours at the level of the legal entity: 2,000 Hourly rate: 10,000/2,000 = 5 Allocation between projects: EUR Project 1: 600 worked hours => 600 x 5 = 3,000 indirect costs Project 2: 400 worked hours => 400 x 5 = 2,000 indirect costs Project 3: 1.000 worked hours => 1.000 x 5 = 5,000 indirect costs [Example 2: allocation via percentage of personnel cost] Overheads of the organisation: EUR 10,000 Personnel cost at the level of the legal entity: EUR 100,000 Rate: 10,000/100,000 = 0,1 (10%) Allocation between projects: EUR Project 1: personnel cost = 30,000 => 30,000 x 0,1 = 3,000 indirect costs Project 2: personnel cost = 20,000 => 20,000 x 0,1 = 2,000 indirect costs 71
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Guide to Financial Issues relating
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In addition, all FP7 beneficiaries
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Article II.6.1.b) - Interim payment
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PART 1: FP7 EC GRANT AGREEMENT - CO
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this SME flat rate under the cost c
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Contribution to the Guarantee Fund
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considered as the project coordinat
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Article II.4.4 of ECGA - Certificat
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1 EUR 350,000 EUR 175,000 EUR 175,0
Page 19 and 20: Specific case of beneficiaries with
Page 21 and 22: 3. Submission of the certificate on
Page 23 and 24: e consistent with the beneficiary's
Page 25 and 26: eligible costs not yet certified th
Page 27 and 28: Example 2 Project duration: 3 years
Page 29 and 30: Subcontracting costs are direct cos
Page 31 and 32: • the criteria defining "quality"
Page 33 and 34: complementary way. This means using
Page 35 and 36: Where actual costs are not availabl
Page 37 and 38: Acceptability criteria for average
Page 39 and 40: Criterion d: Productive time As a g
Page 41 and 42: • When the average personnel cost
Page 43 and 44: For years 2007-2008-2009 these annu
Page 45 and 46: The formula applied is the same as
Page 47 and 48: A. THIRD PARTIES MAKING THEIR RESOU
Page 49 and 50: this case it is the university whic
Page 51 and 52: parties making available resources
Page 53 and 54: above for Joint Research Units. The
Page 55 and 56: Non-exhaustive list of taxes and pe
Page 57 and 58: administrative, absence, EU-project
Page 59 and 60: Some activities may be considered n
Page 61 and 62: applicable national labour law, the
Page 63 and 64: The following criteria must be appl
Page 65 and 66: • each successive 12-hour period:
Page 67 and 68: equipment purchase. If the service
Page 69: Indirect costs, also called overhea
Page 73 and 74: Such costs are normally deemed to b
Page 75 and 76: principle be able to opt for the 60
Page 77 and 78: certificate of financial statements
Page 79 and 80: Article II.16 of ECGA - Upper fundi
Page 81 and 82: Changes of legal status of benefici
Page 83 and 84: * Remark: Actual commercial exploit
Page 85 and 86: They may cover the salary costs of
Page 87 and 88: fee to a conference carried out by
Page 89 and 90: eneficiaries may opt for a lump sum
Page 91 and 92: Example of calculation of EU fundin
Page 93 and 94: Example: 3-year project with 3 mill
Page 95 and 96: Maximum EU/Euratom financial contri
Page 97 and 98: • The beneficiary has to reimburs
Page 99 and 100: The Communication permits the use o
Page 101 and 102: Article II.24 of ECGA - Liquidated
Page 103 and 104: FINAL PROVISIONS Article II.40 of E
Page 105 and 106: 2 nd period: the access provider de
Page 107 and 108: The EU/Euratom financial contributi
Page 109 and 110: Step 2: The budget for the RTD Perf
Page 111 and 112: For our project example we show two
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Guide to Financial Issues relating to FP7 Indirect Actions - KoWi

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