FoSentHEProject number: 144713-TEMPUS-2008-HR-JPcR (2008-4745)How to write a goodfinancial report?Lejla BosakJEP TEMPUS REPORTING FRAMEWORK
Presentation outlineThree keys for good financial reporting The Base: Review of the Grant ContractEssentialsDetailed guidelines are there : in depth understanding is the key Financial Reporting FrameworkThe framework is clear: project team with clearly defined roles andinternal processes is the key Forms and Supporting DocumentsStrict, precisely defined and time bonded procedures; self-explanatoryforms, detailed supporting documentation requirements: meticulousexecution is the key
GRANT AGREEMENT Special Conditions General Conditions Annexes‣ Annex I: Description of the action‣ Annex II: Estimated budget of the action‣ Annex III: Technical implementation reports and financial statementsto be submitted‣ Annex IV: Guidelines for the use of the grant‣ Annex V: Third party fiche
ROLE OF THE BENEFICIARIESThe grant holder shall:a) have full responsibility for ensuring that the action is implemented inaccordance with the agreement;b) be the intermediary for all communication between the consortiummembers and the Commission in accordance with Article I.8. Anyclaims that the Commission might have in respect of the agreementshall be addressed to, and answered by, the grant holder, save wherespecifically stated otherwise in the agreementc) be responsible for supplying all documents and information to theCommission which may be required under the agreement, in particularin relation to the requests for payment. The grant holder shall notdelegate any part of this task to the consortium members or to anyother party. Where information from the consortium members isrequired, the grant holder shall be responsible for obtaining andverifying this information and for passing it on to the Commission;
ROLE OF THE BENEFICIARIESThe grant holder shall:d) inform the consortium members of any event of which the grant holder is awarethat is liable to substantially effect the implementation of the action;e) inform the Commission of transfers between items of eligible costs, as providedin Article I.4.4;f) make the appropriate arrangements for providing the financial guarantee or thejoint guarantee of the beneficiaries participating in the action, when requested,under the provisions of Article I.5;g) establish the payment requests on behalf of the beneficiaries, in accordancewith the agreement, the estimated eligible costs as foreseen in Annex II, andthe actual costs incurred. All payments by the Commission are made to thebank account(s) referred to in Article I.7.1;
ROLE OF THE BENEFICIARIESThe consortium members shall:a) agree upon appropriate arrangements betweenthemselves for the proper performance of the action;The beneficiaries are deemed to have concluded aninternal cooperation agreement regarding their internaloperation and co-ordination. The cooperation agreementshall include all aspects necessary for the management ofthe beneficiaries and the implementation of the action;b) forward to the grant holder the data needed to draw upthe reports, financial statements and other documentsprovided for in the agreement including its Annexes;
ROLE OF THE BENEFICIARIESThe consortium members shall:c) ensure that all information to be provided to the Commission is sent viathe grant holder, save where the agreement specifically stipulatesotherwise;d) inform the grant holder immediately of any event liable to substantiallyaffect or delay the implementation of the action of which they areaware;e) inform the grant holder of transfers between items of eligible costs, asprovided in Article I.4.4;f) provide the grant holder with all the necessary documents in the eventof audits, checks of evaluations, as described in Articles II.19 and II.6
BREAKDOWN OF THE COSTSArticle 1.3I.3.1.The total eligible costs of the action for which the Commission grant is awardedequals the total cost of the action, as shown in the estimated budget in AnnexII and indicated at Point A.4. The estimated budget shall give a detailedbreakdown of the costs that are eligible for Community funding under theterms of Article II.14, and of all receipts, so that receipts and costs are inbalance.I.3.2 Indirect costs are eligible for flat-rate funding of 7% of the total direct costseligible, subject to the conditions laid down in Article II.14.3.I.3.3. The Comission shall contribute an amount of 95% of the estimated totaleligible direct costs as indicated in Point A.3 The final amount of the grantshall be determined as specified in Article II.17, without prejudice to ArticleII.19. The Community grant may not finance the entire costs of the action. Theamounts and scores of co-financing other than from Community funds shall beset out in estimated budget referred to Article I.3.1.
BREAKDOWN OF THE COSTSArticle 1.3I.3.4By way of derogation from Article II.13, the beneficiary grant holdermay, in agreement with the consortium members, when carrying outthe action, adjust the estimated budget by transfers between items ofeligible costs, provided that this adjustment of expenditure does notaffect implementation of the action and the transfer between itemsdoes not exceed 10% of the amount of each item of estimated eligiblecosts for which the transfer is intended, and without exceeding thetotal eligible costs indicated in paragraph 2.The grant holder shall inform the Commission in writing.Above this limit of 10%, the grant holder will issue a request foramendment as specified in Article II.13.
PAYMENT ARRANGEMENTSArticle 1.4PRE-FINANCING‣ within 45 days after ageement has been signed by both parties, representing 60% of themaximum grant amoutFURTHER PREFINANCING‣ may not be made before at least 70% of the previous pre-financing has been used up. It has tobe accompanied by the documents specified in Article II 15.2 and by the progress report –within 45 days‣ EC may suspend the period of payment in accordance to procedure layed down in Article II16.2. In that case the beneficiary shall have 30 days to submitt the additional information ordocuments requiredPAYMENT OF THE BALANCE‣ The request shall be accompanied by the final technical implementation report, including thesummary report for publications and the financial statement (Article II.15.4).‣ The EC has 45 days to approve or reject the request & documents (Article II.15.4).‣ The beneficiary shall have 30 days to submitt additional information or a new report.‣ A ballance payment wil be made to the beneficiary within 45 days after the approval by theComission of the report‣ The Commission may suspend the period for payment (procedure in Article II.16.2)
BANK ACCOUNTArticle 1.6. All payments shall be made to the beneficiary’sbank account or sub-account determined in Euro asindicated in Annex V The account or sub-account must identify paymentsby the Commission. If the funds paid to this accountyield interests or equivalent benefits under the Lawof the State on whose territory the account isopened, such interests or benefits shall, if generatedby pre-financing payments, be recovered by theCommission (Article II.16.4)
ELIGIBLE COSTS – GENERAL CRITERIAArticle II.14• they must be linked to the subject of the agreement and they must be provided for in theestimated budget annexed to it;• they must be necessary for performance of the action covered by the agreement;• they must be reasonable and justified and they must accord with the principles of soundfinancial management, in particular in terms of value for money and cost-effectiveness;• they must be generated during the lifetime of the action as specified in Article I.2.2 of theagreement;• they must be actually incurred by the beneficiaries, be recorded in their accounts inaccordance with the applicable accounting principles, and be declared in accordancewith the requirements of the applicable tax and social legislation;• they must be identifiable and verifiable.
ELIGIBLE DIRECT COSTSArticle II.14DEFINITIONThe eligible direct costs for the action are those costs which, with due regard forthe conditions of eligibility set out in Article II.14.1, are identifiable as specificcosts directly linked to performance of the action and which can therefore bebooked to it direct. In particular, the following direct costs are eligibleprovided that they satisfy the criteria set out in the previous Article II.14.1:• the cost of staff assigned to the action, comprising actual salaries plus socialsecurity charges and other statutory costs included in the remuneration,provided that this does not exceed the average rates corresponding to thebeneficiary’s usual policy on remuneration;• travel and subsistence allowances for staff taking part in the action, providedthat they are in line with the beneficiary’s usual practices on travel costs or donot exceed the scales approved annually by the Commission;
ELIGIBLE DIRECT COSTSArticle II.14• the purchase cost of equipment (new or or second-hand), provided that it is written off inaccordance with the tax and accounting rules applicable to the beneficiary and generallyaccepted for items of the same kind. Only the portion of the equipment's depreciationcorresponding to the duration of the action and the rate of actual use for the purposes ofthe action may be taken into account by the Commission, except where the natureand/or the context of its use justifies different treatment by the Commission;• costs of consumables and supplies, provided that they are identifiable and assigned to theaction;• costs entailed by other contracts awarded by a beneficiary for the purposes of carrying outthe action, provided that the conditions laid down in Article II.9 are met;• costs arising directly from requirements imposed by the agreement (dissemination ofinformation, specific evaluation of the action, audits, translations, reproduction, etc.),including the costs of any financial services (especially the cost of financial guarantees).Such costs may also include specific costs incurred by the grant holder for fulfilling hisresponsibilities in his capability of the body responsible for the overall management ofthe action and the co-ordination of the beneficiaries
ELIGIBLE INDIRECT COSTSArticle II.14.3DEFINITIONThe eligible indirect costs for the action are those costs which, with dueregard for the conditions of eligibility described in Article II.14.1, arenot identifiable as specific costs directly linked to performance of theaction which can be booked to it direct, but which can be identifiedand justified by the grant holder or a consortium member using theiraccounting system as having been incurred in connection with theeligible direct costs for the action. They may not include any eligibledirect costs.By way of derogation from Article II.14.1, the indirect costs incurred incarrying out the action may be eligible for flat-rate funding fixed at notmore than 7% of the total eligible direct costs. If provision is made inArticle I.4.2 for flat-rate funding in respect of indirect costs, they neednot be supported by accounting documents
NON-ELIGIBLE COSTSArticle II.14.3• return on capital;• debt and debt service charges;• provisions for losses or potential future liabilities;• interest owed;• doubtful debts;• exchange losses;• VAT, unless the beneficiary can show that he is unable to recoverit;• costs declared by a beneficiary and covered by another action orwork program receiving a Community grant;• excessive or reckless expenditure.
NON-ELIGIBLE COSTSArticle II.14.3II.14.5 Contributions in kind shall not constitute eligible costs. However, theCommission can accept, in duly substantiated exceptional cases, that the cofinancingof the action referred to in Article I.4.3 should be made up entirely orin part of contributions in kind. In this case, the value calculated for suchcontributions must not exceed:• the costs actually borne and duly supported by accounting documents of the thirdparties who made these contributions to the beneficiary free of charge but bearthe corresponding costs;• the costs generally accepted on the market in question for the type of contributionconcerned when no costs are borne. Contributions involving buildings shall notbe covered by this possibility.In the case of co-financing in kind, a financial value shall be placed on thecontributions and the same amount will be included in the costs of the action asineligible costs and in receipts from the action as co-financing in kind. Thebeneficiaries shall undertake to obtain these contributions as provided for in theagreement.II.14.6 By way of derogation from Article II.14.3, indirect costs shall not be eligibleunder a grant for an action awarded to a beneficiary who already receives anoperating grant from the Commission during the period in question.
ELIGIBLE COSTS - ARTICLE II.14Internal procedures alignmentThe beneficiary’s internal accounting and auditingprocedures must permit direct reconciliation of thecosts and revenue declared in respect of the actionwith the corresponding accounting statements andsupporting documents.
Financial Penalties Article II.12By virtue of the Financial Regulation applicable to the generalbudget of the European Communities, any one or several of thebeneficiaries declared to be in grave breach of their obligationsunder the agreement shall be liable to financial penalties ofbetween 2% and 10% of the value of their share of the grant inquestion, with due regard for the principle of proportionality.This rate may be increased to between 4% and 20% in the event of arepeated breach in the five years following the first. Thebeneficiary concerned shall be notified in writing of anydecision by the Commission to apply such financial penalties
FINANCIAL RESPONSIBILITY - ARTICLE II.18The beneficiaries agree to be irrevocably andunconditionally, jointly and severally responsible forany amount due to the Commission by one of themwhich could not be honoured by the latter. The amountdue to the Commission will not exceed the maximumvalue of the contribution that could be granted to thebeneficiaries in accordance with Article I.4.3, increasedwhere applicable by interest on late payment.The beneficiaries are not jointly responsible for financialpenalties which could be imposed on any defaultingbeneficiary in accordance with Article II.12.
CHEKS & AUDITS - ARTICLE II.20II.20.1 The grant holder undertakes to provide any detailedinformation requested by the Commission or by any otheroutside body authorised by the Commission to check that theaction and the provisions of the agreement are being properlyimplemented. Where the Commission so wishes, it may requestsuch information to be provided directly by a consortiummember.II.20.2 The beneficiaries shall keep at the Commission's disposalall original documents, especially accounting and tax records, or,in exceptional and duly justified cases, certified copies oforiginal documents relating to the agreement, stored on anyappropriate medium that ensures their integrity in accordancewith the applicable national legislation, for a period of five yearsfrom the date of payment of the balance specified in Article I.5.
CHECKS & AUDITS - ARTICLE II.20II.20.3 The beneficiaries agree that the Commission may have an audit of the use made ofthe grant carried out either directly by its own staff or by any other outside bodyauthorised to do so on its behalf. Such audits may be carried out throughout the periodof implementation of the agreement until the balance is paid and for a period of fiveyears from the date of payment of the balance. Where appropriate, the audit findingsmay lead to recovery decisions by the Commission.II.20.4 The beneficiaries undertake to allow Commission staff and outside personnelauthorised by the Commission the appropriate right of access to sites and premiseswhere the action is carried out and to all the information, including information inelectronic format, needed in order to conduct such audits.II.20.5 By virtue of Council Regulation (Euratom, EC) No 2185/96 and Regulation (EC) No1073/1999 of the European Parliament and the Council, the European Anti-Fraud Office(OLAF) may also carry out on-the-spot checks and inspections in accordance with theprocedures laid down by Community law for the protection of the financial interests ofthe European Communities against fraud and other irregularities. Where appropriate,the Inspection findings may lead to recovery decisions by the Commission.II.20.6 The European Court of Auditors shall have the same rights as the Commission,notably right of access, as regards checks and audits
GRANT AGREEMENTSummaryGH have full responsibility for ensuring that the action is implemented inaccordance with the agreement; and is the intermediary for allcommunication between the consortium members and theCommission; including establishing the payment requestsCMs have full responsiblity to inform GH of all relevant factors affectingexecution, including transfers between items of eligible costs, andtimely provide all relevant documentation for reporting and auditsThe Commission finances up to 95% of the total costs according to AnnexII budget, and is entitled to delay payments in case of any concernoccurs. In case of a discrepancy, it can request reimbursement, imposepenalties or even terminate the contract.Payment terms, eligible and non eligible costs, reporting procedures andforms, financial responsiblities and penalties , and termination termsare precisely defined in the Agreement
PRESENTATION OUTLINEThree keys for good financial reporting The Base: Review of the Grant ContractEssentialsDetailed guidelines are there: in depth understanding is the key Financial Reporting FrameworkThe framework is clear: project team with clearly defined roles andinternal processes is the key Forms and Supporting DocumentsStrict, precisely defined and time bonded procedures; self-explanatoryforms, detailed supporting documentation requirements: meticulousexecution is the key
REPORTING FRAMEWORKThe PrincipleThe ComissionOnline time limited reporting10 days to send supporting docsGrant holderContinous / monthly reporting(including supporting docs)Consortium MemberConsortium MemberConsortium Member
JEP TEMPUS REPORTING FRAMEWORKTechnical implementation reports and financial statements tobe submitted by the grant holder:1. Implementation reports2. Summary publication reports3. Financial reportsMust be submitted in the language of the grant agreement andin accordance with the instructions provided in the JEP on-lineReport form:http://ec.europa.eu/education/programmes/tempus/contractjep_en.html
Reporting FrameworkOverviewREPORTS & PREFINANCING DEADLINES1st REPORT 1. Report on action’simplementation (IR 1)2. Summary report forpublications2nd REPORT 1. Report on action’simplementation (IR 2)2. Summary report forpublications2nd PRE-FINANCINGStatement on the costsincurred3rd REPORT 1. Final report onaction’simplementation (IR 3)2. Summary report forpublications3. Financial statementWhen 70% of the firstpre-financing has beendisbursed
DOCUMENTS to be submitted with the statement oncosts incurred respectively with financial reporting• the request for payment (see supporting document in AnnexV/3);• the supporting documents for the staff costs declared (seeguidelines and supporting document in Annex IV);• the supporting documents for the replacement costs declared(see guidelines and supporting document in Annex IV);• the supporting documents for the staff travel costs and costs ofstay declared (see guidelines and supporting document in AnnexIV);• the supporting documents for the equipment declared (seeguidelines in Annex IV);• the supporting documents for the printing and publishing costsdeclared (see guidelines in Annex IV)
PRESENTATION OUTLINEThree keys for good financial reporting The Base: Review of the Grant ContractEssentialsDetailed guidelines are there : in depth understanding is the key Financial Reporting FrameworkThe framework is clear : project team with clearly defined rolesand internal processes is the key Forms and Supporting DocumentsStrict, precisely defined and time bonded procedures; self-explanatoryforms, detailed supporting documentation requirements: meticulousexecution is the key
Guidelines for the use of the grantAnnex IV: 11 Pages of Operational & Reporting EssenceComposition and modification to the participating institutionsSupporting documents‣ Readable copies‣ Within 10 days of the submission of the on line report‣ Lack of presentation of one or more documents may lead to a request for reimbursement ofcorresponding expensesBudgetary headings‣ Staff costs‣ Travel costs and costs of stay‣ Equipment‣ Printing and publishing costs‣ Other costs‣ Indirect costs‣ Co – financingForms & Maximal eligible daily rates for staff costs
EXAMPLES Staff costs Travel costs and costs of stay
STAFF COSTSFor administrative or academic tasks which are directlynecessary for the achievement of the project objectivesMust not exceed local ratesMust correspond to the employing institution’s usual policy onremunerationNon statutory costs – excludedAdditional hours – financed at the normal hourly rate / not atthe higher rateOn the basis of the task not on the status of the personDaily staff cost rates are limited / Annex III of the GuidelinesThe rate of the country where partner is registered will beapplied, independent of where the task is executed
TRAVEL COSTS AND COSTS OF STAY The grant awarded for travel costs and costs ofstay is stated in Annex II of the Grant Agreement Include costs of travel, accomodation,subsistence, and personal and health insurancecosts, visas etc Do not cover travel for research activities
TRAVEL COSTS AND COSTS OF STAYBENEFICIARIES (STAFF) The people under official contract in theconsortium institutions‣ University teachers and trainers or trainers from enterprisesand other institutions‣ Officials and administrators, non teaching university staff orstaff from enterprises and other participating institutions Experts Subcontractors
TRAVEL COSTS AND COSTS OF STAYEligible ActivitiesTeaching / training assignments for EU staff in Partner CountryUniversities & vice versaRe-training and up-dating courses from the PartnersPractical placements in companies, industries and institutions forteaching/admin staff and trainees from PartnersManagement and coordination meetings for coordination, planning,monitoring, and quality control activitiesIntensive and strictly targeted (re) training courses – i.e. languagetranings for PartnersVisits for dissemination purposes to other parties in Partner CountriesFor activities other than above, written authorisation fromEC needs to be required
TRAVEL COSTSEligible ExpensesReimbursement is based on the real costs, independent of themeans of travel chosen; partners are required to use thecheapest means of travel (Apex tickets non use needs to beexplained)Includes all costs and all means for travel from the point oforigin to the point of destination (including visa fees, travelinsurance, cancellation costs)Expenses for private car travel, where substantiated and wherethe price is not excessive, will be covered by either a rate perkm (0.22€max) or the price of a rail, bus or plane ticket ; onlyone ticket will be reimbursed regardless of the number of thepeople travelling in the same vechicleEntry visas and obligatory insurances should also be notedunder this heading
STAFF COSTS OF STAYEligible ExpensesDaily allowances to cover costs for subsistence, accomodation, local and publictransport such as bus and taxi, personal or optional health insurance etc.Maximal amounts in € per person are defined up on a location and theduration of the stayExcept in the case of a national law to the contrary, consortium institutionsshould not suspend payment of the normal salaries of their staff during anytravel in the framework of Tempus projectSupporting documents to be sent with the financial statement for the paymentof the balance: Individual Grant Holder Report (Annex II of the Guidelines)together with all copies of travel tickets, boarding passes, invoices, receipts orin case of travel by car, copy of internal regulations as to the reimbursementrate per km. The aim of the supporting documentation is to demonstrate theactual costs of the travel and the fact that the travell actually took place. Whentravel costs are shared (coach), the supporting documentation (invoice) forthe group should be provided and each individual should report on her / hisshare of the renting costs in the Individual Grant Holder’s report
PRESENTATION OUTLINEThree keys for a good financial reporting The Base: Review of the Grant ContractEssentialsDetailed guidelines are there : in depth understanding is the key Financial Reporting FrameworkThe framework is clear : project team with clearly defined rolesand internal processes is the key Forms and Supporting DocumentsStrict, precisely defined and time bonded procedures; self-explanatoryforms, detailed supporting documentation requirements: meticulousexecution is the key
FoSentHEProject number: 144713-TEMPUS-2008-HR-JPcR (2008-4745)QUESTIONS?