NPP 2007-2013 Common Eligibility Rules Lead Partner Seminar 14th November 2012 City Hotel,...

NPP 2007-2013Common Eligibility Rules

Lead Partner Seminar14th November 2012

City Hotel, Londonderry/Derry, Northern Ireland, UK

Gustaf Forsberg

Know the feeling?

Overhead co

sts

Final beneficiary

Non-eligible co-

financing

Expenditure actually paid

Equivalent probative value

Public co-financingOwn work

NMS funding

448DecisionBudget

Second-hand equipment

In kind contributions

Pro rata

Percentage rates

VAT

Project

Revenue

Financial

charges

Time sheets

Eligibility

ERDF

Project accounts

Claim form

Progress report

Separate Project Accounts

Project accounting

- Each partner must keep separate project accounts in their national currency.

- Each partner must be able to present a ledger from his accounting system, showing ONLY transactions generated in the project

- Note that holder of common cost should make a specific account for that budget

Regular activities PROJECT

Accounts Accounts

Separate Project Accounts

• The accounting system must ensure the posting of all expenditures and revenues related to the project

• Expenditures must be entered into the accounts and paid before they can be claimed

• All expenditures and revenues must be posted and detailed in bi-annual progress reports

• Reporting periods will be given in your decision, and will be April - September and October - March

Supporting Documentation

Copies kept by the Partner (for on the spot checks and/or random sampling):- copies of invoices and receipts- rental and leasing contracts

- employment contracts (originals)- An information and communication binder,

clearly demonstrating eligibility in accordance with information and communication regulations

- An public procurement binder, with all necessary documents in connection to any purchase where a tender was undertaken and of course when it was necessary

- other documentation

NB! The original documents must be kept by all partners. Secure the ”audit trail”.

The Partner must preserve copies of ALL supporting documents in case of an audit. Documentation should be kept at least until three years after programme closure, currently recommended until 2021.

Eligibility rules of expenditure

New system in the Northern Periphery Programme 2007-2013 Some new regulations, but still the same hierarchy when assessing

eligibility: European Regulations National Legislation NPP 2007-2013 Common Eligibility Rule Approved main project/preparatory project

Project spending outside of an approved project description is ineligible. The projects have to apply the strictest definition among Regulation, Legislation and Rule to ensure eligibility.

National Legislation

Legislation applicable in each programme partner country:

Knowledge of each programme partner country’s own legislation is the responsibility of each organisation and the project participants.

NPP 2007-2013 Common Eligibility Rules

Staff costs including social contributions Travel and accommodation External experts Office costs (directly allocated) Office costs (distributed proportionally) Promotion / publications, seminars / conferences, meetings Equipment and supplies (Including small scale investments) Other costs Common costs In kind costs Indicative list of ineligible expenditure Project revenues


Staff costs including social contributionsa) They are based on and supported by legal contracts / employment agreementsb) They are documented:

-If staff from the Lead Partner’s / Partner’s ordinary operations is assigned to part time work in the project, work performed should be reported in detail by the use of timesheets. The timesheets must state name, date/time and activity. They must be signed by the employee and his / her manager. By signing the timesheet the manager also certifies the additionality of the project assignment and that the activities specified on the timesheet are not being double financed.

c) Hourly rates should be calculated according to the following model:Monthly salary + social contribution charge / Normal (= contracted) amount of working hours per month

d) The calculated social contribution charge does only consist of legally required social charges e) No extra charges besides social contribution charge are included in the hourly ratef) Fringe benefits are not included


Staff costs including social contributions

Travel and accommodation External experts Office costs (directly allocated) Office costs (distributed proportionally) Promotion / publications, seminars / conferences, meetings Equipment and supplies (Including small scale investments) Other costs Common costs In kind costs Indicative list of ineligible expenditure Project revenues


Travel and accommodation

a) The most economic way of transport has been used. (exceptions for sustainable alternative)

b) The travel took place within the programme areac) The accommodation cost is in the middle price range. Higher price

ranges (>140 EUR /night) must be duly justified and motivated on the individual invoice.

d) Daily allowances are in line with the conditions set for public authorities in the country concerned


Staff costs including social contributions Travel and accommodation

External experts Office costs (directly allocated) Office costs (distributed proportionally) Promotion / publications, seminars / conferences, meetings Equipment and supplies (Including small scale investments) Other costs Common costs In kind costs Indicative list of ineligible expenditure Project revenues


External experts

a) The work of the external expert is essential to the projectb) Rates charged by the external expert are reasonable. Daily rates over

800 EUR must be carefully motivated to be considered as eligiblec) Rates are in relation to level of experience and expertised) Project partners can not be contracted as external expertse) Sub-contracting by external experts, not part of the original bid, is only

eligible if it forms a minor part of the of the contracted activities and is clearly adding value to the project not leading to any additional costs.


Staff costs including social contributions Travel and accommodation External experts

Office costs (directly allocated) Office costs (distributed proportionally) Promotion / publications, seminars / conferences, meetings Equipment and supplies (Including small scale investments) Other costs Common costs In kind costs Indicative list of ineligible expenditure Project revenues


Office costs (directly allocated)

Examples of eligible costs in this category are:

a) Premises costs such as rent, heat, light, water and service charges related solely to the project and corresponding to the m2 space used for project activities. Besides standard accounting material, a copy of the underlying premise agreement is obligatory for eligibility.

b) Administrative costs such as phone calls, postage, copying and office supplies related solely to the project


Staff costs including social contributions Travel and accommodation External experts Office costs (directly allocated)

Office costs (distributed proportionally) Promotion / publications, seminars / conferences, meetings Equipment and supplies (Including small scale investments) Other costs Common costs In kind costs Indicative list of ineligible expenditure Project revenues


Office costs (distributed proportionally) 1 (3)

General provisions of eligibility

a) It must be impossible to allocate the costs directly to the projectb) Proportionally distributed office costs must be attributable to the

implementation of the projectc) The distribution rate may not exceed 25% of direct salary cost (hourly

rate calculated according to 1 (c))d) The costs must be properly documented through accounting material

and periodically reviewed



The costs must be distributed according to the following model:

1) Calculate total allowed office expenditure to be distributed proportionally/year [x]

2) Calculate total no. of hours worked in the organisation/year [y]

[x]/[y] = proportional cost/hour [z]

Eligible cost is retrieved by multiplying [z] by the number of hours worked in the project according to the timesheets.



Detailed list of costs allowed in this category:

a) Administrative service; Book-keeping, salary administration, postal / telephone services, copying and centralized computer support

b) Office suppliesc) Premises costs such rent, heat, light, water and service charges

NOTE ONLY THIS MODEL IS ELIGIBLE

NPP 2007-2013 Common Eligibility Rules Staff costs including social contributions Travel and accommodation External experts Office costs (directly allocated) Office costs (distributed proportionally)

Promotion / publications, seminars / conferences, meetings

Equipment and supplies (Including small scale investments) Other costs Common costs In kind costs Indicative list of ineligible expenditure Project revenues


Promotion / publications, seminars / conferences, meetings

a) Costs related to all aspects of promotion and publications specific to the project

b) Costs related to organising and participating in seminars / conferences and meetings

Please note that meals/catering should be of a moderate nature and according to normal standards in each partner country. Excessive entertainment is not to be regarded as eligible expenditure. All meals/catering must be supported by a list of participants and a statement outlining the purpose of the occasion.

NPP 2007-2013 Common Eligibility Rules Staff costs including social contributions Travel and accommodation External experts Office costs (directly allocated) Office costs (distributed proportionally) Promotion / publications, seminars / conferences, meetings

Equipment and supplies (Including small scale investments)

Other costs Common costs In kind costs Indicative list of ineligible expenditure Project revenues


Equipment and supplies (Including small scale investments) 1 (2)

General principlesa) Cost for equipment includes purchase price as well as costs for site

preparation, delivery, handling and installation when applicableb) The equipment must be essential for the delivery of the project, used

solely for that purpose and purchased within the eligible project periodc) The full purchase price is only eligible if the item is used solely for the

project during its total economic and depreciable lifetime. In all other cases only depreciation costs shall be eligible


Equipment and supplies (Including small scale investments) 2 (2)

The purchase cost / depreciation cost of second-hand equipment is eligible under the following conditions:a) It must be certified by the seller that the equipment has not

previously been co-financed with public fundsb) The price of the equipment shall not exceed its market value and

shall be less than the purchase costs of similar new equipmentc) The equipment shall have the technical characteristic necessary for

the project and comply with applicable norms and standards


Staff costs including social contributions Travel and accommodation External experts Office costs (directly allocated) Office costs (distributed proportionally) Promotion / publications, seminars / conferences, meetings Equipment and supplies (Including small scale investments)

Other costs Common costs In kind costs Indicative list of ineligible expenditure Project revenues


Other costs

Other costs which are eligible according to general principles and regulations and necessary for the implementation of the project may be placed under this category


Staff costs including social contributions Travel and accommodation External experts Office costs (directly allocated) Office costs (distributed proportionally) Promotion / publications, seminars / conferences, meetings Equipment and supplies (Including small scale investments) Other costs

Common costs In kind costs Indicative list of ineligible expenditure Project revenues


Common costsThis expenditure category should contain the distributed partner’s share of the common costs in the project.

The holder of a common cost shall make a separate common cost budget, named pX 3(3) in part 3 of the application, containing all common costs held by their organisation. The individual eligibility rules shall apply for each expenditure category in this budget.

NOTE: When claiming, the holder of a common cost has to certify common costs expenditures held by their organisation after which distribution can be made throughout the partnership.

.


Staff costs including social contributions Travel and accommodation External experts Office costs (directly allocated) Office costs (distributed proportionally) Promotion / publications, seminars / conferences, meetings Equipment and supplies (Including small scale investments) Other costs Common costs

In kind costs Indicative list of ineligible expenditure Project revenues

“Don’t panic!”(Quote: Douglas Adams: The Hitch-Hikers Guide to the Galaxy)

Co-financing cash/own work vs. in-kind


In kind costsa) Only public or public equivalent in kind contributions from organisations

outside the partnership are eligibleb) They consist of the provision of land or real estate, equipment or raw

materials, research or professional workc) Their value can be independently assessed and audited;

- Value of land or real estate must be certified by an independent qualified valuer or duly authorised official body- For research and professional work, the eligibility rules for “staff costs including social contributions” shall apply

The co-financing from the Northern Periphery Programme can not exceed the total eligible expenditure excluding the value of in kind contributions


In kind costs

Demonstrating an in-kind contribution as a certified cost will not generate ERDF or ERDF equivalent funding unless actual costs have been spent by the project partner. ERDF or ERDF equivalent funding will only be paid out fully if the full share of in kind AND cash match funding can be demonstrated in the claim. It is of the highest relevance that any in-kind contribution is contributed to the project at the same pace as the project implementation/spending takes place.

A partners financial budget (Example)

External cash co-financing 20.000Own contribution “own work” 20.000NPP grant 60.000Total 100.000

Costs that are not covered by anyone else are in fact this partners co-financing. It is irrelevant whether they are staffing costs or any other costs.

All costs should always be included in your entries and substantiated

Why is own work = cash?


Staff costs including social contributions Travel and accommodation External experts Office costs (directly allocated) Office costs (distributed proportionally) Promotion / publications, seminars / conferences, meetings Equipment and supplies (Including small scale investments) Other costs Common costs In kind costs

Indicative list of ineligible expenditure Project revenues


Indicative list of ineligible expenditurea) Fees for financial transactions (except for transnational transaction charges)b) Interest on debt, loan charges or costs resulting from the deferral of payments to creditorsc) Exchange rate losses or other costs tied to currency exchanged) Fines, other legal fees or court costse) Costs for finance leases or other hire purchase arrangementsf) Redundancy paymentsg) Payments into private pension schemesh) Bad debtsi) Overtime pay for part time workers in the projectj) Purchase of landk) Decommissioning of nuclear power stationsl) Housingm) Recoverable VATn) Unpaid costs


Staff costs including social contributions Travel and accommodation External experts Office costs (directly allocated) Office costs (distributed proportionally) Promotion / publications, seminars / conferences, meetings Equipment and supplies (Including small scale investments) Other costs Common costs In kind costs Indicative list of ineligible expenditure

Project revenues


Project revenues

Eligible expenditure shall be reduced with revenues generated by the project. The following is to be regarded as revenue:

a) Revenues generated by sales, lease, services and fees or other similar activities

b) Revenues in other form than money

Revenues generated by the project shall be accounted for continuously by the project partner

General Eligibility Rule

Public Match Funding

Both In-kind and Cash match funding have to be paid out to its share of the project expenditures when claiming.

When certifying ensure that match funding payments are being certified and that enough is paid out at every given point.

Note: A public organisation who is participating can always state that that their match funding share has been paid out as an “advance”, due to their legal status.

Types of Audit

• National Controllers (First Level Control)

• ”On- the-spot checks” (National Controllers)– verify delivery of products and services– verify the reality of expenditure

• Sample checks (2nd Level Control)– 5 % of eligible expenditure– representative sample– ”professional” independent auditors

• ”The grey men from Brussels”

European Regulations

Commission rules on eligibility of expenditure can be found in:

Regulation (EC) No 1080/2006, Art 7 and 13 Regulation (EC) No 1081/2006, Art 11 Regulation (EC) No 1083/2006, Art 56 Regulation (EC) No 1828/2006, Art 48-53


Other Commission rules applicable:

Regulation (EC) No 1083/2006, Art 2 (5) and Directive 2004/18/EC (Public procurement)

Regulation (EC) No 1083/2006, Art 54 (State Aid) Regulation (EC) No 1828/2006, Art 9 (Publicity) Regulation (EC, Euratom) No 1605/2002, Art 48 (2) (Sound financial

management) Regulation (EC) No 1083/2006, Art 16 (Equality between men and

women and non-discrimination) Regulation (EC) No 1083/2006, Art 17 (Sustainable development)


Other Commission rules applicable:

Regulation (EC) No 1083/2006, Art 54 (Double financing) Regulation (EC) No 1083/2006, Art 55 (Generation of revenue) Regulation (EC) No 1828/2006, Art 24 (d) (Legality and regularity of

expenditure paid outside the Community)

Please note that this list may not be exhaustive.

NPP 2007-2013 Common Eligibility Rules Lead Partner Seminar 14th November 2012 City Hotel,...

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