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Finance Helpdesk Newsletter #12

Upcoming Public Finance Helpdesk Workshop

Guide to Financial Issues relating to Indirect Actions of the Seventh Framework Programme

Coordinators bank accounts

Pre-financing

Certificate of Methodology

Overheads calculation

Average Personnel Costs

Normal Accounting procedure

Exchange Rates

Airport taxes

 

Upcoming Public Finance Helpdesk Workshop:

09/07/2007 - 1 Day FP7 Financial Workshop in Edinburgh, Scotland.

 

The above workshop will be aimed at project managers and is particularly relevant to anyone who wants to understand the FP7 Financial Rules and how to report correctly as applied to the Cooperation Theme.

 

The Workshop will cover:

·          Differences between FP6 and FP7

·          FP7 Financial Rules

·          Budgeting Rules

·          Flat rate Overheads Vs Real Costs (FC Calculation)

·          Derogation Scheme

·          Cost Recording

·          Eligible Costs

·          In-House Financial Recording Systems

·          Cost Reporting

·          Management Reports (Form C)

·          Audit Certificates

·          Final Payments

 

Places are limited and will be allocated on a first register – first serve basis.

To register, please download the registration form and send completed form by Email here, or fax to: +972 89327362

 

Guide to Financial Issues relating to Indirect Actions of the Seventh Framework Programme:

This document will in essence be a working draft with updates every six months. The current draft does contain mistakes however, is a good basis. We look forward to seeing the 1st update.

 

It is important to remember however, that the guide has a very strong disclaimer that says “The Commission does not accept responsibility for the consequences of errors or omissions herein enclosed” more importantly however, it says that “These guidelines do not reflect an official position of the Commission; only the provisions of the signed grant agreement are binding

 

Below we go into some FP7 issues:

 

Coordinators bank accounts:

As for FP6, in FP7 it is recommended that a bank account is used exclusively for the handling of the project funds; the reason being that, in order to fulfil its obligations, the coordinator must at any moment be able to identify dates and figures related to any payment received or made under the GA (Article II.2.3), or identify any interest that has been earned on undistributed funds. In any case, if an existing account/sub-account is used, the accounting methods of the beneficiaries must make it possible to comply with the above mentioned requirements.

 

Pre-financing:

In FP7 there is only one pre-financing (advance payment) in the project life, there can be multiple interim payments depending upon your reporting periods, and there is one final payment.

 

Certificate of Methodology:

In FP7, The Commission may accept that some beneficiaries (as yet still not defined), may apply for a “certificate on the methodology” that will be used for the identification of personnel and indirect costs, (not for the other categories of costs). Applying for the certificate is not expected to be mandatory for indirect costs, but is required if beneficiary wishes to use average personnel costs – see below. Once submitted, this methodology will have to be approved by the Commission. Afterwards, this methodology will be used to prepare its claims with regard to both personnel (either actual or average) and indirect costs, and the related control systems.

 

Overheads calculation:

Where the a fixed overheads rate is not applied in form C or not available for a beneficiary, it seems that the EU expects the organisation to use it’s own normal overhead calculation, but will only allow this if it is based on either direct personnel costs or direct personnel hours. It appears from annex 7e, that any other basis is not acceptable. (ANNEX VII - FORM E - TERMS OF REFERENCE FOR THE CERTIFICATE ON THE METHODOLOGY – see end of fp7-ga-annex7e_en  “7. Allocation of indirect costs to the project is via personnel hours, either as [choose one] a. A percentage of personnel costs; b. A fixed hourly rate.”)

We will be issuing an update to once this issue has been clarified

 

Average Personnel Costs:

Where average rates are to be used this must be approved in advance – see Certificate of Methodology in Guide “Certificate on average personnel costs (see Article II. 14) - As an exception to the obligation to submit actual costs a beneficiary may opt to declare average personnel costs.  For this purpose a certification on the methodology used to estimate average cost must be submitted to the EC services for approval. This methodology must be consistent with the beneficiary's management principles and usual accounting practices. Averages are deemed not to differ significantly from actual personnel costs. Such certification shall be issued in accordance with the part related to personnel costs of Form E in Annex VII and will have the following particularities :

  • It is mandatory (whenever the beneficiary opts to declare average personnel costs) unless such certification or a certificate on the methodology has already been provided
  • It is open to all beneficiaries (not at EC discretion)
  • It does not waive the obligation to provide an intermediate certificate on the financial statements (whenever the thresholds are reached)”

Once the certificate is accepted, it will be valid for all subsequent financial statements from the same beneficiary submitted under the Seventh Framework Programme unless the beneficiary's methodology not changes.

 

Normal Accounting procedure:

Normal accounting procedures must be used for reports to EU. If travel, consumables and depreciation of equipment on R&D projects are usually (or if this is the only R&D project, in this case) shown in management/financial accounts as overheads (indirect costs), they can not be claimed as direct costs in form C.  This restriction has not been applied to all personnel costs in the Guide to Financial Issues relating to Indirect Actions of the Seventh Framework Programme” (“Where it is the usual practice of the beneficiary to consider all of certain types of personnel costs - such as administrative or support personnel - as indirect costs, the costs of this personnel can not be charged as direct eligible costs, but only as indirect costs”) and subcontracting costs. It is not clear if this means that it is assumed that these will be direct costs by definition in management/financial accounts, or that the same restriction may be applied to these costs in future versions of the Guide.

 

Exchange rates:

Only exchange rates available from the EU Central Bank (http://www.ecb.int/stats/eurofxref/ ) or, where the currency is not quoted here, the daily rate from the Central Bank of the State where the beneficiary is resident will be allowed.

 

Airport taxes:

The particular case of Airport taxes: In general, airport taxes are not real taxes in the sense of tax law but a fee for a service delivered by a public or semi public body in charge of a (public) service, such as airports (independently from the fact that that some airports might have a private legal form). Therefore, although many airport “taxes” imposed by these authorities may be considered a fee and therefore eligible because not a duty or indirect tax, it is also possible that a particular airport 'tax' may well be considered to be a 'duty' applied to the cost of the airline ticket in which case it would be non eligible.

 

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