Financial GuidelinesFinancial Guidelines

FP6 – IST Directorate C 1st Evaluation proposals

co-ordinators Briefing

17 July 2003

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AimAim

To introduce some of the main financial principles

To cover some concepts that have changed in Framework Programme 6 (compared to Framework Programme 5)

To draw attention to particular issues related to Networks of Excellence, the Additional Cost reporting model and subcontracting

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Some main financial principlesSome main financial principles

Collective Financial Responsibility

Pre-financing, audit certification and regular reporting

Reimbursement of costs

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Collective Financial ResponsibilityCollective Financial ResponsibilityDefinitionDefinition

Each contractor shall be liable for the use of the Community financial contribution in proportion to his share of the project up to a maximum of the total payments he has received

To be used as a last resort

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The rule of financial collective responsibility is not applicable in some cases:

a) The contractor is: a public body an international organisation a contractor whose participation is guaranteed by a Member or

Associated StateTherefore that contractor shall be solely responsible for its’ budget.Other contractors are not responsible for these contractors.

b) The consortium is not responsible for: any amount owed by a defaulting contractor for any contractual

breach discovered after the end of the contract liquidated damages due by a defaulting contractor other financial penalties and other sanctions imposed on a

defaulting contractor

Collective Financial Responsibility Collective Financial Responsibility ExceptionsExceptions

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Collective Financial Responsibility Collective Financial Responsibility Contribution in proportion to his shareContribution in proportion to his share

“Contribution in proportion to its’ share” of the project is calculated as follows

Where pre-financing is to be recovered

as share of the provisional Community financial contribution

Where a “settled” payment is to be recovered

as share of Community financial contribution based on certified costs accepted by the Commission

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Collective Financial Responsibility Collective Financial Responsibility Contract Preparation Forms - Form A5Contract Preparation Forms - Form A5

The consortium consists only of publicbodies and/or organisations whoseparticipation is guaranteed by aMember State/Associated State

YES No action

NOAmong the non-public bodycontractors whose participation is notguaranteed by a MemberState/Associated State, there is oneentitled to receive more than 50% ofthe requested EC contribution to allnon-public body contractors whoseparticipation is not guaranteed by aMember State/Associated State

NO

No automatic action, however, theCommission services may requestadditional financial information, in whichcase, complete form A6 and attachadditional financial information requiredby A5.

YESThe requested EC contribution for thiscontractor exceeds by more than €300,000 50% of the requested ECcontribution to all non-public bodycontractors whose participation is notguaranteed by a MemberState/Associated State

NO

No automatic action, however, theCommission services may requestadditional financial information, in whichcase, complete form A6 and attachadditional financial information requiredby A5.

YESThis contractor has already suppliedthe additional financial information tothe Commission (under one of itspolicies) in the last 12 months

YES

I ndicate the Commissionprogramme name and contractnumber to which the informationhas been supplied

NOComplete form A6. Attach theadditional financial informationrequested in form A5

The co-ordinator completes form A6. In addition:

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Pre-financing, audit certification and regular reportingPre-financing, audit certification and regular reporting

Periodic pre-financing pre-financing remains the property of the Community initial pre-financing upon signature by Commission and co-

ordinator or when minimum number of contractors have acceded or when all contractors have signed

up to 85% (80% for instruments without collective financial responsibility) of the first reporting period and the first 6 months of the subsequent reporting period

Audit certificates certifies the costs claimed, provided by an external auditor

or in the case of public bodies a competent public officer at least one audit certificate per contractor covering the

whole duration of the indirect action must be provided an audit certificate ‘settles the amounts justified and

accepted during a reporting period’

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Grant for integration

Grant to the budget Flat-rate

Networks of excellence

Integrated Projects

Specific targeted research projects

Specific research projects for SMEs

Integrated initiatives relating to infrastructure

Actions to promote human resources & mobility Coordination actions

Specific support actions

Reimbursement of costsReimbursement of costsCalculation methodCalculation method

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Reimbursement of costsReimbursement of costsCostsCosts

New principles: cost categories are replaced by contractor’s own accounting rules and legal environment focus on the reality and the necessity of the cost, rather than on formality (cost categories)

Therefore, costs must be: actual, economic and necessary for the project incurred during the duration of the project (exception: costs of the final reports) recorded in the accounts (or third parties)

and must exclude indirect taxes, duties, interests, costs reimbursed in respect of another Community project, and not give rise to profit

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Reimbursement of costsReimbursement of costs CostsCosts

Reimbursement of eligible costs claimed by contractors In accordance with the cost reporting models used by

each contractor Maximum reimbursement rates of eligible costs per

type of activity Approval of requested periodic reports Subject to the submission of an audit certificate Taking into account the receipts of the project Limits of public funding established by international

regulations and in particular by the Community framework for State aid for research and development for certain activities

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Reimbursement of costsReimbursement of costs Cost reporting modelsCost reporting models

FC: actual direct and indirect costs all instruments, however in case of for Co-ordination

Actions and Specific Support Actions flat rate for indirect costs (20% of direct costs minus subcontracting reimbursed

FCF (variant of FC): actual direct costs + flat rate for indirect costs (20% of direct costs minus subcontracting)

all instruments

AC: actual additional non-recurring direct costs + flat rate for indirect costs (20% of direct costs minus subcontracting)

all instruments

NeNeww

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Reimbursement of costsReimbursement of costs Type of activityType of activity

Research and technological development (including innovation related activity)

Demonstration

Training

Other specific support activities

Consortium management: costs reimbursed up to 100% within the limit of 7% of Community contribution

NeNeww

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Reimbursement of costsReimbursement of costs Maximum reimbursement rates of eligible costs Maximum reimbursement rates of eligible costs

per instrument, activity and cost modelper instrument, activity and cost modelMaximum

reimbursement rates of eligible costs

Research and technological

development or innovation activities

Demonstration activities Training activities Management of the consortium activities

Other specific activities (*)

Network of excellence100%

(up to 7% of the contribution)(AC : eligible direct costs)

100%

Integrated project FC/FCF : 50%AC : 100%

FC/FCF : 35%AC : 100%

100%100%

(up to 7% of the contribution)(AC : eligible direct costs)

Specific targeted research or innovation project

FC/FCF : 50%AC : 100%

FC/FCF : 35%AC : 100%

100%(up to 7% of the contribution)

(AC : eligible direct costs)

Specific research project for SMEs

FC/FCF : 50%AC : 100%

100%(for collective research only)

100%(up to 7% of the contribution)

(AC : eligible direct costs)

Integrated infrastructures initiative

FC/FCF : 50%AC : 100%

FC/FCF : 35%AC : 100%

100%(up to 7% of the contribution)

(AC : eligible direct costs)100%

Coordination action 100%(FC indirect costs : f lat rate(**))

100%(up to 7% of the contribution)

(AC : eligible direct costs)(FC indirect costs : f lat rate(**))

100%(FC indirect costs : f lat rate(**))

Specific support action100%

(up to 7% of the contribution)(AC : eligible direct costs)

(FC indirect costs : f lat rate(**))

100%(FC indirect costs : f lat rate(**))

(*): Other specif ic activities means: - for Netw ork of Excellence : Joint Programme of Activities, except management of the consortium activities.- for Integrated infrastructures initiative: any "specific activity" covered by Annex I, including transnational access to infrastructures- for Coordination Action: Coordination activities, except management of the consortium activities- for Specif ic support action: any "specif ic activity" covered by Annex I, including transnational access to infrastructures

(**): Flat rate for FC indirect costs : 20% of all their eligible direct costs minus the eligible direct costs of sub-contracts.

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Reimbursement of costsReimbursement of costs Third party contribution & ReceiptsThird party contribution & Receipts

Third party contribution resources made available by third parties on the basis of prior

agreement are eligible as costs for the project costs will have to be recorded in the accounts of this third party -

to be covered by audit certificates the provision is not intended to reduce the number of contractors

but to take into account particularities of some entities contractors shall ensure that third parties whose resources are

made available to the project are informed on the use of their resources

Receipts financial transfers or contributions in kind from third parties if

the third party has provided these specifically for the project (I.e. the participant has no management discretion on the use of the third party resources)

income generated by the project (including e.g. the admission fee to a conference organised by the consortium - excludes income generated in using knowledge resulting from the project)

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Specific informationSpecific information

Networks of Excellence

Participants using the AC cost reporting model

Subcontracting

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Specific information Specific information Networks of ExcellenceNetworks of Excellence

The maximum budget is calculated taken into account: degree of integration number of researchers (and doctoral students*) characteristics of the field of research joint programme of activities

* bonus per doctoral student is equivalent to 4,000€/year up to a maximum of 10% of the grant in respect of the number researchers

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Specific information Specific information Networks of ExcellenceNetworks of Excellence

Need exhaustive list of the names of the researchers and the doctoral students to be included in Annex I

The consortium may request a lower grant for integration than that resulting from the ‘method’

The Commission shall pay the Community financial contribution in respect of a completed period provided that the following conditions are fulfilled:

…the eligible costs, calculated in accordance with Part B of Annex II, of at least the Community financial contribution for the completed period were incurred in implementing the joint programme of activities(see Annex III - NoE)

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Specific information Specific information Changes in FP 6Changes in FP 6

Direct costs for contractors using the Additional Cost model

direct costs of personnel shall be limited to the actual costs of the personnel assigned to the project where the contractor has concluded with the personnel

a temporary contract for working on Community RTD projects

a temporary contract for completing a doctorate a contract which depends, in full or in part, upon external

funding additional to the normal recurring funding of the contractor. In that case, the costs charged to this contract must exclude any costs borne by the normal recurring funding

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Specific information Specific information Partners using the AC cost reporting modelPartners using the AC cost reporting model

Partners using the AC cost reporting model will have to identify all the resources employed in the project and provide a global estimate of all their costs - not only additional eligible costs

Partners using the AC cost reporting model - exclude any direct additional costs specifically covered by contributions from third parties

Partners using the AC cost reporting model may charge permanent personnel under Management Activities under certain conditions

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Specific information Specific information SubcontractingSubcontracting

Contractors must have the capacity to carry out the work described in Annex I

Subcontracts may be a form of direct eligible cost

Subcontracts relate to the production of a service

Tasks need to be identified in Annex I or include minor tasks not relating to core work of the project

Subcontracts to be awarded following competitive tender offering, best value for money, under conditions of transparency and equal treatment