IST in FP6 Context, rationale, Content and instruments

1
Financial Guidelines for ERA-NET instruments
2
Introduction General principles

• EC financial support Public procurement or
  Grant

3
Introduction General principles

• EC FP6 financial support Both Public
  procurements and Grants

4
Introduction General principles

• Form depends of the type of instrument concerned

5
1- Grant to the Budget 1.1- Calculation of the EC
contribution

• When it is in the form of a grant to the budget,
  the Community financial contribution is
  calculated according to
• a provisional budget of estimated eligible costs
  and receipts broken-down per type of activity and
  per participant
• the type of cost reporting model used by the
  participants
• the maximum reimbursement rates of eligible
  costs per type of activity and cost model
  according to the instrument concerned
• and within the limits of public funding
  established for research and technological or
  innovation activities and demonstration
  activities by the Community framework for State
  aid for research and development

6
1- Grant to the Budget 1.1- Calculation of the EC
contribution
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.1- Eligible costs

• Notion of eligible costs is defined by four
  cumulative levels
• The definition of eligible costs itself Art.
  II.19
• The restrictions introduced by the definitions
  of direct and indirect eligible costs Art.
  II.20 and II.21
• The restrictions introduced by the type of
  activities proposed per type of instruments
  Art. II.2
• The restrictions introduced by the cost
  reporting models used by the participants. Art
  II.22

7
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.1- Eligible costs 1.1.1.1-
Definition of eligible costs (Level 1)

• An eligible cost is cost which is not part of
  the list of non-eligible costs Art II.19.2
• The following non-eligible costs may not be
  charged to the project
• any identifiable indirect taxes, including VAT
  or duties
• interest owed
• provisions for possible future losses or
  charges
• exchange losses
• costs declared, incurred or reimbursed in
  respect of another Community project
• cost related to return on capital
• debt and debt service charges
• excessive or reckless expenditure
• any cost which does not meet the conditions of
  an eligible cost.

8
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.1- Eligible costs 1.1.1.1-
Definition of eligible costs (Level 1)

• Eligible costs incurred for the implementation
  of the project must fulfil all of the following
  conditions (1/3)
• they must be actual, economic and necessary for
  the implementation of the project Art
  II.19.1.a) and
• they must be determined in accordance with the
  usual accounting principles of the contractor
  Art II.19.1.b) and
• they must be incurred during the duration of the
  project except for the costs incurred in drawing
  up the final reports which may be incurred during
  the period of up to 45 calendar days after the
  end of the project or the date of termination
  whichever is earlier Art II.19.1.c) and

9
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.1- Eligible costs 1.1.1.1-
Definition of eligible costs (Level 1)

• Eligible costs incurred for the implementation
  of the project must fulfil all of the following
  conditions (2/3)
• they must be recorded in the accounts of the
  contractor that incurred them , no later than at
  the date of the establishment of the audit
  certificate. The accounting procedures used in
  the recording of costs and receipts shall respect
  the accounting rules of the State in which the
  contractor is established as well as permit the
  direct reconciliation between the costs and
  receipts incurred for the implementation of the
  project and the overall statement of accounts
  relating to the overall business activity of the
  contractor, Art II.19.1.d) and

10
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.1- Eligible costs 1.1.1.1-
Definition of eligible costs (Level 1)

• Eligible costs incurred for the implementation
  of the project must fulfil all of the following
  conditions (3/3)
• In the case of contributions made by third
  parties established on the basis of an agreement
  between the contractor and the third party
  existing prior to the participation of the
  contractor in the contract, and for which the
  tasks and their execution by such a third party
  are clearly identified in the technical Annex
  (Annex I), the costs must be Art. II.19.1.e)
• incurred in accordance with the usual accounting
  principles of such third parties and the
  principles set out for any contractor and
• meet the other provisions of the eligible costs
  definition and of Annex and
• be recorded in the accounts of the third party
  no later than the date of the establishment of
  the audit certificate.

11
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.1- Eligible costs 1.1.1.2-
Definition of direct and indirect eligible costs
(Level 2)

• Direct eligible costs are all costs that fall
  under the definition of eligible costs which can
  be charged directly to the project, and are
  determined by the contractor in accordance with
  its usual accounting practices Art II.20.1.
• Two particular cases
• For AC contractors, only additional direct costs
  are eligible (see point 1.1.1.4)
• Subcontracts may be, by definition, a form of
  direct eligible costs.
• However, as a general rule, contractors
  must have the capacity to carry out the
• work themselves.
• Subcontracting is a derogation !

12
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.1- Eligible costs 1.1.1.2-
Definition of direct and indirect eligible costs
(Level 2)

• The specific conditions for subcontracting (1/3)
  Art. II.6
• a sub-contract relates to the production of a
  service. It should be clear then that any
  intellectual property results from any
  subcontracted work belongs to the contractor and
  must be at the entire disposal of the contractor
• any subcontract must be selected
• in full compliance with the national legislation
  of the contractor concerned.
• the selection criteria of the subcontractor(s)
  must be based on the best value for money given
  the quality of the service proposed (best
  price-quality ratio) and must assure transparency
  and equality of treatment
• gt quotes public procurements )
• Subcontracts may relate only to a limited part
  of the project.
• Therefore, core elements of the project can not
  be subcontracted.

13
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.1- Eligible costs 1.1.1.2-
Definition of direct and indirect eligible costs
(Level 2)

• The specific conditions for subcontracting (2/3)
  Art. II.6
• As a general rule, the tasks to be subcontracted
  need the prior agreement of the Commission and
  are identified in Annex I.
• By derogation to this general rule, contractors
  are free to subcontract tasks that are not
  identified as such in the technical annex but
  with the additional obligation to justify the
  necessity of those subcontracts at the relevant
  periodic justification.
• Even though certain subcontracted services may
  be performed by a subcontractor, the contractor
  maintains full responsibility for its actions and
  must ensure that certain the provisions of the
  model contract are reflected in the agreement
  with the subcontractor.

14
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.1- Eligible costs 1.1.1.2-
Definition of direct and indirect eligible costs
(Level 2)

• The specific conditions for subcontracting (3/3)
  Art. II.6
• In its agreement with the subcontractor (the
  subcontract), the contractor must ensure that
• the subcontractor waives all rights in respect
  of the Commission under the contract
• the following provisions of Annex II (General
  conditions) to the FP6 model contract applies
  also to the subcontractor
• Confidentiality (Article II.9)
• Communication of data for evaluation, impact
  assessment, standardisation purposes and
  communication of information beyond the research
  community (Article II.10)
• Information to be provided to Member States or
  Associated States (Article II.11)
• Publicity (Article II.12)
• Payment modalities (suspension of payments)
  (Article II.28.8)
• Controls and audits (Article II.29)

15
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.1- Eligible costs 1.1.1.2-
Definition of direct and indirect eligible costs
(Level 2)

• Indirect eligible costs are all eligible costs
  determined by the contractor, in accordance with
  its usual accounting practices, which are not
  directly attributable to the project but are
  incurred in direct relation to the direct
  eligible costs of the project. Article II.21
• A particular case in ERA-NET any indirect
  eligible costs are deemed to be covered by a flat
  rate (see point 1.1.1.4)

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1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.1- Eligible costs 1.1.1.3- Type
of activities (Level 3)

• Type of activities provided depends of the type
  of instrument concerned

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1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.1- Eligible costs 1.1.1.3- Type
of activities (Level 3)

• Management of the consortium activities cover
  actions that can be carried out by every
  contractor or in some cases are limited to only a
  few contractors (except for the audit
  certificates) include the following task (1/2)
  Art. II.2.4
• obtaining audit certificates by each of the
  contractors.
• implementation of competitive calls by the
  consortium for the participation of new
  contractors, in accordance with the provisions of
  the contract (not applicable for ERA-NET).
• maintenance of the consortium agreement if it is
  obligatory
• obtaining any financial security such as bank
  guarantees when requested by the Commission

18
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.1- Eligible costs 1.1.1.3- Type
of activities (Level 3)

• Management of the consortium activities cover
  actions that can be carried out by every
  contractor or in some cases are limited to only a
  few contractors (except for the audit
  certificates) include the following task (2/2)
  Art. II.2.4
• any other management activities at the consortium
  level not covered by any other activity, such as
• coordination of the technical activities of the
  project
• the overall legal, contractual, ethical,
  financial and administrative management
• coordination of knowledge management and other
  innovation-related activities
• overseeing the promotion of gender equality in
  the project
• overseeing science and society issues related to
  the research activities conducted within the
  project
• any other management activities foreseen by the
  annexes.

19
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.1- Eligible costs 1.1.1.3- Type
of activities (Level 3)

• The costs of the management of the consortium
  activities are reimbursed at a rate of 100 to
  all contractors regardless of their cost model,
  up to a limit of 7 of the Community financial
  contribution to the project.
• Once the limit of 7 of the Community financial
  contribution is reached, a management activity
  that is linked to another activity of the project
  can be charged under this activity.
• The limitation of 7 of the Community financial
  contribution does not apply to each individual
  contractor but to the project as a whole. Art.
  II.25

• For training activities, the salary costs of
  those being trained are not eligible under this
  activity Art. II.25.
• Under a Coordination Action, other specific
  activities relate to Coordination.

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1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.1- Eligible costs 1.1.1.4- Cost
reporting models (Level 4)

• Three cost models are suggested for participants
  under FP6
• Full Cost with actual indirect costs (FC)
• Full Cost with indirect Flat rate costs (FCF)
• Additional Cost with indirect flat rate costs
  (AC)

21
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.1- Eligible costs 1.1.1.4- Cost
reporting models (Level 4)

• General definition Art.22.1

• Full Cost with actual indirect costs (FC)
• In this model, eligible direct and indirect costs
  are charged by the contractors.
• Full Cost with indirect Flat rate costs (FCF)
• In this model, eligible direct costs and a flat
  rate for indirect costs are charged by the
  contractors. This flat rate applied is 20 of all
  eligible direct costs minus the eligible direct
  costs of sub-contracts.
• Additional Cost with indirect flat rate costs
  (AC)
• In this model, eligible direct additional costs
  and a flat rate for indirect costs are charged by
  the contractors. The flat rate is equal to 20 of
  all eligible direct additional costs minus the
  eligible direct additional costs of sub-contracts.

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1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.1- Eligible costs 1.1.1.4- Cost
reporting models (Level 4)

• ERA-NET definition Art.22.1 Art. II.25

• Full Cost with actual indirect costs (FC)
• Derogation to the general definition eligible
  direct costs and a flat rate for indirect costs
  are charged by the contractors. This flat rate
  applied is 20 of all eligible direct costs minus
  the eligible direct costs of sub-contracts.
• gt definition identical to FCF
• Full Cost with indirect Flat rate costs (FCF)
• General definition
• Additional Cost with indirect flat rate costs
  (AC)
• General definition

23
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.1- Eligible costs 1.1.1.4- Cost
reporting models (Level 4)

• Particularities

• Direct additional costs Art. II.20.2 are
  direct costs additional to the normal recurring
  costs of the contractor and not covered by any
  other sources of funding. For direct additional
  costs of personnel, there are three
  possibilities to charge these costs to the
  contract
• personnel with a temporary contract for working
  under the Community contract concerned 
• personnel with a temporary contract with a view
  to completing a doctorate 
• personnel whose employment contract depends
  wholly or in part on additional external
  financing. In this case, costs charged to the
  project must exclude all costs covered by normal
  recurring financing.
• One derogation to the definition of eligible
  costs, relates to the costs incurred for
  management of the consortium activities by
  contractors using the AC model. They may charge
  their eligible direct costs (especially of
  permanent personnel) to this activity, on
  condition that they can to identify and justify
  them precisely. The flat rate for indirect costs
  also applies to these eligible direct costs Art.
  II.25.

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1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.1- Eligible costs 1.1.1.4- Cost
reporting models (Level 4)

• Access to a cost model depends on the type of
  legal entity concerned Art. II.22.2 and
  II.22.3
• All legal entities can use the FC model with the
  exception of physical persons 
• Physical persons are obliged to use the AC
  model 
• Non-commercial or non-profit organisations
  established either under public law or private
  law and international organisations may choose
  one of the AC, FCF or FC models.
• However, only those non-commercial or non-profit
  organisations which do not have an accounting
  system that allows the share of their direct and
  indirect costs relating to the project to be
  distinguished may opt for the AC model.
• Legal entities defined as SMEs have the choice
  between the FC and FCF model.

25
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.1- Eligible costs 1.1.1.4- Cost
reporting models (Level 4)
26
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.1- Eligible costs 1.1.1.4- Cost
reporting models (Level 4)

• General rule Each contractor shall apply the
  same cost reporting model in all contracts
  established under the Sixth Framework Programme
  Art. II.22.4.
• As a derogation to this principle Art. II.22.4
• any legal entity which is eligible to opt for
  the AC model in a first contract can change to
  the FCF or the FC model in a later contract. If
  it does so, it must then use the new cost
  reporting model in subsequent contracts
• any legal entity which is eligible to opt for
  the FCF model in a first contract can change to
  the FC model in a later contract. If it does so,
  it must then use the new cost reporting model in
  subsequent contracts.
• AC ? FCF ? FC
• YES F FCF ? FC
• AC ? FC

FC ? FCF ? AC NO F FC ? FCF FCF ?AC
27
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.2- Maximum reimbursement rates

• General rules for the maximum reimbursement
  rates of eligible costs Art. II.25
• The type of cost model, the type of activity and
  the type of instrument determine the maximum
  reimbursement rates of eligible costs
• For contractors using the AC model 100 of
  their additional costs whatever those activities
  might be. (Exception is for management activities
  which may include the costs of permanent
  personnel if they can be calculated and proven to
  be real).
• For contractors using the FC or FCF models
• for research and technological development or
  innovation activities 50 of eligible costs
• for demonstration activities 35 of eligible
  costs
• for training activities 100 of eligible
  costs
• for management of the consortium activities
  100 of eligible costs
• for other specific activities 100 of eligible
  costs.

28
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.2- Maximum reimbursement rates

• ERA-NET rules for the maximum reimbursement
  rates of eligible costs Art. II.25
• For contractors using the AC model 100 of
  their additional costs whatever those activities
  might be both for Coordination Actions (CA) and
  Specific Support Actions (SSA). (Exception is for
  management activities which may include the costs
  of permanent personnel if they can be calculated
  and proven to be real).
• For contractors using the FC or FCF models
• for training activities 100 of eligible costs
  (for CA only)
• for management of the consortium activities
  100 of eligible costs
• for other specific activities (coordination)
  100 of eligible costs.

29
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.2- Maximum reimbursement rates
30
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.2- Maximum reimbursement rates

• The reimbursement rate is a possible maximum
  rate because
• the receipts of the project must be taken into
  consideration in determining the total amount of
  the Community financial contribution Art.
  II.23
• the 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
  and legal entities must also be taken into
  account in determining the total amount of the
  Community financial contribution Art. II.24.3.
• (Does not apply for ERA-NET, as RTD and
  demonstration activities are not proposed under
  ERA-NET instruments).

31
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.3- Receipts

• When it is a grant to reimburse eligible costs,
  the Community financial contribution may not have
  the purpose or effect of producing a profit for
  the beneficiaries (the participants). Art.
  II.24.2
• The notion of profit is defined as the surplus
  of receipts over the costs of the action in
  question ()
• As a consequence, since the Community financial
  contribution for a Grant to the Budget is
  calculated, among other criteria, on the basis of
  a provisional budget and according to maximum
  reimbursement rates of eligible costs, this
  provisional budget must be composed of estimated
  eligible costs as well as of estimated receipts
  (cf CPF A3.1).

32
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.3- Receipts

• Taking into account the notion of receipts, the
  maximum reimbursement rates of eligible costs
  must be understood as limited by the difference
  between the total eligible costs and the receipts.

• Three kinds of receipts must be taken into
  consideration Art. II.23
• Financial transfers or their equivalent to the
  contractor from third parties 
• Contributions in kind from third parties
• Income generated by the project.
• In the first two cases (financial transfers or
  contributions in kind), these endowments are
  considered as receipts of the project if the
  third party has provided them specifically to be
  use in the project.
• If, on the other hand, these endowments are at
  the discretion of the contractor they are not to
  be considered as receipts.

33
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.3- Receipts

• In the second case, where contributions from
  third parties are used for the project by the
  contractor, the latter is required to inform the
  third party of this use and in accordance with
  the national legislation or practice in force.
• In the case of income generated by the project
  itself
• any income generated by the project itself,
  including the sale of assets bought for the
  project (limited to the initial cost of
  purchase) are considered as income to the project
  (eg admission fee to a conference carried out
  by the consortium sale of the proceedings of
  the aforementioned conference  sale of an
  equipment bought for the project) 
• by derogation to the above mentioned principle,
  income generated by the use of the knowledge
  resulting from the project is not considered as a
  receipt. Indeed, the use of the knowledge
  resulting from the project is the main objective
  of any project supported by an FP6 Community
  financial contribution.

34
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.3- Receipts

• Participants using a full cost model (FC or FCF)
  must declare all their eligible costs and all
  types of receipts.
• Participants using the additional cost model
  (AC) Art. II.20.2
• May only charge their additional direct eligible
  costs that are not covered by any other
  contribution
• Must only declare their receipts taking the form
  of income generated by the project itself.
• At the level of the calculation of the grant
  (proposal/negotiation), provide only information
  relating to assured receipts.

35
1- Grant to the Budget 1.1- Calculation of the EC
contribution 1.1.4- Examples

• Example 1 CA with no receipts
• Example 2 CA with receipts

36
1- Grant to the Budget 1.2- Payment modalities of
the EC contribution 1.2.1- General overview

• The Community financial contribution mentioned
  in the second paragraph of article 5 of the
  core-contract is a maximum that can never be
  exceeded Art. II.28.2.
• Community financial contribution is paid to the
  consortium through the coordinator Art. 8.1.
• A system of periodic pre-financing (advances)
  and periodic payments Art. 8.
• Payments are based on the approval of periodic
  reports and/or reviews Art. 7 and Art. II.7.

37
1- Grant to the Budget 1.2- Payment modalities of
the EC contribution 1.2.1- General overview

• When it is in the form of a grant to the budget,
  the Community financial contribution is made to
  the consortium under the following cumulative
  conditions Art. II.24.1
• is based on the same modalities than those used
  for its calculation (eligible costs, receipts,
  cost reporting models, maximum reimbursement
  rates)
• plus
• according to the assessment of requested reports
  provided by the consortium (see 1.2.2.1 and
  1.2.2.2)
• subject to the submission of audit
  certificate(s) (see 1.2.2.3) Art.II.26
• taking into consideration the interests (or any
  equivalent benefit) yielded by prefinancing (only
  for the coordinator) Art. II.27

38
1- Grant to the Budget 1.2- Payment modalities of
the EC contribution 1.2.2- Detailed
modalities 1.2.2.1- Reporting Periods

• The duration of each project is divided in
  reporting periods Art. 6.
• For ERA-NET, duration of reporting periods are,
  as a general rule, the following ones
• SSA one single reporting period (duration equal
  or inferior to 12 months)
• (First cut-off data average duration 11
  months max 12 min 9 18 contracts)
• (Second cut-off data average duration 11
  months max 12 min 9 5 contracts)
• CA several reporting periods
• For CA of duration of 36 months 2 reporting
  periods (2 x 18)
• For CA of duration of 48 months 3 reporting
  periods (2 x 18 1 x 12)
• For CA of duration of 54 months 3 reporting
  periods (3 x 18)
• For CA of duration of 60 months 3 reporting
  periods (2 x 18 1x 24) or 4 reporting periods
  (2 x 18 2 x 12)
• (First cut-off data average duration 48 months
  max 60 min 36 14 contracts)
• (Second cut-off data average duration 46 months
  max 60 min 36 18 contracts)
• Contracts with 2 reporting periods 7
  contracts with 3 reporting periods 25)

39
1- Grant to the Budget 1.2- Payment modalities of
the EC contribution 1.2.2- Detailed
modalities 1.2.2.2- Reports

• Any report must
• F be concise and clear
• F be organized by work packages and tasks
• F identify the contributions from the various
  participants
• F respect the reporting guidelines
• F respect the page limit where applicable
• F be submitted within the contractual delays

40
1- Grant to the Budget 1.2- Payment modalities of
the EC contribution 1.2.2- Detailed
modalities 1.2.2.2- Reports

• Periodic reports for CAs
• The coordinator, on behalf of the consortium must
  submit to the Commission, by electronic means and
  by mail, within 45 calendar days following the
  end of each reporting period the following
  periodic reports Art. II.7.1 and II.7.2
• a periodic activity report
• a periodic management report including
• a justification of the resources deployed by
  each contractor, linking them to activities
  implemented and justifying their necessity
• Form C (Financial statement per activity)
  provided by each contractor for that period
• a summary periodic financial report
• a report on the distribution made between
  contractors of the Community financial
  contribution during that period
• any supplementary reports required by any Annex
  to the contract, especially Annex I (technical
  annex).
• and if requested an audit certificate per
  contractor (see 1.2.2.3)

41
1- Grant to the Budget 1.2- Payment modalities of
the EC contribution 1.2.2- Detailed
modalities 1.2.2.2- Reports

• Final Reports (for CAs and SSAs)
• The coordinator, on behalf of the consortium,
  must submit to the Commission, by electronic
  means and by mail, within 45 calendar days (this
  delay may be increased by 45 days at the request
  of the consortium), following the end of the last
  reporting period the following final reports
  Art. II.7.1, II.7.3 and II.7.4
• a final activity report
• a final management report
• any supplementary reports required by any Annex
  to this contract, especially Annex I (technical
  annex) and Annex III (specific provisions)
• an audit certificate per contractor (see
  1.2.2.3).
• The coordinator, on behalf of the consortium must
  submit to the Commission, by electronic means and
  by mail, within 60 calendar days following the
  date of reception of the last payment of the
  Commission the following report
• a report on the distribution of the Community
  financial contribution between contractors made
  after the end of the project

42
1- Grant to the Budget 1.2- Payment modalities of
the EC contribution 1.2.2- Detailed
modalities 1.2.2.3- Audit certificates

• Audit certificates
• An audit certificate is a certification of the
  costs claimed under the project (Form C). It is
  not an audit that the Commission may launch at
  any time and up to 5 five years after the end of
  the project.
• At least one audit certificate per contractor
  covering the whole duration of an indirect action
  must be provided for projects supported through a
  Grant to the Budget.
• Without an audit certificate, a financial
  statement approved by the Commission(Form C) can
  not lead to the requalification of the relevant
  part of the pre-financing as a final payment

43
1- Grant to the Budget 1.2- Payment modalities of
the EC contribution 1.2.2- Detailed
modalities 1.2.2.3- Audit certificates

• Audit certificates
• For ERA-NET SSAs one audit certificate per
  contractor at the end of the project
• For ERA-NET CAs
• The timing of submission of an audit certificate
  per contractor is at the discretion of the
  Commission services. In this context, as a
  general rule
• For contracts with 2 reporting periods 2 audit
  certificates per contractor
• For contracts with 3 reporting periods 2 or 3
  audit certificates per contractor
• For contracts with 4 reporting periods 3 audit
  certificates per contractor
• Even though an audit certificate may not be
  required for a specific period, an audit
  certificate must always be provided by any
  contractor where the Community financial
  contribution requested by that contractor in its
  Form C exceeds 750,000 for that period.

44
1- Grant to the Budget 1.2- Payment modalities of
the EC contribution 1.2.2- Detailed
modalities 1.2.2.3- Audit certificates
45
1- Grant to the Budget 1.2- Payment modalities of
the EC contribution 1.2.2- Detailed
modalities 1.2.2.3- Audit certificates

• Audit certificates
• An audit certificate can be delivered by
• an external auditor
• or, for a public body a public competent officer
  
• The auditor must be
• independent from the contractor (in appearance
  and in fact or considered as independent by
  nature by national authorities)
• qualified to carry out statutory audits of
  accounting documents
• in accordance with the 8th Council Directive
  84/253/EEC of 10 April 1984 or similar national
  regulations (for external auditor)
• recognised as such by national authorities
  (competent public officers).

46
1- Grant to the Budget 1.2- Payment modalities of
the EC contribution 1.2.2- Detailed
modalities 1.2.2.3- Audit certificates

• Audit certificates
• An audit certificate will certify (model provided
  in FP6 Financial Guidelines)
• that the total eligible costs declared by the
  contractor in Box 2 of one (or several) Form(s) C
  comply with the following cumulative conditions
• they are determined according to the relevant
  cost reporting model for which this type of legal
  entity is eligible
• they fulfill the definition of eligible costs,
  except for the requirement of necessity in the
  allocation of resources by the contractor.
• the total amount of receipts declared by the
  contractor in Box 3 of one (or several) Form(s)
  C
• the total amount of interest yielded by the
  pre-financing declared for the relevant period by
  the coordinator in Box 4 of one (or several)
  Form(s) C
• the relevant basis for the conversion rate used
  of EURO (if relevant)

47
1- Grant to the Budget 1.2- Payment modalities of
the EC contribution 1.2.2- Detailed
modalities 1.2.2.4- Prefinancing and payments

• SSAs
• A first prefinancing equal to 80 of the
  estimated maximum Community financial
  contribution within 45 calendar days following
  the date of entry into force of the contract.
  Art. 8.2.(a)
• Within 45 calendar days following the approval
  by the Commission of the requested reports and no
  later than 90 calendar days following the receipt
  of the complete requested reports
• Payment of the outstanding balance (if any)
  Art. 8.2.(b) and Art.8.2.(e)
• or Request for reimbursement. Art. II.28.6
• Reminders
• F Co-financing is an obligation for SSAs (see
  footnote n1 of table of Section 2 of Annex III
  of FP6) gt Total eligible costs justified and
  accepted must be superior to EC contribution
• F For SSAs, where the total eligible costs
  claimed are lower than the grant foreseen in the
  contract, the reimbursement rate shall be 95 of
  the eligible costs Art. II.25.

48
1- Grant to the Budget 1.2- Payment modalities of
the EC contribution 1.2.2- Detailed
modalities 1.2.2.4- Prefinancing and payments

• CAs
• A first prefinancing equal to 80 of the
  estimated Community financial contribution for
  the first reporting period (P1) and the first six
  months of the second reporting period, within 45
  calendar days following the date of entry into
  force of the contract. Art. 8.2.(a)
• Example
• gt First prefinancing equal to 80 x (830.000
  290.000) 896.000

49
1- Grant to the Budget 1.2- Payment modalities of
the EC contribution 1.2.2- Detailed
modalities 1.2.2.4- Prefinancing and payments

• CAs
• Within 45 calendar days following the approval
  by the Commission of the requested periodic
  reports and no later than 90 calendar days
  following the receipt of the complete requested
  periodic reports
• if audit certificate
• a payment settles the amounts justified and
  accepted for the relevant reporting period
  (example P1)
• an intermediary prefinancing equal to a maximum
  of 80 of the estimated Community financial
  contribution for the subsequent reporting period
  (example P2) and the first six months of the
  reporting period following (example P3), within
  the limit of 80 of the difference between the
  maximum Community financial contribution and the
  payment(s) accepted.

50
1- Grant to the Budget 1.2- Payment modalities of
the EC contribution 1.2.2- Detailed
modalities 1.2.2.4- Prefinancing and payments

• CAs
• Within 45 calendar days following the approval
  by the Commission of the requested periodic
  reports and no later than 90 calendar days
  following the receipt of the complete requested
  periodic reports
• if no audit certificate
• an intermediary prefinancing equal to a maximum
  of 80 of the estimated Community financial
  contribution for the subsequent reporting period
  (example P2) and the first six months of the
  reporting period following (example P3)
• within the limit of 80 of the difference
  between the maximum Community financial
  contribution and the payment(s) accepted.
• and if at least 70 of the initial prefinancing
  has been consumed

51
1- Grant to the Budget 1.2- Payment modalities of
the EC contribution 1.2.2- Detailed
modalities 1.2.2.4- Prefinancing and payments

• CAs
• Example related to the impact of audit
  certificate (for a CA)
• Hypothesis
• The periodic justified and accepted eligible
  costs are considered as equal to the estimated
  Community financial contribution per reporting
  period.

52
1- Grant to the Budget 1.2- Payment modalities of
the EC contribution 1.2.2- Detailed
modalities 1.2.2.4- Prefinancing and payments

• CAs
• Example related to the impact of audit
  certificate (for a CA)
• Case n1
• Case n2

53
1- Grant to the Budget 1.2- Payment modalities of
the EC contribution 1.2.2- Detailed
modalities 1.2.2.4- Prefinancing and payments
54
1- Grant to the Budget 1.2- Payment modalities of
the EC contribution 1.2.2- Detailed
modalities 1.2.2.4- Prefinancing and payments
55
1- Grant to the Budget 1.2- Payment modalities of
the EC contribution 1.2.2- Detailed
modalities 1.2.2.5- Example
56
1- Grant to the Budget 1.3- Recoveries and
sanctions

• Two kinds of controls may be distinguished
• Ex-ante controls (before the signature of the
  contract)
• Ex-post controls (during and after the
  implementation of the project)
• Reimbursements to the Commission.
• Sanctions
• Liquidated damages
• Financial penalties
• Exclusion for irregularity
• Other sanctions

57
THANK YOU FOR YOUR ATTENTION