Finances in FP6 projects

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• Finances in FP6 projects
• Inga irante
• Latvian National Contact Point
• kunu iela 4, Riga, LV-1050
• tel. [phone], fax [phone]
• E-mail spie_at_latnet.lv , www.zinatne.lv

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Financing - Principles

• Non-profit principle
• Joint financing principle
• Complementary principle

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Financing - Base

• Costs
• Urgent, economic, necessary,
• Incurred by the end of the project accepted in
  the final report,
• Occurred,
• Costs must comply with national accounting rules

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Financing Cost models

• 3 cost models
• FC
• FCF
• AC

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Which cost model to choose?

• Small and medium-sized enterprises FC/FCF
• Non-commercial or non-profit organizations,
  international organizations, universities FC/FCF
  or AC
• Private companies other than small and
  medium-sized enterprises FC
• Natural persons compulsory AC

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Financing Cost models

• The choice of cost models depends on
• Can you separate direct project costs from
  indirect ones?
• Yes FC/FCF
• No AC

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Financing Cost models

• One legal person ? one cost model in all FP6
  contracts
• One exception
• From AC to ? FCF or FC
• From FCF to ? FC
• Change in one direction only, not back !!!!

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Cost reimbursement rates in the relevant cost
model activities
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Breakdown of project costs

• Direct costs
• the costs which are directly related to the
  project and can be clearly identified and
  justified in accordance with national accounting
  rules and principles.
• (salary, materials, business trips ....)

• Indirect costs
• the costs which are not directly related to the
  project but are directly connected with the
  project expenses.

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Breakdown of FC FCF model costs

• Direct costs are the costs that can be directly
  attributed to the project,
• Indirect costs
• FC determined by the EC,
• FCF calculated as 20 of the direct costs,
  minus subcontract

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Breakdown of AC model costs

• Direct costs are all costs that can be directly
  attributed to the project and are not covered by
  another funding,
• Indirect costs calculated as 20 of the direct
  costs, minus subcontract

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Indirect costs in FCF and AC models

• Costs related to general administration and
  management
• Office and laboratory costs, including hire and
  depreciation of buildings and equipment, and
  related costs, such as water, heating,
  electricity, operational, insurance and security
  costs
• Communication costs, network connection charges,
  postage and office supplies
• General office equipment, for example office
  software
• Miscellaneous periodic consumables
• ! ! ! providing that they can be identified and
  justified in the accounting system as having
  arisen in direct connection with acceptable
  direct costs attributed to the project

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Unacceptable costs that cannot be attributed to
the project

• Any recognizable indirect taxes, including VAT or
  duties
• Interest payments
• Provisions for potential future losses or
  expenses
• Currency exchange losses
• Costs declared or reimbursed in connection with
  any other Community project
• Costs from the movement of capital
• Debts and debt servicing costs
• Excessive or unreasonable costs

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Documentary evidence of costs

• In order to justify actual costs
• Timesheets,
• Pay-rolls,
• Invoices,
• Receipts,
• For business trips plane boarding tickets
  (sometimes)

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TimesheetProject No._______
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Deliverables

• Periodic or final activity report
• Periodic or final management report 
• Form C (financial report on the activity)
• Summary of the periodic financial report
• Report on the breakdown of financial investment
  among partners during this period (to be
  delivered by the Coordinator)
• Supplementary reports required in the appendix to
  the contract

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Costs in form C must be declared in EUR

• Costs that are not in euros can be converted in
  two ways
• By using the exchange rate applicable on the
  actual date of costs
• By using the exchange rate applicable on the
  first day of the month after the end of the
  reporting period.
• The chosen currency exchange rate must be applied
  for the whole duration of the project.
• Exchange rates can be found at the following
  Internet address
• http//www.ecb.int/stats/eurofxref/

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When is audit necessary?

• Audit certificate is necessary
• If the amount required in Form C exceeds 750 000
  EUR,
• For the integrated projects each year,
• For the Network of Excellence projects each
  year,
• For other projects as agreed

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Who may issue an audit certificate?

• External auditor (in accordance with Latvian
  legislation certified auditor)
• To a state organization competent public
  official  

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Who may issue an audit certificate?

• To public and state organizations external
  auditor (certified auditor) or competent public
  official,
• To private companies external auditor,
• (certified auditor)

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Audit costs

• Never forget about them include them in the
  estimated budget!
• They are included in the project management costs
  (EC will reimburse 100 of them if they do not
  exceed 7 of the total amount of the EC
  financing)
• Auditor is a subcontractor

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Audit costs

• Audit certificate costs depend on
• The amount being audited,
• Number of transactions during the period,
• Number of procurement tenders during the period,
• Are you a new customer or already known to the
  auditor?

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Worth to remember!

• Reporting period is very short 45 days from the
  project completion date,
• Find the auditor before the end of the reporting
  period,
• Include at least 2 weeks in your calculation for
  the audit

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Most frequent errors!!!

• (Auditors responsibility is to check the
  information included in Form C regarding the
  costs and income of the project)
• Timesheets, timesheets and once again
  timesheets!
• Salaries, hourly rates,
• VAT and other taxes (must not be included in
  other expenses),
• Wrong separation of direct and indirect costs,
• Wrongly classified costs of
• - research,
• - demonstration,
• - training,
• - management,
• - other costs.

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Where information can be found?

• www.cordis.lu/fp6/find-doc.htm

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Thanks for your attention !

• Inga irante
• Latvian National Contact Point