Presentation is loading. Please wait.

Presentation is loading. Please wait.

EU Funding Workshop Intermediate Body Training

Similar presentations

Presentation on theme: "EU Funding Workshop Intermediate Body Training"— Presentation transcript:

1 EU Funding Workshop Intermediate Body Training
Basic principles and requirements Welcome Groupings Interactive , Practical Examples & Q&As Domestics Feedback 1 1 1 1

2 EU Competitiveness Programme
€306m ERDF Intervention rate 50% 4 Priorities P1 Competitiveness and Innovation P2 Enterprise and Entrepreneurship P3 Improving accessibility P4 Technical assistance €306 will reduce to €283m following virement to ESF P1 €115m P2 €85m P3 €80.5 P4 €2.5m 2 2 2 2

3 Financial Flow Impact Financial penalties Reputational Accountability
100% Public Expenditure Eligible Expenditure input to EU Database Claim Submitted to EC Impact Financial penalties Reputational Accountability 50% of Eligible Expenditure Received from EC EU receipt reimbursed 1 3 3 3 3

4 How is the Programme Managed?
Managing Public Money NI DFP Guidance (Audit and Financial Management Division) EU Regulations and Guidance Programme Documents & Guidance Guiding principle – ‘Strictest Rules Apply’ 4 4 4 4

5 Players Audit Authority DETI Audit – Jackie Connolly
Managing Authority DETI EU Support Unit – Maeve Hamilton Certifying Authority DETI Accountability – David Conliffe Intermediate Bodies DETI / Invest NI / NITB DARD DSD – to be formalised DRD – to be formalised

6 Managing Authority Role
Programme Development Overall Programme Management High level approval of activity Guidance and Operating manual N+2 Claim initiation Evaluation Negotiating Programme changes with EC Reporting on Progress Closure Detailed in the Operating Manual. 6 6 6 6

7 Certifying Authority Role
Validity and accuracy of claims Certification of claims Submission of claims to the Commission Accounting for and disbursing EU receipts Irregularity and recovery monitoring Can do own checks but should supplement and not duplicate work of others. They can also rely on any other work that provides assurance eg Internal Audit, Audit Authority, NIAO, EU, Management checks etc. 7 7 7 7

8 Audit Authority Role Audit Strategy System Audits Audits of Operations
Annual Control Report and Opinion Closure Declaration Enhanced role this Programme because of Commission resource issues including new MS accession. System Audit and Audit of Operations Better assurance from System Audit = smaller samples and vice versa Reporting to the Commission and error rate impact 8 8 8 8

9 Defined in the Memorandum of Understanding
IB Role Selection of operations Appraisal Award of funding Monitoring Verifying operations and expenditure Financial accountability Reporting Publicising Maintaining the database Safeguarding the audit trail Defined in the Memorandum of Understanding Everyone - admin or financial/verification has a role Scoring - Priority objectives and criteria - can be supplemented by more specific criteria. Operation – project funded under Grant scheme or activity funded through contract 9 9 9 9

10 Key Issues Eligibility of Activity and Expenditure Audit Trail
Procurement Publicity This is what will be covered in the next sections. 10 10 10 10

11 Must contribute to the delivery of the relevant Programme Objectives
Eligible Activity Must contribute to the delivery of the relevant Programme Objectives 11 11 11 11

12 Ineligible Activity Displacement of similar existing activities
Building and renovation of housing Agriculture, Fisheries and Forestry Local social welfare facilities EC Sectoral Restrictions (shipbuilding etc) Displacement – eg support for a specific retail outlet or service provider. Housing - exclusion re energy efficiency – capped at 4% of Member State ERDF allocation. Agri/ Fishery etc.– own Programmes 12 12 12 12

13 Ensuring Activity is Eligible
Selection Criteria Selection Panels Appraisal Casework Committees Approval Bodies Letters of Offer/Contracts Monitoring and reporting against terms and conditions Letter of Offer – highlight need to be precise. 13 13 13 13

14 Eligible Expenditure Principles
Against approved project activity Directly attributable to the project Relates to Northern Ireland Actually incurred and paid by the final beneficiary between 1 Jan 2007 and 31 Dec 2015 Approved – in the Letter of Offer/Contract Directly attributable: Golf Fees Retirement function Christmas Tree Unrelated trip to Monte Carlo NI Not eligible - Salary costs paid against employees that were based outside Northern Ireland. Eligible – Trade Mission outside NI 14 14 14 14

15 Eligible Costs for Capital
Land 10% of the total eligible expenditure Valuation Land/Buildings – no national or EU grant within 5 years Prelim –site surveys, environmental appraisals - NB still must be incurred within the programme period. Professional Fees – Value/Procurement Leasing – costs less than purchase Retention – MPMNI and relevant DAOs). If in doubt ask!! Purchase and/or development of Land Purchase or development of Real Estate Preliminary Expenditure Professional Fees Purchase/lease of plant and equipment 15 15 15 15

16 Eligible Staff Costs Basic Salary Statutory Contributions
Pension Contributions Training Costs Recruitment Costs Non-statutory Sick/Maternity Pay Holiday Pay Commission Shift allowance Taxable Benefits Basic salary - can include contracted increments in salary. Statutory - National insurance and Inland Revenue Reasonable pension contribution Contract – holiday pay, maternity, sick pay, statutory holiday entitlement Training costs - If directly required for project Recruitment - if project involves taking on additional staff. Maternity/Sick/Holiday Pay – where defined in a contract of employment or an organisation’s general employment conditions. Benefits – if a private company contract of employment includes taxable benefits such as commission, health insurance, company car etc. these are eligible, subject to any ceilings set by the Intermediate Body or scheme conditions. For public bodies, these types of cost are generally ineligible. Must be defined in T&Cs of employment Private companies only 16 16 16

17 Part-time Staff Costs Time Records How is the hourly rate calculated?
% of time – records for 100% of time showing project time elements so that percentage can be verified Variable hours – timesheet detailing the time spent working on project activity Timesheets must be signed, dated and authorised (either electronically or physically) 17 17

18 Daily/Hourly Rate Calculation
Basis Example Actual salary for claim period (ERNI, pension and additional taxable contracted costs elements) £5,000 Contracted working days per week 5 Multiply by period covered by claim e.g. 13 weeks 65 Subtract contracted leave pro rata for claim period (e.g. 20 days/4 = 5) 60 Subtract contracted statutory holidays pro rata for claim period (e.g. 10 days/4 = 2.5) 57.5 Gives daily rate of £5,000/57.5 = £86.96 Divide by contracted daily hours (e.g. £86.96/8 hours = £10.87 18 18 18 18

19 T&S Mileage Accommodation Meals Air/rail/bus/other travel
Mileage - (actual) capped at the public sector rate per mile Accommodation – again subject to public sector ceilings Meals – receipted actuals and reasonable - against public sector subsistence rates Air/Rail/Bus - Public transport unless justified Travel outside of the EU would need additional justification. 19 19 19 19

20 Other Eligible Costs Hospitality Professional/Consultancy Fees
Accommodation Consumables Marketing/Promotion Other (insurance, depreciation, maintenance etc) Hospitality – GN issued by the Managing Authority Professional – Procured & re-tendered every 3 years Accommodation - rent, rates, electricity, water, heating, telephone, ICT, cleaning and security Apportionment - if only part of the premises is used Consumables – not exceed 20% of total eligible cost – raw materials would be classified differently. Marketing/Promotion – adherence to publicity Insurance/maintenance – within period Depreciation – if the item was not previously funded 20 20 20 20

21 Ineligible Expenditure – Common Errors
Payment against scale or unit costs Notional costs Time records incomplete or missing for part-time staff Recoverable VAT Missing or incomplete audit trail Expenditure outside Programme/LoO period Some of these are not eligible under Government accounting rules either. Unpaid voluntary work has been ruled out as it is too difficult to verify the ‘real’ cost and the audit effort is therefore disproportionate. Notional costs – council charging for a room in a building owned by them and not normally rented out. 21 21 21 21

22 Ineligible Expenditure – some of the rest
Bank charges or fees on accounts Mandatory training under statutory provision Fines, financial penalties and litigation costs Dividends Set up/contribution to private pension schemes Not going to cover all but focus on key ones. Bank charges are ok when relate directly to set up and maintenance of a separate account required as a condition of funding but excludes fees etc due to poor management, Charges for financial transactions, foreign exchange commissions and losses. Mandatory training under statutory provision – particularly relevant for those funding companies for training activities. Entertainment – different from the modest hospitality allowed under the hospitality guidance. 22 22 22 22

23 Management Verification

24 Who conducts Management Verification?
Finance staff Programme managers Technical staff Grant inspectors Managing Authority Intermediate Body Programme staff - monitoring progress Technical Staff – QS etc Managing Authority – reinforce MoU role v direct verification and spot checks 24

25 Management Verification
Can encompass: Claim checks Contract monitoring Project Visits Board Meetings/Project Launches Formal Article 13 on-site verification Claim checking - (desk or on-site) – to original audit trail documents Contract monitoring checks – milestones etc Visits – Technical or normal monitoring; Board Meetings – often review project progress and also verify existence of the project/asset. Launches – verify existence but also publicity requirements Formal A13 25 25 25 25

26 Management Verification – Key Issues
Timing Common sense No expenditure – no point in a financial inspection Foundations being dug - no point in QS visit Rule of thumb as soon as practical and with opportunity to rectify Frequency One off event – at the time Larger or multi-annual projects - at least once per annum Asset retention issue – remember to monitor post project Nature Depends on the project Capital build - need technical site visits frequently Largely programme delivery then on-the-spot Records – Who, where, what, when. Database All activity recorded Used by EC and CA and AA to identify gaps. NIAO issue – 30/9/2010 – record input or all projects included in drawdowns. Timing Frequency Nature Keeping adequate records Database entries 26 26 26 26

27 Audit Trail Covered in the coming slides
Key area of risk and irregularities 27 27

28 What is the Audit Trail The comprehensive set of documents which provide a complete history of a project and provide evidence that proper procedures were applied and outcomes achieved. 28 28 28

29 Audit Trail Documents Application forms Selection/Appraisal records
Contract/Letter of Offer Management and control records Payment records Monitoring reports Closure documents Everything that supports the administration and management of the project and its expenditure. Contract Docs - reference CPD. Payment – covered in next slides 29 29 29 29

30 Audit trail – How long, in what format and where?
Period Programme Spend to 2015 Closure documents submitted 2017 Commission undertaking to close within 2 years – 2019 3 years from last payment to MS 2022 is used but in some cases 2021 – may need to be updated Format – original, copy, micro-fiche, electronic (scanned) - readable, updated as technology changes, accessible, traceable. For government bodies additional infosec standards apply. For wholly automated transactions (Easyjet/banking on-line) ISO/BS Security standards apply. Location – Project v Intermediate Body - risks. Bankruptcy cases – no longer considered irregularities but audit trail must be complete Highlight schemes with high levels of businesses failing – high risk – think about system (IB could retain copies of audit trail docs). Period – 2022 Format Location 30 30 30 30

31 Payment Audit Trail May differ depending on the nature of the expenditure but in general will include: Proof of commissioning of the goods/service Proof of receipt of the goods/service Proof of payment Will cover in detail some of the key issues: However in general all payment audit trail documents will provide proof of purchase, proof of service/delivery and proof of payment. Regulation expects 100% vouch but sampling approach recognised in COCOF guidance. Sampling methodology also part of the audit trail. 31 31 31 31

32 Personnel Costs Contract of Employment Payroll records Time records
Breakdown of contributions (statutory and any company specific elements) Proof of Payment Contract of employment –KEY!!!! Full time - payroll records – P11, Sage etc Part-time - time records - show 100% of time and are signed off. Breakdown - ERNI, pension etc to check eligible; Supporting docs - HMRC etc. Issues Real salary cost - not a scale/unit cost Note issues re self employed. What to do if access denied. 32 32 32 32

33 Equipment/Consumables
Invoices Lease/rental agreements User logs Procurement documentation as appropriate Proof of payment Asset Register Invoices; Lease/ rental contract and inventory list User logs– e.g. franking/fax machines; Evidence of adherence to relevant procurement rules; Proof of payment; Asset Register records including disposal arrangements. 33 33 33 33

34 Contract Expenditure Procurement documentation & the contract
Monitoring/management documentation Invoice and evidence of any 3rd party costs included on a real cost basis Proof of payment Proof of compliance with procurement rules. Contract documents; Contract management documentation –reports / meetings etc. Invoices; Proof of payment; 34 34 34 34

35 Travel and Subsistence
Claim form signed, dated and approved Receipts/invoices Supporting evidence of the event Proof of payment Travel claim form, appropriately authorised; Invoices/receipts; Reports, records, minutes, presentations, photos, attendance sheets Proof of payment; 35 35 35 35

36 Payment Audit Trail Indirect Costs/Overheads Invoices
Accounting records Apportionment data Proof of payment Regardless of actual v flat rate there is a need to keep a trail which for real costs is all the supporting docs and for flat rate is the docs used to arrive at the flat rate. These include: Original invoices and documentation to support the full actual cost to the organisation; Accounting records – can be based on management accounts but should ultimately be verified to the formal audited accounts Apportionment data – floor space diagrams, headcount etc. Proof of payment; 36 36 36 36

37 Procurement European Commission requires adherence to both EU and National rules DFP (CPD) set NI thresholds and rules Area of focus for EC Auditors in particular 37 37

38 Procurement – Public v Private
Rules apply to Public Bodies VFM for private companies Reasonableness test for private companies If in doubt refer to CPD Mandatory only for public bodies Private company - economic appraisal and casework test VFM. Check reasonableness – laptop costing £5000 or buying a porsche If in doubt refer to CPD as they are the national experts. 38

39 Common Procurement issues
Not adhering to threshold requirements Insufficient advertising Evaluation criteria in ToR not used in assessment Extensions to contract Incomplete supporting documentation / audit trail Payments not in line with agreed payment schedule Activity not verified in line with contract terms 3rd Party costs not appropriately verified Unapproved single tender actions 39 39 39 39

40 Publicity European Commission requires adherence to both EU and National rules DFP (CPD) set NI thresholds and rules Area of focus for EC Auditors in particular 40 40

41 Publicity Letters of Offer / contract documents Brochures / leaflets
Invitations Advertisements Web-pages Promotional items Billboards & Plaques Publications and press releases Presentations Conferences/exhibitions/training/events MANDATORY Letters of Offer Billboards for infrastructure projects Press releases announcing the funding. JUDGEMENT Company A receives grant to develop website – logo and wording must be on website Company B receives grant for R&D – website does not need it but research published must carry the publicity EXAMPLE – no premises then common sense – use a website or do a press release 41 41 41 41

42 Publicity – general principles
Logo and strap line Front of material Equal prominence Readable Proportionate and appropriate Size – recommended that it takes up a proportional size of the material (rule of thumb 25%) 42 42 42 42

43 Consequences of non-compliance
Activity 100% of expenditure on the activity Expenditure 100% of the error value Audit trail Up to 100% Publicity Up to 10% of the total grant Tendering Dependent on the nature of non-compliance anything from 5% to 100% of contract value. Recovery - MA on IB. IB to clawback from beneficiary. Audit Trail No excuses accepted re timeliness of audit or the amount of previous verification activity. This is also applicable where access to audit trail documents is denied or restricted. Publicity - 10% of total grant – Sparta airport example Tendering 5%-10% - failure to advertise in papers perceived to relate directly to a particular section of the community. 25% - one quote less than required at the threshold 100% - failure to advertise. 43 43 43 43

44 Ensuring Compliance Strong risk awareness and management
Strong financial controls Training and Documentation Early stage education of funding recipients Verification activity To summarise – key is avoiding non-compliance. The fallout from which ranges from adverse publicity, damage to reputation, PAC through to financial sanctions. This is one of a number of steps to try to ensure that everyone involved has a grounding in the key principles. Implication for audit authority sample sizes etc and the likelihood of EC audit scrutiny. 44 44 44 44

45 Guidance and Assistance
45 45 45 45

Download ppt "EU Funding Workshop Intermediate Body Training"

Similar presentations

Ads by Google