Financial Management Gintas Janušonis 15 October, 2009, Šiauliai

 Programme Document  Programme Manual  Approved Application Form  Subsidy Contract  Partnership Agreement (incl. Annex 4)  Relevant EU and national legislation, National Eligibility Rules  Guidelines for First Level Controllers (FLC) Which ever rule is stricter - applies! 2 Eligibility: Legal Framework

Sound Financial Management Council Regulation no 1605/2002 of 25 June 2002  The principle of efficiency is concerned with the best relationship between resources employed and results achieved  The principle of effectiveness is concerned with attaining the specific objectives set and achieving the intended results  The principle of economy requires that the resources used by the institution for the pursuit of its activities shall be made available in due time, in appropriate quantity and quality and at the best price 3 Main Principles

4 General Rules Applicable to Project Budget:  Avoiding Corruption and Conflict of Interest  No Double Financing  Ownership of Project Results  Public Benefit  No Sub-Contracting Between PPs

5 Eligibility of Expenditure  Costs are born by the LP or PP and would not have arisen without the project  Expenditure has actually been paid out  Expenditure is directly linked to the Project  Expenditure is reported under the correct BL and WP  Expenditure is reported in the same Reporting Period as it was paid (with exception of preperation costs and cost- sharing, if relevant)  The reported expenditure must not exceed approved eligible Project budget  Expenditure in BL 4-8 should be indicated and cannot exceed limits set in AF

6 Eligibility of Expenditure Separate accounting system is kept:  Project specific accounting code (Council Regulation No 1083/2006,Art. 60(d)) to record project costs in the accounting system.  Book-keeping lists/ overviews- list of all expenditures for all transactions relating to the project.  Project number, short project title, WP and partner title should be indicated, by writing it or stamping on the original invoices and checks/ payment orders and agreements. If space is available, also Programme title should be indicated.

 BL1 Personnel  BL2 Direct Administration costs  BL3 Indirect Administration costs  BL4 External Services  BL5 Travel and Accommodation  BL6 Equipment and Infrastructure  BL7 In Kind costs  BL8 Preparation costs 7 Budget Lines

8 BL1: Personnel costs Includes:  Salaries, wages;  Employment taxes, social security;  Health insurance and pension contributions; of the staff directly engaged in the project and employed by the Partner institution on the basis of an employment/ labour contract. Requirements:  The actual salary rate has to be applied!  Costs must be certified on the basis of job agreements, decrees, time sheets, record of tasks carried out.

9 BL2:Direct Administrative costs Directly linked to the project and fulfilling the following conditions:  Essential for the project’s implementation and would not have been incurred if the project had not been carried out;  If possible, consumables to be reported as project expenditure should be purchased separately from other office consumables.

10 BL3: Indirect Administrative costs (Overhead costs) - share of regular monthly payments for rent, electricity, heating, depreciation costs and other similar costs directly related to project activities and calculated pro rata according to justified and clear method Usually the share calculation is based on:  The working time of staff members  Office space used for the project Indirect Administrative costs can be up to 5 % of the total eligible project budget.

11 BL4: External Services  Expenses paid by PP to external providers External = not employed by PP institution  Basis: supply contracts, service contracts, enterprise agreements, invoices  Costs are reasonable according to the standard rates in the country where the contracting Partner is located; average market rates resulting from public procurement procedures apply;  Only expertise specified in the Application Form  Quality of produced outputs is to be ensured

12 BL5: Travel and Accommodation  T ravel costs are eligible only if they are directly related to and essential for the effective delivery of the project  The most economic or reasonable way of transport must be used  Despite the PP legal status (NGOs) the subsistence allowances rates as well as accommodation costs must not exceed the set limits for the public authorities under national regulations

13 BL6: Equipment and Infrastructure  Investments funded by the Programme should be aimed at public use and their ownership and the way of use cannot be changed five years after the project has been finalized  Public procurement rules must be followed  Only investments specified in the Application Form  Quality of produced outputs is to be ensured

14 BL7: In Kind Costs  Only unpaid voluntary work!  Unpaid voluntary work must be:  essential to the project  based on a written agreement  proved by timesheets indicating the hours worked for the project and signed by a person and his/her supervisor  minimum monthly or hourly official national net salary level is followed.  Staff costs for personnel working in the project partner institutions based on employment contract and receiving a regular salary do not count as in-kind contribution

15 BL8: Preparation Costs  Preparation costs are eligible only for projects that are approved by the JMSC  Preparation costs are eligible if the payments are made not earlier than 24 months before the JMSC decision and latest the day before the JMSC decision  Preparation activities and costs have to be listed in the Application Form  Only preparation of technical documentation (feasibility study/ investment project, technical project, environmental impact assessment, permits for building) for the project, translation of these documents and translation of the Application Form are eligible as preparation costs

16 Examples of Non-eligible Costs  VAT, other taxes and charges, if these are legally recoverable  Bank transfers within Latvia and Lithuania  Expenditure which is not directly linked to the project activities  Payments for political or religious activities  Fines, financial penalties and expenses of litigation  Luxury goods and services, presents See full list in Programme Manual, Chapter 9.6

17 Currency Rate Currency rates:  currency (other than EUR) must be converted into EUR with an accuracy of four digits after the comma (e.g ).  PP have to follow the daily exchange rate of the Bank of Latvia and the Bank of Lithuania.  any foreign-exchange commissions and losses are not eligible.

De-commitment  The MA has rights to withhold ERDF co-financing if it has not been spent in time and if Programme is subject to decommitment procedure by EC  Projects having the under-spending rate of more than 20 % can be subject to the de-commitment procedure  Plan vs reality (INTERREG IIIB) 18