Ismar Financial and administrative procedures Nearest Kick-off meeting Bologna, 11 October 2006

Ismar Financial management Sound financial management is grounded in sound project and proposal development Estimates of resources per Task Clear division over partners Justification of costs Typical financial tasks Monitoring and adjustment of project finances Elaboration and collection of financial statements, incl. audit certificates

Ismar The Nearest budget References: negotiation CPF A3.1 Annex 1 to the Contract p Type of activities related to eligible costs: Research and technological development activities Management/coordination activities EC contribution in form of a grant to the budget Max EC contribution to the project Euro

Ismar Cost models Full cost (FC) –Actual costs including real overhead costs to be justified Full Cost Flat Rate (FFC) –Actual costs excluding overheads to be justified –Indirect cost: 20% of direct costs (excl. Subcontracts) Additional Costs (AC) –Additional costs to be justified by specific contracts for personnel and invoices –Indirect cost: 20% of direct costs (excl. Subcontracts) [Article II.22]

Ismar Reimbursement rate of eligible costs [Article II.25]

Ismar Initial Pre-financing payment Pre-financing 80% of first 18 months Project Start date 45 days Contract signature

Ismar Periodic reporting and interim payments Project Period X Submission periodic reports Advance payment (corrected) 80% of upcoming 18 months EC approval tXtX+1 45 days days

Ismar Interim payments conditions Contract Article 8.2 (d) Where less than 70% of a pre-financing has been used at the end of a reporting period, and notwithstanding the approval by the Commission of related reports, subsequent intermediate pre-financing may be paid only: On the basis of a complementary periodic management report that shall be submitted to the Commission once the 70% spending rate has been achieved For the Nearest first reporting period these conditions mean that interim payment will be delayed if at least the 73% of the project budget for the Year 1 has not been spent at the end of year 1.

Ismar Payment Scheme Expected EC contribution for semester 1 ( months 1-6)A Expected EC contribution for semester 2 ( months 7-12)B Expected EC contribution for semester 3 ( months 13-18)C Expected EC contribution for semester 4 ( months19-24)D Expected EC contribution for semester 5 ( months 25-30)E Expected EC contribution for semester 6 ( months 31-36)F Total Expected EC contribution for whole projectT=A+B+C+D+E+F Initial EC prefinancing ( start of the project)P0 = 0,8* (A+B+C) EC contribution approved for report 1( period 1: months1-12)G First intermediate EC prefinancing (after report1 if G>0,7*P0)P1 = 0,8*(C+D+E)- (P0-G) EC contribution approved for report 2 (period 2: months 13-24)H Second intermediate EC prefinancing (after report2 if H>0,7*P1)P2 = 0,8*(E+F)- (P1-H) EC contribution approved for report 3 (period 3,months )I Final payment ( if (G+H+I) < T)P3= (G+H+I)- (P0+P1+P2) Final payment ( if (G+H+I) > T)P3=T- (P0+P1+P2)

Ismar Final payment Final payment of the project (20% kept) is done when all the reporting obligation are completed and accepted by the Commission (Financial regulation ; Art 182) Remember that an audit certificate is requested at the end of the project

Ismar Financial reporting For each reporting period of activity Each contractor shall produce a “periodic management report” including: a detailed justification of costs incurred and of resources deployed, linking them to activities implemented and justifying their necessity, financial statement per activity set out according to Form C (Annex VI to the Contract) duly signed by he authorised persons (person responsible for the work and financial officer) Electronic version of Form C will be provided by the coordinator Cost incurred in currencies other than Euro (CNRST) shall be reported in Euro on the basis of the conversion rate as that would have been applied on the date that actual costs were incurred or the rate applicable on the first day of the month following the end of the reporting period.

Ismar Eligible cost Annex II- Article 19 a) they must be actual, economic and necessary for the implementation of the project b)they must be determined in accordance with the usual accounting principles of the contractor c) 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 days after the end of the project or the date of termination whichever is earlier d) 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 referred to in ArticleII.26. The accounting procedures used in the recording of costs shall respect the accounting rules of the State in which the contractor is established as well as permit the direct reconciliation between the costs incurred fo the implementation of the project and the overall statement of accounts relating to the overall business activity of the contractor

Ismar Form C – most important part Type of Activity Research and Technological Development / Innovation (A) Demonstration (B) Training (C) Management of the Consortium (D) Other Specific Activities (E) Total (F) = (A)+(B)+(C)+(D) +(E) Contract or Third Party(ie s) Contrac tor Thir d Part y(ies ) Contrac tor Third Party(ie s) Contrac tor Third Party(ie s) Contrac tor Third Party(ie s) Contrac tor Third Party(ie s) Direct costs 0,00 Of which subcontract ing 0,00 Indirect costs 0,00 Adjustment s to previous period(s) 0,00 Total costs 0,00

Ismar Justification of major cost items and resources A brief description of the work performed by the contractor during the period. This should be addressed at the workpackage level, and the work specification should be detailed enough to justify the resources employed Explanatory note on any major cost items such as important equipment purchases, major travel costs, large consumable items etc., justifying their necessity to the project. A tabular overview of budgeted costs and actual costs, by contractor and by major cost item including personnel (see Table 3). For AC contractors, a tabular overview of all resources employed on the project and a global estimate of all costs. A tabular overview of budgeted person-months and actual person- months, by workpackage (Table 4). The budgeted person-months should normally be taken from Annex I to the contract. For AC contractors, in addition estimate the number of person-months of permanent staff working on the project. A summary explanation of the impact of major deviations from cost budget and from person-month budget.

Ismar Table 3 –Budget vs Actual costs

Ismar Table 4 Person month table

Ismar Audit certificates Audit certificates should certify that costs: Are incurred during the project Are recorded in the account of the contractor Are determined in accordance with the usual accounting principles of the contractor Meet the other main contractual requirement regarding the eligibility of costs In the Nearest project Audit certificates are due only at the end of the project

Ismar Audit certificates Who is qualified to sign an audit certificate? Independent from the contractor Qualified to carry out statutory audits of accounting documents In case of public body: Can be a competent public officer provided that its legal capacity is recognised by the relevant national authority