Delegation of the European Commission to Russia European Union Delegation to the Russian Federation 1 Financial Reporting for Grant Contracts General Conditions 2008

Delegation of the European Commission to Russia European Union Delegation to the Russian Federation 22 Structure of your contract Grant contract consists of : Special conditions + Annexes: Annex I Description of the Action Annex II General conditions applicable to EC financed grant contracts for external actions Annex III Budget for the Action Annex IV Contract award procedures Annex V Standard request for payment Annex VI Model narrative and financial report Annex VII Model report of factual findings and TOR for expenditure verification Our financial reporting requirements are based on the above documents.

Delegation of the European Commission to Russia European Union Delegation to the Russian Federation 3 Pre-financing payments First pre-financing is paid within 45 days, as from the date of reception of signed contract. Requests for further pre-financing payments (if any) should be sent on a 12 months basis accompanied by Interim Narrative and Financial reports. They must be prepared using templates of guidelines on financial reporting sent with 1st payment notification and provided in original, dated and signed. Payments of further pre-financings are executed on the basis of the approval of the Interim Narrative report – and provided that the EC contribution to the expenditure reported in the Interim Financial report = at least 70% of the first pre-financing payment (and at 100% of any previous payments).

Delegation of the European Commission to Russia European Union Delegation to the Russian Federation 4 Pre-financing payments If the consumption of the previous pre-financing is less than 70%, the amount of the new pre-financing payment shall be reduced by the unused amounts of the previous pre-financing payment. The total sum of pre-financings under the contract may not exceed 90% of the amount referred to in Article 3.2 of Special conditions. The Interim Financial report indicates real costs of the project implementation within reported period. It consists of the Summary table, which level of detail reflects exactly the budget breakdown in the contract. If the contract budget has been modified through an addendum, please include the latest figures in the section “Budget as per Contract / last Addendum”.

Delegation of the European Commission to Russia European Union Delegation to the Russian Federation 5 Contract modifications Any amendment to the Contract must be set out in writing in an addendum. However, where the amendment to the Budget or Description of the Action does not affect the basic purpose of the Action and the financial impact is limited to a transfer between items within the same main budget heading including cancellation or introduction of an item, or a transfer between main budget headings involving a variation of 15% or less of the amount originally entered (or as modified by addendum) in relation to each concerned main heading, the Beneficiary may amend the budget and inform in writing without delay the Contracting Authority accordingly. This method may not be used to amend the headings for Administrative costs or the Contingency reserve.

Delegation of the European Commission to Russia European Union Delegation to the Russian Federation 6 Administrative costs & Contingencies Administrative costs should include project costs which cannot be attributed to any other budget headings. Please note that the amount under this budget heading cannot be higher than % indicated in your contract (Article 3.3 Special conditions). In case the total accepted cost of your project is lower than the cost indicated in the budget, the amount accepted under this budget heading will be calculated by application of this %. Fixed % of administrative costs is applied in Interim and Final Financial reports. If envisaged, a Contingency reserve (not exceeding 5% of the direct eligible costs) is used only with the prior written authorisation of the Contracting Authority.

Delegation of the European Commission to Russia European Union Delegation to the Russian Federation 77 Final Financial report Balance payment – on approval of the final reports. Final reports shall be forwarded within 3 (6) months following the end of the implementation period of the Action. Final reports: Financial & Narrative. They must be accompanied by an Expenditure Verification report issued by the auditor (named in the contract) using format of Annex VII. The auditor must confirm and attest the accuracy of your Final Financial report by signing of its each page. The Final Financial report should indicate the total real cost of the project implementation. Only eligible costs should be reported, i.e. those incurred by your organisation (or partner organisations) during the project implementation period. Please use templates of guidelines on financial reporting.

Delegation of the European Commission to Russia European Union Delegation to the Russian Federation 8 Final Financial Report 8 The Final Financial report consists of a Summary Table (reflexion of the budget breakdown), detailed tables for individual budget headings and some supporting documents. All supporting documents for the incurred expenditure should be kept by the Beneficiary in originals for 7 years after the payment of the balance for control purposes. For contracts with expenditure verification, the only documents to be provided with the Final Financial report are: copies of confirmations of registration of purchased equipment in your assets, or copies of certificates of Transfer of Ownership, accompanied by equipment specifications as detailed in the relevant invoice and copies of certificates of origin. For contracts without expenditure verification, please submit requested documents as listed in the guidelines on financial reporting.

Delegation of the European Commission to Russia European Union Delegation to the Russian Federation 9 Final Financial Report 9 A Transfer of Ownership is required if your organisation is not based in Russia or is not the final beneficiary of the project, in which case the equipment purchased within the framework of the project should be transmitted to the local partners or the final recipient of the Action. Copies of certificates of origin and certificates of Transfer of Ownership should only be provided to us for equipment the purchase cost of which was more than 5,000 EUR per item.

Delegation of the European Commission to Russia European Union Delegation to the Russian Federation 10 Rule of Origin All supplies and materials purchased under a contract financed under a Community instrument must originate from the Community or from an eligible country. Eligible countries under ENPI regulation are as follows: Member States of the Community: Austria, Belgium, Bulgaria, Czech Republic, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom. Countries - beneficiaries of this Regulation: Algeria, Armenia, Azerbaijan, Belarus, Egypt, Georgia, Israel, Jordan, Lebanon, Libya, Moldova, Morocco, Palestinian Authority of the West Bank and Gaza Strip, Russian Federation, Syria, Tunisia, Ukraine. Countries - beneficiaries of an Instrument for Pre-Accession Assistance set up by Council Regulation (EC) No 1085/2006 of 17 July 2006 establishing an Instrument for Pre-Accession Assistance (IPA): Croatia, The former Yugoslav Republic of Macedonia, Turkey, Albania, Bosnia, Montenegro, Serbia, including Kosovo. Member States of the EEA: Iceland, Liechtenstein, Norway. The country of origin is deemed to be the country in which the goods have gone their last, economically justified, substantial transformation.

Delegation of the European Commission to Russia European Union Delegation to the Russian Federation 11 Rule of Origin / Nationality Certificates of origin for supplies / materials are made out by the competent authorities of the country of origin of the supplies. Self- certification produced by suppliers are not acceptable. Certificates of conformity indicating several locations (eligible and non-eligible countries) of production plants are not acceptable either. We accept customs declarations or facture-invoice with indication of the country of origin. Rule of nationality does not apply to persons recruited on labour contracts, i.e. staff. These persons should be shown under heading 1 of the budget. However, nationality rule applies to service providers (companies) and individual consultants/experts hired on service/assignment contracts. These service providers ideally should be shown in the heading 5. Eligible nationalities for ENPI are published on bility/documents/a2_eligibilityprogrammes _en.doc bility/documents/a2_eligibilityprogrammes _en.doc If consultant of non-eligible nationality is needed for the project, a PRIOR derogation (HoD for grants) should be asked, like for the derogation to the rule of origin in case no equipment of eligible origin could be found on the market.

Delegation of the European Commission to Russia European Union Delegation to the Russian Federation 12 Taxes, including VAT Taxes, including VAT are not eligible expenditures, unless the Beneficiary (or, where applicable, its partners) can show it cannot reclaim and applicable regulations authorise coverage of taxes. In case taxes cannot be reclaimed or offset, a confirmation from relevant competent authorities should be provided. If Beneficiaries are EU VAT registered organisations, more likely they can reclaim the VAT. If not - justification / confirmation from the relevant authority to be provided. If Beneficiaries are RF registered organisations, more likely they can reclaim the VAT by off-setting. However, there 2 types of organisations which can not reclaim the VAT in Russia: (a) public authorities and (b) organisations which apply a simplified taxation system. If you are (a)- an official letter that the VAT can not be reclaimed by offsetting should be provided. If you are (b)- an official certificate from local tax inspection about application of a simplified taxation system should be provided. All other organisations should submit their VAT Declaration for the latest accounting period.

Delegation of the European Commission to Russia European Union Delegation to the Russian Federation 13 Procurement by Grant Beneficiaries If the implementation of an Action requires procurement by the Beneficiary, the contract must be awarded to the most economically advantageous tender (i.e, the tender offering the best price-quality ratio), in accordance with the principles of transparency and fair competition and taking care to avoid any conflicts of interest. Procurement rules – Annex IV of your contract. For supplies of a value of € or less, the Beneficiary may place orders on the basis of a single tender. For supplies of a value of less than € the Beneficiary consults at least three service providers/suppliers of its choice and negotiates the terms of the contract with one or more of them (negotiated procedure without publication). Artificially splitting related activities into smaller lot sizes or contracts to circumvent the procurement thresholds is prohibited.

Delegation of the European Commission to Russia European Union Delegation to the Russian Federation 14 Final Financial Report Detailed table for budget heading 1 (Human Resources) Respect the rates and number of units for salaries and per diems. Each project staff member must regularly fill in timesheets. Originals of timesheets must be kept by your organisation for control purposes. Please always indicate in the summary table the name of the person on mission, his/her position, destination and period on mission and follow budget breakdown and numbering. Per diem rates cannot exceed rates set out in Annex III - maximum amounts.

Delegation of the European Commission to Russia European Union Delegation to the Russian Federation 15 Final Financial Report Detailed tables for budget headings 2 (Travel), 3 (Equipment and Supplies), 4 (Local Office), 5 (Other costs, services) and 6 (Other) Summarize all relevant payments in chronological order, but still grouping them per budget line. Costs expressed in the currency of payment with an indication of the date of payment. Costs must be converted to Euro at the rate made up by the average of the rates published on in InforEuro website: &SearchField=&Period=2003-5&Delim=,&Language=en for the months covered by the relevant report.

Delegation of the European Commission to Russia European Union Delegation to the Russian Federation 16 Calculation of the Balance Payment Special conditions Total cost of the Action:500, € EU contribution (90%) to total cost:450, € Pre-financing payment (80%):360, € Further pre-financing payment:45, € Balance payment (10%): 45, €

Delegation of the European Commission to Russia European Union Delegation to the Russian Federation 17 Calculation of the Balance Payment Calculation of the balance amount based on real accepted costs (final financial reports): Total amount of accepted eligible costs: 490, € EU contribution (90% of total accepted eligible costs): ,00 € Balance payment: (441, € - 360, € - 45, € ) ,00 €