1. Presentation by Mrs. Isabel Serra, EMPL/F/3
Concept of real costs in the framework of grants/aid schemes
Presentation by Mrs. Isabel Serra, EMPL/F/3

2. Concept of real costs in the framework of grants/aid schemes
Objective and nature of ESF activities
Intangible character (individuals)
Specificities on the eligibility of expenditure
Non eligibility of purchase of land and real estate
Equipment - Depreciation

3. Concept of real costs in the framework of grants/aid schemes
Equipment - depreciation
Traditionally ESF finances depreciation (rule 1.6)
National rules are of application
Analysis of opportunity
Depreciation versus renting/leasing

4. Concept of real costs in the framework of grants/aid schemes
Focus of management and control in ESF
Effective implementation of the action
Expenditure effectivelly incurred and paid
Coherence between "physical" and financial aspects

5. Concept of real costs in the framework of grants/aid schemes
Article 32(1) subparagraph 3 of Council Regulation 1260/1999
Rule n° 1 of Commission Regulation 448/2004
Interpretative note of Commission services

6. Concept of real costs in the framework of grants/aid schemes
Payments by final beneficiaries
In the form of cash (exceptions in-kind contributions, depreciation and overheads)
expenditure incurred and actually paid out
Opposed to the concept of advances from final beneficiary to final recipient
Not to confuse with payment on account

7. Concept of real costs in the framework of grants/aid schemes
Payments by final beneficiaries
Salaries
Direct costs or overheads
Direct pay
Social security/taxes obligatory by national law
VAT and other taxes

8. Concept of real costs in the framework of grants/aid schemes
Payments by final beneficiaries
In-kind contributions
Eligible for funding if the conditions of rule 1.7 are respected
Final Recipient should keep evidence
Independent certification
Calculation of value
Time-sheets for hours worked

9. Concept of real costs in the framework of grants/aid schemes
Final beneficiary does not carry out implementation of the action
Agreement for the implementation
Financially responsible for the project
Expenditure paid by final recipient supported by invoices
Responsible for verifying the reality and eligibility of the project and expenditure
Audit trail maintained down to final recipient

10. Concept of real costs in the framework of grants/aid schemes
Differenciation of the justification of real costs
[NOT] Public procurement
Invoices in accordance with contractual terms

11. Concept of real costs in the framework of grants/aid schemes
Each Euro declared as expenditure incurred and paid on a project is justified by :
receipted invoices or,
accounting documents of equivalent probative value

12. Concept of real costs in the framework of grants/aid schemes
At Project level
Need of complete and clear budgets
Avoid interpretation
Main categories of costs on one side
Identify possible revenues
Identify clearly sources of funding on the other side

13. Concept of real costs in the framework of grants/aid schemes
Main categories of costs
Direct costs – Costs linked to the specific project
Overheads – Costs necessary to the regular activity of the final recipient
Charged on a pro-rata basis
Based on real costs
National guidelines to final recipients

14. Concept of real costs in the framework of grants/aid schemes
Sources of funding:
ESF
National, Regional, Local
Private
Budget should be equilibrated – No over financing
Eligibility rules apply to total expenditure of the project independently of financing source

15. Concept of real costs in the framework of grants/aid schemes
At the time of final declaration of expenditure
Other revenue
Identified in Eligibility rule n° 2
Deducted from eligible costs
Net amount presented for funding
Sources of funding cover net eligible costs
No over financing