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ROMANIA EU STRUCTURAL INSTRUMENTS OPERATIONAL PROGRAMMES 2007-2013 Draft ANNEX TO IMPLEMENTATION GUIDANCE MANUAL Examples of management tools from EU Member States November 2005 ANNEX TO IMPLEMENTATION GUIDANCE MANUAL CONTENTS INTRODUCTION • STATUS OF MATERIALS CONTAINED IN THE ANNEX • ADDING TO THE ANNEX A. POLICY DEVELOPMENT, PROGRAMMING, PROGRAMME MONITORING AND EVALUATION A.1. PROGRAMMING • A.1.1. Operational Programmes (OPs) o Example 1 - Methodology for quantification of indicators (Fraser Assoc.) A.2. PARTNERSHIP MANAGEMENT • A.2.1. OP Monitoring Committee o Example 1 – Monitoring Committee Terms of Reference (Wales, UK) • A.2.2. Regional Coordinating Committees • A.2.3. Broader partnership management A.3. PROGRAMME MONITORING • A.3.1. Annual and Final Implementation Reports o Example 1 – Annual Report format – Objective 1 - 2004-2006 (Hungary) • A.3.2. Implementation Review A.4. PROGRAMME EVALUATION • A.4.1. Ex-ante, mid-term and ex-post OP evaluation A.5. MODIFICATIONS TO THE PROGRAMME • A.5.1. Rules governing OP modification • A.5.2. Allocation of reserves A.6. INFORMATION AND PUBLICITY • A.6.1. Compliance with information and publicity rules o Example 1 – Communications Action Plan 2000-2006, Eastern Scotland (UK) B. MANAGEMENT OF PROGRAMME IMPLEMENTATION AND PERFORMANCE B.1. PROGRAMME MANAGEMENT • B.1.1. Management of OP performance • B.1.2 Managing Technical Assistance under an OP o Example 1 – Menu of possible Technical Assistance actions – (Polish TA Manual 2004-2006) B.2. BUILDING THE PROJECT PIPELINE • B.2.1. Project development o Example 1 – Guidance on project development through local partnerships – Objective 1, 2000-2006 (Wales UK) o Example 2 – Environmental sustainability checklists for capital (i.e. „hard‟) and revenue (i.e. „soft‟) projects – Objective 2, 2000-2006 (North East England, UK) o Example 3 – Equal opportunities checklist for projects – Objective 2, 2000-2006 (North East England, UK) • B.2.2. Project applications o Example 1 – ERDF application form and guidance notes – Objective 1, 2000- 2006 (Wales UK) B.3. PROJECT APPRAISAL • B.3.1 Project eligibility check o Example 1 – Project eligibility checklist (adapted) • B.3.2. Project technical appraisal o Example 1 – Project appraisal scoring grid (adapted) • B.3.3. Compliance of projects with EC rules on state aids • B.3.4. Compliance of projects with EC rules on public procurement • B.3.5. Compliance of projects with detailed national rules on eligibility of expenditure o Example 1 – Eligibility rules taken from Commission Regulation (EC) 1685/2000 as applied during the 2000-2006 period B.4. PROJECT SELECTION • B.4.1 Project Selection methodology • B.4.2. Approval procedure for „major‟ projects (>€25m and >€50m) B.5. PROJECT CONTRACTING • B.5.1 Signing project contracts o Example 1 – Possible project contract model (Adapted Hungarian template) • B.5.2 Modifying project contracts B.6. AFTERCARE SERVICES • B.6.1 Providing aftercare to Beneficiaries C. FINANCIAL MANAGEMENT AND CONTROL C.1. VERIFYING DELIVERY OF OPERATIONS • C.1.1. Verification of Beneficiaries‟ expenditure claims o Example 1 – Structural Funds claim form and associated guidance note – Objective 1, 2000-2006 (Wales, UK) • C.1.2. On the spot verification of operations o Example 1 – Extracts from UK guidance package for on the spot verifications • C.1.3 Authorisation of payments to Beneficiaries • C.1.4 Monitoring of outputs and results C.2. FINANCIAL CORRECTIONS • C.2.1 Detecting and reporting irregularities o Example 1 – Extracts from UK guidance package on reporting irregularities • C.2.2 Correcting irregularities C.3. CERTIFICATION OF EXPENDITURE • C.3.1 Certification of expenditure at programme level • C.3.2 Compliance with the n+2 rule o Example 1 – N+2 monitoring table – adapted to Romanian situation from a UK spreadsheet tool • C.3.3. Management of OP financial tables o Example 1 – Financial tables and exchange rate management spreadsheet tool • C.3.4 Programme closure C.4. AUDIT TRAIL • C.4.1 Maintenance of audit trail on operations o Example 1 – Description of audit trail in response to Commission questionnaire (Objective 1 Regional Development OP 2004-2006 - Hungary) INTRODUCTION The Annex to the Guidance Manual contains examples of operational documents, forms and tables etc., which are used in EU Member States. These documents provide additional material to support many, but not all, of the Sections of the Guidance Manual. STATUS OF MATERIALS CONTAINED IN THE ANNEX The materials in the Annex are presented for illustrative purposes only. They largely cover activities relevant to the current 2000-2006 phase of implementation. Such materials will need to be adapted to the requirements of the 2007-2013 Structural Instruments regulations, if used for future OP implementation in Romania. In some cases materials presented in the Annex have been adapted, under Phare Twinning projects, to Member States partners‟ best estimate of the Romanian situation after accession and of the new regulatory framework for the Structural Instruments. These will also need to be checked thoroughly against the final implementation provisions agreed in Romania and the requirements of the final version of the 2007-2013 regulations. ADDING TO THE ANNEX The Annex is a more „open‟ document that the Guidance Manual itself. New materials which are considered relevant may be added at any time. MAINTAINING AND UPDATING THE ANNEX TO THE GUIDANCE MANUAL • The person responsible for updating this Manual is [Name, Institution]. Any new materials proposed for insertion into the Annex should be sent by Email to the following address [insert Email address] A. POLICY DEVELOPMENT, PROGRAMMING, PROGRAMME MONITORING AND EVALUATION A.1. PROGRAMMING A.1.1. – Operational Programmes (OPs) Example 1 – Methodology for quantification of indicators (Fraser Associates) The following pages set out a simple example of the quantification process, in this case based on assistance to new and existing SMEs. There are five steps: to the quantification process: • Assume distribution of resources across Measure. • Apply assumptions on unit costs. • Apply assumptions on gross economic outcomes. • Apply assumptions on the gross-net adjustment. • Check rationality against baseline data. The last step is to ensure that the target set is a sensible one. There is no sense setting a target for assistance for 200 existing environmental businesses if there are only 100 in the sector, for example. Also, the process of comparing the beneficiary target with the baseline population helps to inform whether: • the total resource is adequate to address a priority. • there is an appropriate balance of resources between different priorities. A.2. PARTNERSHIP MANAGEMENT A.2.1. – OP Monitoring Committee Example 1 – Monitoring Committee Terms of Reference – Wales (UK) OBJECTIVE 1: MONITORING COMMITTEE Terms of reference Meetings 1. The Monitoring Committee will determine its pattern of meetings so as to ensure the proper and timely conduct of the Committee‟s business. It will be expected to meet broadly at quarterly intervals, though more frequent meetings might be appropriate in the early part of the Programme period. For the convenience of members, the Monitoring Committee will agree a forward schedule showing the timing, venue and location of meetings, normally one year in advance. 2. Meetings will normally be convened by the Chair on his/her own initiative; at the request of the European Commission; or, exceptionally, with the Chair‟s agreement, at the request of another member of the Committee. Notice of at least 15 working days will normally be given although exceptionally this notice may be shorter. 3. The Chair will draw up the agenda, and will include items requested by more than three members of the Committee. Any such requests must be made in writing at least 15 working days before the date of any meeting. The minutes of the previous meeting will be included on the agenda which will normally be sent out at least 10 working days before the date of any meeting. On the initiative of the Chair, or at the request of another member of the Committee with the approval of the Chair, items for the agenda may be tabled less than 10 working days before the meeting. All working papers for the meeting will be circulated with the agenda, although exceptionally papers may be circulated at a later date. 4. The Monitoring Committee will decide whether its meetings, in whole or in part, should take place in public or in private. However, the Chair may propose to the Committee that discussion of any particular agenda item should take place in public or on a more restricted basis. Participation in Meetings 5. Members of the Committee will be eligible, subject to paragraph 6 below, to participate in all business transacted by the Committee. Individual members who are unable to attend a particular meeting may be represented by their named alternates, provided that the Chair is notified before or at the beginning of the meeting. Any advisor who, by agreement of the Chair, accompanies a member shall not be eligible to participate in the Committee‟s business. 6. Members of the Committee are required to declare any interest they may have in a particular agenda item before discussion of it begins. A member declaring an interest may be asked by the Chair to withdraw from the meeting for the duration of discussion on that item, or otherwise requested not to participate in that item of business. 7. The Monitoring Committee and its subordinate groups will operate on the basis of consensus. In the event of a disagreement the Chair, using all appropriate channels, shall seek to resolve any differences arising within the partnership. Written procedures 8. At the initiative of the Chair or, with the agreement of the Chair, at the initiative of another member of the Committee, proposals may be submitted to the Committee for adoption by written procedure. Members will normally be asked to give their written opinion on any such proposal within 15 working days. The proposal shall be deemed agreed by the Committee in the absence of any written objections within that period. 9. Where written objections from any member are received by the Secretariat within 15 working days, the Chair will determine whether: a. the proposal shall be deemed lost; b. discussion should take place with the relevant member concerning their objection; or c. the proposal should be referred back to the Committee for further consideration. 10. A member may withdraw written objections to any proposal at any time and, when every written objection is withdrawn, the proposal shall be deemed agreed by the Committee. 11. Following the 15 working day period, the Secretariat shall inform the Committee: a. whether any proposal submitted to the MC for adoption has, in the absence of any written objection, been deemed agreed; or b. if any member has registered written objections to a proposal and, if so, what the Chair has determined. Schedule: Key Tasks 12. The Monitoring Committee shall establish a schedule detailing the timing and arrangements to be followed in carrying out certain key tasks, including the preparation of annual and final implementation reports and the mid-term evaluation of the programme. Working Groups 13. The Monitoring Committee will be free to establish any subsidiary working groups which it feels necessary for the speedy and efficient conduct of business. Secretariat 14. The Secretariat to the Committee will be provided by the Welsh European Funding Office, which will assist and advise the Committee in respect of all the functions and procedures set out above. A.3 PROGRAMME MONITORING A.3.1. Annual and Final Implementation Reports Example 1 – Model for Implementation Reports Hungary – Objective 1 (2004-2006) Model for Implementation Reports Both the annual and the final implementation report should be structured according to the following chapters. 1) Executive summary The executive summary should contain information on aim of the report and a brief description of all the key issues covered in detail in the following chapters. 2) Changes in general conditions with importance for the implementation of the assistance Under this chapter the report shall include the key and new elements modifying the existing situation when the assistance was conceived and started being implemented. The potential consequences of those changes on programme implementation particularly regarding coherence between the different Structural Funds or between them and other financial instruments like the Cohesion Fund or the EIB should be described. Problems if any related to the national matching funds (both public and private) should also be referred to. 3) Progress in the implementation of each priority The report should present progress achieved in the implementation of each priority, for each Fund. It should include the available information regarding physical or output indicators in order to measure progress. It is accepted that the first annual report may not include all relevant data on this area but in that case the second annual report should fill in those missing parts. In addition to quantifying and analysing the physical indicators mentioned in the OP and in the programme complement, the report should: • Justify the modifications in any of the programme complement approved by the OP monitoring committee (scope or contents of measures, physical indicator, etc); • Describe the main problems and difficulties faced during the year and how they have been overcome; • Present a comparison between programming of each priority and progress achieved so far – through quantification of indicators the report should demonstrate if execution is in time and if implementation is being pursued in the right direction according to plan. Any positive or negative element influencing the outcome of the OP should be explained and corrective actions already taken should be described; • Include information on financial engineering techniques (as in article 28 (3) of Regulation 1260/1999). 4) Financial progress The report should show the updated financial data concerning the programme by filling in the table annexed to this report model. That financial table should include only eligible actually paid certified expenditure. The annual report should also comprise detailed information on the financial flows regarding the Structural Funds transfers from the Commission to the Competent Body for payments. Both for national expenditure and for Structural Funds transfers it would be useful to present the annual and the cumulated financial situation from the starting point of the programme. A comparison between programmed and real figures should be made. Shortcomings should be justified and measures taken to improve the situation should be described. The report should present as well the fields of intervention coded for each measure using the standard classification on the level of 3 digits (according to annex IV. point 3 of Regulation no. 438/2001). Where needed (in the case of heterogeneous measures) more than one code should be given with the corresponding estimated share. It should be clear that total expenditure to be certified by the paying authority should correspond to payments effected by final beneficiaries and supported by paid invoices of by accounting documents of equivalent probative value. 5) Steps taken by the managing authority and the monitoring committee to ensure the quality and effectiveness of implementation. The report should indicate initiatives taken by the managing authority and by the monitoring committee to improve quality and impact of the operational programme. In particular all modifications of the programme complement made by initiative of the managing authority or at request of the monitoring committee, notably to change the relative financial share of a given measure within a priority axis, should be mentioned. 5.1) Monitoring and evaluation actions The report should mention efforts undertaken to develop the monitoring and evaluation system. This comprises: • The state of data collection for the establishment of indicators referred to in the NSRF, OP and programme complement; • Any problem encountered in applying indicators should be analysed and details provided on the measures taken to overcome it; • Outline of discussions and decisions taken by the monitoring committee on this topic; • The status, development and issues covered by any steering committee set up to review the progress of monitoring and evaluation; • The development and issues covered by any thematic working group set up to deal with specific policy area (environment, equal opportunities); • Summary of any evaluation studies carried out the previous year; • A description of how equality between men and women has been taken into account in monitoring and evaluation activities. 5.2) Financial control actions The Romanian authorities being the first responsible for financial control of operations funded by the Structural Funds, the report should include: • A notice on the annual report on the management and control systems as provided for in article 13 of Regulation no. 438/2001; • The confirmation that the Structural Funds monies are used in accordance with the sound financial management principles; • A summary of the most important problems that have been faced in managing the programme and the measures taken to overcome them; • The financial impact of detected irregularities, the corrective measures already taken and if necessary the modifications to be made on the management and control system. 5.3) Summary of main problems encountered This is the most strategic part of the report. The report should describe the most important problems encountered in managing the programme and the initiatives taken to overcome them. It should include all quantitative and qualitative aspects that have influenced progress of the programme implementation both internal and external to the programme. Measures to correct the situation may be taken by initiative of the managing authority or of the Member State government, at the request of the OP monitoring committee or following recommendations of the European Commission. The EC recommendations may be made in order to improve effectiveness of the monitoring and management arrangements (according to article 34 (2) of Regulation 1260/1999) or to correct detected irregularities that have not yet been corrected (according to article 38 (4) of Regulation 1260/1999). If the managing authority decides not to follow the EC recommendations pursuant to article 34 (2), it should explain the reasons for that decision in the report. In case of irregularity correction (article 38 (4)) the managing authority is obliged to comply with the Commission recommendation and should describe the measures taken to overcome the problem. 5.4) Use of technical assistance The report should describe how the managing authority used the technical assistance allocation over the previous year. In particular a distinction must be made between expenditure linked to management, implementation, monitoring and control activities which are subject to specific ceilings (in accordance with eligibility sheet no. 11 of Regulation 1685/2000) and all other expenses. 5.5) Measures taken to ensure publicity of the OP Publicity and information actions focused on potential final beneficiaries (to inform them about the new opportunities offered by the Programme) and on the general public (to make it aware of the role played by the European Union on economic and social development of Romania) should be described in the report. In fact progress in implementing the communication plan should be analysed and the main impacts of the publicity actions should be presented. 6) Steps taken to ensure compatibility with other Community policies and to ensure overall co-ordination The managing authority should indicate initiatives taken to ensure full respect of Community policies including competition, public procurement, environment protection, elimination of inequalities and promotion of equality between men and women. Regarding competition policy, the report should confirm that the state aids provided for in the programme have been implemented as planned and did not exceed the approved rate of assistance ceilings. In particular it is important to ensure coherence between the data provided in the report and the annual reporting system to the DG Competition on state aid to SME and on “de minimis” aids. Any modification to the state aid table annexed to the OP should be mentioned and justified. The coordination of the community assistances – e.g. support from the single Structural Funds, Operational Programmes, Community Initiative Programmes, Cohesion Fund, and the European Investment Bank – also have to be mentioned. 7) Progress and financing of major projects and global grants Detailed information should be provided on the financial progress and main results of major projects (see Articles 25-26 of Community Regulation 1260/1999) and global grants (see Article 27 of Community Regulation 1260/1999) included in the operational programme. Financial table* for annual/final implementation report by priority Commission Reference No of the related OP: Title: Year: (in euro) Priority/ Measure Total*** (1) Total eligible actually paid and certified expenditures (2) % of eligible cost (3=2/1) Other Field of intervention** Priority 1 Measures 1.1 Measures 1.1 etc. Priority 2 Measures 2.1 Measures 2.1 etc. Technical assistance Total ERDF Total N.B. Measure-level information required during 2000-2006 may no longer be required by the Commission for 2007-2013 * A table covering last calendar year and a table covering cumulative amount up till the end of pervious year (in the case of annual report) should be presented. ** The field of intervention should be coded for each measure using the standard classification on the level of 3 digit where needed (in case of heterogeneous measures) more than one code should be given with the corresponding estimated share. *** This column contains the amounts that are the basis of calculation of the Funds (either the total eligible cost, or the total public/eligible cost. A.6. INFORMATION AND PUBLICITY A.6.1. Compliance with information and publicity rules Example 1 – Communications Action Plan 2000-2006, Eastern Scotland (UK) COMMUNICATIONS ACTION PLAN In accordance with the Commission Regulation (EC) No 1159/2000 of 30 May 2000 on information and publicity measures, the Programme Monitoring Committee (PMC) of the East of Scotland Objective 2 Programme will ensure that appropriate actions will be undertaken to publicise the European Structural Funds. In particular, publicity actions will be aimed at informing the following groups of the role of Structural Funds support: • Potential and final beneficiaries • Project operators and promoters • The end beneficiaries • Local and regional public authorities • Trade and professional bodies • Economic and social partners, bodies promoting equal opportunities and the relevant non-governmental organisations about the opportunities afforded by the assistance; • General public Accordingly, the Managing Authority, in consultation with the Programme Monitoring Committee, shall inform the European Commission on an annual basis of the initiatives which have been undertaken to fulfill the proposed publicity actions as detailed in Section 6.4 of the Plan. At a minimum the publicity actions to be undertaken to ensure the above target groups involved will include: • Guidance to applicants detailing publicity requirements, including the provision of detailed guidelines • Development and maintenance of the East of Scotland Programme Website providing an extensive range of information and guidance • Promotional Literature including biannual Newsletters • Good practice Case Studies/Project exemplars • Press Releases • Mobile Exhibition Boards for use at seminars and conferences • The widespread application of the Scottish European logo “Europe and Scotland- Making it Work Together” The Communications Action Plan for the Programme is detailed on the following pages and will be consistent with the Communications and Publicity Strategy for the European Structural Funds in Scotland 2000-2006. 7.1 BACKGROUND AND RATIONALE This plan details the proposals to publicise and promote the Structural Funds assistance within the East of Scotland Programme for the period 2000 to 2006. An effective Communications Action Plan will form an integral part of Programme implementation and will seek to increase public awareness, transparency and visibility of the activities of the European Structural Funds. Monitoring of the Plan will be undertaken by the Programme Management Executive and reviewed formally by the Programme Monitoring Committee. In accordance with the General Regulation (EC) 1260/1999, the Annual Implementation Report will detail the measures taken to implement the Communications Action Plan. 7.2 AIM The East of Scotland Programme Communications Action Plan aims to: Promote a positive image of the East of Scotland Programme, of the European Structural Funds and the European Union. 7.3 OBJECTIVES • To raise awareness and promote a better understanding of the activities of the Structural Funds and the benefits which accrue from their effective application to the regional development effort. • To provide information and advice of the opportunities afforded by and the role of the European Structural Funds to the following target groups: • To inform the general public of the role of the European Union, in co-operation with the Member State, in the provision of European Structural Fund support • To assist in the delivery of a transparent Programme. 7.4 TARGET GROUPS • Whilst the Communications Action Plan seeks to promote the Programme as widely as possible, the following audiences will be targeted: • Potential and final beneficiaries • Project operators and promoters • Local and regional public authorities • The end beneficiaries • Trade and professional bodies • Economic and social partners, bodies promoting equal opportunities and the relevant non-governmental organisations about the opportunities afforded by the assistance; • General public 7.5 PRACTICAL IMPLEMENTATION MEASURES A range of practical measures will be utilised to deliver the Communications Action Plan. The means and methods will vary according to the nature of the audience and information publicised. These methods will be reviewed and monitored to ensure they are appropriate and, if necessary, new ones explored. Where appropriate, other language and audio versions will be produced of relevant documentation to enable wider accessibility. The following Table indicates the proposed measures in more detail: METHOD DESCRIPTION TARGET AUDIENCES MONITORING Programme Publications and Guidelines The Programme Complement will be published on a CD format. Other publications are planned around specific themes e.g. the Horizontal Themes, LMI reports. A set of guidelines will be produced for general use, but more particularly to assist potential and final beneficiaries in making applications to the Programme. The guidelines will include details on the Programme structures and membership, application procedures, selection criteria, intervention rates, horizontal themes and a glossary. Available to all target groups with specific relevance to potential and final beneficiaries. Feedback will be through a general request on the website and also through regular updates following the annual review process, inviting comments from the main partners. Publicity Guidance Guidance including a copy of the regulation text will be provided to all applicants as part of the project approval package. This guidance will also be available on the website and as general guidance to any interested parties. Also publicity guidelines on acknowledging EU Structural Fund Assistance will be published and made available to all partners. All approved project applicants – but available to any interested party. Formal monitoring of compliance with the publicity regulation will be carried out through checks on claims submitted and physical monitoring and verification visits undertaken by the PME and the Scottish Executive. Website The further development and enhancement of the East of Scotland website is a key element of this communications action plan. The site will include a variety of information: Full text of Programme Complement Programme documentation (applications forms, guidance, guidelines) which will be downloadable Details of application processes; selection criteria Details of the programme structures and membership Explanation of the funds and examples of past projects Answers to commonly asked questions Minutes of meetings, lists of project approvals Annual implementation reports; evaluation reports Good practice and case studies The website is not viewed as a static communications tool, rather one which will be updated, enhanced and adapted on a regular basis in line with the needs of the Partnership. All target groups. Feedback is requested on the website which will regularly be considered by a website working group within the Programme Management Executive. More formally, the Committee members will be invited to comment on the website through the annual reviews. METHOD DESCRIPTION TARGET AUDIENCES MONITORING Newsletter A biannual newsletter will be produced and widely distributed to the target groups. The newsletter will include: statistical updates on the distribution of the funds; their effects; relevant economic statistics (including labour market updates) for the East of Scotland Programme Area; details of all awards offered and key Committee decisions and policies; publicising projects; advertising events, application deadlines and new guidance available The newsletter will also be available on the website. All target groups Feedback will be requested within the newsletter and comments on the newsletter will form part of a general survey to be undertaken of the Programme Management Executive annually. Workshops/Seminars Regular seminars and workshops will be undertaken throughout the lifetime of the Programme. These will largely focus on applying for funds; claiming funds; monitoring and evaluation and the horizontal themes. More than 10 workshop seminars have already been undertaken to publicise and explain the new Programme and provide guidance in completing the new application forms. Over 500 people have already attended such workshops. Slides from workshop seminars will be available on the website. The PME and Scottish Executive will also be actively involved in undertaking presentations on the Programme when requested to ensure the Programme is actively publicised as widely as possible. Depending on the workshop content, all target groups. Focus on key sectoral project applicants for some. Feedback invited through the general survey on the work of the PME and also following some workshops. Good Practice Case Studies The Programme Management Executive will actively seek to ensure good practice examples are integrated into guidelines, accessible on the website and publicised through the newsletter. Good practice examples from the previous Objective 2 Programme on sustainable development are already incorporated into guidelines and these will be updated include examples of equal opportunities and other areas of interest. All target groups. Regular updates to be incorporated. METHOD DESCRIPTION TARGET AUDIENCES MONITORING Exhibition Display Boards/Promotional Material Display boards were used to publicise the previous Programme and provide examples of activity funded by the Programme. This will continue and form a useful way of publicising the funds at events run by the Partnership and also by partnership bodies who will be able to use the boards on loan. All target groups. Content to be reviewed by PME on an annual basis. Commemorative Plaques Standard permanent plaques for internal use have been designed and produced and are available to project sponsors at cost. Project Sponsors of Infrastructure Projects Press Releases Press releases will be prepared to make the public aware in advance of changes to the Programme and to disseminate general information. Of particular interest is the press release announcing Committee decisions on project approvals with a list which will be made widely available to any interested party. The PME and Scottish Executive will also provide articles and features, on request for relevant publications. All target groups. The regularity and content of press releases to form part of the annual review process. 7.6 Monitoring and Evaluation of the Communications Action Plan The Annual Implementation Reports will contain information on publicity measures in accordance with Article 35 of the Regulation No 1260/1999. The Table above indicates the regular monitoring to be undertaken of the Communications Action Plan. At the core of the monitoring process will be the annual review which the Programme Monitoring Committee will undertake when it will consider all aspects of programme implementation. The annual review will provide the platform for amending or enhancing the actions undertaken to ensure effective publicity of the Programme and the European Structural Funds to all interested parties. 7.7 Financing the Communications Action Plan The indicative budget for the Communications Action Plan is £100,000 over the Programme period. This will be monitored and reviewed by the ESEP Board in the first instance reporting to the Programme Monitoring Committee. 7.8 Responsibility for Implementation The Scottish Executive will have overall responsibility for the implementation of the Communications Action Plan. The designated officer is: Name……………….. Address…………….. Email……………….. Telephone………….. The designated officer for the East of Scotland Programme Management Executive is: Name……………….. Address…………….. Email……………….. Telephone………….. B. MANAGEMENT OF PROGRAMME IMPLEMENTATION AND PERFORMANCE B.1. PROGRAMME MANAGEMENT B.1.2 Managing Technical Assistance under an OP Example 1 – Menu of possible Technical Assistance actions – (Polish TA Manual 2004- 2006) N.B. This example is based on application of the EU detailed eligibility rules for 2000- 2006 enshrined in Commission Regulation (EC) 1685/2000. TECHNICAL ASSISTANCE Eligible actions under Polish TA – OP 2004-2006 Under the 200-2006 regulations the scope of eligible expenditure under Technical Assistance was relatively broad, although ceilings were applied to certain types of expenditure. The detailed rules on eligible expenditure and ceilings presented below may be different in the context of the new regulations for 2007-2013. Eligible expenditure under technical assistance The common rules concerning the eligibility of expenditure for actions in the field of the technical assistance were provided for in Commission Regulation No. 1145/2003 laying down detailed rules for the implementation of Council Regulation No. 1260/1999. Eligible activities will be guided by the final content of the Technical Assistance OP vis a vis any Technical Assistance measures in the other OPs. A menu of possible eligible activities is set out below (based on Polish TA Manual for 2004-2006) Training The expenditure eligible for financing is as follows: - costs of training services rendered by experts, consulting companies and advisory and training companies, - costs of renting the premises and the multimedia equipment, - catering costs, - accommodation costs, - costs of travelling of the participants to the training centre, - costs of preparing and copying the training materials, - costs of advisory services and external services, - costs of preparing and carrying out the training, - costs of renting the premises and the multimedia equipment, - costs of elaboration or renting of publications and of distribution of the didactic and information materials, - costs of purchasing didactic and information materials. Monitoring Projects concerning the following may be financed: - administrative servicing of the Operational Programme Monitoring Committees, - administrative servicing of the Operational Programmes Monitoring sub- Committees, - collection, gathering, analysing and processing of the data for monitoring purposes, comparison of the data with the stipulated indicators and elaboration, in collaboration with the social partners, of decisions concerning modifications to the Operational Programme, - preparation by the Managing Authority and Intermediate Bodies regular, annual and final reports on the progress of Operational Programme implementation, - preparation of the reports on the implementation of the particular Community horizontal policies under the Operational Programme, - preparation of the periodical reports on the implementation of the Operational Programme. The expenditure eligible for financing is as follows: - costs of organising the Committee meetings, - costs of preparing and copying the materials, - costs of renting the premises and the multimedia equipment, - costs of communication and exchange of information with the Committee members, - costs of seconding the employees, - travelling costs, - catering costs, - accommodation costs, - costs of services rendered by the experts appointed to participate in the Committee meetings, - costs of collection, gathering, processing and analysing of the data for the monitoring purposes, - costs of preparing, copying and dissemination of the reports on the Committee meetings and the annual and final reports. Expert‟s Opinions, Analyses, Research and Innovative Measures The project types and expenditure eligible for financing are as follows: - costs of expert‟s opinions and analyses for the purpose of both the elaboration of the methodology of an effective management, monitoring and control and the standardisation of procedures, - costs of expert‟s opinions and analyses of the process of preparing the Structural Funds future interventions, - costs of studies and concepts for the purpose of the improving the efficiency of the Operational Programme implementation, the improvement of achieving the objectives provided for and the delivery of the priorities stipulated, the introduction of the necessary modifications and reallocations and which support the process of preparing the Structural Funds future interventions, - costs of printing, copying and distribution of the concepts, analyses, expert‟s opinions and studies, - costs of preparing the presentations. Evaluation Types of projects eligible for financing: - eligible administrative costs relating to the servicing of the evaluation unit for the Operational Programme, including mainly the costs of organising the meetings, preparation, copying and distribution of the working materials, costs of communication and exchange of information between the bodies involved in the process of Operational Programme evaluation, - costs of seconding, catering and accommodation, travel costs, staff costs of the employees (including the social security contributions) seconded to carry out the tasks related to evaluation, - costs of the evaluation carried out by the external evaluators, - costs of translations/interpretations necessary in the process of evaluating the Operational Programme, - expert support in the form of the work of experts, preparation of expert‟s opinions, analyses, studies and concepts for the purpose of the elaboration of the evaluation methodology and standards and their on-going improvement, - costs of the fees of national and foreign experts, - costs of preparing the expert‟s opinions and analyses, - costs of preparing the studies and concepts, - costs of translations/interpretations for the purpose of assessment (evaluation), - costs of printing, copying and distribution of concepts, analyses, expert‟s opinions and studies, - costs of preparing the presentations. Equipment The expenditure eligible for financing is as follows: - costs of preparing terms of reference for the tendering procedure and of carrying out the tendering procedure, - costs of purchasing computer hardware, - costs of purchasing licences and software, - costs of installing computer hardware, - costs of purchasing other electronic appliances belonging to the office equipment, - costs of purchasing and installing computer hardware, - costs of purchasing and installing network active elements, - costs of purchasing and installing routers, - costs of purchasing and exploitation of the IT and telecommunications equipment, - costs of purchasing and installing the data transmission appliances, - costs of purchasing and subscription of the publications concerning the IT and telecommunications techniques. Development and maintenance of MIS systems Objectives: - ensuring of a smooth exploitation of the MIS system on a daily basis, - on-going development of the system and its improvement, - improvement of the quality of the maintenance and the services provided for by the system to its users, - day-to-day maintenance and development of the MIS network in order to ensure an effective communication between all the institutions responsible for the implementation of the OP Types of projects which will be financed should concern: - the organisational development (modification of the organisation, modification of the users‟ roles, etc.), - the administrative development (possible amendments in the legal acts, forms and key reports), - the functional development (modification or expansion of the system functionalities) and the technical development (expansion of the network, equipment and software), - ensuring of a smooth exploitation of the system on a daily basis by: • emergency service, • operational maintenance, • administration and maintenance of the system, - exploitation and development of the MIS wide area network by: • day-to-day maintenance of the MIS dedicated network, • day-to-day use of the commutation links (alternative access to the System for the users not covered by the MIS network), • connecting of the additional users to the MIS network, • increase of the MIS capacity (as required). The expenditure eligible for financing is as follows: - costs of preparing the terms of reference for the tendering procedure and of carrying out the tendering procedure, - costs of advising, - costs of preparing the System development, - costs of the System development, - costs of the System maintenance. Publicity and dissemination of information The following types of projects may be delivered within the measures concerned: - elaboration, publication and distribution of the information materials (publications, brochures, leaflets, CD-ROMs and other possible forms) and the materials promoting the Operational Programme and the Structural Funds, - organisation of the campaigns and actions promoting and informing about the Operational Programme and the Structural Funds, - promotion of “the best projects” and “the best practices”, - organisation of the information and promotion campaigns concerning the possibilities of using the structural assistance under the Operational Programme, - organisation of the seminars and workshops concerning the exchange of experience between the Managing Authority and the Managing Authorities and Implementing Institutions for complementary programmes supported by the Structural Funds, - elaboration, publication and distribution of the information materials, procedure manuals and guides for the beneficiaries and the potential project providers, - elaboration, publication and distribution of the annual reports on the progress of Operational Programme implementation, - organisation of the periodical meetings involving the participation of the technical service and the system users for the purpose of exchanging the experiences and informing about the difficulties encountered as regards the handling and using of the ROP MIS system, software deficiencies, need to modify the software and its functions, obtaining answers to the most frequently asked questions (FAQ), - organisation of the seminars and conferences the result of which should be the elaboration of proposals of decisions affecting the optimising of the MIS system and its evolution and coming to an agreement as regards the introduction of the modifications proposed, - organisation of the on-line assistance in the form of the telephone info-line, preparation, issuance and distribution of the information materials, organisation of the Internet information services, etc. - organisation of the thematic meetings aiming at the information and promotion of the Structural Funds, - advisory assistance as regards the creation of detailed promotion plans for the Operational Programme, - creation and maintenance of the telephone information posts (help-desks), - creation and maintenance of a website concerning the OP. The expenditure eligible for financing is as follows: - costs of printing and distribution of leaflets, brochures and other materials informing about the Structural Funds and the Operational Programme, - costs of purchasing the consumables – data carriers, paper, foil, toner, ink cartridges for printers, etc., - costs of the website development, - costs of the development and maintenance of the MIS information services, - costs of organising the working meetings and workshops, - costs of the on-going updating of information, - costs of the website modification, - costs of maintenance and day-to-day servicing of the website, - costs of the website promotion, costs of carrying out the tendering procedure, - costs of running the info-line, - costs of preparing the promotion materials, - costs of preparing the stands, banners and other materials used for marking projects and publicity events, - costs of rendering the consultation services, - costs of renting the premises and multimedia equipment, - costs of consecutive interpretations during conferences and seminars, - costs of translating the information materials, - costs of elaboration, publication and dissemination of the information materials, copies of programmes, leaflets and brochures, multimedia presentations, manuals and guides, - costs of the promotion posters, - costs of presentations concerning the examples of the best practices and the best projects at the fairs and publicity events, - costs of purchasing the consumables – data carriers, paper and foil, toner and ink cartridges for printers, etc. - costs of preparing the plan of publicity and information activities, - costs of communication with the social and economic partners, - costs of communication with the managing authorities and the implementing institutions, - costs of seconding, travelling and accommodation of the employees, - costs of travelling of the participants to the training centre, - catering costs, - accommodation costs. Ceilings on certain types of eligible expenditure According to the provisions of Regulation 1145/2003 concerning the approval of expenditure relating to the actions co-financed by the Structural Funds, eligible actions described above were classified as follows: Actions subject to the expenditure limit in accordance with Rule 11.2 − expenditure relating to the selection, monitoring and control of the projects, assistance and actions. These operations will include the funding of expert‟s opinions necessary for the selection of projects and the costs of experts supporting the project selection committees. It is also possible to finance the audit to be carried out by an external auditing company, − costs relating to the operation of the Monitoring Committee – costs of the meetings of the Monitoring Committee and its Sub-committees are eligible costs according to Regulation 1145/2003 (it is provided for to cover the costs of participation, i.e. travelling, accommodation and subsistence for the Committee permanent members as well as for the experts participating in the work of such Committees, and the costs of preparing the reports concerning the progress in the Programme implementation), − reimbursement of the salary costs, including the social security contributions, relating to the civil servants, public officials or any other staff seconded to carry out the abovementioned tasks, − upgrading the skills of the personnel implementing the Operational Programme, − it is also provided for to carry out training for the persons dealing with the implementation, which would aim at the exchange of experience, improvement of the work effectiveness and the familiarisation with any possible modifications under the Programme. The amount of the Community contribution to the funding of actions subject to the expenditure limit shall not exceed the values stipulated in point 2.4. of Rule no. 11 of the abovementioned Regulation, i.e. a percentage contribution from the Structural Funds to the funding of the Programme in relation to the total value of the Community assistance for the Programme concerned according to the following formula: − 2.5 % of that part of the total Structural Funds' contribution which is less than or equal to the amount of EUR 100 million, − 2 % of that part of the total Structural Funds' contribution which exceeds the amount of EUR 100 million but is less than or equal to EUR 500 million, − 1 % of that part of the total Structural Funds' contribution which exceeds the amount of EUR 500 million but is less than or equal to EUR 1 000 million, − 0.5 % of that part of the total Structural Funds' contribution which exceeds the amount of EUR 1 000 million. Actions not subject to the expenditure limit in accordance with Rule 11.3 There is no limit on the percentage contribution from the Structural Funds for Technical Assistance activities listed below: − promotion of the Operational Programme operations, − information campaign for the potential recipients of the assistance. As part of such a campaign, conferences and seminars for the Beneficiaries are held, programming documents as well as aid applications together with the completion instructions are distributed and the website providing current information on the Programmes implementation is maintained, − upgrading the skills of the personnel dealing with the Operational Programme implementation, − it is also provided for to carry out training for the persons involved in the implementation process, which would aim at the exchange of experience, improvement of the work effectiveness and the familiarisation with any possible modifications introduced to the Programme, − purchase of the computer hardware used directly for the management and monitoring of the Operational Programme. B.2. BUILDING THE PROJECT PIPELINE B.2.1. Project development Example 1 – Guidance on project development through local partnerships –Objective 1 2000-2006 (Wales UK) WEST WALES AND THE VALLEYS: OBJECTIVE 1 GUIDANCE FOR LOCAL PARTNERSHIPS (extracts) INTRODUCTION 1.1 Objective 1 can only account for part of the economic development that takes place in an area. Some local partnerships have therefore found it useful to broaden their remit to cover economic development more generally. This guidance looks at the key roles to be covered in respect of Objective 1, i.e. to: • develop and review a strategy to target Objective 1 resources to local areas of need and opportunity; • monitor progress in implementing the strategy and identify gaps in provision; • assist applicants in developing and delivering projects which will fulfil the objectives of the strategy; • promote the Programme locally. but suggests that wherever possible this should be set in the context of wider economic development. 1.2 To a large extent the day-to-day work on these tasks will be carried out on behalf of the partnership by its secretariat; it is up to the partnership to decide to what extent tasks should be delegated to the secretariat. Collectively the partnership and secretariat should adopt a proactive approach to encouraging and assisting delivery of the Programme in their area. MONITORING AND REVIEW OF STRATEGY 2.1 Local partnerships have prepared local strategies for their areas. These have been agreed by the PMC and summaries are available on the WEFO web-site. 2.2 WEFO provides partnerships with details of commitments, spend and outputs of local projects in each Measure of the Programme. It also provides details of outputs of sub-regional and regional projects that are being delivered within the partnership area. 2.3 In the light of this information and more detailed information that they may gather locally, partnerships should monitor performance against their targets and review their strategy on an ongoing basis. Strategies were reviewed in June 2003 and will be reviewed again in 2004 after the Mid Term Review of the Programme. 2.4 The review should cover: a) a review of monitoring information on the performance of Objective 1 projects delivering in the area; other indicators of economic performance; external developments affecting the economy; b) consideration, in the light of this, of whether changes are needed: i in the implementation of the strategy; are there, for example, gaps in the provision of certain types of activity; and ii in the strategy itself. 2.5 Partnerships will want throughout to ensure that their strategy for Objective 1 complements national and other local or regional policies or programmes. DEVELOPMENT AND ASSESSMENT OF PROJECTS 3.1 Local partnerships have a crucial role to play in ensuring that robust, good value- for-money and well-developed projects are put forward and selected for appraisal and funded. There are three stages to this: a) gateway/enquiry handling 3.2 Where the partnership identifies gaps in its strategy that it feels local projects can fill, it should adopt a proactive approach to encouraging potential applicants to develop projects. 3.3 The partnership also provides one of the contact points for potential sponsors making enquiries about the Programme. The partnerships should advise the applicant on the issues covered in the WEFO web-site guidance, i.e.: • whether the activity proposed is eligible; • which Measure of the Programme it might fit into; • whether there is funding available in the Measure and whether the activity fits within the priorities identified for the remaining resource; • what sources of assistance are available to the applicant in developing their project, e.g. the local partnerships and private and voluntary sector units. and also: • whether the proposed activity fits within the local strategy; • what approved projects may already provide sources of funding, e.g. key funds; • whether other projects offering a similar service or activity have already been approved (and duplication can therefore be avoided); • if Objective 1 funding is not appropriate, what other sources of funding might be available. b) the development of local projects 3.4 WEFO and other partners will encourage the sponsors of local projects to seek assistance from the local partnership at as early a stage as possible, for two main reasons: i to enable the project sponsor to understand how his/her project can be developed to contribute most effectively to the local strategy; this will include how it complements and links to other activity in the area, whether this is delivered by Objective 1 projects or not, and ways in which the cross-cutting themes should be applied in local circumstances. ii to give the less experienced project sponsor practical advice in Objective 1 procedures and documentation. It may for example, be helpful for the partnership to discuss with the applicant how the project fits with the core criteria against which it will be scored by WEFO. The attention of the applicant ought also to be drawn to the guidance available on application of the crosscutting themes. In addition to helping applicants with the application procedures, partnerships should draw sponsors' attention to post-approval claim and reporting responsibilities. They will also want to draw the attention of project sponsors to the availability of the “Guide to Setting up a European Project Manual” and to the training available to project managers. 3.5 The assistance of partnerships at the development stage can make a significant contribution to ensuring that a project proceeds smoothly and speedily through WEFO's appraisal process. c) comment on projects under appraisal 3.6 WEFO will seek comments from the local partnership on applications for local projects which are submitted to it; these will represent an important element of WEFO‟s appraisal of the project‟s overall value for money Partnerships will be invited to comment on: i the extent to which the project addresses the needs and responds to opportunities identified as priorities within the strategy; the assessment should consider, for example, the location of proposed employment opportunities, the type and quality of employment proposed, the target beneficiaries (young people, economically inactive etc) and their relevance to the strategy; ii the links of the project to other Objective 1 projects and to other policies and programmes; iii the extent to which the project proposes maximisation of the opportunities for local people, e.g. in terms of encouraging use of local labour in construction and giving local people the best chance of accessing jobs; iv the extent to which the cross-cutting themes are built into the project, taking account of the opportunities available locally; v the degree of innovation, in terms of the activity itself or the way it is delivered. 3.7 The partnership is also invited to comment on other relevant issues which relate to local circumstances, the quality and deliverability of the project, e.g. the track record and competence of the applicant locally in delivering successful projects, the realism of outputs and expected demand. Partnerships are not asked to score projects against the core criteria, which would duplicate WEFO's role, but may wish to cover these in a checklist of points for discussion with applicants. 3.8 Where partnerships have been involved in the development of projects they may wish to provide a letter of support to the applicant, covering the points in 3.6 and 3.7 above, to accompany the application; a template is attached at Annex A. 3.9 WEFO will also alert local partnerships to other projects that are under appraisal. This will enable local partnerships to be aware of proposed regional projects and draw WEFO's attention to any overlap with existing activity in the local area . d) support for projects in measures where there are local funding allocations 3.10 In those measures of the Programme where allocations have been made to local partnerships and a project sponsor is seeking to use some of a partnership‟s allocation the partnership will need to consider, taking into account the criteria in paragraph 3.6, whether they wish to support the project. Decisions should be taken by the partnership board; they should be reached in a transparent way and clearly recorded, with a justification based on the above criteria, in the minutes of the board. 3.11 If the partnership board has decided to support the project the partnership should provide the applicant with letter of support which confirms that they are content for their local allocation to be drawn; a template is provided at Annex A. 3.12. If the partnership board has decided not to support the project, the applicant should be informed of the decision and advised of his or her right to seek clarification. PROMOTION OF THE PROGRAMME 5.1 The local partnerships are uniquely placed to ensure that local residents are aware of the opportunities that the Programme makes available to them both directly and indirectly. 5.2 The partnership thus has a threefold, proactive role: a) to publicise the Programme to those who may be able to contribute to its delivery as project applicants; in practice most public sector applicants will be aware of the possibilities, but there may be some in the private and voluntary sectors who are not familiar with the opportunities; b) to publicise the opportunities available to those who may benefit from projects already approved, e.g. providing business support or training, whether these be local or regional projects; c) to make the wider public aware of the way that the Programme is progressing and general economic and other improvements that it is bringing to the area. 5.3 The partnership itself will be best placed to consider how local information and media outlets can be used to undertake this role most effectively. Throughout, the partnership will need to take into account of and complement WEFO's communication programme. MEMBERSHIP 6.1 The principal decision-making and advisory body for the local partnership area is the partnership; membership of the board should reflect the characteristics of the area and the opportunities identified in the local strategy. 6.2 The exact size of the board is for the discretion of the partnership. A balance should be struck between the need to ensure efficient conduct of business and representation of relevant interests. It is envisaged that it should not normally be necessary for the number of members to exceed that of the PMC, i.e. 18 members. 6.3 There should be equal representation from the public sector, the social partners, and from the community and voluntary sector: • the public sector covers those from central and local government, other democratically elected bodies, statutory agencies and organisations funded fully or in significant part by central government or local taxation; • the social partners cover the business sector, individual businesses as well as business representative bodies, and representation from the trade union movement and related organisations; • the community and voluntary sectors cover not-for-profit voluntary sector organisations which are independent of the public or private sectors but may include community businesses. Not-for-profit, non-statutory bodies, whose membership or board comprises a majority of either public or private sector members, are not included. 6.4 Members should be chosen according to the experience and expertise of the individuals concerned. They will normally be nominated by an organisation in their sector; in accepting a place on the board they will, however, be expected to put the wider economic interests of the local partnership area before sectoral or other, narrower, interests (see section below on conflicts of interest). 6.5 There should also be an approximate gender balance amongst members of the partnership. The PMC have agreed that each gender should be represented by a minimum of 40% of the membership, which is the minimum level of participation set out by the Commission. 6.6 In order to ensure that they can observe this requirement on gender balance and, more generally, that the membership continues to reflect those sectors of the community most concerned with its economic development, all partnerships should have a process for reviewing their membership. The membership from each sector should be reviewed each year. Specifically, the members of each sector should meet separately to consider: • whether the existing membership adequately reflects the interested organisations in the area. There may be a case, for example, for rotation of representation between different organisations, whilst ensuring that sufficient continuity is maintained at the level of individual members to ensure smooth operation of the partnership. • whether any changes in the individuals representing those organisations are appropriate, taking into account the wishes of the organisations concerned and the wishes as well as the expertise and experience of existing members. Normally, no individual member should serve for longer than four years and the sector should manage this requirement by agreeing, for example, a staggered timetable for bringing in new members. 6.7 The sector should agree, by consensus, a recommendation to the full board on representation from the sector for the following year. In reaching this recommendation the sector should bear in mind that: • overall, membership of the board will need to observe the required gender balance; • a reasonable level of continuity should be maintained; 6.8 To reflect these points, where a change in representation is recommended, either of organisation or individual, two nominations should be put forward, one of each gender. This may mean that a single organisation will put forward two nominations, to be endorsed by the sector, or that the sector will agree that two nominations from different organisations should go forward. The partnership will then consider the recommendation from the sector and formally select and agree its membership for the next year. 6.9 Each sector should also recommend to the partnership alternate members for each full member of the partnership. Alternate members should represent a similar range of interests to those of full members. 6.10 The Chair of the partnership should be elected by the whole board. He/she may come from any of the three sectors. The Chair should be re-elected every year and no individual should serve for longer than three years. The board may also wish to elect one or two vice-chair[s], who should come from sectors other than that of the Chair. Advisors 6.11 The PMC has decided in relation to its own functions and activities to make use of the experience and expertise of a range of statutory and other bodies. These bodies are invited to attend meetings and, through circulation of papers and minutes, are kept fully informed of programme development. Partnerships are recommended to adopt a similar practice. In the case of the PMC the relevant bodies are the: • Countryside Council for Wales • Environment Agency, Wales • Disability Rights Commission • Equal Opportunities Commission • Commission for Racial Equality • Wales Tourist Board • Welsh Arts Council • Welsh Language Board, and • Chwarae Teg. 6.12 There may be other bodies who have particular expertise to offer, e.g. in the area of ICT, and who could also be included as advisors; partnerships should, however, restrict advisor status to organisations who have specialist knowledge to offer in a relevant field. If the board feels it desirable at any time to have expertise available on any other subject, it is open to them to invite advisors on an ad hoc basis. 7 OPERATION Meetings 7.1 It is for the partnership to decide how often it wishes to meet. The number of members constituting a quorum for decisions to be taken is a matter for the local partnership. 7.2 As a general rule partnership meetings should be open to members of the public. However, there may be items on the agenda, in particular those that relate to the discussion of specific projects, where the board may decide that this would be inappropriate. Sub-groups 7.3 Given the extent of the task, it may be appropriate for partnerships to establish sub-groups to carry out particular activities. Sub-groups should include members with an appropriate mix of skills and experience – it is not necessary for there to be equal representation from the three sectors – and should be fully accountable to the board. Conflicts of interest 7.4 It is essential that the procedures of the partnership should be transparent and that there are procedures in place to handle any conflicts of interest that may arise. The underlying principle, set out in the Code of Conduct for PMC and partnership members, is that where a member has a financial or non-financial interest which would prejudice or give the appearance of prejudicing his or her ability to participate in a disinterested manner in discussion of a particular matter, he or she must make an oral statement declaring the nature of the interest and should not remain in the room for discussion of the matter concerned. 7.5 Potential conflicts of interest for members are most likely to arise in the 7ontext of discussion about individual projects. The two most likely scenarios are: a) where a member of the partnership has a direct interest in a project, in terms of : i a personal financial interest, ii being employed by the organisation making the application (except as indicated in b (i) below), or iii any other direct interest, such as being a member of the management board of the applicant organisation; b) an indirect association with a project, by virtue of, for example: i being employed by the applicant organisation, but in a capacity in which the member has not had and will not have any role in the development or management of the project; ii being employed by, or otherwise directly associated with, an organisation which is not the project applicant but is providing match funding for the project. 7.6 In the case of interests which fall within the definition at (a), the member concerned must declare that interest and not be present in the room for discussion of that project. It is for the secretariat to present all projects to the partnership and to respond to questions about them. It is not acceptable for a member of the applicant organisation to present a project and then leave the room for subsequent discussion of it, as this can put applications from organisations who are not represented round the table at a disadvantage. 7.7 In the case of interests which fall within the definition at (b), the member concerned should declare his/her interest but may remain in the room for the discussion and may speak if invited to do so by the Chair. 7.8 This guidance may not cover all situations which can arise. In such cases, it is for the Chair of the meeting to decide on the procedure to be followed, bearing in mind the underlying principle set out above. Secretariat 7.9 Each partnership has appointed a lead body which provides the secretariat to the partnership. The secretariat acts as the executive arm of the partnership in carrying out a range of functions, under the overall direction and advice of the partnership or, in some instances, WEFO. The secretariat will, for example, take the lead in work on revising and updating the strategy, collate monitoring information, provide a contact and enquiry point for the partnership, assist project applicants, liaise with other partnerships and organisations and with WEFO. 7.10 It is acknowledged that there can be strains and tensions in partnerships from time to time. In most cases the partnership itself will be able to resolve these. If WEFO is made aware of these it will discuss the issues with the partnership concerned and its lead body with a view to finding a way of resolving them. If appropriate, it will refer the issue(s) to a small sub-group of the PMC for their advice. Annex A [Project name] [Project sponsor] [Priority: Measure: ] [Supporting Partnership] The [name of partnership] Partnership Board confirms its support for the enclosed project application on [date] following an assessment based on fit with its strategy and the criteria set out in paragraphs 3.6 and 3.7 of the Local Partnerships section of the West Wales and the Valleys Objective 1 – Guidance for Partnerships and Thematic Advisory Groups. Where relevant The Partnership has also endorsed use of £[…] of its indicative allocation for Priority [.. ] Measure [.. ] for the project, subject to the project application for structural funds to WEFO being successful. An extract of the minutes of the meeting confirming the Partnership‟s support is attached. Signed [Partnership Name] Secretariat Example 2 – Environmental sustainability checklists for capital (i.e. „hard‟) and revenue (i.e. „soft‟) projects – Objective 2, 2000-2006 (North East England, UK) Example 3 – Equal opportunities checklist for projects – Objective 2, 2000-2006 (North East England, UK) Equal Opportunities Checklist This checklist will form a mandatory part of the process of checking the quality threshold of projects. • the checklist should demonstrate how equal opportunities have been mainstreamed into the project • if you answer No to any question you must provide details as to why it is not relevant to your project • if a particular criteria is Not Applicable an explanation is required • if your project does not secure a “Positive” score on at least 4 of the criteria, a meeting will be arranged with the European Secretariat‟s equal opportunities expert, who will be able to provide advice on how to achieve improvements Before considering how equal opportunities impacts on your project you should refer to the equal opportunities profile in part 1 Section 2 of the SPD and Section 1 of the Programme Complement which sets out the strategy and objectives for mainstreaming Equal opportunities in the Objective 2 Programme. Organisation Name Project Title Programme Measure Q1. In designing and developing the project have the needs of the equal opportunities target groups been addressed? Yes - Positive 0 No - Negative 0 Not Applicable 0 Please provide details of how you have identified the needs of the target groups and integrated these into the project: If Not Applicable please justify this: In designing and developing your project you need to be aware of how it will address the equal opportunities strategy of your Partnership and the SPD? Have target groups been consulted during the design and development stages of the project? Have representatives of under-represented groups taken part in the decision making process i.e. has the project been marketed and promoted using positive images of the target groups in locations used/accessed by these groups Q2. Will all clients/beneficiaries receive advice/guidance/training on equal opportunities legislation/issues as part of the project? Yes 0 No 0 Not Applicable 0 Please describe action taken to promote equal opportunities legislation: If Not Applicable please justify this: Projects should include positive actions to promote equal opportunities issues through training and dissemination of information (advice should be sought from the European Secretariat on whether these costs could be included as part of the overall project expenditure). Business plans should include an Equal Opportunities Statement (ESF applications include specific equal opportunities questions covering similar areas). Guidance and advice for the projects will be available from the equal opportunities expert in the European Secretariat as well as the web-site and the Equal Opportunities Guidance pack. Q3. Will the project be delivered at flexible times/locations? Yes 0 No 0 Not Applicable 0 Please provide details: If Not Applicable please justify this: In delivering the project consideration must be given to the needs of under-represented groups. Are the premises/locations accessible to all under-represented groups e.g. access for people with disabilities, safe and secure environment for vulnerable members of society? Will the project be delivered at times convenient to all target groups? Q4. Does the project promote family friendly policies? Yes 0 No 0 Not Applicable 0 Please provide details: If Not Applicable please justify this: In promoting family friendly policies consideration should be given to the provision of childcare facilities as an integral part of the project. Is the location a safe and secure environment for all target groups? The Equal Opportunities Guidance pack provides advice on positive actions that can be taken to encourage family friendly policies. Q5a. Will the project ensure that all target groups have equality of access to training opportunities? Yes 0 No 0 Not Applicable 0 Please provide details: If Not Applicable please justify this: The project needs to demonstrate how target groups have equality of access to training opportunities. Has promotional literature, information and application forms been devised to be user friendly/large print/multi-lingual. Has ICT been used for distance learning? Do training delivery methods take account of accessibility issues e.g. open learning packages or community based training? Q5b. Has the project in providing business support advice addressed the needs of the target groups? Yes 0 No 0 Not Applicable 0 Please provide details: If Not Applicable please justify this: Details of how the project has addressed the needs of the target groups should be provided. Are these opportunities for members of under-represented groups to train/seek employment in posts where traditionally they are under represented such as professional/managerial/technical positions? Are there opportunities for target groups to access finance to start up new businesses? Are application forms for finance user friendly, available in a range of formats from large print to electronic and multi-lingual? B.2.2. Project applications Example 1 – ERDF application form and guidance notes – Objective 1 2000-2006 (Wales UK) Example of application form OBJECTIVE 1 WALES (Adapted) See also Guidance on how to complete the application form (embedded below) EUROPEAN GRANT APPLICATION - ERDF • Please read the accompanying guidance notes when completing each section of this form. • You MUST attach a Project Plan to this application. 1. NAME OR PROPOSED NAME OF PROJECT 2. SUPPORTING PARTNERSHIP NAME (where applicable) 3. PRIORITY AND MEASURE Identify, from the Operational Programme Document and the Programme Complement, the Priority and the Measure that your project is intended to help deliver. Priority Measure 4. PROJECT COSTS Total eligible project cost: Grant requested: Grant rate: 5. THE APPLICANT Organisation name: Address (include County and Postcode): Web site (if you have one): Organisation Category Code and Registration Number(s) This information is necessary to ensure that we can account properly for any grant that may be awarded to your project. If you think that more than one code might apply, please consult Intermediate Body. Code No: All Private Sector applicants and others that have not previously submitted an application for European Funds: please attach a copy of your most recent and the two previous years audited accounts and a copy of your Articles of Association or Memorandum of Agreement. All applicants: please also quote your registration number(s) below (as appropriate). 6. CONTACT DETAILS First Contact: Second Contact: Name: Title/role: Telephone number: Fax number: Email address: 7. TIMETABLE Proposed start date End date 8. PREVIOUS STRUCTURAL FUND GRANT Has the project received Structural Funds before? Yes: 0 No: 0 If YES, please insert the Programmes and the project reference numbers. These can be found on the Approval Letters. 9. LOCATION Is the project to be delivered at a different location from the Applicant? Yes: 0 No: 0 If Yes, please indicate the location or locations by inserting the names of the local authorities and wards here. A location map is required for all Capital projects and for any project that will operate in more than one location. 10. PURPOSE Please summarise the purpose of the project here. Explain how it will deliver the aims of the Priority and Measure. Full details should be included in the Project Plan. 11. DIRECT LINKS WITH OTHER EC STRUCTURAL FUND PROJECTS OR PROJECTS FUNDED FROM OTHER PUBLIC SECTOR SOURCES Please record any such links here. 12. INVOLVEMENT OF OTHER ORGANISATIONS Will any organisations other than the Applicant be involved in the delivery of the project? If so, please state who, what their involvement will be, and/or the intended procurement arrangements. 13. PROJECT OWNERSHIP Will the project or any of its assets be owned by an organisation OTHER THAN the Applicant? Yes: 0 No: 0 If Yes, please explain why this is necessary and describe the arrangements that will be made to ensure that the assets will be used for only the purposes stipulated in the grant offer. 14. ENVIRONMENTAL SUSTAINABILITY Will the project include any activity within or have any other impact on any of the following? NATURA 2000 designated site 0 Area of Outstanding Natural Beauty 0 National Nature Reserve 0 Site of Special Scientific Interest 0 Scheduled Ancient Monument or Listed Building 0 National Park 0 Any other designated area (please specify below) 0 None apply 0 Describe the positive and negative Environmental impacts of the project, or refer to the relevant section of the Project plan. Remember that if there will be no adverse effects, or the effects will be positive, you must justify your view. Indicate any authorisations (eg Environment Agency consents for discharges or emissions) that will be required and whether these have been obtained. If your project requires an environmental impact assessment please supply a copy. PLANNING PERMISSION Is Planning Permission required? Yes: 0 No: 0 If Yes, have you obtained all the necessary consents: Yes: 0 No: 0 If Yes, attach a copy of the permission including any conditions and the relevant plans as approved. Also attach (where relevant) building regulation approval and ground investigation reports, structural/building surveys, and asbestos/timber treatment surveys. If you are waiting for planning permission, please state the planning application registration number and when you expect to receive it. If you do not know when you expect to receive it, please say why. Grant aid may be withheld until the necessary permissions have been obtained. Does your application involve a development on the following: Greenfield site Yes: 0 No: 0 Brownfield site Yes: 0 No: 0 If on a greenfield site please give details of the consideration you gave to brownfield alternatives: If your organisation has an Environmental policy please attach a copy. 15. ICT All grant-aided projects should make a positive contribution to ICT. Outline how ICT opportunities have been integrated into the project design and implementation, mentioning any specific components that show this. If your organisation has an ICT strategy please attach a copy. 16. EQUAL OPPORTUNITIES All grant-aided projects should make a positive contribution to equality of opportunity for all. Outline how equal opportunities have been integrated into the project design and implementation, mentioning any specific components that show this. If your organisation has an Equality Strategy please attach a copy. 17. ADDED VALUE We need to know to what extent the project is dependent on grant. What will you do if ERDF grant is refused? Tick one box only. Go ahead as planned: 0 Go ahead as planned, but over a longer timescale 0 Go ahead, but on a reduced scale: 0 Will not go ahead at all: 0 18. STATE AID This is a complex subject, so it is PARTICULARLY IMPORTANT that you read the guidance notes before you complete this section of the form. The decision on whether and how state aids regulations might impact on your project depends on both what you are delivering and whether there are or could potentially be commercial competitors for that activity. If you are unsure how State Aid rules apply to your project please contact the Intermediate Body for advice. What the project will deliver: Will the project deliver assistance to organisations Yes: 0 No: 0 operating in a competitive market? If yes, which of the following methods do you propose to use to comply with the state aids regulations: De minimis block exemption Yes: 0 No: 0 SME block exemptionYes: 0 No: 0 Training aid block exemption Yes: 0 No: 0 Employment aid block exemption Yes: 0 No: Already approved notified scheme Yes: 0 No: 0 If already approved, please supply the following: Approval Date Date of notification to the Commission Aid number assigned by the Commission Amount of Aid € Your competitors Does your organisation undertake economic activities Yes: 0 No: 0 which may have commercial competitors? Could the activity for which you are seeking support Yes: 0 No: 0 have commercial competitors? If so, state aids regulations may constrain the amount of public funding you may receive. Please seek advice from Intermediate Body. 19. QUANTIFIABLE TARGETS This table should be completed to show the calendar year in which the “outputs” and “results” of the project will be delivered. Remember that the entries in this table relate specifically to the Measure that you specified at Section 5 of this form. If the application is for a regional project please breakdown the targets by local partnership on a separate sheet. Note that the definitions you use here should follow the wording in the Programme Complement for the chosen Priority and Measure. 20. PROJECT COSTS Set out the eligible only costs of the Measure specified at Section 3 of this form, and show in which calendar year the costs will occur. You should explain the basis for each cost heading in the project plan. Eligible Capital costs * Please attach an open market value in accordance with national valuation and appraisal standards ** Please attach a site plan, an elemental breakdown of building and construction costs (including fees breakdown). *** If the eligible costs include any mobile or portable items please give details on a separate sheet. Eligible Revenue (current) costs **** Please attach job descriptions. 21. ELIGIBLE EXPENDITURE PROFILE * Private sector capital projects should attach a development appraisal. 22. PROJECT FUNDING PACKAGE Set out how the cost of the project will be met. Written confirmation of match funding must be provided by each individual organisation and must be attached to this application. SOURCES OF FUNDS Total cost Eligible cost** Date confirmation of funding received / to be received Applicant‟s own funds, if in Public Sector Other Public Sector funds: 1st organisation 2nd organisation 3rd organisation 4th organisation EC Funds (not ERDF), 1st source 2nd source TOTAL OF PUBLIC FUNDS Applicant‟s own funds, if in private sector Other private sector funds: 1st organisation 2nd organisation 3rd organisation TOTAL PRIVATE SECTOR FUNDS Voluntary Sector funds: 1st source 2nd source 3rd source TOTAL VOLUNTARY SECTOR FUNDS Contributions in Kind from Public Sector* Contributions in Kind from Private Sector* Contributions in Kind from Voluntary Sector* TOTAL CONTRIBUTIONS IN KIND* Project Income ERDF Funds requested TOTAL ALL FUNDING *If you have included Contributions in Kind, please supply full details on a separate sheet (land and property contributions need to be based upon a valuation report). ** The grand total of Eligible Costs must equal the grant total in Section 21. 23. ERDF GRANT RATE Please show the amount of ERDF grant requested as a percentage of the total eligible costs of the project. 24. OTHER GRANTS Will ERDF Grant replace expenditure that already has been or will be financed from other grant programmes? Yes: 0 No: 0 If Yes, attach a full explanation as to how this is consistent with the need for ERDF grant. 25. PUBLICITY Describe the arrangements that you will make to meet the European Community‟s publicity requirements. 26. CHECKLIST OF ATTACHMENTS The following is the list of supporting documents mentioned elsewhere in this form. Please use it to ensure that you enclose all the documents that apply to this application for grant. Project Plan – obligatory Yes: 0 No: 0 Location Map(s) (see section 9) Yes: 0 No: 0 Last 3 years audited accounts (see Section 4) Yes: 0 No: 0 Articles of Association or Memorandum of Agreement (see Section 4) Yes: 0 No: 0 Planning Permission and any attached conditions (see Section 14) Yes: 0 No: 0 Building regulation approval (see Section 14) Yes: 0 No: 0 Ground investigation, structural/building, Or asbestos/timber treatment surveys (see Section 14) Yes: 0 No: 0 Architects Plans (see Section 14) Yes: 0 No: 0 Environmental Policy (see Section 14) Yes: 0 No: 0 ICT Strategy (see Section 15) Yes: 0 No: 0 Equal Opportunities Policy (see Section 16) Yes: 0 No: 0 Site Plan (see Section 20) Yes: 0 No: 0 Fees breakdown (see Section 20) Yes: 0 No: 0 Apportion of Plant and Machinery costs (see Section 20) Yes: 0 No: 0 Elemental Building and Construction costs (see Section 20) Yes: 0 No: 0 Job Descriptions (see Section 20) Yes: 0 No: 0 Details of Contributions in Kind (see Section 21) Yes: 0 No: 0 Valuation Report (see Section 20 and 21) Yes: 0 No: 0 Letters confirming match funding (see Section 21) Yes: 0 No: 0 Development appraisal (see Section 21) Yes: 0 No: 0 Explanation of other Grants (see Section 24) Yes: 0 No: 0 Other supporting documents – please specify below Yes: 0 No: 0 If all necessary supporting documents are not attached, the application may not be accepted. 27. CERTIFICATE I certify that the entries in this form and the details in the Project plan and any other attachments enclosed are, to the best of my knowledge and belief, correct and the grant applied for this minimum required for the project to proceed as described. I can also confirm that I am not aware of any reason why the project may not proceed or be delayed other than those reasons declared and the commitments can be made within the timescales indicated in the Operational Programme Document to which this project relates. I understand that if the application is not complete in all relevant details and every aspect, including this section, it may not be accepted. Signature Position in organisation Name (BLOCK CAPITALS please) Date Telephone number: Fax number: Email address: B.3 PROJECT APPRAISAL B.3.1 Project eligibility check Example 1 – Project eligibility checklist (adapted) Project Eligibility Checklist Operational Programme …………………… Name of Project: _____________________________________________________ Registration Number: _________________________________________________ Applicant:____________________________________________________________ Eligibility Criteria Meets Criteria Comments Section A - Applicant Organisation is eligible as set out in OP Measure call for applications Applicant is a legal, registered entity in Romania Project will be developed and undertaken in Romania Application has proof of the availability of co-financing resources Section B – Project Corresponds with sectoral strategy Corresponds with regional / local strategy Project/ investment will take place within the Programme period All obligatory studies have been/ will be completed and are /will be made available Application complies with the call for proposals Project meets Programme, Priority and Measure criteria Funding required is within the measure budget. Meets EC polices and addresses: Equal Opportunties and Sustainable Development criteria Project is deemed eligible / ineligible. Signature_________________________ Date___________________________________ B.3.2. Project technical appraisal Example 1 – Project appraisal scoring grid (adapted) Operational Programme ……………………………….. Selection criteria (scoring framework) Name of Project: _____________________________________________________ Registration Number: _________________________________________________ Applicant:____________________________________________________________ Section : A Compliance with programme, priority and measure objectives Criteria Score Comments 1 Relationship with programme objectives: priority and measure 20 - fully meets 10 - partially meets 5 - weak links 2 Project is coherent and feasible and activities are in compliance with other projects /objectives of the programme 20 - fully meets 10 - partially meets 5 – poor links 3 Project is located in a target area / identified as a priority target with the local Strategy. Evidence of partnership working. 25 – High 10 – Medium 5 – Low priority 4 Realistic, relevance and quantifiable indicators (measurable outputs / results, the definition of clear and reachable objectives as set out in ROP) 25 – Very good 10 – Good 5 – Poor 5 Project is in line with other ROP measures and EU/national programmes. The project does not conflict with other projects. 10 – meets all EU and ROP objectives 5 – meets some 1 – poor correlation Section B Reasonability / feasibility of the project 6 Quality of the application (transparent layout, coherency, details, reasonability/ justification) 25 – Good /Visible 10 – Average 3 – Poor / unclear 7 Methodology – development and preparation of the project is good (project based on a clear conception). Detailed and feasible schedule of activities that will allow project to start and finish on time. 20 – Clear /Visible and very well developed 10 – Average, some more work is needed 3 – Poor / unclear, unlikely to move forward within proposed time scales 8 Sustainability - Financial (project profitability, return analysis); - applicant has the professional expertise to sustain the project; - from the point of view of environmental protection; - multiplier effects associated with project implementation - size of affected population - project has a clearly defined exit strategy and applicant will maintain project for its full economic life (minimum 5 years). 25 – Very good 15 – Good 5 – Poor 9 Budget and cost efficiency - accuracy and degree of detail of budget; - compliance of the expenses planned with the objectives set; justifiability and reality of their volumes; - necessity of proposed expenses for project implementation - project offers good value for money and cost : outputs ratio - budget control and accountability are effective. 30 – Very good 20 – Good 5 – Poor Total Score Max 200 Projects scoring between 200 and 80* proceed to full appraisal. Projects below quality threshold either referred back to applicant for more development or rejected. * quality threshold set by PMC (this is based on a judgment taking into account quality, volume of applications, risk factors, experience and/or the desire to seek improvements. Weightings can also be varied to factor in certain features that are considered more important.) Scoring procedure conducted by ____________________________________(Name) Operational Programme ……………………………… Validation and Summary of project scoring Name of Project: _____________________________________________________ Registration Number: _________________________________________________ Applicant:___________________________________________________________ Scorer* Score Comments First scorer Second scorer Average Score First scorer ___________________________ Second scorer _________________________ Agreed Project Score ________________________# Comments by the Validating Officer: Score Validated by ____________________ * to maintain anonymity scorers can be giver identifier numbers. # The agreed project score can be the average score or a modified score arrived at by the Officer carrying out the validation. Operational Programme ………………………… Selection and Scoring Procedure - Ranked List of Scored Projects Priority: (Title and no.) ________________________________________________________________________ ___ Measure: (Title and no.) ________________________________________________________________________ _____ Budget available for this call _____________ Quality Threshold applied by PMC________ Rank No Project name and Reference Applicant Score Grant Requested Cumulative Grant Comments 1 2 3 4 ____ Budget cut off __________ _______ __________ _________ 5 6 ____ Quality Threshold____ _______ __________ _________ 7 Total Programme Managers comments and advice to the Project Selection Committee: Signed________________________________________ Date ________________________________________ Head of Managing Authority. Notes: Projects 1 to 4 can be funded Projects 5 and 6 are placed on a reserve list. Alternatively the MA recommends to PSC that the grant requests of one or more projects (1 to 4) are reduced, to allow funding of more projects (5 and/or 6). Project 7 is rejected (below quality threshold). B.3.5. – Compliance of projects with detailed national eligibility rules Example 1 – Eligibility rules taken from Commission Regulation (EC) 1685/2000 as applied during the 2000-2006 period N.B. The rules contained in this example may help to serve as a guide only. National rules for eligibility of expenditure will apply for 2007-2013. Commission Regulation (EC) 1685/2000 ELIGIBILITY RULES INDEX - 2000-2006 1 Expenditure actually paid out 2 Accounting treatment of receipts 3 Financial and other charges and legal expenses 4 Purchase of second-hand equipment 5 Purchase of land 6 Purchase of real estate 7 VAT and other taxes and charges 8 Venture capital and loan funds 9 Guarantee funds 10 Leasing 11 Costs incurred in managing and implementing the Structural Funds 12 Eligibility of expenditure depending on the location Rule No 1: Expenditure actually paid out 1. Payments by final beneficiaries 2. Payments by final beneficiaries within the meaning of the third subparagraph of Article 32(1) of Council Regulation (EC) No 1260/1999 of 21 June 1999 (hereinafter General Regulation), shall be in the form of cash subject to the exceptions indicated in point 1.5. 2.1 In the case of aid schemes under Article 87 of the Treaty and aid granted by bodies designated by the Member States, “payments by final beneficiaries” means aid paid to individual recipients by the bodies which grant the aid. Payments of aid by final beneficiaries must be justified by reference to the conditions and objectives of the aid. 2.2 Payments into venture capital, loan and guarantee funds (including venture capital holding funds) are treated as “expenditure actually paid out” within the meaning of the third subparagraph of Article 32(1) of the General Regulation provided that the funds meet the requirements of Rules 8 and 9 respectively. 2.3 In cases other than those referred to in point 1.2, “payments by final beneficiaries” means payments effected by the bodies or public or private firms of the type defined in the programme complement in accordance with Article 18(3)(b) of the General Regulation having direct responsibility for commissioning the specific operation. 2.4 Under the conditions set out in points 1.6,1.7 and 1.8, depreciation, contributions in kind and overheads can also form part of the payments referred to in point 1.1. However, the Structural Funds‟ co-financing of an operation shall not exceed the total eligible expenditure actually paid, excluding contributions in kind, at the end of the operation. 2.5 The cost of depreciation of real estate or equipment for which there is a direct link with the objectives of the operation‟s eligible expenditure, provided that: a) national or Community funds have not contributed towards the purchase of such real estate or equipment; b) the depreciation cost is calculated in accordance with the relevant accountancy rules; c) the cost relates exclusively to the period of the co-financing of the operation in question. 1.7 In-kind contributions are eligible expenditure provided that: a) they consist in the provision of land or real estate, equipment or materials, research or professional activity or unpaid voluntary work; b) they are not made in respect of financial engineering measures referred to in Rules 8,9 and 10; c) their value can be independently assessed and audited; d) in the case of the provision of land or real estate, the value is certified by an independent qualified valuer or duly authorised official body; e) in the case of unpaid voluntary work, the value provided is determined by the amount of time spent nd the normal hourly and daily rate for the work carried out; and f) the provisions of Rules 4, 5 and 6 are complied with where applicable. 1.8 Overheads are eligible expenditure provided that they are based on real costs which relate to the implementation of the operation co-financed by the Structural Funds and are allocated pro rata to the operation, according to a duly justified fair and equitable method. 1.9 The provisions of points 1.5 to 1.8 are applicable to individual recipients referred to in point 1.2 in the case of aid schemes under Article 87 of the Treaty and aid granted by bodies designated by Member States. 1.10 Member States may apply stricter national rules for determining eligible expenditure under points 1.6, 1.7 and 1.8. 3. Proof of Expenditure 3.1 As a rule, payments by final beneficiaries, declared as interim payments and payments of the final balance, shall be supported by receipted invoices. Where this cannot be done, payments shall be supported by accounting documents of equivalent probative value. 3.2 As regards rural development, the provisions specified in point 2.1 applies without prejudice to specific rules established in Commission Regulation (EC) No 445/2002 laying down detailed rules for the application of Council Regulation (EC) No 1257/1999 on support for rural development from the European Agricultural Guidance and Guarantee Fund (EAGGF) for the case of the determination of standard unit costs for certain investments in the forestry sector. 3.3 In addition, where operations are executed in the framework of public procurement procedures‟ payments by final beneficiaries, declared as interim payments and payments of the final balance, shall be supported by receipted invoices issued in accordance with the provisions of the signed contracts. In all other cases, including the award of public grants, payments by final beneficiaries, declared as interim payments and payments of the final balance, shall be justified by expenditure actually paid (including expenditure referred to in point 1.5) by the bodies or public or private firms concerned in implementing the operation.. 4. Subcontracting 4.1 Without prejudice to the application of stricter national rules, expenditure relating to the following subcontracts is ineligible for co-financing by the Structural Funds: • subcontracting which adds to the cost of execution of the operation, without adding proportionate value to it; • subcontracts with intermediaries or consultants in which the payment is defined as a percentage of the total cost of the operation unless such payment is justified by the final beneficiary by reference to the actual value of the work or services provided. 4.2 For all subcontracts, subcontractors shall undertake to provide the audit and control bodies with all necessary information relating to the subcontracted activities. Rule No 2: Accounting treatment of receipts 1. “Receipts” for the purposes of this rule covers revenue received by an operation during the period of its co-financing or during such longer period up to the closure of the assistance as may be fixed by the Member State, from sales, rentals, services, enrolments/fees or other equivalent receipts with the exception of: a) receipts generated throughout the economic lifetime of the co-financed investments and subject to the specific provisions of Article 29(4) of the General Regulation; b) receipts generated within the framework of financial engineering measures referred to in Rules 8,9 and 10; c) contributions from the private sector to the co-financing of operations, which appear alongside public contributions in the financing tables of the relevant assistance. 2. Receipts under point 1 represent income which reduces the amount of co- financing under the Structural Funds that is required for the operation in question. Before the Structural Funds‟ participation is calculated and no later than at the time of the closure of the assistance, they are deducted from the operation‟s eligible expenditure in their entirety or pro rata, depending on whether they were generated entirely or only in part by the co-financed operation. Rule No 3: Financial and other charges and legal expenses 1. Financial charges Debit interest, other than expenditure on interest subsidies to reduce the cost of borrowing for businesses under an approved State aid scheme, charges for financial transactions, foreign exchange commissions and losses and other purely financial expenses are not eligible for co-financing by the Structural Funds. However, charges for transnational financial transactions within assistance under PEACE II and the Community Initiatives (INTERREG III, LEADER+, EQUAL and URBAN II) are eligible for co-financing by the Structural Funds after deduction of interest received on payment on account. Furthermore, in the case of global grants, debit interest charges paid by the designated intermediary prior to payment of the final balance of the assistance are eligible, after deduction on payment on account. 2. Bank charges on accounts Where co-financing by the Structural Funds requires the opening of a separate account or accounts for implementing an operation, the bank charges for opening and administering the accounts, are eligible. 3. Legal fees for advice, notary fees, the costs of technical or financial expertise and accountancy or audit costs These costs are eligible if they are directly linked to the operation are necessary for its preparation or implementation or, in the case of accounting or audit costs, if they relate to requirements by the managing authority. 4. Costs of guarantees provided by a bank or other financial institutions These costs are eligible to the extent that the guarantees are required by national or Community legislation or in the Commission Decision approving the assistance. 5. Fines, financial penalties and expenses of litigation These expenses are not eligible. Rule No 4: Purchase of second-hand equipment The purchase costs of second-hand equipment are eligible for co-financing by the Structural Funds under the following three conditions without prejudice to the application of stricter national rules: a) the seller of the equipment shall provide a declaration stating its origin and confirming that at no point during the previous seven years has it been purchased with the aid of national or Community grants; b) the price of the equipment shall not exceed its market value and shall be less than the cost of similar new equipment; and c) the equipment shall have the technical characteristics necessary for the operation and comply with applicable norms and standards. Rule No 5: Purchase of land 1. General rule 1.1 The cost of purchase of land not built upon shall be eligible for co-financing by the Structural Funds under the following three conditions without prejudice to the application of stricter national rules: a) there shall be a direct link between the land purchase and the objectives of the operation co-financed; (b) except in the cases described in point 2, the land purchase may not represent more than 10% of the total eligible expenditure of the operation, unless a higher percentage is fixed in the assistance approved by the Commission. (c) a certificate shall be obtained from an independent qualified valuer or duly authorised official body confirming that the purchase price does not exceed the market value. 1.2 In the case of aid schemes under Article 87 of the Treaty, the eligibility of land purchase shall be assessed in terms of the aid scheme in its entirety. 2. Environmental Conservation Operations For environmental conservation operations, all the conditions indicated below shall be met for the expenditure to be eligible: - the purchase is the subject of a positive decision by the managing authority - the land is devoted to the intended use for a period determined in that decision, - the land is not for agricultural purposes save in duly justified cases accepted by the managing authority, - the purchase is made by or on behalf of a public institution or a body governed by public law. Rule No 6 : Purchase of real estate 1. General rule The cost of purchase of real estate, i.e. buildings already constructed and the land on which they are built, is eligible for co-financing by the Structural Funds if there is a direct link between the purchase and the objectives of the operation concerned under the conditions set out in point 2 without prejudice to the application of stricter national rules. 2. Terms of eligibility 2.1 A certificate shall be obtained from an independent qualified valuer or duly authorised official body establishing that the price does not exceed the market value and either attesting that the building is in conformity with national regulations or specifying the points which are not in conformity where their rectification by the final beneficiary is foreseen under the operation. 2.2 The building shall not have received, within the previous 10 years, a national or Community grant which would give rise to a duplication of aid in the event of co- financing of the purchase by the Structural Funds. 2.3 The real estate shall be used for the purpose and for the period decided by the managing authority. 2.4 The building may only be used in conformity with the objectives of the operation. In particular, the building may be used to accommodate public administration services only where such use is in conformity with eligible activities of the Structural Fund concerned. Rule No 7: VAT and other taxes and charges 1. VAT does not constitute eligible expenditure except where it is genuinely and definitively borne by the final beneficiary or individual recipient within the aid schemes pursuant to Article 87 of the Treaty and in the case of aid granted by the bodies designated by the Member States. VAT which is recoverable, by whatever means, can not be considered eligible, even if it is not actually recovered by the final beneficiary or individual recipient. The public or private status of the final beneficiary or the individual recipient is not taken into account for the determination whether VAT constitutes eligible expenditure in application of the provisions of this rule. 2. VAT which is not recoverable by the final beneficiary or individual recipient by virtue of the application of specific national rules shall only constitute eligible expenditure where such rules are in full compliance with the Sixth Council Directive 77/388/EEC on VAT. 3. Where the final beneficiary or individual recipient is subject to a flat-rate scheme under Title XIV of the Sixth Council Directive 77/388/EEC on VAT, VAT paid is considered recoverable for the purposes of point 1. 4. Community co-financing may not exceed total eligible expenditure excluding VAT, without prejudice to the provisions of Article 29(6) of the General Regulation. 5 Other taxes and charges, (in particular indirect taxes and social security contributions on wages and salaries), which arise from co-financing by the Structural Funds do not constitute eligible expenditure except where they are genuinely and definitively borne by the final beneficiary or individual recipient. Rule No 8: Venture capital and loan funds 1. General rule The Structural Funds may co-finance the capital of venture capital and/or loan funds or of venture capital holding funds, (hereinafter funds), under the conditions set out in point 2. For the purposes of this Rule, ”Venture capital funds and loan funds” mean investment vehicles established specifically to provide equity or other forms of risk capital, including loans, to small and medium-sized enterprises as defined in Commission Recommendation 96/280/EC as last amended by Recommendation of 6 May 2003. “Venture capital holding funds” mean funds set up to invest in several venture capital and loan funds. The Structural Funds‟ participation in funds may be accompanied by co-investments or guarantees from other Community financing instruments. 2. Conditions 2.1 A prudent business plan shall be submitted by the co-financiers or sponsors of the fund specifying, inter alia, the targeted market, the criteria, terms and conditions of financing, the operational budget of the fund, the ownership and co-financing partners, the professionalism, competence and independence of the management, the funds‟ by- laws, the justification and intended utilisation of the Structural Funds‟ contribution, the investment exit policy and the winding-up provisions of the fund, including the reutilisation of returns attributable to the contribution from Structural Funds‟. The business plan shall be carefully appraised and its implementation monitored by or under the responsibility of the managing authority. 2.2 The fund shall be set up as an independent legal entity governed by agreements between the shareholders or as a separate block of finance within an existing financial institution. In the latter case, the fund shall be subject to a separate implementation agreement, stipulating in particular the keeping of separate accounts distinguishing the new resources invested in the fund, (including those contributed by the Structural Funds), from those initially available in the institution. All participants in the fund shall make their contributions in cash. 2.3 The Commission cannot become a partner or shareholder in the fund. 2.4 The contribution from the Structural Funds shall be subject to the limits laid down in Article 29(3) and (4) of the General Regulation. 2.5 Funds may invest only in SMEs at their establishment, early stages, (including seed capital), or expansion and only in activities which the fund managers judge potentially economically viable. The assessment of the viability should take into account all sources of income of the enterprise in question. Funds will not invest in firms in difficulty within the meaning of the Community Guidelines on State aid for rescuing and restructuring firms in difficulty. 2.6 Precautions should be taken to minimise distortion of competition in the venture capital or lending market. In particular, returns from equity investments and loans, (less pro-rata share of the management costs), may be preferentially allocated to the private sector shareholders up to the level of remuneration laid down in the shareholder agreement, and after that, they shall be allocated proportionally between all shareholders and the Structural Funds. Returns to the fund attributable to the Structural Funds‟ contribution shall be re-used for SME development activities in the same eligible area. 2.7 Management costs may not exceed 5% of the paid-up capital on a yearly average for the duration of the assistance unless, after a competitive tender, a higher percentage proves necessary. 2.8 At the time of the closure of the assistance, the eligible expenditure of the fund, (the final beneficiary), shall be the capital of the fund that has been invested in, or loaned out to, SMEs including the management costs incurred. 2.9 Contributions to funds from the Structural Funds and other public sources, as well as the investments made by funds in individual SMEs, are subject to the rules on State aid. 3. Recommendations 3.1 The Commission recommends the standards of good practice set out in points 3.2 to 3.6 for funds to which the Structural Funds contribute. The Commission will regard compliance with these recommendations as a positive element when it examines the fund‟s compatibility with State aid rules. The recommendations are not binding for the purposes of the eligibility of expenditure. 3.2 The financial contribution of the private sector should be substantial, and above 30%. 3.3 Funds should be large enough and cover a wide enough target population to ensure that their operations are potentially economically viable, with a time scale for investments compatible with the period of the Structural Funds‟ participation and focusing on areas of market failure. 3.4 The timing of payments of capital into the fund should be the same for the Structural Funds and the shareholders, and pro rata to the stakes subscribed. 3.5 Funds should be managed by independent professional teams with sufficient business experience to demonstrate the necessary capability and credibility to manage a venture capital fund. Management teams should be chosen on the basis of a competitive selection process, taking into account the level of fees envisaged. 3.6 Funds should not normally acquire majority stakes in firms and should pursue the objective of realising all investments within the life of the fund. Rule No 9: Guarantee funds 1. General rule The Structural Funds may co-finance the capital of guarantee funds under the conditions set out in point 2. For the purpose of this Rule, ”Guarantee funds” mean financing instruments that guarantee venture capital and loan funds within the meaning of Rule no 8 and other SME risk financing schemes, (including loans), against losses arising from their investments in small and medium-sized enterprises as defined in Recommendation 96/280/EC as last amended by Commission Recommendation of May 2003. The funds may be publicly supported mutual funds subscribed by SMEs, commercially-run funds with private-sector partners, or wholly publicly financed funds. The Structural Funds‟ participation in funds may be accompanied by part-guarantees provided by other Community financing instruments. 2. Conditions 2.1 A prudent business plan shall be submitted by the co-financiers or sponsors of the fund in the same way as for venture capital funds, (Rule no 8), mutatis mutandis and specifying the target guarantee portfolio. The business plan shall be carefully appraised and its implementation monitored by or under the responsibility of the managing authority. 2.2 The fund shall be set up as an independent legal entity governed by agreements between the shareholders or as a separate block of finance within an existing financial institution. In the latter case, the “fund” shall be subject to a separate implementation agreement, stipulating the keeping of separate accounts distinguishing the new resources invested in the fund, (including those contributed by the Structural Funds), from those initially available in the institution. 2.3 The Commission cannot become a partner or a shareholder in the fund. 2.4 Funds may only guarantee investments in activities that are judged potentially economically viable. Funds shall not provide guarantee for firms in difficulty within the meaning of the Community guidelines on State aid for rescuing and restructuring firms in difficulty. 2.5 Any part of the Structural Funds‟ contribution left over after the guarantees have been honoured shall be reused for SME development activities in the same eligible area. 2.6 Management costs may not exceed 2% of the paid-up capital on a yearly average for the duration of the assistance unless, after a competitive tender, a higher percentage proves necessary. 2.7 At the time of the closure of the operation, the eligible expenditure of the fund, (the final beneficiary), shall be the amount of the paid-up capital of the fund necessary, on the basis of an independent audit, to cover the guarantees provided including management costs incurred. 2.8 Contributions to guarantee funds from the Structural Funds and other public sources, as well as the guarantees provided by such funds to individual SMEs are subject to the rules on State aid. Rule No 10: Leasing 1. Expenditure incurred in relation to leasing operations is eligible for co-financing under the Structural Funds subject to the rules set out in points 2 to 4. 2. Aid via lessor 2.1 The lessor is the direct recipient of the Community co-financing, which is used for the reduction of the lease rental payments made by the lessee in respect of assets covered by the leasing contract. 2.1 Leasing contracts for which Community aid is paid shall include an option to purchase, or provide for, a minimum leasing period equal to that of the useful life of the asset to which the contract relates. 2.2 Where a leasing contract is terminated before expiry of the minimum leasing period without the prior approval of the competent authorities, the lessor shall undertake to repay to the national authorities concerned, (for credit to the appropriate fund), that part of the Community aid corresponding to the remainder of the leasing period. 2.3 The purchase of the asset by the lessor, supported by a receipted invoice or an accounting document of equal probative value, constitutes the expenditure eligible for co- financing. The maximum amount eligible for Community co-financing must not exceed that market value of the asset leased. 2.4 The purchase of the asset by the lessor, supported by a receipted invoice or an accounting document of equal probative value, constitutes the expenditure eligible for co- financing. The maximum amount eligible for Community co-financing shall not exceed the market value of the asset leased. 2.5 Costs connected with the leasing contract, (notably tax, lessor‟s margin, interest refinancing costs, overheads, insurance charges), other than the expenditure referred to in point 2.4, are not eligible expenditure. 2.6 Community aid paid to the lessor shall be used in its entirety for the benefit of the lessee by means of a uniform reduction in all the leasing rentals for the duration of the leasing period. 2.7 The lessor shall demonstrate that the benefit of the Community aid will be transferred fully to the lessee by establishing a breakdown of the rental payments or by an alternative method giving equivalent assurance. 2.8 The costs referred to in point 2.5, the use of any fiscal benefits arising from the leasing operation and other conditions of the contract should be equivalent to those applicable in the absence of any Community financial intervention. 3. Aid to lessee 3.1 The lessee is the direct recipient of the Community co-financing. 3.2 The leasing rentals paid to the lessor by the lessee, supported by a receipted invoice or an accounting document of equivalent probative value, constitute the expenditure eligible for co-financing 3.3 In the case of leasing contracts which include an option to purchase or which provide for a minimum leasing period equal to the useful life of the asset to which the contract relates, the maximum amount eligible for Community co-financing shall not exceed the net market value of the asset leased. Other costs connected with the leasing contract, (tax, lessor‟s margin, interest refinancing costs, overheads, insurance charges etc.), are not eligible expenditure. 3.4 The Community aid in respect of leasing contracts referred to under point 3.3 is paid to the lessee in one or more tranches in respect of leasing rentals effectively paid. Where the term of the leasing contract exceeds the final date for taking account of payments under the Community assistance, only expenditure in relation to leasing rentals falling due and paid by the lessee up to the final date for payment under the assistance can be considered eligible. 3.5 In the case of leasing contracts which do not contain an option to purchase and whose duration is less than the period of the useful life of the asset to which the leasing contract relates, the leasing rentals are eligible for co-financing by the Community in proportion to the period of the eligible operation. However, the lessee must be able to demonstrate that leasing was the most cost-effective method for obtaining the use of the equipment. Where the costs would have been lower if an alternative method, (for example hiring of the equipment), had been used, the additional costs shall be deducted from the eligible expenditure. 3.6 Member States may apply stricter national rules for determining eligible expenditure under points 3.1 to 3.5. 4. Sale and leaseback Leasing rentals paid by a lessee under a sale and leaseback scheme may be eligible expenditure under the rules set out in point 3. The acquisition costs of the asset are not eligible for Community co-financing. Rule No 11: Costs incurred in managing and implementing the Structural Funds 1. General rule Costs incurred by Member States in the management, implementation, monitoring and control of the Structural Funds are ineligible for co-financing except as provided for in point 2 and falling within the categories set out in point 2.1. 2. Categories of management, implementation, monitoring and control expenditure eligible for co-financing 3. The following categories of expenditure are eligible for co-financing under assistance under the conditions set out in points 2.2 to 2.7: - expenditure relating to the preparation, selection, appraisal and monitoring of the assistance and of operations (but excluding expenditure on the acquisition and installation of computerised systems for management, monitoring and evaluation), - expenditure on meetings of monitoring committees and sub-committees relating to the implementation of assistance. This expenditure may also include the costs of experts and other participants in these committees, including third-country participants, where the chairperson of such committees considers their presence essential to the effective implementation of the assistance, - expenditure relating to audits and on-the-spot checks of operations. 3.1 Expenditure on salaries including social security contributions is eligible only in the following cases: a) civil servants or other public officials seconded by duly documented decision of the competent authority to carry out tasks referred to in point 2.1; b) other staff employed to carry out tasks referred to in point 2.1. The period of secondment or employment may not exceed the final date for the eligibility of expenditure laid down in the decision approving the assistance. 3.2 The Structural Funds‟ contribution to the expenditure under point 2.1 shall be limited to a maximum amount which will be fixed in the assistance approved by the Commission and shall not exceed the limits set out in points 2.4 and 2.5. 4. For all assistance, except Community Initiatives, the PEACE II special programme and innovative actions, the limit shall be the sum of the following amounts: - 2.5% of that part of the total Structural Funds‟ contribution less than or equal to €100 million; - 2% of that part of the total Structural Funds‟ contribution which exceeds €100 million but is less than or equal to €500 million - 1% of that part of the total Structural Funds‟ contribution which exceeds €500 million but is less than or equal to €1000 million; - 0.5% of that part of the total Structural Funds‟ contribution which exceeds €1000 million. 4.1 For Community Initiatives, innovative actions and the PEACE II special programme, the limit shall be 5% of the Structural Funds‟ total contribution. Where such assistance involves the participation of more than one Member State this limit may be increased to take account of higher costs of management and implementation and will be fixed in the Commission‟s decision. 4.2 For the purposes of calculating the amount of the limits in points 2.4 and 2.5, the Structural Funds‟ total contribution shall be the total fixed in each assistance approved by the Commission. 4.3 The implementation of points 2.1 to 2.6 of this Rule shall be agreed between the Commission and the Member States and laid down in the assistance. The rate of the contribution will be fixed in accordance with Article 29(7) of the General Regulation. For the purposes of monitoring, the costs referred to in 2.1 will be the subject of a separate measure or sub-measure within technical assistance. 5. Other expenditure under technical assistance 5.1 Actions which can be co-financed under technical assistance, other than those set out in point 2 (such as studies, seminars, information actions, evaluation, and the acquisition and installation of computerised systems for management, monitoring and evaluation), are not subject to conditions set out in points 2.4 to 2.6. Expenditure on the salaries of civil servants or other public officials in carrying out such actions is not eligible. 6. Expenditure by public administrations relating to the execution of operations The following expenditure of public administrations is eligible for co-financing outside technical assistance if it relates to the execution of an operation, provided that it does not arise from the statutory responsibilities of the public authority or the authority‟s day-to-day management, monitoring and control tasks. a) costs of professional services rendered by a public service in the implementation of an operation. The costs must be either invoiced to a final beneficiary, (public or private), or certified on the basis of documents of equivalent probative value which permit the identification of real costs paid by the public service concerned in relation to that operation. b) costs of the implementation of an operation, including the expenditure related to the provision of services, borne by a public authority that is itself the final beneficiary and which is executing an operation on its own account without recourse to outside engineers or other firms. The expenditure concerned must relate to expenditure actually and directly paid on the co-financed operation and must be certified on the basis of documents which permit the identification of real costs paid by the public service concerned in relation to that operation. Rule No 12: Eligibility of expenditure depending on the location 1. General rule As a general rule, operations co-financed by the Structural Funds shall be located in the region to which the assistance relates. 2. Exception 2.1 Where the region to which the assistance relates will benefit wholly or partly from an operation located outside that region, the operation may be accepted by the managing authority for co-financing, provided the conditions set out in points 2.2 to 2.4 are satisfied. In other cases an operation may be accepted as eligible for co-financing under the procedure in point 3. For operations financed under the Financial Instruments for Fisheries Guidance (FIFG), the procedure under point 3 must always be followed. 2.2 The operation must be located in a NUTS III area of the Member State immediately adjacent to the region to which the assistance relates. 2.3 The maximum eligible expenditure of the operation is determined pro rata to the proportion of the benefits from the operation which it is foreseen will accrue to the region and shall be based on an evaluation by a body independent of the managing authority. The benefits shall be assessed taking account of the specific targets of the assistance and its expected target. The operation cannot be accepted for co-financing where the proportion of benefits is less than 50%. 2.4 For each measure of the assistance, the eligible expenditure of the operations accepted under point 2.1 should not exceed 10% of the total eligible expenditure of the measure. In addition, the eligible expenditure of all operations in the assistance accepted under point 2.1 should not exceed 5% of the total eligible expenditure of the assistance. 2.5 Operations accepted by the managing authority under point 2.1 shall be indicated in the annual and final implementation reports of the assistance. 3 Other cases In the cases of operations located outside the region to which the assistance relates but which do not fulfil the conditions of point 2, and of operations financed under the FIFG, the acceptance of the operation for co-financing shall be subject to prior approval by the Commission on a case-by-case basis following a request submitted by the Member State, taking into account in particular the proximity of the operation to the region, the level of benefit to the region which can be foreseen, and the amount of the expenditure in proportion to the total expenditure under the measure and under the assistance. In the case of assistance relating to the outermost regions, the procedure in this point will be applicable. B.5 PROJECT CONTRACTING B.5.1 Signing project contracts Example 1 – Possible project contract model (adapted Hungarian template) Grant contract (sample) Reference number: ………… ………… GRANT CONTRACT Established by and between (name) ………… ………… (address) ………… ………… (on behalf of the Managing Authority for ……………….., Government of Romania) and (name) ………… ………… (address) ………… ………… tax register number ………… ………… bank account number ………… ………… as beneficiary (hereinafter: Beneficiary) with the contents as stated below. I. Grant subject 1.) The contents of this contract concern the part financing of the costs of the project titled ………… ………… , registered under the reference number ………… ………… (hereinafter: project), granted as non-repayable direct assistance. The project start date is ………… …………, its completion date is ………… ………… . Grant cannot be paid in relation to expenditure on ………… ………… . Grant can only be paid in relation to expenditure on ………… ………… . referred to in the project application:…… 2) Total project costs including non-recoverable VAT:…… 3) Location of project implementation:…… 4) Starting date …….., and end date ……… of project implementation. 5) Project must be operated at least 5 years from the end day of implementation. II. The source, amount and payment of grants 1) Grant will be paid from the following national and European funds: • ………… • ………… . 2) The amount of grant payable is calculated as a proportion of eligible expenditure including non-recoverable VAT up to a level of …… %, but ……… at the most 3) After the approval of payment claim and performance the Sponsor remits the proportional amount of the eligible costs including non-recoverable VAT to the account No. ………. of the Beneficiary. 4) The Beneficiary can solely account for the costs provided in the list of eligible costs within the standard application package. III. Project progress report and claim for grant payment 1) Claims for grant payment must be submitted quarterly. Each claim must cover the three months in question (the first claim must cover the period till the end of the third month from the date of signing the grant contract). It shall be submitted within 15 calendar days counted from the last calendar day of the preceding quarter. Failure to adhere to this schedule may result in the termination of grant. The Beneficiary has to submit his/her claim for grant payment for the costs arisen within 15 days after the written notice of the Managing Authority/Intermediate Body. Arisen costs that are not included in the claim cannot be accounted for later on. Claims must be accompanied by original invoices and the documents certifying the payment of the invoices, also the concerned certificates, documents, papers. Each claim must also be accompanied by a detailed report (project progress report) describing progress made against the quantified targets set out in this grant contract. The project progress report must be submitted every quarter even if no claim for grants is made. For projects with a grant not more than € 100,000 or projects with duration of not more than 6 months, only a single claim and project progress report must be submitted when the project is completed. 2) Once the Intermediate Body has received the fully documented claim, grant will normally be paid, or the claim rejected, within 30 calendar days, unless it is necessary for the Intermediate Body to seek further information to support the claim. 3) After final payment, the Beneficiary must submit project progress reports annually on quantifiable targets that can only be met after final payment. These reports must include the implementation of the following quantifiable objectives: ………… ………… . 4) During the determination of the contract the Beneficiary submits a copy of his/her final report (if obliged to prepare one) until May 31st of the current year. IV. Grant availability The grant can only be utilized for the implementation and implementation cost of the project for the amounts provided for in the budget detailed in Annex 1 and for actions defined within the application. The part of the grant not utilized according to the schedule defined in Annex 1 can only be used up in case of the modification of this contract. The sponsor reserves the right to refuse the Beneficiary‟s request regarding modifications. The savings achieved against the planned budget proportionally reduces the amount of support. Contingent added costs are not refunded by the Managing Authority/Intermediate Body. V. Procurement 1) Relevant public procurement regulations have to be complied with. Within the coverage of the procurement directives, contracts above certain limits are required to be advertised in the Official Journal (OJ) of the European Communities. Bids for contracts must be assessed on an objective basis and contract awards should be published in the OJ. Grant will be reclaimed if it is found subsequently that the procurement rules have not been observed. VI. Information and Publicity 1) Name of the Beneficiary, subject and amount of grant awarded will be published by the Sponsor. 2) Information and publicity measures for the general public shall include (according to Commission Regulation No 1159/2000): a) in the case of infrastructure investments whose total cost exceeds €1 million: - billboards erected on site, - permanent commemorative plaques for infrastructures accessible to the general public, to be installed (congress centres, airports, stations etc.). Representative of the Managing Authority/Intermediate Body have to be invited for major milestones of the realisation of the investment. b) in the case of part-financed training and employment measures: - measures making beneficiaries of training schemes aware that they are participating in an operation part-financed by the European Union and the state; - measures making the general public aware of the role played by the European Union and the state in relation to operations financed in the field of vocational training, employment and the development of human resources. c) in the case of investments in business, measures to develop local potential and all other measures receiving financial assistance from the European Union and the state: - information for beneficiaries about their participation in an operation part- financed by the European Union and the state in one of the ways described below. Representative of the Sponsor have to be invited for major milestones of the realisation of the investment. 3) Rules on the technical means of information and publicity a) Billboards Billboards shall be erected on the sites of projects involved in part-financed infrastructure investments whose volume exceeds the amounts given above. Such billboards shall include a space reserved for the indication of the European Union‟s and the state‟s contribution. Billboards must be of a size which is appropriate to the scale of the operation. The size of the billboard has to be in accordance with the scale of the investment. The section of the billboard reserved for the European Union‟s and the state‟s contribution must meet the following criteria: - it shall bear the European and the national emblem and the following text, to be set out as shown below: Project part-financed by the European Union and the Romanian state - the emblems shall be presented in accordance with the current specifications; - the lettering used to indicate the financial contribution of the European Union must be the same size as the lettering for the national indications, but fonts can be different; - the Funds concerned may be mentioned; - the section of the billboard reserved for the European Union‟s contribution shall take up at least 25 % of the total area of the billboard. Billboards shall be removed not later than six months after completion of the work and replaced by a commemorative plaque. b) Commemorative plaques Permanent commemorative plaques shall be placed at sites accessible to the general public (congress centres, airports, stations, etc.) which represent projects part- financed by the European Union and the state. In addition to the emblems, such plaques must indicate the European Union‟s and the state‟s contribution and may mention the Funds concerned. In the case of physical investments in commercial business premises, commemorative plaques shall be installed for a period of one year. If a beneficiary decides to erect billboards or commemorative plaques, produce publications or undertake any other information measure regarding projects below the financial thresholds indicated above, the European Union‟s and the state‟s contribution shall likewise be indicated. c) Posters In order to inform participants and the general public of the role played by the European Union and the state in the development of human resources, vocational training and employment, investment in firms and rural development, posters shall be displayed indicating the European Union‟s and the state‟s contribution and possibly the Funds concerned on the premises of bodies implementing or benefiting from measures covered by this contract. d) Information and communication material Publications (such as booklets, leaflets and newsletters) about regional assistance part-financed by the European Union and the state shall contain a clear indication on the title page of the European Union‟s and the state‟s participation and, where appropriate, that of the Funds concerned as well as the European and the national emblem. Publications shall include references to the body responsible for the information content and to the managing authority designated to implement the assistance package in question. In the case of information made available by electronic means (websites, databases for potential beneficiaries) or as audio-visual material, the principles set out above shall apply by analogy. Websites concerning the Structural Funds should - mention the contribution of the European Union and, if appropriate, that of the Fund concerned at least on the home page, - include a hyperlink to the other European Commission websites concerning the Structural Funds. e) Information events The organisers of information events such as conferences, seminars, fairs and exhibitions in connection with the implementation of operations covered by this contract shall make the European Union‟s contribution to these assistance packages explicit by displaying the European flag in meeting rooms and using the emblem on documents. VII. Documentation 1) According to Article 38.6, Council Regulation No 1260/1999, documents relating to the implementation of the project and its financing should be retained until three years after the European Community has made the final payment in respect of the programme under which the project is funded. Beneficiaries are therefore unlikely to be able to destroy their documents before the end of 2019. Wherever possible, original documents or authenticated copies should be kept in a separate folder. In case it is not possible to respect this rule, the folder should contain clear information on the location of the original documents making sure that they are easily available. The folder should contain the following documents or information on their location: - copy of application form and required annexes, - copy of additional information or changes to the application, - grant contract, and modifications (in case the contract have been modified) - correspondence with the Managing Authority/Intermediate Body, - copy of project progress reports and required annexes - original of invoices and other annexes to claim & report forms, - documents of public procurement, if required, - evidence of publicity measures taken, if required (e.g. brochures, photos of billboards), - any other evidence on background and rationale of the project (e.g. feasibility study, needs analysis) 2) As well as being made available to Romanian audit teams, the Beneficiary must produce the original documents or verified true copies when required to do so by the European Commission or the European Court of Auditors. Failure to produce the original documents or satisfactory agreed substitutes could result in repayment of grant. VIII. Audit 1) The Managing Authority/Intermediate Body and the organisations assigned by law - the Managing Authority‟s Audit team, the Romanian Court of Accounts, the European Commission and the European Court of Auditors - have the right with a minimum of one working day‟s notice, to inspect the appropriation of grants used for the implementation of the project including on-the-field inspections. 2) The Beneficiary puts the documents, certifications, books, registers linked to the implementation of obligations under this contract, at disposal during the period of inspection, and provides information on facts and circumstances required for the inspection. IX. Breach of contract and cancellation 1) The Managing Authority is entitled to request withholding of payments for the maximum of 60 days, if the Beneficiary does not fulfil the obligations under this contract or under rules defined in relevant laws. If the Beneficiary should maintain the violation of the contract or laws the Managing Authority/Intermediate Body cancels the contract. 2) The Managing Authority/Intermediate Body cancels the contract in the following cases: • if any of the information provided in the application for grant, in supporting or subsequent correspondence or in claims for grant payments and project progress reports is found to be substantially incorrect or incomplete; • there is a material change in the nature, implementation, scale, costs or timing of the project such that the project no longer complies with the description set out in the application and any amendments that may have been agreed subsequently; o Note: for projects awarded grant of up to €500,000, a material change is a one of 10% or more over the lifetime of the project to an individual expenditure category, the expenditure profile and quantifiable targets. For larger projects, the Beneficiary should seek advice from the Managing Authority/Intermediate Body. • the future of the project is in jeopardy, or there is unsatisfactory progress towards completing the project; defined as a failure to meet the aims, forecast quantified targets or profile of expenditure; • during a 5 year period after its implementation, the project undergoes substantial change defined as being used for purposes other than those specified in the application or having a change of owner without prior agreement of the Managing Authority/Intermediate Body; • the Beneficiary has not followed the EC procurement directives for contracts within scope, or has not demonstrated that contracts outside the scope of the EC procurement directives were awarded after a satisfactory competitive tender process; • the Beneficiary fails to provide information about the project requested by the Managing Authority‟s Audit team, the Romanian Court of Accounts the European Commission or the European Court of Auditors or their representatives; • the Beneficiary fails to fulfil any of the obligations under this contract. 3) Should the Beneficiary fail to fulfill his/her obligations under the contract, he/she is required to repay all or a proportional part of the utilized grant. 4) The Beneficiary must tell the Managing Authority/Intermediate Body in writing immediately if for any reason • the project should fail, or is in jeopardy, • meets lasting difficulties, • the timing of the project is late so that the project no longer complies with the description set in the contract, • there has been a change in the details of this contract. 5) If an associated Structural Fund project of the Beneficiary becomes subject to investigation, payment of grant for this project may be suspended whilst the necessary actions are carried out on the project in question by the appropriate body. 6) If the project cannot be implemented because of unforeseen circumstances, the contract becomes extinct. If the project can be implemented through the modification of the contract, the Beneficiary has to initiate modifications from the Managing Authority/Intermediate Body. X. Securities 1) The Beneficiary authorises the Managing Authority in respect of each of his/her bank accounts for debiting his/her bank account by prompt collection order if the Beneficiary does not satisfy any of the obligations under this contract. The Beneficiary accepts, that the statement on desistance shall be delivered simultaneously with the submission of the prompt collection order. A prerequisite of payments is the submittal of the authorization letter according to point 1 of the account executive bank of the Beneficiary to the Managing Authority. 2) The Beneficiary lets a mortgage registered on the basis of a mortgage deed put down in a public instrument concerning the asset ………… ………… for the benefit of the Managing Authority/Intermediate Body. 3) Grant can be transferred only if - the Managing Authority is authorised for prompt collection, and - the mortgage is registered by the Land Registry or by the Chamber of Notaries. XI. Settlement of legal disputes Any legal dispute arising out of or in connection with this contract – depending on the sum in dispute – shall be settled by the High Court of Romania. This contract has been prepared in 3 original copies of … pages. The enclosed attachments of … inseparably constitute part of the contract. Annexes: • Budget • Outputs, results and impacts • Authorisation(s) for prompt collection • Mortgage contract/ bank guarantee/ insurer‟s guarantee Done at, ………… ………… ………… ………… ………… ………… Beneficiary Sponsor Grant contract Annex 1: Budget Costs (Lei) year 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total land acquisition building and construction plant and machinery intangible assets material investments personal expenditure non-recoverable VAT Total Funding (Lei and %) grant applied for other grants (please specify) bank loans other sources (please specify) applicant‟s funds in kind contribution total 100% Annex 2: Outputs, results and impacts Quantifiable targets year Baseline 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total (output indicator 1) (output indicator 2) (result indicator 1) (result indicator 2) (impact indicator 1) (impact indicator 2) (project specific indicator 1) (project specific indicator 2) C. FINANCIAL MANAGEMENT AND CONTROL C.1. VERIFYING DELIVERY OF OPERATIONS C.1.1. Verification of Beneficiaries‟ expenditure claims Example 1 – Structural Funds claim form and associated guidance note – Objective 1, 2000-2006 (Wales, UK) See embedded pdf files below C.1.2. – On the spot verification of operations Example 1 – Extracts from UK guidance package for on the spot verifications: Template letter to beneficiary informing of an on the spot visit; List of project documentation required for an on the spot visit Advice for teams carrying out on the spot visits Template of on the spot visit record PROJECT DOCUMENTATION REQUIRED ON A SITE VISIT Any of these documents may be requested for viewing during a monitoring visit. Not all need to be checked. Available Checked Unsatisfactory Comments PROGRAMME MANAGEMENT DOCUMENTATION Grant Contract / Addenda • • • Monitoring Information to verify project targets • • • General Programme Management Documentation • • • Details of any agreed amendments • • • Time sheets (where appropriate) • • • FINANCE Accounting records • • • List of assets purchased under ERDF • • • Paid invoices • • • Bank Statements • • • PUBLICITY RECORDS Publicity Material • • • EU logos on procured items • • • ADVICE FOR TEAMS CONDUCTING ON THE SPOT VERIFICATIONS Preparing for the visit Prior to the meeting, familiarise yourself with the available documentation. As a minimum, you should have copies of the application forms, as well as copies of the offer letter and any correspondence that refers to the project. If it is an external partner or contractor it may be useful to obtain a copy of their most recent annual report and accounts in advance – use your discretion to decide on whether or not to request these. Write down any questions that come to you while you are reading the papers. The Beneficiary should have agreed the date and time of the visit and should have some warning as to what to expect and what paperwork will need to be produced. So they should know that they will be asked to produce original receipts to back up a particular figure. It is a good idea to confirm the monitoring arrangements in writing with the applicant, well in advance. Who and what needs to be available on the day of the visit Personnel Personnel who should be available on the day include The project manager Person(s) responsible for the activity of the project Person responsible for general record-keeping for the project Person responsible for the financial record-keeping of the organization Supporting documentation Some or all of the following should be available The project application The specification of the project and/or the workplan All general record-keeping documentation All financial record-keeping documentation Written methods of apportionment of staff and overhead costs Last set of audited accounts Organisation‟s financial records including salary records Last set of management accounts Carrying out the visit 1. Begin by finding out about the organization as a whole, or, for very large organisations, the department as a whole. This is necessary because they may be trying to fund non-project activity with EU project funding and you need to be able to judge whether the levels and methods of apportionment are reasonable. 2. Ask which of the staff have been trained in EU funding requirements. 3. Ask about their financial systems and housekeeping. Do they have a simple cash book system, a manual double entry or a computerised system? Is the cash book reconciled with the bank statement on a regular basis? Is the petty cash balanced regularly? Are regular meaningful financial reports produced? Do they have an organised system for filing numbered invoices and receipts? Are these originals, and are they easily retrievable? For larger organisation is it possible to extract information from their complex financial system 4. Do some testing of the general records using your documentation checklist 5. Check that the project has systems in place for financial reporting, so that they can monitor expenditure. The systems must be adequate for the needs of EU funding. You must understand their method of apportioning staff time and overhead costs and that this is based on project activity as a proportion of the activity of the organisation as a whole 6. Make sure that they are able to report against the headings in the financial section of the EU application – that is, they have the system set up to do this. It is also important to check that they are clear about exactly what costs they are able to claim – and at what level – and that these are all eligible. 7. Also check that co-financing (and revenue income where it cannot be used as co- financing) is being provided at the levels agreed in the application. Make sure that any in- kind funding is covering EU eligible costs and that this is properly documented. There will almost certainly be a limit on the level of in-kind match funding that can be used – check this carefully with current Commission regulations. 8. Question them on how the project activity is progressing and whether they are likely to deviate from the plan outlined in the application, partner agreement or contract. Overall action plan for on the spot visits Action By when Notes 1.Select a project for a monitoring visit. This could be for a range of reasons, but is likely to have been discussed in advance with colleagues. 2.Telephone to arrange a date and time to visit About 2 weeks in advance Request any directions or other necessary practical information. 3. Send letter to confirm date and time and to confirm areas for discussion and evidence that may be examined. Within 2 days of phone call Ensure copy of letter goes on project file and that Project Officer is informed 4. Prepare for the visit using the project file and the database. Start to fill in the pro forma By the day prior to the visit Areas with gaps that will need particular discussion may be identified here. Also, areas for potential concern may be raised. 5.Carry out the visit Use pro forma and checklist document for taking notes and ensuring that each area – and any particular questions raised in research – are covered. Ensure before leaving that the Beneficiary is aware of the main areas that may require action. 6.Write up the report Within 2 days of the visit Recommendations for action to be taken should be included and be very specific, achievable and with a timescale. 7. Send the report out to the Beneficiary along with a copy of the Action form to be filled in by the Beneficiary. Also give a copy of the report to relevant persons within the IB such as the Project Officer. Within 3 days of the visit Clear deadline for the Beneficiary to respond to the recommendations as to how they will be met and by when. Ensure a copy of the monitoring report goes to the Project Officer and is also on the project file 8. Transfer a copy of the recommendations onto the monitoring visits record sheet. At the same time as 7. This gives a summary of all recommendations for all projects and tracks the completion of the agreed action. 9.Follow up recommendations According to agreed timescale Spreadsheet will assist in this. Will probably need to see subsequent claims. Dealing with problems or tricky issues during on the spot visits This section highlights some common problems or tricky issues that may come up during an on-site monitoring visit along with practical guidance on what to do if you come across such a situation. Is this the project we contracted? One of the key elements we need to establish as part of the monitoring activity is whether the applicant is delivering the project we contracted with and that the applicant is clear about the contractual terms and conditions and the activity that is eligible and approved. Often projects develop during appraisal with ineligible activity being excluded or other activities being modified. Misunderstandings about what the project is or should be can occur when the individuals involved in developing the project move on to new positions, new roles, etc. It is often easy for the applicant to “slip back” to their original project and undertake activities that are ineligible or otherwise inappropriate. If there is a difference in understanding of what the project is this should be sorted as a matter of urgency. The application and other correspondence on the file should indicate what project we think we have contracted. We can then agree with the applicant what activities are eligible, what activities are ineligible and what activities need to be modified before they can be considered as part of the project. This should all be confirmed, in writing, to the applicant and they should be given adequate time to make any necessary changes. It would be sensible to undertake a follow-up visit soon after the agreed deadline for implementing any necessary changes to ensure the project is now back on course. Are the contract conditions complied with? Has the applicant complied with all conditions in the offer letter? If not, are the conditions still relevant? If the conditions are no longer relevant consideration should be given to issuing an addendum to the contract to remove inappropriate or out-of-date conditions. If the conditions are still relevant what does the applicant intend to do to comply with the conditions? Any areas of concern should be confirmed to the applicant in writing and the applicant should be given sufficient time to address such issues. The applicant should be required to provide evidence that the necessary action has been taken and consideration should be given to undertaking a follow-up visit to establish that this is the case. Is project delivery against contract? Is the project progressing in accordance with the agreed profile for both spend and outputs/results and are the outputs and results being properly accounted for? If project progress is falling behind schedule or not delivering at all ask the applicant probing questions such as why things are not going according to plan ? what has changed since the project was approved ? can they still deliver the original project or does it need to change? what steps are being taken to make up lost ground ? do they need support ? Encourage the applicant to be realistic in his/her assessment of the situation and try to separate the different issues so that you can deal more easily with each one. Do not accept vague reassurances. Try to separate the different issues so that you can deal more easily with each one. Agree a re-profiling of the project or a reduction in the size and scope of the project and the corresponding grant, if required. If the project is ahead of schedule there may be scope to capture more outputs and results or extend the project over a longer period and increase the grant available in return for a corresponding increase in outputs and results. Outputs definitions correctly understood and applied? As part of the monitoring activity we should satisfy ourselves that outputs and results are being properly recorded, in accordance with relevant output guidance. Often applicants do not correctly understand the definitions and sign up to outputs and results targets, which they later cannot deliver. At times applicants fail to correctly count the outputs – they either underestimate or double count the outputs they are delivering. In some cases they might be applying the definitions incorrectly and reporting outputs that they are actually not delivering. For instance there is often lack of clarity as regards what constitutes a „business assisted‟ or „capacity building project‟. Where outputs and results are not being properly applied, recorded or reported we should highlight this issue to the applicant and agree what action they should take to rectify the situation. Consideration should be given to undertaking a follow-up visit to confirm that the necessary action has been taken. Are adequate records being kept? Part of the monitoring process is to confirm that adequate records are being kept and that expenditure claimed is eligible. The offer letter details the requirements for keeping documentation and ensuring adequate audit trails exist. During the monitoring visit monitoring officers should select a representative sample of items from recent claims and ask the applicant to demonstrate the audit trail for that item(s). In particular outputs and results reported by the applicant should be backed by proper evidence for instance businesses assisted claimed by the project should be backed by time sheets / invoices from consultants. If discrepancies are found in record keeping processes these should be confirmed to the applicant in writing stating exactly what they should do in the time available and what will happen to them if they do not comply (e.g. that no further payments will be made and steps will be taken to recover monies paid to date). The applicant should be given adequate time to address these issues whereupon a follow-up visit should be undertaken to check that the necessary changes have been implemented. In areas of particular concern consideration should be given to referring the project to the audit team who can then decide if a full audit might be appropriate. Compliance with regulations? The offer of Structural Funds assistance requires the applicant to comply with various EC regulations covering areas such as: Record keeping Article 88 of the draft General Regulations requires applicants to keep adequate records of all transactions relating to assistance from Structural Funds programmes. Applicants are required to keep such records for a period of three years after the European Commission has made a final payment on the structural funds programme. As part of the monitoring process checks should be undertaken to establish the adequacy of the applicants‟ record-keeping systems. In grant schemes, the final recipient‟s invoices need to be retained and this should be checked. Any areas of concern should be confirmed to the applicant in writing and the applicant should be given sufficient time to address these issues. A follow-up visit should be undertaken to confirm that adequate record-keeping arrangements are now in place. b. Public Procurement The offer letter details the various regulations applicants must comply with. These cover public works (Directive 93/37/EEC amended by Directive 97/52/EC), public supplies (Directive 77/62/EEC amended by Directive 93/36 EC and 97/52/EC), public services (Directive 92/50, as amended by Directive 97/52/EC) and utilities (Directive 90/531/EEC). c. Publicity Section II of the Implementing Regulation details the commission‟s publicity requirements. These requirements are also summarised in the offer letter. Checks should be made to ensure the applicant is meeting its contractual obligation to publicise structural Funds assistance for a project. d. State Aids What, if any, state aids issues were raised during appraisal. If the project was approved on the basis of a block exemption or any other approved scheme was the block exemption/ specially approved scheme ever lodged? If so, is there a copy of the block exemption/ specially approved scheme on file? Make sure the applicant understands their ongoing commitments to prepare annual reports, etc. If the project was approved on the application of de minimis what records is the applicant keeping to ensure, as far as possible, that they are not breaching de minimis aid levels? Any failure to comply with any of these regulations must be resolved. The applicant should be given an opportunity to suggest how they will comply with the regulations/directives and should supply evidence that demonstrates the necessary changes have been made. Consideration should be given to undertaking a follow-up visit to confirm the necessary changes have been made. Something about the project not quite right ? On-site monitoring visits can be tricky as the applicant may try to distract you with free lunch, a tour of the site or meeting with beneficiaries. Do not get side-tracked. Try to be clear and do not accept any excuses for the following: Missing documentation Invoices for large amounts of money with no clear indication of the value of the product or service Absent records (eg “they are with the auditors” or “the administration officer has taken the file home”) Key staff are absent and no-one else is able to answer questions Unauthorised changes to project activity Also make sure that the applicant is clear that your visit is not an audit or inspection check. Sometimes the applicant might try to get your approval for using certain accounting methodologies or record keeping practices. Remember you are not a financial expert and are not expected to comment on such issues. If you are not sure, but suspect that something is wrong, then you may decide that a follow up visit by yourself or the audit team is required. Don‟t allow applicants to trick you into rubber- stamping their overhead apportionment methodologies or other accounting practices or systems / processes. Feedback and reporting You should give the project being verified verbal feedback on the day itself, and follow up with a letter and written report. The letter and report should be as supportive as possible and should specify any actions which the project must take in order to comply with the Commission regulations and in accordance with the offer letter. You should give them a time-scale in which to bring their records or practices up to standard and ask for confirmation in writing when this has been done. Preventing Fraud If you suspect that fraud is taking place in a project that you have responsibility to monitor, you must immediately seek advice from the MA on what action to take but in the meantime suspend all payments to the project. Template of the monitoring visit record Reference Data Programme Date of Visit Address of Premises Visited Duration of Visit Project Details Project Title Reference Number Sub-Region Priority Measure Monitoring Record Date of last monitoring visit Pending Actions from previous visits Names of Personnel present during Visit Name Job Title GO monitoring officer Project Personnel Project Timeline Start Date (offer letter) Actual Start Date Completion Date (offer letter) Anticipated Completion Date Reasons for Slippage Implications Action to be taken Expenditure Offer Letter* Claimed to date* Final Expected Difference Eligible Expenditure Structural Funds Implications Actions to be taken Project Management and Administration Are the systems to ensure the effective implementation of the project in place as stated in the application? Detail any alterations Financial Management What arrangements are there to control and monitor project expenditure? Detail any problems. List of invoices checked against claims (details such as invoice number, date and amount cross referenced to claim) Physical Progress and indicators Comment on evidence, quality and eligibility of outputs/ impacts. Also, make note of any additional outputs & results that the project may be achieving but is not reporting Are zero/baseline measurements made, when appropriate (eg number of employees in a company at the start of the Programme) Partnership What role has each partner actually played in the implementation of the project? How are the match funding arrangements working Partner Funding Contribution to Outputs Indirect Support Linkages Provide details of how this project has integrated with other publicly funded projects, how this has benefited the project and what future linkages are planned Publicity Has the project fulfilled its commitment to publicise the EU‟s contribution to this project as stated in the application? Check evidence of this Tendering and Procurement Procedures Has the applicant adhered to public procurement regulation? Check evidence of this Horizontal Themes Horizontal Cross Cutting Theme Indicators – has the applicant agreed a set of horizontal cross cutting theme outputs and results, have they the necessary systems in place, are they recording them in the correct way? etc. Check on key horizontal theme aspects of application – are they delivering? (i.e. where they state that they will do x where possible). Due to the inclusion of the horizontal themes in the programme, has the applicant done more on these areas than they may normally have done (i.e. is there any added value?)? Give details. Has the applicant encountered any barriers to addressing the horizontal themes? Give details. Equal opportunity ICT Sustainability & Environmental General Comments Overall summary of the observations and conclusions Are there any examples of good practice that could be publicised or promoted? Action Points Action points and deadline for response Who is responsible for these action points? Action points completed? Signatures: Monitoring Officer: Date: Managing Authority must have systems in place to check that action points are implemented Checklist of documentation General Records Criteria Evidence Required To check Satisfactory Comments / Description of Items Checked (if not included in main report) Yes No Project Specification & Workplan Detailed written plan of the project, Feasibility Study, surveys agrees with application. Includes specific measurable objectives Sample Project management Minutes of Board/ management meetings Progress reports Computerised systems & procedures Tender documents Fixed Assets register Records to ensure sub-contractors are monitored & managed Other documentation such as HSE records, disaster recovery plan, marketing plan etc Sample Physical Progress Relevant records for the output/result (eg payroll details in case of job created) Systems to ensure that project outputs & impacts are properly recorded and evidence of achievement maintained Monitoring information All Publicity Records Criteria Evidence Required To check Satisfactory Comments / Description of Items Checked (if not included in main report) Yes No Levels of Publicity Letterheads, stationery Billboards Recruitment material Sample Financial Records - Income Criteria Evidence Required To check Satisfactory Comments / Description of Items Checked (if not included in main report) Yes No Match funding Written confirmations if available Receipt of match funding in accounts Back-up evidence eg remittance advice, bank statements All Match funding in kind How is this made up Detailed audit trail eg payroll records, apportionment Agreed methodology for valuing & monitoring the contribution All De-minimis State aid (if applicable) Offer letter Details of all public financial assistance received by applicant over the past 3 years Detailed records of aid received All Revenue income (if any) Items in books of accounts showing revenue income All Private income (if any) Items in books of accounts showing private income (check that this is not ineligible) All Financial Records - Expenditure Criteria Evidence Required To check Satisfactory Comments / Description of Items Checked (if not included in main report) Yes No Project direct costs Items in main books of accounts, showing total of project direct costs All Project direct costs Schedule of direct costs by headings shown in application Audit trail to original documentation eg invoice, travel expense claims Sample Staff Wages/ salary costs Salary records broken into actual costs per staff member Apportionment of staff time to project All Overhead costs Working papers showing source of overhead costs & how these are charged to the project Written methods / policy of apportionment Sample Conclusion/Overall Assessment C.2. FINANCIAL CORRECTIONS C.2.1 Detecting and reporting irregularities Example 1 – Extracts from UK guidance package reporting irregularities Notification forms Worked example Guidance notes NOTIFICATION FORMS IDENTIFICATION OF COMMUNICATION ANNEX A Section A: to be completed by DTI Member State: UNITED KINGDOM Date Sent: Case No: Quarter: Administrative department in Member State: Regional: ODPM National: DTI Section B: to be completed by Government Office Name of Reporting Officer: ODPM Irregularity Report No.(ESAD to complete): Position Within GO: Date Reported: Government Office: (blank) Is this Irreg report: NEW 0 AN UPDATE 0 Does this Irreg report CLOSE the irregularity (ie are all irregular funds recovered) YES 0 NO 0 DETAILS OF IRREGULARITY 1 Description of operation 1.1 Community Support Framework (ESF Only) (blank) 1.2 Name of Programme (blank) 1.3 EC decision No and Date: (DTI to complete) 1.4 Member State‟s ref No: (DTI to complete) 1.5 ARINCO No: (blank) Organisation Name: Type of organisation (CFE, VS, LA, etc) Title of Project Dossier Number Measure (e.g. 3.2.2) 2 Provision infringed 2.1 Community Regulation: 1261/1999 ERDF 2.2 National Regulation: the terms and conditions of the offer letter 3 Date of first information leading to suspicion of irregularity: 3.1 Source of first information leading to suspicion of irregularity (tick box) Inspection: Article 4 Monitoring: Contract Management: Audit Certification: 0 0 0 0 Other Audit Visit: Informant: More… (select from drop down list): (blank) 0 0 Other (give brief details): 4 Manner in which the irregularity was confirmed If the irregularity was confirmed in a manner different to how it was first suspected (as described in Section 3) then give brief details below: Details: 5 Type of irregularity (tick all that apply) False Claim: Inadequate match funding: Inadequate beneficiary records: Ineligible expenditure: Project not delivered in line with its contract: 0 0 0 0 0 False Supporting Documents: Poor management/financial control: No publicity: No added value: Systemic issues (in one of above categories) More… (select from drop down list) (blank) 0 0 0 0 0 Other (please specify) 5.1 Practices employed in committing the irregularity Provide a brief description of the practices employed in committing the irregularity. 5.2 Are these practices considered new? Yes: 0 No: 1 5.3 If Yes, has notification been sent under Article 4 of EC Regulation 1681/94 or 1831/94? Yes: 0 No: 0 Not Known: 0 6 Are other Member States involved?: Yes: 0 No: 1 6.1 If Yes, has notification been sent under Article 4 of EC Regulation 1681/94 or 1831/94? No: 0 Not known: 0 Yes: 0 If yes, date & references: 7 Period of the irregularity 7.1 Dates on, or between, which the irregularity took place: to 8 Authorities or bodies 8.1 Authorities or bodies which drew up the official report on the irregularity: GO - 8.2 Authorities or bodies responsible for administrative or judicial follow up: GO - 9 Date on which the irregularity report was drawn up: 10 Name and address of natural and legal persons involved 10.1 The name and official address of the organisation involved. Organisation Name: Organisation Address (inc postcode): FINANCIAL ASPECTS 11 Funding details This is the agreed total level of funding for the project. 11.1 Total Amount of Operation (must equal 11.2 + 11.3) £ 11.2 ERDF Element £ 11.3 Match Funding Element £ 12 Nature and amount of IRREGULAR expenditure Of the funding actually paid to the project this is the breakdown of the irregular amounts. 12.1 Nature of irregular expenditure (ie staff costs, other costs, match funding) 12.2 Irregular Total Expenditure (this must equal 12.3 + 12.4) £ 12.3 Irregular ERDF £ 12.4 Irregular Match Funding £ Are the entries in section 12 ESTIMATES? YES: 0 NO: 0 13 Amount of funding which would have been wrongly paid had the irregularity not been discovered: 13.1 Total Expenditure (= 13.2 +13.3) £ 13.2 ERDF Element £ 13.3 Match Funding £ 14 Financial consequences 14.1 Amount of irregular expenditure (TDE) not yet paid (= 13.1 – 12.2) £ Amount of ERDF not yet paid (= 13.2 – 12.3) £ Amount of Match Funding not yet paid (= 13.3 – 12.4) £ 14.2 Has further payment been suspended. YES: 0 NO: 0 If NO, why not? 15 Possibility of recovery Potential for recovery of ERDF funds reported at 12.3: Good 0Possible 0 Unlikely 0 Reasoning: 16 Irregular amount recovered (cumulative): Total Declared Expenditure (TDE) £ 16.1 ERDF amount: £ 16.2 Match funding amount: £ 17 Irregular amount remaining to be recovered: Total Declared Expenditure (TDE) £ 17.1 ERDF Amount £ 17.2 Match funding amount £ 18 Date of special report in accordance with Article 5(2) of Regulation (EC)N°1681/94 or with Regulation (EC)N°1831/94: (to be completed by ODPM): STAGE OF PROCEDURES 19 Action by Member State This is any action taken under National Legislation to safeguard the recovery of irregular payments 20 Administrative proceedings Please indicate any action taken concerning the irregularity Refund of irregular funds being pursued: 0 Off-setting against other payments: 0 Case forwarded to other authorities: 0 If fraud is suspected, has the case been referred to: the Police: 0 ODPM: 0 Other action taken: 21 Judicial proceedings If the case has become the subject of criminal proceedings then give details here. 22 Abandonment of recovery proceedings: Have recovery proceedings been abandoned? Yes 0 No 1 If Yes then select a reason why: (blank) 22.1 Was the Commission notified before the decision to abandon the recovery procedure was taken? No: 0 Yes: 0 If yes, then please give reference numbers: 23 Have criminal procedures been abandoned? There have been no criminal proceedings: 1 No: 0 Not known: 0 Yes: 0 Sections 24, 25 and 26 to be completed by ODPM and DTI 24 Termination of procedures 24.1 Has the Commission been notified of administrative or judicial decisions or the main points thereof, concerning termination of proceedings in accordance with Article 5(1) of Regulation 1681/94 or with Regulation 1831/94: No: 0 Yes: 0 If yes, then please give reference numbers: 25 Penalties imposed (administrative and/or judicial): 26 If Article 3(3) of Regulation 1681/94 or of Regulation 1831/94 applies: 26.1 to which of the above does it apply?: 26.2 has authorisation of the competent court or tribunal been applied for?: 27 Any additional observations: ANNEX B STRUCTURAL FUNDS IRREGULARITY REPORT (SFIR) GUIDANCE 1. Overview This annex gives a brief overview of the irregularity reporting process as well as examples of how to complete the „Financial Aspects‟ section of the form. Section 3 contains the step by step guidance for completing each section of the SFIR. As described in Para 9 of the Action Note, an Irregularity Report (SFIR) is required where an irregularity >€4000 (£2829 for 2005) has been identified. The SFIR form is used for both initial reporting of Irregularities and updates on the action taken to recover the funds at risk. Stages of an irregularity: * Note that some irregularities (particularly those found as a result of an Article 10 inspection) may be initially reported before the irregular amount is crystallised. In these cases only complete Sections 1- 14. 2. Financial Aspects Section Examples The information to be entered in the Financial Aspects section of the SFIR is explained in the three scenarios below. (In all 3 cases a 50% intervention rate has been assumed for simplicity) It is assumed that a project has been approved the following: Total Amount of Operation: £400,000 ERDF Element: £200,000 Match Element: £200,000 Cumulatively this would look like: Payment 1 Payment 2 Payment 3 Payment 4 *TDE (£) 100,000 200,000 300,000 400,000 ERDF (£) 50,000 100,000 150,000 200,000 MATCH (£) 50,000 100,000 150,000 200,000 * total declared expenditure Scenario 1: 6 Months has elapsed since an irregularity was first identified. It is estimated that the irregularity will be £75,000 ERDF. The error is identified after 2 payments have been made to the project. No funds have been recovered as the irregular amount hasn‟t yet been crystallised. FINANCIAL ASPECTS 11 Funding details This is the agreed total level of funding for the project. 11.1 Total Amount of Operation (must equal 11.2 + 11.3) £ 400,000 11.2 ERDF Element £ 200,000 11.3 Match Funding Element £ 200,000 12 Nature and amount of IRREGULAR expenditure Of the funding actually paid to the project this is the breakdown of the irregular amounts. 12.1 Nature of irregular expenditure (ie staff costs, other costs, match funding) Other costs 12.2 Irregular Total Expenditure (this must equal 12.3 + 12.4) £ 150,000 12.3 Irregular ERDF £ 75,000 12.4 Irregular Match Funding £ 75,000 Are the entries in section 12 ESTIMATES? YES: X NO: 0 13 Amount of funding which would have been wrongly paid had the irregularity not been discovered: 13.1 Total Expenditure (= 13.2 +13.3) £ 150,000 13.2 ERDF Element £ 75,000 13.3 Match Funding £ 75,000 14 Financial consequences 14.1 Amount of irregular expenditure (TDE) not yet paid (= 13.1 – 12.2) £ 0 Amount of ERDF not yet paid (= 13.2 – 12.3) £ 0 Amount of Match Funding not yet paid (= 13.3 – 12.4) £ 0 14.2 Has further payment been suspended. YES: 0 NO: X If NO, why not? Work is ongoing to determine the irregular amount at risk. 15 Possibility of recovery Potential for recovery of ERDF funds reported at 12.3: Good 0 Possible 0 Unlikely 0 Reasoning: 16 Irregular amount recovered (cumulative): Total Declared Expenditure (TDE) £ 16.1 ERDF amount: £ 16.2 Match funding amount: £ 17 Irregular amount remaining to be recovered: Total Declared Expenditure TDE) £ 17.1 ERDF Amount £ 17.2 Match funding amount £ Scenario 2: The irregularity identified in scenario 1 has now been crystallised at a reduced amount of £10,000 ERDF. For 448/2001 purposes the contract has been reduced by 20K and the irregular funds (10K ERDF) have been recovered by claw back. FINANCIAL ASPECTS 11 Funding details This is the agreed total level of funding for the project. 11.1 Total Amount of Operation (must equal 11.2 + 11.3) £ 400,000 11.2 ERDF Element £ 200,000 11.3 Match Funding Element £ 200,000 12 Nature and amount of IRREGULAR expenditure Of the funding actually paid to the project this is the breakdown of the irregular amounts. 12.1 Nature of irregular expenditure (ie staff costs, other costs, match funding) Other costs 12.2 Irregular Total Expenditure (this must equal 12.3 + 12.4) £ 20,000 12.3 Irregular ERDF £ 10,000 12.4 Irregular Match Funding £ 10,000 Are the entries in section 12 ESTIMATES? YES: 0 NO: X 13 Amount of funding which would have been wrongly paid had the irregularity not been discovered: 13.1 Total Expenditure (= 13.2 +13.3) £ 20,000 13.2 ERDF Element £ 10,000 13.3 Match Funding £ 10,000 14 Financial consequences 14.1 Amount of irregular expenditure (TDE) not yet paid (= 13.1 – 12.2) £ 0 Amount of ERDF not yet paid (= 13.2 – 12.3) £ 0 Amount of Match Funding not yet paid (= 13.3 – 12.4) £ 0 14.2 Has further payment been suspended. YES: 0 NO: X If NO, why not? All funds have been recovered. 15 Possibility of recovery Potential for recovery of ERDF funds reported at 12.3: Good X Possible 0 Unlikely 0 Reasoning: All funds have been clawed back from the project. 16 Irregular amount recovered (cumulative): Total Declared Expenditure (TDE) £ 20,000 16.1 ERDF amount: £ 10,000 16.2 Match funding amount: £ 10,000 17 Irregular amount remaining to be recovered: Total Declared Expenditure TDE) £ 0 17.1 ERDF Amount £ 0 17.2 Match funding amount £ 0 Scenario 3: This scenario is based on a systemic irregularity being found totalling £40,000 ERDF. (£10,000 irregular in each of the four payment periods). The irregularity was found and crystallised after the third payment to the project had been made resulting in 30K ERDF to be recovered by claw back. The contract value has been reduced by the total funding in error (80K) of which ERDF is 40K. FINANCIAL ASPECTS 11 Funding details This is the agreed total level of funding for the project. 11.1 Total Amount of Operation (must equal 11.2 + 11.3) £ 400,000 11.2 ERDF Element £ 200,000 11.3 Match Funding Element £ 200,000 12 Nature and amount of IRREGULAR expenditure Of the funding actually paid to the project this is the breakdown of the irregular amounts. 12.1 Nature of irregular expenditure (ie staff costs, other costs, match funding) Other costs 12.2 Irregular Total Expenditure (this must equal 12.3 + 12.4) £ 60,000 12.3 Irregular ERDF £ 30,000 12.4 Irregular Match Funding £ 30,000 Are the entries in section 12 ESTIMATES? YES: 0 NO: X 13 Amount of funding which would have been wrongly paid had the irregularity not been discovered: 13.1 Total Expenditure (= 13.2 +13.3) £ 80,000 13.2 ERDF Element £ 40,000 13.3 Match Funding £ 40,000 14 Financial consequences 14.1 Amount of irregular expenditure (TDE) not yet paid (= 13.1 – 12.2) £ 20,000 Amount of ERDF not yet paid (= 13.2 – 12.3) £ 10,000 Amount of Match Funding not yet paid (= 13.3 – 12.4) £ 10,000 14.2 Has further payment been suspended. YES: 0 NO: X If NO, why not? All funds have been recovered and the contract has been reduced. 15 Possibility of recovery Potential for recovery of ERDF funds reported at 12.3: Good X Possible 0 Unlikely 0 Reasoning: All funds have been clawed back from the project. 16 Irregular amount recovered (cumulative): Total Declared Expenditure (TDE) £ 60,000 16.1 ERDF amount: £ 30,000 16.2 Match funding amount: £ 30,000 17 Irregular amount remaining to be recovered: Total Declared Expenditure TDE) £ 0 17.1 ERDF Amount £ 0 17.2 Match funding amount £ 0 Due to the systemic nature of the error, Section 13 and 14 reflect the potential irregularity that could have been claimed and paid had the irregularity not been detected. Section 13.1 is the amount that the contract value has to be reduced by to satisfy the requirements of EC regulation 448/2001. Sections 16 and 17 should only reflect the recovery against the amounts reported in section 12. 3. Step by Step Guidance Additional help files can be found by pressing the F1 key when completing the SFIR. Enter all dates in the format 12 March 2004 or 12/3/4. The dates will then be auto formatted to the correct format of year/month/day – 04 03 12. IDENTIFICATION OF COMMUNICATION Section A to be completed by DTI Section B Name of reporting officer: Enter the name of the person completing the Irreg report. GO Irregularity Report Number: Enter your own internal reference number. Position within GO: Enter your position / job. Date Reported: The date the Irreg report was filled in. Government Office: Enter which Government Office you work for. Is this Irreg: New/Update: If this is the first notification of the irregularity then select NEW. If it is updating an irregularity previously reported then select UPDATE. Does this Irreg report CLOSE the irregularity: If you are reporting (either initially or as an update) that all irregular funds have been fully recovered then select YES. If there are irregular funds still outstanding and to be recovered then select NO. DETAILS OF IRREGULARITY 1. Description of operation: 1.1 Community support framework: Applies to ESF only 1.2 Name of programme: In the case of a CSF, this would be the relevant operational plan within the CSF, i.e England Objective 3. For all other programmes it is the programme title – i.e East Midlands Objective 2. 1.3 EC decision N° and date: DTI to complete. 1.4 Member State‟s reference N°: DTI to complete 1.5 ARINCO N°: Select from the drop down list. (The programme name has been included for easy identification) 2. Provision infringed 2.1 Community provision infringed: This is the Regulation breached by the irregularity – it is usual to put in here the number of the regulation relating to the fund concerned. They are 1261/1999 ERDF, 1262/1999 ESF, 1257/1999 EAGGF Guidance, and 1263/1999 FIFG. There are other regulations relating to the operation of the funds, but the above are the main ones for the four funds. If you are aware of the case being in breach of another irregularity, such as Publicity or the Public Procurement Directive, for instance, then put the appropriate regulation/directive number here. 2.2 National provision infringed: This is usually “the terms and conditions of the offer letter”, so that statement is adequate. Again, however, if you are aware of a specific legal infringement under UK law, then put the details here. 3. Date of first information leading to suspicion of irregularity: The date of any inspection, telephone call from informant, on the spot check, etc 3.1 Source of first information leading to suspicion of irregularity: Detail here what caused the suspicion of an irregularity – informant, audit report, inspection, on the spot check, monitoring visit or ECA Audit. Check the appropriate box or select from the drop down list. 4. The manner in which the irregularity was discovered: This is the manner in which the irregularity was confirmed – audit visit, monitoring visit, etc. This can be the same as the above entry in some cases. 5. Type of irregularity: This is what it says –what sort of irregularity – false claim, ineligible items claimed for, lack of evidence of project existence, systemic etc Check the appropriate type of irregularity or select more from the drop down list. 5.1 Practices employed in committing the irregularity: This is text – a short statement of the irregularity, for instance if it is ineligible expenditure, then here you would detail that ineligible expenditure. 5.2 Are these practices considered new?: Here the answer is usually “No” – unless the aspects of the case are so novel that OLAF should be informed in a special report to alert them so that they could let other Member States know in order to prevent such occurrences across the EU. 5.3 If yes, has notification been sent under Article 4 of Regulation (EC)1681/94 or of Regulation. (EC) 1831/94? Yes  date and references, No , Not known  Tick the appropriate box. If “Yes” to 5.2 special report must be sent so tick yes box and give the references, date etc of the special report in here –The special report should be attached. This can be in the form of a letter stating the facts. I f you tick no or not known then action should be taken to ensure that such a report under Article 4 is made as soon as possible. 6. Other Member State and third countries involved: Again, this is usually “No”, unless the case involves another Member State 6.1 If yes, has notification been sent under Article 4 of Regulation (EC) 1681/94 or of Regulation (EC) 1831/94? Yes  date and references, No , Not known  Tick the appropriate box. If “Yes” to 5.2 a special report must be sent so tick yes box and give the references, date etc of the special report in here –The special report should be attached. This can be in the form of a letter stating the facts. If you tick “no” or “not known” then action should be taken to ensure that such a report under Article 4 is made as soon as possible to OLAF. 7. Period of the irregularity: 7.1 Date on which, or dates between which, irregularity was committed: This is the period of time covered by the irregular expenditure – although in the case of liquidation, it could be the day on which the company went into liquidation/receivership. 8. Authorities or bodies 8.1 Authorities or bodies which drew up the official report on the irregularity: 8.2 Authorities or bodies responsible for administrative or judicial follow-up: 9. Date on which the official report on the irregularity was drawn up: Date this form was completed 10. Name and address of natural and legal persons involved: 10.1 Organisation Name: This is the organisation or organisations involved in the irregularity. Their full address including postcode is required. There can be more than one legal entity involved so simply copy the format and add the appropriate details to section 27 of the SFIR. Organisation Address: Enter the registered address of the organisation including the postcode. FINANCIAL ASPECTS See page 2 of this Annex for worked examples on completing sections 11 – 17 11. Funding Details This is the agreed total level of funding for the project 11.1 Total amount of operation: The total value of the eligible expenditure. 11.2 ERDF Element: The ERDF share. 11.3 Match Funding Element: All National, including Private Sector if appropriate. NOTE: 11.2 & 11.3 must add up to 11.1 12. Nature and amount of IRREGULAR expenditure: Of the project‟s actual expenditure, this is the breakdown of the amounts found to be irregular. NB These amounts should never be greater than the amount of funding the project has had. 12.1 Nature of the expenditure: Give a brief description of the type of expenditure that is being reported as irregular – Example “Salaries”, “Overheads”, “Capital equipment” Free text –so any description is valid 12.2 Total amount of the expenditure: The total value of the ineligible expenditure 12.3 Irregular ERDF: this is the amount of ERDF found to be irregular. 12.4 Irregular Match Funding: NOTE – 12.3 & 12.4 MUST ADD UP TO 12.2 Are entries in section 12 ESTIMATES?: If the amount that is irregular is still under review and is not yet crystallised tick YES 13. Amount which would have been wrongly paid had the irregularity not been discovered: This section shows the breakdown of funds of the total irregularity (in the case of systemic errors this will include amounts not yet claimed by the project) Take care- although irregular expenditure under section 12 may be de minimis, if the amount could have been higher had the irregularity NOT been identified, then it should be reported. 13.1 Total Expenditure 13.2 ERDF Element 13.3 Match Funding 14. Financial consequences 14.1 Amount of irregular expenditure not yet paid: This is the amount of TDE that is irregular that the project has not yet been paid. It is the difference between sections 13.1 and 12.2 (13.1 -12.2) Amount of ERDF not yet paid: 13.2 – 12.3 Amount of Match not yet paid 13.3 – 12.4 14.2 Has further payment been suspended: Yes  No , If the answer here is “no”, then an explanation should be given as to why payments have not been suspended. 15. Possibility of recovery: A view should be given as to the recovery of the funds wrongly paid - good, possible, unlikely – If the funds are already recovered, how this was achieved [by adjustment of a future claim or by repayment]. 16. Irregular amount recovered: This is the breakdown of the irregular funds that have been recovered. The figures here are the figures showing recovery of paid irregular funds as quoted in Section 12. They should be the amounts recovered to date if funds are being recovered in instalments. Total Declared Expenditure: 16.1 ERDF amount: 16.2 Match Funding amount: 17. Total amount to be recovered: This will be for the funds not recovered. The figures here should match the amounts quoted in Section 12, unless the funds are being recovered in part payment or instalments, so the amount here could be the Section 12 amount less the Section 16 recovery. 17.1 ERDF amount: 17.2 Match Funding amount: 18. Date of special report in accordance with Article 5(2) of Regulation (EC)N°1681/94 or with Regulation (EC) N°1831/94: STAGE OF PROCEDURES 19. Action by Member State 19.1 Interim measures: This is any action taken under National legislation to safeguard the recovery of irregular payments -free text. Complete this with whatever information you may think appropriate. 20. Administrative proceedings: Please indicate any action taken concerning the irregularity – decision to recover funds, setting-off against other payments made to the beneficiary, case forwarded to any other authorities for proceedings. In the case of suspected fraud, the case may have been handed over to the Police or Serious Fraud Office. 21. Judicial proceedings: If the case has become the subject of criminal proceedings, the give details here. 22. Reasons for any abandonment of recovery proceedings: Give the reasons for the abandonment of recovery procedures –For example, bankruptcy, liquidation, lack of assets, death of beneficiary or trustee with no estate 22.1 Was the Commission notified before the decision to abandon the Recovery procedure was taken? Yes  date and references, No , Give the details of the Special report submitted under Section 18 – and if necessary explain why the Commission was not notified before the decision to abandon was made 23. Have criminal procedures been abandoned? Yes , No , Not Known  Tick as appropriate SECTIONS 24 to 26 to be completed by ODPM 24. Termination of procedures 25. Penalties imposed (administrative and/or judicial): 26. If Article 3(3) of Regulation (EC) N°1681/94 or of Regulation (EC) N°1831/94 applies: 27. Additional observations: Please give any further information you feel is relevant. This is a free text area that can be used to give supplementary information to any section in the SFIR. ANNEX C Annex C NOTIFICATION OF INELIGIBLE SPEND 1. For Completion by Officer notifying ineligible spend 1.1 Applicant: 1.2 Project Number: 1.3 Project Measure: 1.4 Amount of Ineligible Spend (TDE): £ 1.5 Amount of Grant Recoverable (ERDF): £ 1.6 Amount Contract to be reduced by: £ Name: Signature: Date: -ordinator for recording and tracking purposes AGREEMENT/CONFIRMATION OF ACCOUNTING ACTIVITY 2. For completion by European Secretariat Contract Management Team 2.1 I agree/disagree the recommended action for recovery of the grant specified in Section 1. 2.2 AGREEMENT CONFIRMED (** delete as appropriate) ** Interim Claim - I confirm that the irregular funding at 1.4 of £ should be refunded/offset against future claims until full recovery has been effected. The contract value has been reduced by the amount at 1.6. ** Final Claim - I confirm that on accounting action has been taken to remove the irregular funding at 1.4 of £ from the ERDF computer system. The contract value at 1.6 has been reduced and recovery of the amount (at 1.4) should now be progressed. 2.3 AGREEMENT NOT CONFIRMED If not confirmed please provide comments and return to Inspection Team/originator of form. Name: Signature: Date: Irreg Co- ordinator for updating of the ERDF computer system. RECOVERY FORM 3. For completion by European Secretariat Payment Team Project Information 1.1 Applicant: 1.2 Project Number: 1.3 Project Measure: 1.4 Amount of Ineligible Spend (TDE): £ 1.5 Amount of Grant Recoverable (ERDF): £ Recovery Position to Date 3.1 Cumulative amount recovered to date: £ 3.2 Indicate whether recovery action completed (YES) or still ongoing (NO) (circle relevant entry) YES NO 3.3 Date full recovery made Recovery 1 3.4 Amount recovered: £ 3.5 Date of Recovery: 3.6 Method of recovery: offset against subsequent claims/repayment /other (explain) (delete as applicable) 3.7 Amount remaining to be recovered Recovery 2 3.4 Amount recovered: £ 3.5 Date of Recovery: 3.6 Method of recovery: offset against subsequent claims/repayment /other (explain) (delete as applicable) 3.7 Amount remaining to be recovered Recovery 3 3.4 Amount recovered: £ 3.5 Date of Recovery: 3.6 Method of recovery: offset against subsequent claims/repayment /other (explain) (delete as applicable) 3.7 Amount remaining to be recovered Recovery 4 3.4 Amount recovered: £ 3.5 Date of Recovery: 3.6 Method of recovery: offset against subsequent claims/repayment /other (explain) (delete as applicable) 3.7 Amount remaining to be recovered Name: Signature: Date: Update, print, and sign form until full recovery made. After each recovery transaction send the signed form to GO Irreg Co-ordinator. ANNEX D SECTION 1 - NOTIFICATION OF INELIGIBLE SPEND This section give details of the funding that is ineligible and is to be recovered either via repayment in the case of final claims, or offset from future claims in the case of interim claims. This should be completed in conjunction with the SFIR report confirming the final amount at risk. This will normally be completed by the person notifying the irregularity and requesting accounting action/recovery of ineligible funds. As the majority of irregularity cases will arise from inspection visits this will usually be the GO Inspection Team. These instructions are applicable to all financial corrections arising from irregularities irrespective of the source of the irregularity, including withdrawals. 1. For Completion by Officer notifying ineligible spend 1.1 Applicant: 1.2 Project Number: 1.3 Project Measure: 1.4 Amount of Ineligible Spend (TDE): £ 1.5 Amount of Grant Recoverable (ERDF): £ 1.6 Amount Contract to be reduced by: £ Name: Signature: Date: 1.1 Applicant As section 1.0 on SFIR report 1.2 Project Number As section 1.0 on SFIR report 1.3 Project Measure Necessary as 438/01 asks for summary of funds recovered by measure. Where irregularities arise from inspection activity this should reconcile with information on 5% return. 1.4 Amount of Ineligible Spend (TDE) As section 12.2 on SFIR report 1.5 Amount of Grant Recoverable (ERDF) As section 12.3 on SFIR report 1.6 Amount contract to be reduced by As section 13.1 on SFIR report. (Note this will be the same as 12.2 except in cases of systemic error. See Scenario 3 in Annex B) – to ensure this form is acceptable to audit, electronic signatures should be avoided. - this form should now be forwarded to the EU Secretariat Contract Management Team along with relevant paperwork relating to the claim revisions. SECTION 2 – AGREEMENT /CONFIRMATION OF ACCOUNTING ACTIVITY This section provides contract managers/programme delivery teams with the option to consider the information enclosed with the form, agree/disagree the findings/ recommendations and, if in agreement, give authority for recovery action to proceed. For 5% inspection and irregularity monitoring and reporting purposes it confirms when recovery action has commenced. To be completed and signed by the person authorising/instigating the recovery action. 2. For completion by European Secretariat Contract Management Team 2.1 I agree/disagree the recommended action for recovery of the grant specified in Section 1. 2.2 AGREEMENT CONFIRMED (** delete as appropriate) ** Interim Claim - I confirm that the irregular funding at 1.4 of £ should be refunded/offset against future claims until full recovery has been effected. The grant offered has been reduced by the amount at 1.6. ** Final Claim - I confirm that on accounting action has been taken to remove the irregular funding at 1.4 of £ from the ERDF computer system. The grant offered at 1.6 has been reduced and recovery of the amount (at 1.4) should now be progressed. 2.3 AGREEMENT NOT CONFIRMED If not confirmed please provide comments and return to Inspection Team/originator of form. Name: Signature: Date: 2.1 Self-explanatory 2.2 Self-explanatory. Inspection teams – but note that in the case of interim claims the column should remain blank until the recovery amount has been fully offset against future claims. Only then can accounting action be regarded as completed. 2.3 Self explanatory – where confirmation is given for recovery action to commence on interim claims it will be necessary to access the impact on profiles and contracts over the remainder of the project lifespan, particularly where systemic error is the causal factor for the irregularity. – It is important that accounting action on the ERDF computer system is not delayed as this can have implications for the debtors control account balance as well as the accuracy of claims to the Commission. – if 2.2 completed this form should now be forwarded to the team responsible for progressing recovery action; if 2.3 return to form originator. ANNEX E EXEMPTIONS FROM THE OLAF REPORTING REQUIREMENT 1. The de minimis rule [already in the regulation] – anything below €4,000 is not reported, unless the Commission request that it be reported. The irregularity does have to be mentioned in the relevant Annual Implementation Report but does not need to be reported to OLAF 2. Error or negligence detected before payment and not resulting in any administrative or judicial penalty. If no money is paid out before the irregularity is detected and there are no penalties resulting. No reporting requirement. 3. Irregularities notified to the GO by the grant recipient without being compelled to do so or before discovery by the GO, either before or after payment of the amounts requested. No reporting requirement. 4. Situations where the GO finds that it was mistaken as regards the eligibility of the project financed and where the error was found before payment. No reporting requirement. C.3.2 Compliance with the n+2 rule Example 1 – N+2 monitoring table – adapted to Romanian situation from a UK spreadsheet tool An example of an n+2 monitoring table is shown below. The Managing Authority should complete sections D and E of this table to determine whether actual and forecast expenditure up to the closest N+2 deadline is sufficient to avoid de-commitment of funds by the European Commission. The data necessary to complete sections D and E should come from the MIS system. The table itself does not need to be submitted to the Commission. It is a tool solely for the use of the Managing Authority, but may be tabled at the Programme Monitoring Committee. C.3.3. Management of OP financial tables Example 1 – Financial tables and exchange rate management spreadsheet tool (embedded Excel file) N.B. The functionality of this spreadsheet tool should be built into the SMIS system C.4. AUDIT TRAIL C.4.1 Maintenance of audit trail on operations Example 1 – Description of audit trail in response to Commission questionnaire (Objective 1 Regional Development OP 2004-2006 - Hungary) EXTRACT FROM HUNGARY‟S RESPONSE TO COMMISSION QUESTIONNAIRE ON REVIEW OF DESCRIPTION OF MANAGEMENT AND CONTROL SYSTEMS - 2004 Audit Trail Provide a description of the audit trail for the programme and/or for individual measures, showing for all stages in the project cycle from application to final payment, the body carrying out the process or making the decision, the documentation produced and retained and the location of storage, (Reg. No 1260/1999 : Art. 38(6); Reg. No 438/2001: Art. 7 and Annex I.) It is recommended that the description of the audit trail follows the sequence set out in Annex I of Reg. No 438/2001. The Procedures Manual of the OP contains the detailed Audit Trail. The audit trail presented above covers the MA and the IB as part of the institutional system. This is because in the Hungarian system, all documents – including project level invoices and related documentation – is kept on IB level, so the completeness of the audit trail is not harmed by the non-inclusion of the final beneficiaries or final recipients as such. Task Responsible body/person Documentation produced and retained Location of storage Elaboration of calls for proposals and application documents (based on the PC and the selection criteria) MA / Programme Manager Draft calls for proposals and application documents MA Approval of call for proposals * MA / Head Approval note MA Elaboration of guidelines for applicants MA / Programme Manager Draft guidelines MA Approval of guidelines for applicants* MA /Head Approval note MA Publication of call for proposals MA / Communications Manager Full text of calls for proposals published MA Website Information and publicity tasks related to the call for proposals (e.g. roadshow events, website, etc.) MA / Communications Manager Communication Strategy, Action Plan, Reports and copies of publications MA, RDAs Receiving and registration of the applications RDA, project manager EMIR, registration number, notification letter for applicant RDA, applicant Accuracy check of the applications (completeness and eligibility) RDA, project manager Check lists RDA Informing applicants submitting incomplete or ineligible applications RDA, project manager Letter for applicant to complete application; rejection letter to the applicant RDA, applicant Evaluation of project applications RDA, project manager Check lists RDA Proposal RDA, project manager, head of the unit List of applications supported and non supported RDA Quality assurance of application selection procedure VÁTI Check lists and list of applications supported and non supported VÁTI Setting up Project Selection Committee (composition and tasks) MA Rules and Procedures, List of Members MA Chairing Project Selection Committee MA Minutes of Meeting MA Approval of the decision of the Project Selection Committee MA Lists of supported and not supported applications MA Notice to applicants on the decision MA Notification letter to applicants MA, RDA, VATI Publication of data of supported projects MA Website notice Web server of MA Preparation of contracting or modification of contract VÁTI Supporting contract VÁTI Approval of the contracts and the modifications thereof VÁTI Contract signed Beneficiary, VÁTI, Monitoring of project implementation process VÁTI RRO, project manager Progress Report, Check lists VÁTI RRO Interim on-the-spot inspections VÁTI, project manager Report of on-the-spot inspection Beneficiary, VÁTI, Receiving the beneficiaries‟ reimbursement claims VÁTI, account manager Check lists Reports, invoices certification of performance and receipts and recorded comments Beneficiary, VÁTI Formal and performance check of the reimbursement claims VÁTI RRO, account manager Check lists VÁTI RRO Interim on-the-spot inspections depending on the project risk VÁTI RRO, project manager Report of on-the-spot inspection Beneficiary, VÁTI RRO Verification of beneficiaries‟ reimbursement claim VÁTI RRO, project manager Individual Performance Report VÁTI Verification of beneficiaries‟ reimbursement claim VÁTI, project manager Performance Report Beneficiary, VÁTI Filling out of verification report for payment approval. VÁTI, project manager Verification Report VÁTI, MA Approval of verification report and payment request alongside MA financial Verification Report MA Authorisation of payments to beneficiaries VÁTI, account manager Copies of Transfer orders VÁTI Transfer of the contribution from the Funds PA Bank transfer sheet MA/PA Claim for ex-post settlement of Community contributions to the MA VÁTI, account manager Copies of cover letter and application VÁTI Ex post on-the-spot inspections VÁTI, project manager Report of on site inspection Beneficiary, VÁTI, Claim for ex-post settlement of Community contribution to the PA MA Form sheet "settling EC contribution" MA & PA Compilation of Statement of Expenditure MA Statement of Expenditure MA & PA Compilation of MA Verification report MA Verification report MA & PA Compilation of Application for Payment PA Application for Payment PA Certification of expenditure declarations PA Certificate PA Submission of Certification of expenditure declarations and applications for payment to the Commission PA Application for Payment Certificate Statement of Expenditure PA & EC Documentation VÁTI Relevant documents VÁTI Regular reporting on the measure (applications, contracts, payments, etc.) VÁTI, MA Various regular reports VÁTI, EMIR, MA Input data related to the to the implementation of the measure into electronic information system VÁTI, MA, RDA EMIR EMIR The description of the audit trail should be sufficient to demonstrate that reconciliation of summary amounts certified to the Commission (See point 0) with the individual expenditure records and supporting documents held at the various administrative levels, by final beneficiaries, and by the bodies or firms carrying out the operations is possible. Instructions on retention of documents necessary for audit trail by administrative levels and beneficiaries Have instructions been given on retention of supporting documents for claims by beneficiaries (para.1 and 3 of Annex I Reg. No 438/2001 and Reg. No 1260/99: Art.38) (Indicate form and reference)? The Decree No. 233/2003. (XII.16.) (Art. 53. Par. (1)) determines the obligation of keeping all documents related to the utilisation of Funds for a period of at least 3 years after the final financial settlement of the program by the European Commission taking into consideration also the provisions of the accounting regulations. Furthermore, the beneficiaries are obliged to keep all of the documents defined in the grant contracts. Describe how the national legislation regarding the retention of documents ensures compliance with EU requirements (provide references). The Hungarian legislation Decree 233/2003. (XII.16.) – attached as an annex to this document - ensures full compliance with EU requirements in this respect. In what format are these documents to be held, e.g., original, microfiche, electronic version (Reg. No1260/99: art 38(6); Reg. No 438/2001: art 7 as amended by Reg. No 2355/2002) ? All documents will be kept original, and whenever possible also in electronic version. Describe the procedure for recording the name of the body holding the supporting documents, its location and the person responsible. The supporting documents are in archives, two copies are preserved by the Regional Development Agencies, one copy is filed by Managing Authority, VÁTI Central Office and VÁTI regional representations have each one copy.
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