Presentation Ljubljana December 14th 2004

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(No Transcript)
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General IIIB principles
Introduction

• Transnationality
• Common goals
• Tangible
• Partnership
• Innovation

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General IIIB principles
Transnationality

• Minimum requirements
• Difference between transnational issue and common
  issue
• Transnational investment

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General IIIB principles
Common Approach

• Starting point for cooperation is a truly common
  problem or a chance
• Projects which are money driven nearly always fail

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General IIIB principles
Tangible Results

• Innovative to the common benefit
• Impact on territory
• Visible and concrete
• Actions can be tangible

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General IIIB principles
Partnership

• Guarantee on implementation
• Consistent and balanced
• Relate to the project objectives

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General IIIB principles
Innovation

• Partnership
• The issue
• The approach
• The techniques

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Crucial Elements in Financial Assessment
Content

• Important financial aspects in Application Form
• How to prepare an application
• Conclusion and tips

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Crucial Elements in Financial Assessment
Introduction

• Certain aspects relating to finance and
  management are crucial to all IIIB programmes
• Difference between preparation phase and
  implementation phase
• Point of view JTS and Assessors
• Advice to International Steering Committee
• What aspects are closely looked at?

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Crucial Elements in Financial Assessment
Important aspects

• Value for money
• Partnership / Contributions
• Budget consistency and transparency
• Financial management structure

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Crucial Elements in Financial Assessment
Value for Money

• Why important
• Proportionate
• Cost effectiveness
• Competiveness
• Penny wise, pound foolish
• Mix of finance and content related issues

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Crucial Elements in Financial Assessment
Partnership / Contributions

• Balanced partnership
• Balanced contribution
• Early commitment from partners
• Letters of commitment
• Letters of intent
• Financial implications should be clear (also
  contribution to management)

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Crucial Elements in Financial Assessment
Budget consistency and transparency

• Consistency between action plan / budget lines /
  total budget
• Detailed description of what will be done
• It can never be too detailed
• Public procurement and state aid rules must be
  complied with
• 236.000 for services and purchases
• 5.9 million for works
• De Minimus rule ( 100.000 over 3 years to
  private companies)

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Crucial Elements in Financial Assessment
Financial Management Structure

• Lead Partner principle
• Centralised or Decentralised management system
• Co-ordination mechanisms / audit trail
• Reporting structure
• Finance project management costs
• Borne by lead partner (including co-financing)
• Borne by all partners (invoices to partners)

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How to prepare application form

• 100 commitment
• Appoint full time coordinator
• Political / managerial support
• Ensure unrestricted information flow across all
  partners
• Break budget and activity down to basic elements
  and agree
• Ensure that all partners agree action plan and
  budget responsibilities
• E.g. contribution to management costs and
  transnational activities
• Many projects have not specified the budgets for
  each partner further than required by the
  application form. This makes good financial
  monitoring difficult.

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How to prepare application form

• A well detailed partner budget should be broken
  down by
• budget lines
• work packages or other sub-components of a
  project
• milestones or phases (in line with planned
  activities)
• Recommendation prepare such details before
  presenting the application. Otherwise,
  immediately after funding approval
• Establish website (and use)
• Be professional
• No secrets

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Crucial Elements in Financial Assessment
Conclusion and tips

• Keep regular contact with programme secretariat
  and partners
• A good application and action plan assists in
  implementation
• A problem shared is a problem halved
• Good preparation is an investment
• Preparation takes longer than assumed
• Proper control assists all participants and
  contributes to successful implementation
• The Devil is in the detail

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Crucial Elements in Financial Assessment
Questions?
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Financial Management Approaches
Contents

• Centralised vs. Decentralised
• Financial Reporting Procedures
• Audits
• Success factors (implementation)

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Financial Management Approaches
Centralised vs Decentralised

• Lead partner bears overall responsibility
• Each individual partner responsible vs more
  responsibility for lead partner
• Centralised or decentralised internal/external
  audit
• Centralised or decentralised bookkeeping
• Agreements in Partner Agreement !

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Financial Management Approaches
Centralised Management System

• Centralised collecting of administrative and
  financial data
• One central budget for investments and common
  activities
• Partners contribute to central budget
• Advantage Clear overview and constant monitoring
• Disadvantage
• Lot of work
• Risk of creating lazy partners

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Financial Management Approaches
Decentralised Management System

• Each partner has own administration and budget
• Partners pay own invoices
• Keep own books
• Responsible for development and delivery of
  agreed projects
• Audited payment claims by internal auditor

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Financial Management Approaches
Typical problems

• Often, partners are not familiar with Interreg
  reporting procedures and regulations. Frequent
  problems are
• Incorrect or inconsistent currency conversion
  (using bank rates incl. charges instead of
  official rates not applying rate of date of
  payment)
• Wrong calculation of staff cost (e.g. adding
  overheads not based on specific salaries)
• Mistakes in manual transfer of figures from one
  to another form
• Wrong totals or changed wording in auditor
  confirmation sheet
• Unclear classification of expenditures by budget
  lines expert cost underpromotion or under
  experts, travel cost under conferences or under
  travelcost etc.
• Uncertainty regarding the eligibility of
  expenditure
• Conclusions
• What can be done by the financial manager, should
  not be left to thepartners
• Partners need regular assistance in preparing
  financial reports

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Financial Management Approaches
Reporting procedures

• Half yearly reports
• Payment claim
• Activity Report
• Forecast Report
• Templates are obligatory
• Templates available from secretariat

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Financial Management Approaches
Administrative requirements

• Reports costs actually incurred and related to
  the project
• Eligibility period
• Aggregated overview of expenses
• Per category of expenditure
• List of invoices
• Reference documents providing proof of payment
  (i.e. a print of the ledger or a print of your
  financial system which makes clear that invoices
  have actually been paid).

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Financial Management Approaches
Reporting procedures

• 1. Financial manager sends individual files to
  partners containing
• budget (detailed by work packages and budget
  lines)
• previously reported expenditure
• exchange rates for automatic conversion
• 2. Partner fills in the forms staff unit cost
  rates and time sheets individual expenditure
  made until 1.5 months before Interreg reporting
  deadline.
• 3. Partner sends audited and signed forms to
  Financial Manager for checking, together with
  copies of all invoices paid (duly numbered,
  indicating date of payment)
• Financial Manager checks, consolidates, prepares
  the summary report and sends it to the auditor
  (internal or external)
• Audited payment claim to secretariat

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Financial Management Approaches
Reporting procedures

• All projects managed by Haute Finance have opted
  for decentralised auditing to limit the LPs
  risks
• Each partners arranges auditor confirmation for
  his expenses
• Forms for partner auditor confirmations, although
  not requested by Interreg, are identical to the
  ones for the LP
• LP arranges total-project auditor confirmation
  based on partners single confirmations and after
  auditing expenses from common account

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Financial Management Approaches
Auditing

• The Interreg requirement
• Interim reports may be audited internally (by
  auditor from another department of partners
  organisation than the one spending)
• Final report must be audited externally.
• In certain countries, a.o. Slovenia, there are
  first level controls
• National cofinancing? audited by Ministry of
  Environment, Spatial Planning and Energy (MESPE)
• Private cofinancing ? audited by private auditor

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Financial Management Approaches
Pros/ Cons internal / external Auditors

• Internal auditor may be cheaper (not always), but
  often is not familiar with Interreg regulations
• Many partners have a regular external auditor for
  their routine audits for their organisation.
  These auditors may do the Interreg auditing at
  moderate cost, but are often also not familiar
  with Interreg regulations.
• An external auditor, if not used for interim
  reports, may decide to audit all expenditures
  from the project start (at least by sampling).
  Then the total audit cost may be higher than
  using an external auditor from the beginning.
• External auditors specialised in Interreg/
  Structural Funds are normally not chosen by the
  partners due to higher cost rates.
• This creates a higher burden on the financial
  manager to advise partners on how to interpret EU
  regulations.

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Financial Management Approaches
Reporting Scheme
Audit - CCL - PMT - Total
City council of Ljubljana
Management budget (PMT)
Alpine Space Secretariat Rosenheim
Partner 2
Audited
City of Ljubljana
Partner 3
Partner 4
Check on correctness and completeness
Partner N
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Financial Management Approaches
Success factors

• Data design of management structure, (handbook
  creation) procedures is only the first step !
• Main succes factor is IMPLEMENTATION of this
  structure.
• Succes factors for implementation are
  involvement from partners, support for chosen
  structure and procedures, available resources
  within project for (financial) management and
  support from Lead Partner organisation.

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Financial Management Approaches
Success factors

• Keep handbook concise / easy to read keep it as
  simple as possible
• Instruct partners in meetings or face to face
  (bilaterals)
• Be available for questions and problems
• Arrange things in an early stage of the project
• Good cooperation between finance manager and
  others within the management structure of the
  project

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MT Building bridges for expertise and knowledge
transfer!
Please dont hesitate to contact MT for further
information or visit MTs website
www.interact-eu.net/mt Feel free to contact
also Hen Gerritse, hen.gerritse_at_hautefinance.nl Jo
ep de Roo, joep.deroo_at_hautefinance.nl
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Introduction afternoon programme
General Setup this afternoon

• Budget lines explanation
• Two relevant programmes
• CADSES
• Alpine Space
• Definition of budgetlines / applicants manual /
  guidelines
• Examples / practice
• Differences between programmes
• How to fill in the Appliation Form

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CADSES Programme
Budget lines

• Project Co-ordination
• Personnel / staff
• Meetings and seminars
• Travel and accomodation

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CADSES Programme
Project Co-ordination

• Coordinating a transnational project business as
  usual?
• Specific difficulties?
• Easy to understimate?
• A job for the left overs in a organisation?
• Specific requirements for the managers?

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CADSES Programme
Project Co-ordination
Tip Present Co-ordination as separate action in
Apl. Form
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CADSES Programme
Personnel / Staff

• is the archive staff of a organisation eligible?
• Is the personnel of your companies restaurant
  eligible?
• Message be reasonable and transparant

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CADSES Programme
Personnel / Staff

• Assigned to operation additional activities
• Closely related to activities in activity plan
• Project manager/ Coordinator / Financial manager
• But also communication, support, administrator.
  auditor, legal advice, content advice etc.
• Real salaries plus social security and other
  remuneration-related costs
• Based on payslips, timesheets

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CADSES Programme
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CADSES Programme
Meetings and seminars

• Define the objectives of meetings and seminars
• Is a meeting on the Bahamas eligible?
• Again be reasonable and transparant concercing
  the frequency and location

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CADSES Programme
Meetings and seminars

• All costs related to organisation of meetings,
  seminars,conferences under this budgetline
• Rent of premises, equipment, translators
• Lunches, dinners etc. not covered by the DSA
• Tip Use a time-related planning scheme and
  standard costs for meetings and seminars
• E.g. 3 thematic workshops (a 3500) and 1 open
  seminar (a 15.000) each year

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CADSES Programme
Meetings and seminars
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CADSES Programme
Travel and Accomodation

• Costs related to international or national travel
  related to the project
• Important to keep all tickets, invoices and
  receipts (from the inception of the project)
• Not for travel in first class and overnight stay
  in 5 hotels
• Costs for overnight stays should not exceed the
  daily subsistence allowances given by commission
• http//europa.eu.int/comm/europeaid/perdiem/perdie
  m.pdf
• E.g. for Slovenia 170

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CADSES Programme
Travel and accomodation
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Coffee break
Coffee break
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Alpine Space
Budget lines

• External experts and consultants
• Infrastructure investments
• Equipment
• General expenses and others

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Alpine Space
External experts and consultants

• Why? Is it the expertise or to fill in a shortage
  of own staff ?
• What? Content, finance, management?
• How? A coaching role?

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Alpine Space
External experts and consultants

• Costs for hired expertise
• Research, studies,
• Management, Co-ordination, financial management
• Audit costs
• Public procurement rules
• Recommended maximum rate of 700 - 800 a day

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Alpine Space
External experts and consultants
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Infrastructure investments

• wide definition. More than physical infra
  structure?
• Are computers for your project an investment?
• How can the renewal of a medieval church tower in
  a city be eligible in a transnational programme?

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Alpine Space
Infrastructure investments

• Owing to limited resources, only small-scale
  infrastructure investments are eligible under
  INTERREG IIIB. Motorway, main road construction
  and other similar infrastructure are excluded.
• Remember the Structural Funds regulations, public
  procurement rules, State Aid rules, Community
  publicity and information requirements and
  environmental legislation.
• Who will be the owner of the investments?

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Alpine Space
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Alpine Space
Equipment

• The project manager wants to lobby for the
  project and is invited for a gala dinner with the
  minister. He buys a smoking. Is this eligible
  equipment?
• Is this necesarry for a succesfull
  implementation?
• Consider the cheapest solution. Think also of
  leasing constructions

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Alpine Space
Equipment

• Only equipment essential for the delivery of the
  project is eligible
• Computers, mobile phones, faxes etc
• Cost of depreciation
• During the project

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Alpine Space
General costs and others

• Be carefull and do not consider it as the the
  project budget bin
• Also costs under this category need justification
  and they must be directly linked to the
  objectives of the project!

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Alpine Space
General costs and others

• General costs should include office costs such as
  stationary (excluding staff and
  equipment),overheads (indirect costs such as
  electricity, rent and insurance calculated and
  charged tothe project on a pro-rata basis) and
  other eligible expenditure incurred during
  theimplementation of the project which does not
  fall under any of the other budget lines.
• Often limited to a maximum of 5 of the projects
  total eligible cost.

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Alpine Space
General costs and others
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Important documents

• Applicants manual / Guidelines for project
  promoters
• CIP and Programme Complement
• Guidelines for Interreg IIIB
• Community regulation
• 448/2004 (Eligibility of expenditure)
• 1159/2000 (Information and publicity)
• 1260/1999 (General provisions)
• 448/2001 (Financial corrections)

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Conclusions and expectations
Future for transnational cooperation

• A bright and sunny future
• Budget doubled
• Pre defined priorities
• Cooperation areas still under discussion
• 75 percent ERDF
• Less bottom up
• higher efficiency

61
MT Building bridges for expertise and knowledge
transfer!
Please dont hesitate to contact MT for further
information or visit MTs website
www.interact-eu.net/mt Feel free to contact
also Hen Gerritse, hen.gerritse_at_hautefinance.nl Jo
ep de Roo, joep.deroo_at_hautefinance.nl