Claims and Certification Support Seminar

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Claims and Certification Support Seminar

• Ann Tune
• European Social Fund Division

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DP Guidance for Claiming Expenditure and
Apportioning Shared Costs
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Auditors, Methods and Consequences of Errors Found

• Variety of auditors
• Systems based approach
• Key staff in attendance
• Documentation to support activity as well as
  expenditure
• Irregularities and Financial Corrections

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Documentation and Certification
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Claims and Certification

• All documentation and certification submitted
  must be originally signed and stamped by an
  authorised person in the organisation.
• Where the organisation has no official stamp, a
  letter on official business headed paper must be
  provided explaining this with each claim.
• All documents should be error free and should
  show no crossing out or liquid paper to cover
  mistakes.

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Claims and Certification (2)

• Maintain legal business documentation to
  demonstrate the following
• Ownership of premises where different addresses
  have been supplied between the DPA/MPA and
  certification documents
• Links with subsidiaries and Intra Company Trading
  arrangements
• Sub contracting services / use of consultants

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Non Financial High Risk Areas !

• Failure to report significant changes that fall
  outside the DPA/MPA
• Nil or inadequate publicity
• Eligibility of a theme this must be
  demonstrated and be maintained
• Failure to maintain sufficient beneficiary details

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Non Financial High Risk Areas ! (2)

• Failure to maintain contingency and exit
  strategies / plans
• Lack of quality assurance mechanisms in place to
  monitor all partners
• Added value not transparent

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Common faults found with record keeping

• Timesheets and expense claim forms not authorised
  by a countersigning manager and not dated
• Timesheets do not show organisation time as well
  as project related time
• Job descriptions not Equal specific for staff who
  work 100 of their time on project
• Invoices related to activity outside the claim
  period.

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Common faults found with record keeping (2)

• Roles of indirect staff not provided in relation
  to the project
• VAT status of all partners not established from
  HMRC
• Inconsistencies with staff rates of pay in
  documentation without any explanation

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Common faults found with record keeping (3)

• Apportionment / costing methodologies not
  documented
• Errors made in claims that have not been
  rectified or recorded as being checked and
  amended
• Evidence of payments not provided or unclear
  especially for apportioned overhead costs
• Unclear or incomplete audit trail

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Expenditure
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Expenditure must be

• Approved in DPA or by a Significant Change
• Actual i.e. not estimated or notional
• Accurate sufficient management checks must be
  in place
• Apportionment fair, equitable, reasonable and
  consistent throughout the project
• Eligible refer to Equal Handbook and ESF rules,
  regulations and handouts.

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Expenditure must be (2)

• Incurred during the project period and defrayed
  prior to claim submission
• Relevant specifically linked to project
• Supported fully by source documents e.g. paid
  invoice
• Transparent clear paper / audit trail
  highlighting all calculations and apportionment
  methodologies used

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Direct and Indirect Expenditure

• Direct Expenditure must be
• Identified wherever possible
• Discrete to project
• Examples include staff salaries, consumables and
  beneficiary allowances, etc.
• Indirect expenditure must be
• Eligible costs incurred by organisation to
  deliver a range of activities including ESF
  project
• Example include shared staff, utility bills,
  insurance, rent and rates

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Financial High Risk Areas !

• Failure to re-profile where actual expenditure
  trend differs significantly from profiled spend
• Utilising notional / budgetary costs instead of
  actual costs for staff and overheads
• Unjustified central overhead costs
• Sale of assets bought by community funds and not
  declared as revenue

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Financial High Risk Areas ! (2)

• Revenue is generated but is not offset against
  claim total
• Including costs for running the organisation and
  not just the project
• Unjustified use of Consultants
• Costs do not reflect good value for money

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Apportionment of Shared Costs

• If intending to use any method other than staff /
  beneficiary time you MUST obtain approval
• All staff / beneficiary time must be recorded in
  units of 1 hour and be actual
• Wherever possible try to identify direct costs.
  For indirect / shared costs you must show the
  apportionment calculation against each item that
  you are claiming
• Simply divide the total project staff /
  beneficiary time for period (in hours) into the
  total staff time / beneficiary time for period
  and multiply this by the actual cost for period
  of claim.

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Apportionment of Shared Costs (2)

• Example
• Heating actual cost for period of claim
  2,700
• Total staff / beneficiary time for period 900
  hours
• Total project staff / beneficiary time for period
  160 hours
• 160 X 2,700 480
• 900

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Apportionment High Risk Areas !

• Allocating budget overheads instead of actual
  costs
• Using amounts taken from the previous years
  financial accounts
• Including organisational costs as well as project
  related costs
• Basing hourly overhead costs on Full Time
  Equivalent (FTEs)

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Apportionment High Risk Areas ! (2)

• Using estimated charges for overheads
• Management fees calculated on per head basis or
  as a of project value to recoup costs
• Vague headings used to describe costs
• Using notional rent or rates instead of actual
  payment

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Apportionment High Risk Areas ! (3)

• Including items in the overheads which are not
  eligible or relevant to the delivery of the
  project
• Charging rent for buildings which the
  organisation owns
• Including costs within a heading that are not
  eligible in line with ESF rules and regulations

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• Any Questions?