Administration of payment claim

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• Administration of payment claim
• Magda Karina
• Central Finance and Contracting Agency, Senior
  Expert, Programme Management and Supervision
  Department
• 01.- 02.02.2012

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Payment claim

• Payment claim template is approved by the Cabinet
  of Ministers as Annex to the national Regulation
  on  EU funds project budget planning, payment and
  expenditure declaration management
• Beneficiaries fill in the payment claim
  information using an empty template
• Payment claim and supporting documents to CFCA
  can be submitted
• paper form (physical submission, mail)
• submission via fax,
• electronic submission (signed and scanned
  documentation in digital storage or signed and
  scanned documentation via e-mail- only signed
  with safe electonic signature )

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Payment claims confirmation

• Performed after verification of expenditure
  supporting documents
• Important
• Expenditure supporting documentation selection
  or 100 check
• Checklist

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ProcessFrom submission till confirmation
- 20 wd
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Payment claims confirmation in CFCA

• Verification of the payment claim and
  supporting documents
• If necessary, perform supporting document
  selection
• Fill out the checklist
• It has been developed in each institution based
  on MA defined principles of division of
  verification checks between the desk checks and
  on the spot checks (main principles are in MA
  guidelines)

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What expenditure supporting documents must be
presented with payment claim?

• Current progress report of the project has
  been received and reviewed
• Copies of
• Bank account printouts, Accounts
• Consignment bills
• Product and service contracts, changes of it, if
  made
• Approved construction project and construction
  permission
• Certificate of acceptance
• Decree, working-time balance, certifications
  etc.
• Others, if necessary
• Beneficiary present copies of documents.
  Originals are checked during checks on the spot
• Documents about the procurement for the Project
  are checked during progress report check

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Expenditure supporting document selection (1)

• To confirm payment claim, not always we check
  expenditure supporting documentation 100
• First and final payment claim 100 check for
  intermediate payment claim may be applied a
  sample check
• The goal of sampling is to use an objective and
  independent method to determine the amount and
  number of transactions for detailed verification
• The sample of supporting documents is selected
  basing on the acceptable error rate

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Expenditure supporting document selection (2)

• To define the acceptable error rate, first
  expenditure must be divided in following groups
• Reimbursement
• Travel and business travel costs
• Administrative costs (rent, electricity,
  maintenance and telecommunications services and
  other expenses)
• Expenses related to procurements and contract
  documents, including expenditure on procurement
  below the thresholds

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Expenditure supporting document selection (3)

• The error rate is determined for each
  expenditure group irregularities expenses
  about which beneficiary didnt submit acceptable
  supporting documentation against approved claimed
  and eligible funding for each expenditure group
•  
• The identified errors in each expenditure groups
  are classified as
• Low error rate (A) - the level of errors in the
  group 3
• Average error rate (B) - 3lt error rate in the
  group 5
• High error rate (C) - the error rate in the
  group gt 5
• According to the error rate in each group we
  determine amount of transactions which we must
  verify in the next payment claim
• Low error rate (A) at least 10 of the
  particular group in the reporting period
• Average error rate (B) - at least 50 of the
  particular group in the reporting period
• High error rate (C) - 100 of the particular
  group in the reporting period

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Expenditure supporting document selection (4)

• To ensure equal opportunities for every random
  object to get in the overall sample for low and
  medium error level, the selection is made in MS
  Excel
• Prepare a list of payments / employees
• Determine the total amount of the costs in
  each group included in the payment claim
• Apply random testing according to our
  previously set error rate and calculate starting
  point using the formula
• ROUND(RAND()(N-1) 10), where "N" is the
  number of payment / employees
• Calculate the step - the inverse percent of the
  minimum amount of test 10 - one in ten 50 -
  every second
• You have to check every tenth or every second
  until it reaches the required amount

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Payment claims confirmation checklist in CFCA (1)

• Formal check
• Are the files/forms complete?
• There is no missing documents?
• Are documents signed by the person entitled to
  do so?
• Is beneficiary/ project/ payment claim/bank
  account identification correct?

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Payment claims confirmation checklist in CFCA (2)

• Application is correct
• Tables are arithmetically correct?
• The total eligible expenditure and its breakdown
  by financial sources specified within table is
  equal to the information provided within the
  summary of the eligible expenses?
• Expenses presented within the tables corresponds
  to the approved eligible costs of respective
  activity?
• All expenditure has been settled during the
  project, except in those cases, which are set by
  the activity's Regulations issued by the Cabinet
  of Ministers?
• PC does not include charges, which are
• related to the incompliance with conditions of
  agreement of project implementation or,
• related to the incompliance with activity's
  Regulations issued by the Cabinet of Ministers
• previously detected as not eligible

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Payment claims confirmation checklist in CFCA (3)

• Expenditure is real
• Eligible expenditure claimed within current
  payment claim complies with submitted supporting
  documentation?
• Payments within payment claim are actually paid
  out and they have appropriate supporting
  documentation, which complies with the agreement?
• Products and services are delivered
  information about fixed assets is correct, if
  replaced, they fully meets the project's initial
  targets and provides the fulfillment of planned
  results of the project?

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Payment claims confirmation checklist in CFCA (4)

• Grant contract specifications are respected
• Is claim without roundings, miscalculations?
• Is budget not overrun?
• Are budget lines respected?
• Are Indicators and goals achieved (final
  payment)?
• EU fund beneficiary has carried out procurement
  for the Project purposes according to the
  requirements of laws and normative acts of
  Latvian Republic

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Payment claims confirmation checklist in CFCA (5)

• There is an indication whether the revenue has
  been generated during the Project implementation
• Information about VAT report is correct?
• Check of the progress report if there are
  deficiency, it doesnt affect the payment claim
• Information from IS about major errors detected
  during checks on the spot visits does not impact
  refunding of the PC (if applicable)

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Payment claims confirmation checklist in CFCA (6)

• The check of supporting documents (copies) of
  expenses included within PC have been submitted
  and verified for the following cost items
• Reward, including the employer's social insurance
  contributions (SIC)
• Business trip expenses, including travel expenses
• Transport costs (the cost for fuel, public
  transport, vehicle rent or transport services)
• Telecommunications and Internet costs
• Stationery costs
• Room rental and maintenance costs (heating,
  electricity, management services, water supply)
• Expenditure for the purchase of office equipment,
  in order to support administrative activities of
  the project
• Publicity and representation expenses
• Insurance costs
• Expenses for equipment, supplies and technology
• Costs for construction of buildings, structures,
  infrastructure and real estate purchase costs
• Other expenses, if applicable

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Amendment

• Project manager can manually correct
  insignificant mistakes in beneficiaries payment
  claim
• Also beneficiary can send in amendments only
  few pages or all the payment claim (if the last
  one occur the first payment claim is asked to
  be revoked)

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Challenges for improvement of payment claim
process

• To introduce the possibility for beneficiary to
  enter the payment claim directly in MIS (using
  the electronic signature)
• To enhance usage of sampling in payment claim
  verification process

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Thank you!