Financial FAQ - Implementation

Financial issues during the Implementation stage / 34 questions

Accounting documents

Should all accounting documents be in English?

All official documents (e.g. timesheets, First level Control report and checklist, cost itemisation list) should also be available in English. Using the programme language makes the documents understandable for the lead partner, first level controller(s), the Joint Technical Secretariat as well as any control body (e.g. European Commission, Second Level Auditors).
Of course, regular original partner organisation's accountancy documents can be in the partner's own language.

Bank account – SEPA

What are the advantages of opening a SEPA account?

Opening a SEPA (Single Euro Payments Area) account results in faster receipt of payment, lower and transparent transfer charges.

Bank information - Trustee accounts

By law, the lead partner is forced to open a trust account. This means that the financial manager acts as a trustee and opens a trust account on behalf of the lead partner organisation. The account holder will be the financial manager. How could we provide this information in the application form?

This procedure is eligible as the lead partner organisation is legally obligated to open up a separate account. The lead partner should provide a short explanation for the special account type in the description of work package 1.

Bank information – Internal reference

In the Progress Report (and Partner report) we are asked to state the “internal reference number” for the bank information (Cover sheet). What kind of information should be written there?

The internal reference depends on the wishes of the partner.
When the Programme or the Lead Partner is transferring the requested amount to the Lead Partner/Project Partner, the internal reference will be included in the note to the payee. Moreover, the number and the acronym of the project are in the note to the payee. This means that this information will be written in the partner's accounting statement for the respective transfer.
The internal reference should help the partners and/or their accounting departments to identify the incoming amounts. Many partner organisations have a special reference number that they would like to have connected to the payment. It is also acceptable if partners leave the field empty.

Changes in activities

What happens if we are not able to finish certain investments until the end of the project?

You may change your activities, if you submitted a request for project changes to the Joint Technical Secretariat and if either the Secretariat or the Monitoring Committee approved this request.

Cost itemisation list and Personnel costs

How to fill in Personnel costs in the cost itemisation list?

All personnel costs are filled in the sheet" Itemisation of actual project costs". The basis for the personnel costs are the calculations of the timesheet. Here the personnel costs of each employee are allocated to the different work packages according to the real working hours of the employee (see section ‘Personnel costs_Report').
As no single invoice underlies the personnel costs the following is recommended to be filled in cost itemisation list:
• Column ‘Internal no°': e.g. labor contract number
• Column ‘Invoice no°': e.g. number of the latest payment order
• Column ‘Invoice date': e.g. date of the latest payment order
• Column ‘Specification of the invoice': reference to the timesheet,
• Columns ‘National currency' and ‘Exchange rate': EUR and 1.0000, because the currency exchange is done already in the timesheet,
• Columns ‘ERDF', ‘NOR', ‘ENPI': depending on the partner's fund, the total amount per WP of the timesheet (see section ‘Personnel costs_Report'), and
• Column ‘Payment date': latest payment date of the timesheet (see section ‘Personnel costs_Compilation').
In this way all personnel costs (net salary + obligatory contributions of the employer) are transferred from the timesheet to the cost itemisation list.

Cost sharing

Is the responsibility described in the Programme Manual to be imposed on each implementing partner of the project? Does it mean that every single cost sharing operation within the project has to be agreed beforehand with relevant first level controllers? Does it mean that in case a cost sharing scheme is included in the partnership agreement, this particular document has to be validated by the first level controllers? Or is it enough to have a green light from first level controllers on the principal procedure (e.g. regulated in the written agreement on cost sharing method), which will be applied in the project?

The roles of the different actors are further explained in the Programme Manual, especially in the chapters about cost sharing and first level control. The first level controllers (FLC) will validate the reported expenditure. Part of their checks will be the validation of the cost sharing documents including the partnership agreement. In order to avoid that the FLC refuse to validate some already paid costs each partner should clarify in advance if the agreed cost sharing model will be accepted by its FLC.
This also includes agreement with the FLC about the documentation he will demand/accept.

In the Programme Manual it is written that “After the costs have been validated by the first level controller of the implementing partner, they are shared according to the agreed and documented cost sharing method.” The cost doesn’t need to be included in each partner’s first level control then?

Correct, the shares of contributing partners are NOT included in their partner reports but the Lead Partner fill in them directly into the overall Progress Report (in FR_5 you will find for this purpose two separate columns - own costs and shared costs). If a partner included the cost shares into the own report, the costs would be reported twice. The shared costs are fully validated by the FLC of the implementing partner.

According the Programme Manual (first sentence in chapter 5.4.3) the cost sharing procedure can be applied after the costs have been validated by the first level controller of the implementing partner. In case of advance payment the real costs incurred in the project cannot be proved at that stage. Should an advance payment note be validated by the first level controller, as well?

There is no need to validate the advance payment because the advance payment must not be reported. It is important to distinguish between the "real costs" and the "cash flow" between the partners - a money transfer between partners does not necessarily equal the amount of real costs.
An example for better explanation: There are 1 implementing (IP) and 2 paying partners (PPs) sharing costs in equal shares. The IP asks for advance payment of 10,000 € from each PP - means he received 20,000 € plus he has own resources. Then the IP purchases the agreed goods/services and spends 27,000 €. This amount will be validated by the FLC of the IP, in the cost sharing invoice it will be stated that each partner's share is 9,000 € (1/3 of 27,000€). This amount will be then reported for all three partners. The IP will return the overpayment of 1,000€ to both PPs.

Can we report cost shares for a partner who has not yet reported own costs?

You may report cost shares for that partner, if this partner has transferred to the implementing partner or lead partner its own contribution related to the cost shares. In this case the proof of this payment is to be submitted to the JTS.

If the partner has not transferred anything yet, then the cost shares should be excluded from the report. As soon as the partner reports own costs, all cost shares related to that partner can be included in the report.

Eligibility period

Can the project start its activities right after the approval by the Monitoring Committee?

In all budget lines and work packages expenditure of project partners that receive ERDF or Norwegian co-financing is eligible from the day after the MC approval on. Therefore projects can start their activities on the day after the Monitoring Committee (MC) approval, but at the latest within three months after the MC approval. ENPI expenditure is eligible from the date of signature of the Grant contract. However the costs can only be reimbursed after the Belarusian partners have passed the national Belarusian approval procedure. This might last between 3 months and a year.

ENPI budget

We are lead partners in a project having partners from BY but not having ENPI budget. Can we spend part of the BY budget?

One of the general principles of the Programme is that each partner budget can be spent only by that given partner - either in form of own costs or in form of shared costs. This means that one partner cannot pay costs on behalf of another partner. The rule is also valid for the ENPI funds. So if the lead partner would like to contract and pay any service (e.g. first level control) for a Belarusian partner, it has to report such costs as own costs and for this the lead partner own ENPI budget is needed.

Extension stage

Is there a danger that investments, which are planned for the extension stage, can be rejected?

The Programme Manual stipulates that the application for the extension stage must be presented not later than half a year before the ending date of the approved project. Afterwards, the application for the extension stage will be assessed and must be approved by the Monitoring Committee. However, the approval of the extension stage will also depend on the availability of programme funds at that moment.

Financial management

The project plans to pool the financial resources of all partners from the same country in a joint account at one appointed organisation. Thereby, a system of national financial coordinators will be set. From this account all expenditures, except for personnel costs, will be paid. Is such a model recommended by the Secretariat or are there any other models found by the Secretariat more effective?

The Joint Technical Secretariat does not recommend to pool funds in one account. Each project partner should have its own account from which the costs are paid.

First level control

Is a list of recommended first level controllers per country available for project applicants coming from countries with a decentralized first level control system?

No, such a list is not available. In decentralised systems, the controlled beneficiary is free to appoint its controller, complying with certain requirements set out in the Programme Manual.
Only for the so-called "mixed system", a pre-defined list of approved controllers is made available. (Please see the chapter on first level control of the Programme Manual for more details.)


Does each project partner have to have a first level control verification for each report by its own national first level controller? Or is it enough to have one first level controller in the Lead Partner's country?

Yes, each partner has to have a national first level controller that validates and confirms its expenditure. It is not acceptable if only the Lead Partner's first level controller validates and confirms the expenditure of project partners.

How to integrate the invoice of the first level controller into the relevant reporting period?

It depends on the start of the preparation of the progress report and the first level controller. If you start early the first payment to the first level controller can be included in the relevant reporting period. The final payment can then be included in the next reporting period. In case the first level controller is paid after the end of one reporting period, the expenditure can be reported in the next report only.

How deep should the first level controller of the lead partner check the partner reports?

The first level controller should rely on the first level control of the project partners. He should base his work on the check of the other first level controllers. The work should not be done twice. But the lead partner's first level controller should satisfy himself that the check has been done by a designated first level controller (e.g. designation certificate, first level control confirmation, checklist, sample documents, etc.).

Are internal first level controllers eligible?

In some countries yes, if they were designated by the relevant bodies. Please note that in some countries the costs of an internal first level controller are not eligible (e.g. Poland). For details see documents on eu.baltic.net, section Country specific information.

Is there a document which lists the requirements for the qualities of the first level controller?

On the programme website you will find a country specific section, where the requirements for the first level controllers are laid down. The contact details and other relevant information are also given.

Is it possible that several project partners from the same country share one first level controller?

Yes, several project partners from the same country can have the same first level controller.
There are two options:

a) Each project partner makes its own contract with the first level controller.

b) Partners can also share the first level controller using the method of cost-sharing. Please note that only external first level controllers can be shared. In this case all project partners shall conclude a cost sharing agreement. One project partner (Implementing partner) shall contract the first level controller and pay his invoices. The other project partners shall pay their share to the Implementing partner. Please also note that although the first level controller is contracted by one partner, all project partners have to have a designation certificate for their first level controllers.

First level control - ENPI

Is there a list of Belarusian companies performing first level control for projects in Belarus?

Such a list does not exist, but our Programme Manual sets the formal requirements. One important requirement is that the first level controller must be a member in the International Federation of Accountants (IFAC) and must apply the IFAC standards. More information about IFAC and a list of its member bodies can be obtained on their website www.ifac.org.

First level control - prices

Is there any information about cost estimations for first level control in each BSR country?

The first level control price depends on the national system. Descriptions and some details of these systems can be found in the Programme Manual, chapter on first level control. In case the Joint Technical Secretariat received any country specific information it will be published on eu.baltic.net und "Country specific information".
In centralized systems the first level control is usually paid by the national authorities, i.e. project partners do not pay anything.
In decentralized systems project partners have to pay for their first level controller on their own. It is recommended that the partners ask a potential first level controller for an offer.

Lead partner principle

How can the lead partner secure himself against problems – especially in financial terms?

You should use the partnership agreement to agree on handling of eventual irregularities, risk management and liability of project partners.

Partner report form and other templates

Some centralised first level controllers have developed special reporting forms and other templates for the partners from their country. What should we do?

The Programme has developed a voluntary Partner Report and other voluntary templates that shall support the Lead Partner in the Project Management. The first level controllers of countries with a centralised system have agreed to accept these templates. In case of difficulties, we would recommend contacting the relevant Project partners and first level controllers to find a joint solution. Even though the centralised first level controllers have accepted the Programme's voluntary templates, it might be that the countries national rules require further documents, which must be provided by the partners of the country
However, the national controllers have to observe the programme rules (e.g. calculation of personnel costs) and they have to use our templates for the first level control report, the first level control checklist and the first level control confirmation.

Partnership agreement

What happens if the partnership agreement is not signed until the deadline? a) If the partnership agreement is not signed before/soon after the end of the 1st reporting period (e.g. 31.7.2009), the project partners cannot report their costs in period 1, or can they report their costs belonging to period 1 in the 1st report anyway? b) If the partnership agreement is signed in period 2, can the project partner report its costs for both period 1 and 2 in the 2nd Progress report?

a) As stipulated in the Programme Manual: The partnership agreement has to be signed before the deadline for submission of the first Progress report (e.g. 1.11.2009). The programme cannot co-finance the expenditure of a partner who has not signed the partnership agreement. In light of this, the partnership agreement might also be signed after the end date of the first reporting period (e.g. 31.7.2009). In this case you have two options:
(1) You include the validated expenditure of the partner into the Progress report anyway. But your first level controller has to mark in his confirmation that the partnership agreement has not been signed. The programme will not pay the co-financing of the partner if the partnership agreement has not been signed until the date of approval of the 1st progress report.
(2) You include the validated expenditure of the partner into the Progress report only after the partnership agreement has been signed. But your partner has to be able to submit his validated partner report to you in time and you have to be able to include his costs in the Progress report until the due date.

b) Yes, you might report expenditure from periods 1+2 in Progress report 2. Please note that if the partnership agreement is not signed by the time the second progress report is due the project partner must be removed from the project partnership.

Payment proof

We are a large organisation having bulk payments and complex IT accounting systems (not only project-related), and due to them we have difficulties defining the payment dates. What can we do in this case?

In this case to prove the reality of expenditure the first level controller should concentrate on the general reliability of the payment system e.g. checking the payment procedures by sampling of (a few) selected items. Once the controller gains reasonable assurance of the reliability of the payments, the project checks can be based on the booking data available in the IT system (booking dates etc.).

Payments

When will project partners get the first payment? To which account will the Programme transfer the co-financing: to the project partner's account or to the Lead Partner's one?

Partners co-financed from ENPI will get the first payment (advance payment) after the Belarusian partners have passed the national approval procedure. This approval procedure lasts at least 6 months and starts after the approval of the project by the Monitoring Committee of the Baltic Sea Region Programme. For example, if the project was approved on 25 October, the approval procedure lasts at least until 25 April. The speed of the approval procedure is determined by the clarity of documents submitted by the project partners to the Belarusian government.
Partners co-financed from ERDF will get their first payment after the first Progress Report has been approved by the Programme. This report is submitted ca. 12 months after the approval of the project. Depending on the quality of the report the checks last between 4 and 6 months. So the first payment can be expected ca. 1 ½ years after the project approval. Partners are asked to plan enough liquidity!
All co-financing will be transferred to the account of the Lead Partner. The Lead Partner has to transfer the amounts further to the respective project partners as soon as possible.

Progress report – Checksum

How can we avoid problems with the checksum?

The checksum is generated on the paper version after pressing the button "finalise and save and print" on the Cover sheet of the Excel version of the report. Please keep in mind that after adding even one single character (e.g. controller's signature date) into the report, the checksum will change and it has to be printed again. Therefore it is important that both, the lead partner and the first level controller agree on the final electronic version of the report (the first level controller is supposed to fill in data in FR_9 first!) and only then print it and sign it. They also have to agree how to arrange it so that the report will not be changed after printing it out and having the first signature on it.

Progress report – Error messages

How can we avoid error messages in the progress report?

First, never enter amounts with more than two digits after the decimal point into the reports, as this will mostly lead to an error message. The only exception here is the exchange rate which is required to enter as four digits after the decimal point. Second, avoid copying of cells from other files or entering of formulas into the cells of the official progress reports (compiled report prepared by the lead partner) or do it very carefully. The copy function might destroy the formatting of the cells and this way some warning messages might stop working.

The lead partners should be aware when calculating the own contribution in FR_5 (progress report) that the reporting form checks for each partner whether the sum of the Programme co-financing and the own contribution is exactly equal to the total expenditure. In cases where the ERDF/Norwegian co-financing amount had to be rounded up, the sums might slightly differ. Therefore please keep in mind that the own contribution (unpaid voluntary work plus financial contribution) has to be equal to the total expenditure reported minus the automatically calculated Programme co-financing in order to avoid any error messages.

Project closure phase

Are depreciation costs of equipment eligible in the project closure phase?

Only depreciation costs of equipment that is needed for a project's closure activities are eligible. These costs should be planned in WP1.

Timesheets

Question to timesheet templates: How do we have to fill in the monthly personnel costs?

The worksheet "Personnel costs_Compilation" shall help project partners to sum up the total personnel costs per month and per reporting period. It shall also help the first level controller to check the calculation of the personnel costs. The monthly net salary and the other charges paid for the employee can be filled in separately. If project partners do not have the single figures for health charges, social charges, taxes, etc., they might fill the total sum into the column "salary". We recommend to agree with the first level controller beforehand and to make a note in the timesheet that explains this special approach. And in any case it is important that the total amount equals the actually paid costs.

The timesheets on the website are for ten months only. Why?

The timesheets should cover one reporting period, which could be up to ten months (e.g. first reporting period).

What is to be filled under health charges, social charges and taxes?

All obligatory charges paid both by the employer and the employee are to be included in these cells.