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Framework Programme Finance Training

Julia Harrow, Senior Faculty Accountant Helen Jordan, Research Development Manager, European and Overseas Programmes. Framework Programme Finance Training. October/November 2007. Framework Programme 6. Main EU programme for funding research Duration: 4 years (2002-2006)

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Framework Programme Finance Training

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  1. Julia Harrow, Senior Faculty AccountantHelen Jordan, Research Development Manager, European and Overseas Programmes Framework Programme Finance Training October/November 2007

  2. Framework Programme 6 • Main EU programme for funding research • Duration: 4 years (2002-2006) • Budget : €17.5 billion (£11 billion)

  3. FP6/FP7 features • Policy driven: designed to achieve Lisbon and Barcelona objectives and support European Research Area (ERA) • Majority of budget supports collaborative, transnational research in prioritised research areas • Partially funded • Complex rules and criteria

  4. Programmes & Activities

  5. Project types / ‘Instruments’ European Collaborative Projects Integrated Project (IP) Large multi partner project to support objective driven research Specific Targeted Research Project (STREP) Small multi partner research, demonstration or innovation project Network of Excellence (NoE) Large multi partner network bringing together a critical mass of resources and expertise Co-ordination Actions (CA) Co-ordination of research Specific Support Actions (SSA) Workshops, studies, training

  6. FP6 Finance - Key Data • Core Contract – provides details of contract finances • Annex II General Conditions – provides general financial terms and conditions • EU Financial Guidelines (250 pages) • Website address to search for a key document: http://www.cordis.lu/fp6/find-doc.htm

  7. FP6 Funding Instruments • Reimbursement of Costs – incl. • Specific Targeted Research Project (STREP) • Integrated Project • Network of Excellence • Coordination Action • Lump Sum Payments • Human Resources & Mobility (Marie Curie Actions) • Specific Support Action

  8. FP6 Cost Models • University of Bristol Model - Additional Cost with flat indirect costs @ 20% (AC) - 100% reimbursement by EC. Adopted by UoB. • Others - Full Cost (FC) - 50% reimbursement by EC - Full Cost with flat indirect costs @ 20% (FCF) - 50% reimbursement by EC

  9. Framework Programme 7

  10. European Framework Programme 7(FP7) • Main European programme for funding research • 7 years in duration (2007-2013) • Budget of €50.5 billion (£33.7 billion)

  11. FP6/FP7 features • Policy driven: designed to achieve Lisbon and Barcelona objectives and support European Research Area (ERA) • Majority of budget supports collaborative, transnational research in prioritised research areas • Partially funded • Complex rules and criteria

  12. FP7 Structure Four ‘Pillars’ of activity: Co-operation – Collaborative Research Ideas – Frontier Research People – Human Potential Capacities – Research Capacity Plus JRC and EURATOM

  13. €4.1bn €4.7bn €7.5bn €32.4bn FP7 Budget

  14. Pillar 1: Co-operation 1. Health 2. Food, Agriculture and Biotechnology 3. ICT 4. Nano, Materials, Production 5. Energy 6. Environment 7. Transport 8. Socio-Economic Sciences and Humanities 9. Security 10. Space

  15. Project types / ‘Funding Schemes’ European Collaborative Projects Large Collaborative Project Large multi partner project to support objective driven research Small to Medium Sized Collaborative Project Small multi partner research, demonstration or innovation project Network of Excellence (NoE) Large multi partner network bringing together a critical mass of resources and expertise Co-ordination and Support Actions Co-ordination or support of research activities and policies

  16. €1.43bn €0.61bn €1.35bn €6.05bn €4.18bn €1.93bn €1.9bn €2.3bn €9.11bn €3.5bn ‘Co-operation’ themes budget split

  17. Pillar 2: Ideas – NEW! • Concept: a ‘European Research Council’ (ERC) • Highly prestigious – competition at a European level • Supporting ‘frontier research’ • Investigator-driven (bottom-up) 2 central schemes: Starting Independent Researcher Grant • Between €100,000 and €400,000 per year for up to 5 years for establish or consolidate a first research team Advanced Investigator Grant • Between €100,000 and €500,000 per year for established research leaders

  18. Pillar 3: People Developing Europe’s workforce: 2 main objectives • Researcher mobility • Between Member States • From Member States to 3rd Countries and Vice Versa • Researcher training • Early stage & experienced researcher training • Wide range of skills training, including transferable skills and working with the private sector

  19. Pillar 4: Capacities • Research infrastructures • Research for the benefit of SMEs • Regions of knowledge • Research potential of convergence regions • Science in society • Support to the coherent development of research policies • International co-operation

  20. EU Countries EU-27 Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Italy, Ireland, Latvia, Lithuania, Luxemburg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, UK Associated Countries (FP6) Croatia, Iceland, Israel, Liechtenstein, Norway, Switzerland, Turkey, Serbia

  21. International Cooperation in FP7

  22. FP7 Finance - Key Data • Core Contract – provides details of contract finances • Annex II Grant Agreement (or GA) – provides general financial terms and conditions • EU Financial Guidelines (only 85 pages!) • Website address to search for a key document: http://cordis.europa.eu/fp7/find-doc_en.html

  23. FP7 Funding Instruments - 1 • Reimbursement of Costs – ‘Co-operation’ Pillar • Collaborative Projects (cc STREPs - these projects are small to medium sized) • Large Integrating Collaborative Projects (cc Integrated Projects) • Networks of Excellence • Coordination and Support Actions (cc Specific Support Actions and Coordination Actions)

  24. FP7 Funding Instruments - 2 • Reimbursement of Costs – Other Pillars • ‘Ideas’ (ERC) • ‘Capacities’ • Lump Sum Payments • ‘People’ (Marie Curie Actions) – for payments of individuals remuneration

  25. FP7 Cost Model - 1 One cost model for all entities • Additional cost model abolished Direct Costs reimbursed as follows: • Activities within ‘Co-operation’ and ‘Capacities’ • Research Training Development (RTD) Activities: 75% • Demonstration Activities: 50% • Project Management, Training, Other Activities: 100% • Except Coordination and Support Actions - allActivities: 100% • ‘Ideas’/ERC: 100%

  26. FP7 Cost Model - 2 Indirect Costs reimbursed as follows: • For most activities (except below) calculate indirect costs as either choice of either actual indirect costs or flat rate of 60% of direct costs (latter is current UoB option) • reimburse as per rules for Direct e.g. 75% for RTD • ERC projects: flat rate of 20% of direct costs • Co-ordination and Support Actions: flat rate of 7% of direct costs • Marie Curie projects: flat rate of 10% of direct costs

  27. Eligible Costs • Actual and necessary • Incurred during timescale of project • Determined by accounting principles and management practices e.g depreciation, travel standard class • Recorded in accounts • Used only to achieve project objectives New for FP7! • Time/cost of permanent researchers e.g. PIs

  28. Management Activities • EC fund 100% of management activities of consortium • FP6 ceiling of 7% of total EC contribution no longer exists (but informal advice is not over 10%) • Additional indirect costs of 60% • Only available funding for Audit costs • Coordination costs except those in RTD activities • Most management activities

  29. Ineligible Costs The following will not be funded: • Indirect taxes incl. VAT • Excessive or reckless expenditure • Indirect costs for subcontractors • Exchange losses – may be managed within C.A. • Student tuition fees • Provisions for future losses • Costs on other EC projects

  30. FP7 and VAT • VAT is an ineligible EC FP cost • Unlike earlier Framework Programmes, HM Revenue & Customs will not reimburse the VAT in FP7. Thus the cost will fall to UoB • UoB decision: irrecoverable VAT costs will be accounted for as a reduction in the indirect income rather than a direct cost to a department

  31. Cost Category Exercise

  32. Calculating Staff Time • Need Number of Productive Hours per year • Determined by deducting holidays, national holidays, sick leave and other entitlements e.g. training • UK Productive Hours: 1650 hours per year • Hourly Rate = Annual FTE salary / 1650 hours • At UoB, this is done via fEC Research Costing tool

  33. Time Recording Q. Who needs to do this? • Any staff costed to a project, including PIs Requirements as are follows: • Record actual (not estimated) hours including time spent on all projects, except PIs who only need to record time on project • Record either start and end time, or number of hours each day N.B. If total hours exceed annual amount, hourly rate will be reduced, thus best to work standard hours Web address: http://www.bris.ac.uk/finance/systems/timesheets/safe/ec-timesheet.xls

  34. Project Budget Virements • Transfer of budget between activities and members is allowed without need for EC approval • Unless results from changes to workplan (as laid out in Annex I of GA) e.g. new subcontractor • Watch for transfer between activities with different funding rates e.g. movements between RTD and Management. N.B. maximum EC contribution remains • If in doubt, consult EC Project Officer

  35. EC Financial Contribution • Maximum contribution cannot be exceeded and includes: • Single Pre-Financing (see slides below) • Interim payments following each Reporting Period • Final Payment plus any prior period adjustments • Calculation of EC payments deducts any interest earned by Coordinator from Pre-Financing (> €50k) • EC withhold 10% retention until date of last payment so pre-financing and interim payments shall not exceed 90%

  36. Pre-Financing 1 (Article 6 of Financial Guidelines + Article II.6 of GA) • Only 1 pre-financing (or advance) payment received at beginning of project • Received from the EC no later than 45 days of contract start date (unless special clause) • Coordinator must distribute to members:- • Once minimum numbers of members have signed and returned Form A (accession form) • Only to those members who have signed and returned Form A

  37. Pre-Financing 2 General Rule for projects with more than 2 reporting periods (RPs) - 160% of average EU funding per RP less 5% Guarantee Fund For projects with 1 or 2 RPs – between 60%-80% of the total EC contribution (specified in contract) Reasons for variations to Pre-Financing: • Project with heavy initial investment – increased • Project with low expenditure in 1st period - decreased

  38. Guarantee Fund(Article II.20 of GA) • Aims to cover financial risks incurred by EC and participants during project • 5% of the total EC contribution retained by the EC and transferred to separate EC fund at time of pre-financing payment • Paid into EC bank account and interest earned should cover risks of non reimbursement of amounts due by project members • Returned to project members via Coordinator at point of final payment • Maximum deduction of 1% of EC contribution may be permanently retained excluding public bodies (so UoB okay!)

  39. Pre-Financing Example 1 Project running over 3 reporting periods (RPs) with total budget €3,000,000 • Average EC contribution = €1,000,000 (i. e. 3,000,000 / 3 years) • 160% of average contribution = €1,600,000 • Contribution to Guarantee Fund @ 5% = €150,000 • Pre-financing to Coordinator = €1,450,000

  40. Pre-Financing Example 2 Project running over 18 months with 1 RP with total budget €900,000 • Pre-financing 75% as stated in EC contract = €675,000 • Contribution to Guarantee Fund @ 5% = €45,000 • Pre-financing to Coordinator = €630,000 N.B. RP may not equal number of years of project

  41. Interim Payments • EC pay all accepted costs of previous Reporting Period as next interim payment (less pre-financing interest) • Does not require Audit Certificate unless total accepted costs have reached €375,000 or multiples thereof (see Financial Audit below) • Interim payments continue during life of project up to threshold of 90% of total budget or final reporting period • EC assumption that participants will get Guarantee Fund so reality is receive up to threshold of 85% until final payment

  42. Project Reporting 1Article II.4 of GA Periodic Report – due within 60 days after end of each Reporting Period Consortium Requirements: • Overview of progress towards objectives • Explanation of use of resources • Financial statement – FORM C for each partner plus consolidated report (Annex IV). New for FP7! • Form C requires separate reporting of Personnel costs

  43. Project Reporting 2Article II.4 of GA Final Reports – due within 60 days after end of project Consortium Requirements: • Final summary report of results, conclusions etc. • Report covering wider societal implications, dissemination plans etc. Plus: Coordinator must submit report on distribution of EC contribution to partners 30 days after receipt of final payment

  44. Financial Audit 1 Article II.4 of GA ‘Certificate on the Financial Statement (CFS)’ • Independent report of factual findings on costs claimed in accordance with GA • Mandatory (for interim and final claims) as soon as EC contribution requested by reimbursement of costs reaches threshold of €375,000 when cumulated with all previous payments for which a CFS has not been submitted. Once a CFS is submitted then threshold applies again for subsequent EC contributions

  45. Audit example – Project with duration of 5 years (€k)

  46. Financial Audit 2Article II.4 of GA Special Cases: • Where project duration is 2 years or less, if €375,000 threshold is met then only one CFS submitted at time of final payment • No CFS required if under threshold • For all projects: no CFS required if costs are approved via ‘Certificate on Methodology’

  47. Financial Audit 3 Article II.4 of GA ‘Certificate on the Methodology’ • Certifies the calculation of personnel costs and overhead rates e.g. Estates and Indirect • No requirement for CFS on interim payments and simplified final certificate • Requires in-depth UoB independent audit of figures/systems prior to EC acceptance • Not likely to use until January 2010

  48. EC Approval of Reports Article II.5 of GA • EC evaluate Project Reports and ideally disburse payment within 105 days of RP After receipt of reports, EC may: • Approve in whole or part, or approve s.t. special conditions • Reject with justification and terminate in whole or part • Suspend time-limit if deliverable(s) are missing • Suspend the payment in whole or part EC shall inform Coordinator of amount of final payment; Coordinator has 2 months if disagree and EC has 2 months to reply thereafter

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