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First Level Control Office BiH FLCO

First Level Control Office BiH FLCO. Sarajevo, 17-18 December 2012. Welcome. Agenda. 10.00 – 10.30: Welcome/Registration/Introduction – training objective & approach

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First Level Control Office BiH FLCO

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  1. First Level Control Office BiH FLCO Sarajevo, 17-18 December 2012

  2. Welcome

  3. Agenda 10.00 – 10.30: Welcome/Registration/Introduction– training objective & approach 10.30 – 11.30: First Level Control (FLC): definition,objective, role of First Level Controllersand theprocedures used, Reporting 11.30 – 11.45: Coffee break 11.45 – 13.00: First Level Control (FLC): areas of attention under the various budget lines 13.00 – 14.00: Lunch break 14.00 – 15.30: First Level Control (FLC): areas of attention under the various budget lines 15.30 – 15.45: Coffee break • 15.45 – 16.15: First Level Control (FLC): areas of attention under the various budget lines 16.15 – 17.00: Q & A / evaluation of the training

  4. Training objective To improve the quality of financial reporting by the Beneficiaries resulting in an increased level of expenditure that can be validated by the CFCU as the national First Level Control Office (FLCO)

  5. First Level Control (FLC) - definition FLC entails verifications carried out at the level of the Beneficiary Country covering the administrative, financial, technical and physical aspects of projects thereby ensuring that the expenditure declared is real, that products and services have been delivered and that the projects and expenditure comply with the relevant Community and national legislation

  6. First Level Control (FLC) - objective guarantee that expenditure reported and claimed by Beneficiaries is justified, substantiated, real, actual, incurred and actually paid andin line with the provisions of the Subsidy Contract/ Partnership Agreement concerned andare in line with all legal provisions governing the Programme

  7. First Level Control – what is checked? Requires a 100% desk-based administrative verification of documents complemented by on-the-spot checks on a sample basis before the issuance of Declarations on the Validation of Expenditure (DVE)

  8. Role of First Level Controllers I • check the regularity and legality of expenditure incurred and declared by Beneficiaries from Bosnia and Herzegovina (BiH) by conducting desk-based administrative and on-the-spot checks • validate the expenditure incurred by Beneficiaries from Bosnia and Herzegovina (BiH) • validate the content of both the activitiesand the finances of the partner report

  9. Role of First Level Controllers II • draft a report andcomplete a checklist on the controls performed • sign and issue a Declaration on Validation of Expenditure (DVE) • keep complete files on the validation process in line with both programme as well as national requirements

  10. First Level Control – procedures used • check of completeness • check of compliance with EU and national legislation, programme rules and procedures and Subsidy Contract • check of plausibility • check of existence and reality

  11. REPORTING BY BENEFICIARY TO FIRST LEVEL CONTROL OFFICE

  12. Progress Report • Presents the activities and costs of one Final Beneficiary for the given reporting period • The Progress Reports must be submited to the competent FLCO who will verify eligible costs

  13. Progress Report Consists of two sections: ACTIVITY REPORT: provides information on the achievement of the project’s activities, milestones and outputs FINANCIAL REPORT: provides information on the project’s expenditure related to the activities per budget line and Work Package

  14. Activity Report • obligatory use of the template developed for the programme published on http://www.adriaticipacbc.org/index.asp?page=interna&level=implementation_documents

  15. Activity Report FORMAT & CONTENT : Excel spreadsheet with 4 worksheets: • Main data • Summary of project activities and main issues • Implemented activities per Work Package • Declarations

  16. Activity Report Section 1 – Main data: Project identification details: code, acronym, title, priority, measure, name of FB, Beneficiary No. in AF, start & end date of project, legal representative of FB, contact person of FB

  17. Activity Report Section 2 – Summary of project activities and main issues • Description of project activities implemented within the period covered by the report • Explanation whether the implementation of the project is in line with the time frame as planned in the AF and if, explanation about the reasons and estimates of the anticipated delay

  18. Activity Report Section 2 – Summary of project activities and main issues • Explanation whether financial progress is in line with spending forecasts in the AF and if not, explanation and estimate of deviation • Problemsencountered during implementation, solutions found, minor changes to planned activities etc)

  19. Activity Report Section 3 – Implemented activities per WP • Comparison between planned & realised activities during the period covered by the report • Description of results & outputs delivered • Financial resources reported Note: it is extremely important that information provided in the Activity Report corresponds to the information provided in the Financial Report and the List of Expenditure as otherwise FLC cannot validate thereported costs

  20. Activity Report Section 4 – Declarations • VAT • Revenues • Grants under the « de minimis » regime • Equal opportunities • Environmental issues

  21. Financial Report • Expenditures per budget lines and WP filled in directly into the MIS • Connection with the supporting invoices or other documents of equivalent probative value Note:In case the invoice (payslip,receipt...) covers activities related to more than one WP,a List of expenditure must be provided.

  22. List of Expenditure Template to be filled in providing details on costs reported with respect to: • WP the expense relates to • budget line the expense is charged against • invoice number and date • specification of the invoice • name of company that issued the invoice • amount in KM • exchange rate used (€ 1 = KM 1.95583) • amount reported in €

  23. List of Expenditure Template can be found on the following link: http://www.adriaticipacbc.org/index.asp?page=interna&level=implementation_documents Note: it is of the utmost importance that First Level Controllers are able to identify the supporting document backing up each expense declared in the report without having to spend a lot of time trying to locate it in the entire package

  24. Expenditure needs to be reported in euro BAM is pegged to € at rate of 1,95583 Rounding to two digits after the comma Example: BAM 1.768,93 equals € 904,439547 which is to be reported as € 904,44

  25. Contract award declaration For all procurement contracts concluded a standard declaration needs to be filled in providing substantial details on the procurement procedure carried out See template

  26. Contract award declaration • Serves the purpose to prove that the most economically advantageous offer has been selected in accordance with the principles of transparency and fair competition by taking care to avoid any conflict of interest

  27. Single tender procedure report • For any awarded contract not exceeded 10.000 EUR, but higher than 500 EUR • Beneficiaries has to fill in this document, upload in MIS when reporting and send the hard copy with the PR to the FLCO • See template

  28. Submission of the Progress Report by Beneficiary • FB sends by email properly filled in Activity Report to Lead Beneficiary who needs to sign and stamp it • Lead beneficiary returns the signed Activity Report to the FB also by email (scanned) • FB uploads electronic version of the Activity Report for the period concerned in the Management Information System (MIS) • If necessary,FB uploads Contract Award Declaration and Single tender procedure Report for the period concerned in the Management Information System (MIS) • FB prints Progress Report from the system (MIS), sign, stamp it and sends hard copy to the FLCO with all supporting documents.

  29. Attachments to the Progress Report • All documents proving the eligibility of costs as invoices,bank statements,public procurement documents,project deliverables, • List of expenditure • Contract Award declaration, if necessary • Single tender procedure Report, if necessary Any other document FLC might require

  30. Timing for reporting • Final Beneficiaries can report their expenditures whenever they want • FB are anyway required to reach the level of expenditures foreseen in the Application form in 4 different periods per year: • by 31 January • by 30 April • by 30 June • by 30 October

  31. ATTENTION! • Total amounts indicated in the Financial Report must be identical to the ones declared in the Activity Report otherwise the FLC could not validate the reported expenditures

  32. ATTENTION! List of expenditure should be identical with the Financial Report, the expenditures must be ordered in the same way in the List of expenditure as they are ordered in the Financial Report ( MIS) See the Instruction on how to submit documents to the FLCO

  33. Budget lines • STAFF COSTS • TRAVEL AND ACCOMMODATION • OVERHEADS • MEETINGS AND EVENTS • EXTERNAL EXPERTISE (+ publicity and visibility) • PROMOTION COSTS • EQUIPMENT • INVESTMENTS • FINANCIAL CHARGES AND GURANTEE COSTS

  34. STAFF COSTS • The main purpose of the FLC checks with respect to this budget line is to establish whether sufficient information is available concerning the expenditure claimed for all staff working on the project • Covers the salaries (gross salary =netto salary + all legal provisions such as holiday entitlement, provision for sick leave, all charges paid both by employee and employer, regular bonus, work weekend with clarification, meal, transport cost,allowance for holiday and excluding voluntary contributions such as institutional pension schemes) of staff of the Beneficiary working either on a full-time or part-time basis on the project as indicated in the Application Form

  35. STAFF COSTS • Calculation of salary based on activities in WP • Be careful with MIS and report ( must be the same amount) • When calculating the salary on WP, check the amount in WP in budget (overbudget) • During project, the amount of salary of project staff can not be increased

  36. STAFF COSTS Documents to be presented by FB / checked by FLCO with 1st report : The FB will submitted with 1st report (to be updated during project lifetime) stating as a minimum: • list of project staff (name of the employee) • employment contract , decision on appointment or service order(qualification, task, start & end date) • job description, position in the project • % of work on the project or indicative number of hours/days involvement • gross salary • indicative total costs to be funded under the project’s budget

  37. STAFF COSTS Documents to be presented by FB / checked by FLCO: • Wherever applicable, the institutional book of rules (so-called « pravilnik o platama » and / or « odluka o utvrđivanjukoeficijenatainačinuobračunaplata ») has to be submitted to the FLCO • Payslip & payroll • Monthly timesheets • Proof of payment • Calculation method

  38. STAFF COSTS Documents to be presented by FB / checked by FLCO: • Monthly timesheets proving the actual time worked on the project stating as a minimum: name of the employee, date, time, detailed description of activity related to the project «Need to be signed by both the employee and the employer and date «  • Template of timesheet used (there are 2 different templates on the programme website) • Be carefulwith employee who works on more then one project Note: Beneficiaries are not obliged to use these templates and can use their own format but the following information should be stated as a minimum:

  39. STAFF COSTS Obligatory minimum information on timesheets: • project acronym, title & code • name & function of the person to which timesheet refers to • extent of employment on the project of person concerned • name of the Beneficiary organisation (in local language and in English) • priority/measure • name & function of the person approving the timesheet on behalf of the Beneficiary organisation • description of project activities carried out as well as activities not related to the project • extent to which the work is dedicated to the project

  40. STAFF COSTS Obligatory : The Calculation method must be the same as the evidence in timesheet, can not be different If you choose hourly method of registration in timesheet, use the same method for calculation of monthly salary for reimbursement

  41. STAFF COSTS Documents to be presented by FB / checked by FLCO: Calculation method / formula used for calculating hourly rates / total staff costs Monthly gross salary + obligatory charges / total working hours in the given month * hours worked on the project in the given month

  42. STAFF COSTS EXAMPLE Basis = gross salary of BAM 2,500 for April 2012 for an employee working part time on the project: Salary paid for April 2012: BAM 2,500 No of hours workable during April 2012: 176 (22*8) Hourly (days) rate: 2,500/176 (22) = BAM 14.20 (113,64) No of hrs worked on project in April 2012: 48 hrs (27.27%) Total eligible cost: 48 * BAM 14.20 = BAM 681.60 or 6*BAM 113,64 =BAM 681,80 Total to be reported (conversion into €): € 348,50

  43. STAFF COSTS Documents to be presented by FB / checked by FLCO: Proof of payment of both the salary and all compulsory charges whereby FLCO needs to be able to identify clearly to whom the salary was paid and what all the extras are that have been paid • Nalog plaćanja • Nalog blagajne kod gotovinskih isplata • Registar plaćanja i faktura (budžetski korisnici) • Izvod banke • Specifikacija uz platu ovjerena od strane Porezne uprave • Izjava odgovorne osobe da se iznos plate isplaćuje kumulativno za sve uposlene u organizacijii da u taj iznos ulaze i plate zaposlenih na projektu

  44. STAFF COSTS MAIN PROBLEMS ENCOUNTERED SO FAR: • Insufficient supporting documentation (e.g. no list of staff or employment contracts submitted) • Lack of proof of actual payment of salaries and other obligatory charges • Lack of information as to how the hourly rate was calculated • No adequate calculation of gross salary (calculation the part of obligatory charges) • Incorrect timesheets

  45. TRAVEL & ACCOMMODATION • Covers expenditure related to the travel and accommodation costs of the employees of the Beneficiary (travel and accommodation costs of external experts participating in the project have to be charged against the budget line « External expertise » – see later) • Travel costs for driver are eligible if he is on list of staff . (Other people) • Travel related with project activities

  46. TRAVEL & ACCOMMODATION The First Level Controller checks whether expenses under this budget line are: • reasonable • foreseen in the Application Form • approved internally within the Beneficiary institution (authorisation of the mission) • in line with the Beneficiary’s internal rules • incurred in the eligible geographical areas of the Programme

  47. TRAVEL & ACCOMMODATION SOME BASIC RULES Assignment of costs • Costs have to be borne by the Beneficiary and therefore proof of direct payment by an employee is insufficient Economy of transport • cheapest way (to be demonstrated on the basis of an assessment by the Beneficiary) • normally public transport (travel by air, bus, train, boat) • economic class is eligible, but business/first class tickets always ineligible (even if allowed by the internal rules of the Beneficiary)

  48. TRAVEL & ACCOMMODATION SOME BASIC RULES Reasonability of board & lodging costs Hotel costs (invoice) and costs of meals should be « reasonably » priced and higher price ranges must be duly justified in each case Note: this requires judgment by the First Level Controller who may ask additional clarifications

  49. TRAVEL & ACCOMMODATION Duration Any travel should be reasonable and should normally start the day before the event (e.g. meeting) until the day after

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