Friday, 8 April 2011

FP8, usual accounting practices and history

While politicians discuss FP8 in terms of “Grand Challenges” and billion euro “Flagship” projects, others are more interested in getting existing funding mechanisms to work. In its consultation paper on FP8, the European Commission (EC) suggests that acceptance of beneficiaries’ own accounting practices in establishing eligible costs (rather than working to EC defined rules) might be “considered”. LERU (the League of European Research Universities) has recently suggested that organisations with an analytical accounting system, responsible for their own finances and subject to annual audit should be able to use their usual accounting practices. EARTO (the European Association of Research and Technology Organisations) has recently asked again that acceptance of usual accounting practices be implemented as a matter of urgency. Why is there such interest in something apparently so simple?

The answer is that, while own accounting rules have been the basis for acceptability of costs from the start of FP6 in 2002, for the last nine years the EC’s own auditors have not accepted the concept. Before 2002, the rule written in the FP5 contract was that own accounting principles were OK if they were acceptable to the Commission. The FP6 contract – and its legal foundation, the Rules for Participation – says eligible costs “must be determined in accordance with the usual accounting principles” of the participant: no mention of acceptability to the Commission. FP7 extended the definition to the “usual accounting and management principles and practices” of participants.

Talk of addressing “Grand Challenges” seems premature when the EC can’t overcome the small challenge of persuading its own audit staff to accept rules agreed in 2002.

Kind regards
Singleimage - FP7 Training Workshops and Advice