Wednesday, 1 May 2013

Horizon 2020 grant agreement

The European Commission (EC) has discussed its ideas for the Horizon 2020 grant agreement with invited audiences during April. Important features include:

Explicit definition of personnel costs, rather than simply their actual costs as used in FP7 (and FP6). Whether the definition will exclude taxes and charges related to personnel costs, which the EC was forced to accept in FP7, is not clear.

For productive hours per year, three options will be offered:

(i) A single number, for example 1680, which could not be audited. The number would also be the maximum hours that could be claimed in a year for EU projects, which would conflict with the time recording rules of some organisations.

(ii) A standard for an organisation, according to its usual cost accounting practices. However, this could be audited.

(iii) Individual productive hours for each person for those with full time-recording as part of their usual accounting practice. This also could be audited.

Options (ii) and (iii) would be subject to a minimum “to avoid abusive practices or practices incompatible with the cost eligibility criteria”.

Time recording: requirements will be defined, but they are not yet available, even though models exist in FP7 guidance documents. However, the EC emphasised that non-compliance with the rules would be a breach of the grant agreement. So potentially personnel costs claimed using a time recording system not meeting the grant agreement terms would be ineligible for funding.

Direct costs will be as FP7: those generated by the project and measured directly, not by apportionment using a cost driver (and, for FP7, are direct costs in its normal accounting). However, the grant agreement will also list types of costs considered to be direct, which potentially could exclude some direct costs included under the FP7 agreement. The list will also include expensive pieces of equipment, even if they are normally considered an overhead by the beneficiary, so making the proposed flat rate overhead more acceptable to those who calculate their overheads.

Exchange rates: for those who keep accounting records in currencies other than euro, there will be an option to use the average exchange rate for the reporting period, to reduce the impact of currency fluctuations.

Interestingly, no mention was made of broader acceptance of beneficiaries’ usual accounting and management practices, which featured in the EC’s proposals for H2020.

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