Thursday, 27 April 2017

Five year audit

This month, the European Ombudsman released a report concerning a financial audit of a Non-Governmental Organisation (NGO) and its participation in three FP7 projects. The audit took place in 2011 and concluded that all personnel costs claimed were not substantiated and so the related grant should be reimbursed to the EC. The problem, according to the auditors, was that the time recording system was unreliable.

The NGO disagreed with the auditor’s draft report, drawing attention to timesheets which were not considered by the auditors but which provide the base for summary reports cited by the auditors. The time sheets were based on those described by the EC in its FP7 Financial Guidelines. The NGO’s comments were included in the draft audit report.

In July 2013 the NGO met with the EC to explain their time sheet system. While the EC accepted that the system was adequate, in 2014 they started to recover the (allegedly) over claimed personnel costs from the NGO. This was because the meeting – set up by the EC to discuss the audit results - took place after the 30 day deadline for submitting comments on the audit report.

However, because the NGO had drawn the EC’s attention to the additional information on time recording in its comments included in the draft audit report, the Ombudsman concluded that the EC should have considered these before finalising the audit report and implementing the results by recovering the (alleged) over payments. It recommended that the EC should review its position, re-examine the timesheets and, if the timesheets are in fact reliable, reverse its decision.

Despite receiving the Ombudsman’s recommendation in August last year, no response from the EC has been published. So, more than five years after the audit, the case is unresolved. Could this be a record?
Kind regards

Monday, 3 April 2017

H2020: Internal invoices

Following lots of pressure from the research community, the EC has decided to accept the cost of internal invoices for the use of research facilities as an eligible cost. These invoices were eligible costs in FP7. But in H2020 the EC required that the consumption of each resource involved – such as the time of staff supporting the equipment, consumables and depreciation – be measured directly for each H2020 project using the facility.

Under the new version 4.0 of the grant agreement, the cost of internally invoiced goods and services used directly for an H2020 project can be claimed based on an average cost per unit of use (per hour, for example), called a “unit cost”. The unit cost must be based on actual costs of items directly linked to the production of the goods or services to be invoiced, excluding overheads.

Interestingly, the cost of support staff, consumables and depreciation of research facilities can potentially also be charged as direct costs under the EC’s LRI (Large Research Infrastructure) option. But the calculation method for this must be certified by the EC. And it is restricted to organisations with at least €20m of expensive equipment, which must represent at least 75% of their fixed assets. Last month we reported that the EC had issued only four LRI certificates during H2020. Will internal invoices allow H2020 participants to avoid the restrictions of LRI?

Kind regards
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