Friday, 27 April 2018

#H2020 Simplification fails

In preparing for H2020, the EC proposed measures to simplify claiming costs which they felt would reduce errors found when auditing. One addressed the topic of productive hours, where they proposed that the grant agreement should – unlike its predecessors - contain the number of annual productive hours to be used for the calculation of hourly personnel rates. As a result, the H2020 grant agreement includes three detailed options for calculating productive hours.

At a number of H2020 coordinators’ days held by the EC, their audit staff presented their forecast of errors which they expected to find in financial statements once H2020 auditing began. These were (i) direct costs apportioned, not measured (ii) timesheets missing or unreliable (iii) best value for money in subcontracting and purchasing not achieved (iv) confusion between basic and additional remuneration and (v) cost of in-house consultants not justified. Errors in productive hours did not feature.

In April, EC audit staff presented their first analysis of the H2020 audits (see table). The unit of measurement is the number of audits which found the error type listed. Many of the forecast errors can be seen there. “Direct costs apportioned, not measured” are in both the equipment category and other goods and services, the latter restated as “indirect costs claimed as direct”. Timesheets are in “incorrect time” and contribute to “other” in personnel costs. “Best value for money” appears directly and also as “inadequate supporting documents” and additional remuneration occurs under personnel costs. Consultants don’t feature – maybe they are hiding in “incorrect remuneration”, though this might also cover mistakes in personnel costings using the last closed financial year method– an H2020 simplification not forecast by the EC auditors to produce problems. But the biggest source of errors is “incorrect productive hours calculation”, which is also not in the EC auditors’ forecast top five, with a prize-winning 31% of the total!

Kind regards