Guidelines for EU-projects
This manual is intended to provide an overview of the basic rules and procedures for reporting EU projects within Horizon 2020.
The contract between the EU and those participating in the project is called the Grant Agreement, hereafter referred to as GA. The basic model is called the "General Model Grant Agreement", and then there are several models for eg. ERC and MSCA. The contract is signed electronically in the EU project portal, Participant Portal by the Grants Office. GA consists of several parts, the first part being of chapters with the legal rules. The following chapters are:
Annex 1 Description of the action (DoA)
Project description where it is listed who does what in the project, when it should be done and how it should be done. In annex 1 there is often a more detailed budget for the project at KI.
Annex 2 Estimated budget for the action
Budget for all partners. It is important that KI's part of the project is in line with what is in the budget. For example, if a subcontractor is to be used, there must be a budget for this.
Annex 3 Accession Forms
Only the EU and the coordinator sign the GA. Other partners in the project join GA by signing accession forms.
Annex 4 Financial statements (FS)
Costs reported to the EU.
Annex 5 Certificate on the financial statements (CFS)
Annex 6 Certificate on the methodology
The method the auditors use in the audit (CFS).
In a project with several partners, according to the regulations, there should also be a consortium agreement. This agreement only covers the project participants and regulates, among other things, the rights to the intangible assets in the project.
This guideline is an overview of basic rules and routines regarding the reporting of EU projects within Horizont 2020.
Eligible and not eligible costs
- Must have occurred at Karolinska Institutet during the project period
- Should have been foreseen in the budget
- Should be directly linked to the work and necessary for the project
- Must comply with national rules and KI internal rules
- Must be reasonable and economically well thought out
- Travel expenses linked to the kick-off meeting are eligible even if they occurred before the project start, provided that the meeting is within the project period.
- Costs for audit certificates that arise after the project period are allowed.
- Costs recorded after the project period but that occurred within the period. For example, travel bills.
- For other specific cases, such as in-kind contributions or third party costs, contact the Grants Management Office.
Not eligible costs
- Provisions for future losses / liabilities
- Interest / liabilities
- Exchange losses
- Bank charges
- Deductible tax / VAT
- Costs incurred within a (temporary) suspension of the project
- Costs that arose before project start or after project completion (some exceptions, see above)
The Commission assumes that we work 1720 hours per year during a full-time employment. This means that if a person then works 50 % at KI: 1720 * 0.5 = 860 productive hours.
Calculation of hourly cost:
Staff costs in H2020 are calculated based on the annual salary from the last closed fiscal year divided by the annual working hours. The hourly rate is then multiplied by the indicated hours in the time reports. In the case of parental leave, service leave and special circumstances, the calculations change.
Step 1: Calculation of hourly cost (Annual salary / Annual work time = Hourly cost)
As an example, a person has been employed 50% in department A in 2018, with an annual salary of SEK 600,000. The person has worked 435 hours in the project of his or hers 936 productive hours.
The hourly cost will then be 600,000 / (1720 * 0.5) = 697.67 SEK
Step 2: Calculation of personnel costs in the project (Hourly cost * Hours in the project = Staff costs)
697.67 * 435 = 303,488.37
The Grants Management Office also makes sure that specified hours do not exceed valid hours when staff participate in other EU / US projects.
Fill in the actual worked hours in the time sheets. The above calculation should be seen as a tool to facilitate the project's planning and compliance with the budget. The time reports can be found in the tab "Documents you need".
All costs incurred in connection with travel (flights, hotel allowances, trains, taxis, etc.) are reported as travel costs. KI's contracted travel agency is used for booking hotels and flights. Flights are booked in economy class.
In order for the cost to be valid, the following must be attached:
- Agenda / conference program or similar that confirms the purpose of the trip. Also attached participant / attendance list from conference if available.
- E-ticket. Boarding cards can be accepted unless e-tickets can be obtained (the institution can turn to Ticket to find old e-tickets).
- Foreign VAT included in travel bills / expenses is not a permitted cost and will not be reported.
See more information about KI-rules regarding travels.
Other direct costs
When purchasing goods and services in EU projects, best value for money or lowest price must be considered from the very first krona. Distribution keys or allocations are not allowed – only 100% use of consumables on the project is approved.
In order to make purchases, one uses primarily Karolinska Institutet's own framework agreement. If KI does not have a framework agreement, you can also use the state's framework agreement via the Kammarkollegiet. This is a formal decision and framework agreement procedure must be followed and it must be done in dialogue with an institution's purchasing coordinator and the Purchasing and Procurement unit. Search the contract catalog to see if your supplier is procured.
Deviation from framework agreements
In some cases, a departure from framework agreements can be made. It is a formal decision and the departure procedure must be followed. It must be done in dialogue with an institution's purchasing coordinator and the Purchasing and Procurement unit.
Direct procurement may be done at departmental level and it is the responsibility of the institution to ensure that the EU legal principles are observed.
Direct procurement is permitted if the value of the procurement is less than SEK 615 312 and the purchasing coordinator must always be contacted when the value exceeds SEK 100,000 (excl. VAT). The value consists of the total value that is procured for the same category of goods / service during a calendar year for the entire KI. If framework agreements are missing and the value of the purchase is less than SEK 100,000, GMO's template "Form for purchases outside a signed agreement" must be filled in to comply with EU rules on best value for money.
The department's purchasing coordinator is responsible for ensuring that documentation is prepared and sent to the Purchasing and Procurement Unit.
For more information about purchasing goods at KI, read the page about purchase and public procurement.
- Can be costs for publications, open access, conference fees, audit costs, materials, consumables (however, be careful not to be considered as indirect costs), and other costs. All other costs must have a direct link to the project.
- Internal invoices: If an invoice comes from KI, the cost is an internal cost. Examples of this is animal houses, core facilities, and local rent. For such costs to be eligible, auditable calculations are required, meaning valid documentation approved by an auditor.
If equipment is to be purchased, this must be included in Annex 1. When the purchase takes place, KI's rules for purchasing and procurement must be followed. Hence, consult the department's purchasing manager. All documentation must be in place before the purchase is made.
Logbooks or other records are required to show the use of the equipment. It is important that the logbooks match the time reports. The logbooks must contain:
- Project Name
- Name of user
Depreciation must be made according to KI's regulations.
All equipment purchased on EU projects must be marked with acronym and GA number. Contact your GMO administrator to recieve printed stickers to place on your equipment.
Subcontractors and consultants
In order for subcontracting to be a valid cost in an H2020 project, the following goods must be met:
- Have been foreseen and described in Annex 1.
- Purchase of goods and services must comply with national rules and guidelines. The law on public recovery must be followed. Best value for money should be followed. The Form for purchases outside a signed agreement needs to be filled in.
- If it is discovered during the project that a subcontractor is to be used, a supplement to GA (amendment) is required. Approval of this request is up to the European Commission.
- Subcontracting between partners in an EU project is not allowed!
Note that smaller services that do not relate to the main work of the project are not subcontracting but are reported as other direct costs. Examples are costs for the audit certificate, catering or shipping.
Indirect costs (INDI)
In H2020, the flat rate for indirect costs are 25%, excluding subcontracting. The part of the institution's indirect costs that are not covered by EU funds need to be co-financed by the Department.
Financial reporting to the EU
Reporting periods are specified in Article 20 of the Grant Agreement, ich in Funding and Tenders Portal (Under Actions → Manage project → Latest legal data → Reporting periods)
After the end of the reporting period, the coordinator (consortium) has 60 days to submit the report to the EU. Partners have 45 days to submit their reports to the coordinator.
The different reports
The sub-reports are called the periodic report and the final report for the final report. Final report consists of a financial report and a scientific report. Some EU projects (eg ERC) also include the periodic reports of both financial and scientific reports.
For H2020 reporting, an average exchange rate from the European Central Bank applies from SEK to EUR over the reporting period. Note that for FP7 the first banking day applies after the end of the reporting period.
Link to ECB:s currency exchange site
Payment of the grant
Prepayment is paid by the European Commission via coordination within 30 days after the contract has been signed or 10 days before the project start.
The height of the prepayment varies from project to project depending on the total contribution and the number of reporting periods. Usually, the amount granted is divided by the number of reporting periods.
Of the total amount, 5% is deposited in the EU guarantee fund.
Interim payments or partial payments are based on approved actual costs for each reported period and occur no later than 90 days after approval of the report.
Reported non-approval costs are deducted upon payment.
The total amount of prepayment and installments never exceeds 90% of the grant granted (in practice, a maximum of 85%, since the 5% of the guarantee fund is not counted).
Payment of the balance
The final payment is made 90 days after the approval of the final reports (Final financial report and Final technical report) and means the payment of the remaining granted contribution including the 5% included in the guarantee fund.
The EU pays a maximum of as much contribution as corresponds to the reported (and approved) costs.
There are three types of EU audits:
Cerificate on Financial Statement, CFS (First Level Audit)
European Commission / European Court of Auditors (Second Level Audit)
OLAF, European Anti-Fraud Office (Third Level Audit)
Certificate on Financial Statement (CFS)
If the direct costs are equal to or exceed EUR 325,000, an audit certificate, Certificate on Financial Statement (CFS), is required to be issued by KI's procured accounting firm. It is then sent in with the final report. Your GMO manager coordinates the process, but it is important that PI is available for any questions during the review.
All audits of the European Commission are carried out by RTD DG - J.2, Common Audit Service (CAS). An exception is the ECA, the European Court of Auditors, which audits the entire Commission's activities and thus also a number of research projects. An EU audit is normally initiated with an informal contact with the auditor via e-mail or telephone regarding which projects are to be reviewed and where and when they should be done. This is followed by a formal Letter of announcement sent to LEAR (Legal Entity Authorized Representative) via the Participant Portal or recommended letter with proof of delivery. The GMO audit group then calls for a meeting with the department (AC, PI, possibly financial staff/admin), LEAR, GMO's unit manager, representative of the GMO audit group and the GMO financial manager.
Factors that may lead to an audit are:
Reviews of the major beneficiaries
Risk-based analysis: high amounts, large number of subcontractors, new beneficiaries, etc.
Reviews on request
Risk factors such as
Incorrect reporting, both conscious or unconscious.
Suspected fraud, such as plagiarism or duplication of grants. This then leads to an audit of OLAF.
When the review is completed, a draft, Draft Audit Report (DAR), is sent, where we have the opportunity to respond to the observations made. If necessary, GMO will submit appropriate, sufficient and convincing proof if we do not agree with what is presented in the draft.
The accepted draft is then a final report, Final Audit Report (FAR), updated with any disagreements. Report on conclusions of audit decision Letter of Audit Conclusions (LoC) is attached.
Depending on the outcome of the audit, several scenarios are possible. A common outcome is that the audit is closed without any financial consequences, with or without recommendations. If major errors are discovered, repayment may result in reimbursement or exclusion from all ongoing projects in the west.
If there is suspicion of fraud, corruption and other crimes that harm the EU's financial interests, it is investigated by OLAF, the European Anti-Fraud Office.