Different topics are tackled: revenues, durability of operations, the 10% and 20% rules and much more which we are consequently adding.

You are able to view all presentations from the Current financial developments INTERACT seminar on 24 March 2011 here.

Questions and Answers

Financial implementation

1. The procedure of cost reimbursement to partners in our programme is extremely slow. What are the measures which MA could apply to alleviate the situation of the partners and help them keep financial liquidity?

• Urgently review the procedures to identify the 'bottlenecks' involved with all the responsible institutions.
• Change the procedures where possible to remove the 'bottlenecks'.
• Put in place targets for different stages of the payment procedure e.g. 90% of payments to be made in x days, review the targets regularly.
• If possible, provide pre-financing for projects. Please rememeber that pre-financing is not a 'spend' and cannot be included in a payment claim to the European Territorial Commission or counted when calculating the decommitment targets.
• Provide an inital quick payment e.g. 50% of the payment claim will be made following the first desk check, the balance after all the checks have been completed. It is highly unlikely that 50% of the payment claim will be irregular.
• Allow more frequent payment claims.

2. The EC suspended payments due to the negative results of the audit. Clearance of irregularities and the application of audit recommendations will take some time. Is there a possibility to make payments only to partners who are not affected by the audit results? How will this situation affect decommitment targets?

The fact that the EC has suspended payments should not affect the payments to partners other than those directly affected by the irregularities. However this does mean that national finance is required to deal with the cash flow issues. To keep up with decommitment targets you must continue to put in payment claims to the EC. Application of audit recommendations can take time but again this should not stop payments which are unaffected by the audit recommendations. In case systematic irregularities have been spotted in the audits, make sure the irregularity is not repeated in the unaffected operations. Regarding decommitment targets, the article 96 of Regulation 1083/2006 provides an exception to the decommitment rule where an application for payment has been made but whose reimbursement has been interrupted or suspended by the Commission. When the problem has been resolved, the automatic decommitment rule is then applied to that part of the budget commitment, which was interrupted or suspended by the Commission.

3. What is a difference between the interruption of payment and the suspension of payment?

An interruption of the payment deadline is made by the Authorising Officer as designated under Regulation 1605/2002. Normally, payment requests are made to the Commission as far in advance as possible and on three separate occasions during a year. For a payment to be made in the current year the payment request is made by 31 October.

If the Authorising Officer is advised, in a report of a national or Community audit body, that there is evidence to suggest a significant deficiency in the functioning of the management and control systems, he/she can interrupt the payment deadline by up to six months. The interruption can also be made if the Authorising Officer must carry out additional verifications following information that expenditure in a certified statement of expenditure is linked to a serious irregularity which has not been corrected.

A suspension of payment is made by the Commission for the reasons set out in article 92 of Regulation 1083/2006. The Commission can decide to suspend all or part of an interim payment after giving the Member State two months to present its observations. The suspension is lifted when the Member State has taken all the necessary measures required by the Commission. If these measures are not executed, the Commission can adopt a decision to cancel all or part of the Community contribution to the OP.

Durability of operations

1. How will we monitor the durability of operations?

All relevant subsidy contracts should have a clause which refers to the provisions of article 57 of Regulation 1083/2006 on monitoring of durability. However, an understanding of exactly what type of operations are covered by this article is necessary as the article refers generally to infrastructure projects, productive investments etc., so not all projects will be affected. The MA or MS should set up a system and designate the body/bodies (e.g. MA) responsible for the monitoring of this requirement, particularly after the closure of a programme. The designated body should also ensure that undertakings which are, or have been subject to a procedure of recovery following the transfer of a productive activity within a MS or to another MS do not benefit from a contribution from the funds. In some specific cases, especially investment projects of high importance for the community, which should remain in public ownership, the regulatory period of 5 years, can be extended. This does not necessarily mean that the owner of the investment cannot change, but the original terms of the grant should be met and the investment should keep its initial character formulated according to the subsidy contract. There is a requirement to monitor this activity for the Annual Report and Final Implementation Report.

2. What kind of checks should be carried out (on-the spot, document verifications)?

A minimum check should be the requirement of the beneficiary/partner to report a substantial modification to the MA/MS. On-the-spot checks would require additional staff resources but could be done on a risk analysis. One of the risk factors could be the ownership of the investment by the private sector.

3. Which documents should be requested from the project partners?

There could be an annual return from the beneficiary/partner to the MA/MS for the duration of the 5/3 year period. Article 57 requires the maintenance of the investment for five years from the completion of the operation or three years from the completion of the operation in MS which has exercised the option of reducing the time limit for the maintenance of an investment or jobs created by SMEs. The MA/MS should prepare the annual return to ensure that the information is collected consistently and accurately. The annual return could be sent out each year by the MA/MS or 5/3 copies sent to the beneficiary/partner at the time of the final payment.

4. How often investment projects should be checked?

As a minimum at the end of the 5/3 year period, it would be recommended to conduct an annual check. Reimbursement of funds is not required when the productive activity ceases due to non-fraudulent bankruptcy.

Answers are given by Sheila Maxwell, an external expert. Please note that these answers are an opinion of an experienced practitioner and not an official position. INTERACT does not warrant or assume any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, product, or process disclosed in or related with this document.

Intellectual Property Rights (IPRs) in 7th Framework Programme (FP7)

To give some food for thought for ETC programme managers on how to cope with IPRs, we invited Lotte Jaspers, an external expert dealing with the 7th Framework Programme's scientific projects, to expain how IPRs are managed in FP7 and which schemes could be applied in ETC programmes.

Presentation by Lotte Jaspers

An Overview into the Intellectual Property Regime of FP7 - Article by Lotte Jaspers

You will also find short version of the article in the INTERACT Publication "European Cooperation Growing Smart" from May 2011, page 31.

Questions and Answers on Automatic decommitment are covered in a a separate website section.