Lithuania-Poland-Russia ENPI Cross-border Cooperation Programme 2007-2013
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Lithuania-Poland-Russia ENPI Cross-border Cooperation Programme 2007-2013 BW

Finance, eligibility of costs

Q: We are state budget unit and Beneficiary. How we should organize accounting records in project implemented jointly?

A: Accounting records of project expenditures should expand from only synthetic accounts plan to analytical accounts (book-keeping) or separate accounting codes which allow to identify each economic operation in the project. Records of the project should be carried out in such way that it could be possible to extract it out of records kept in institution.
Income of funds on project account doesn’t increase financial plan of institution, couldn’t be treated as budget state income in the moment of transfer of money and funds received by institution couldn’t be used as expenditures of budget unit. Funds received on project bank account shall be transferred to project partners or to institution expenditures settlement approved in project implementation reports.
Funds received on project bank account as a reimbursement are transferred in relevant part to project partners and are transferred in relevant part for beneficiary to account on state budget revenue.
Accounting records for project account are carried out independently of institution’s accounting records. Records should be kept as balance sheet register, in EUR and PLN parallel. Caring out accounting for ancillary account should be used book-keeping (synthetical and analytical) plan, separated from accounts for realization financial plan of institution.
Therefore existing account plan should be completed by additionally accounts designed for register funds from foreign countries which will not be recoverable as defined in annex 3 to Regulation of the Ministry of Finance on 5th July 2010 on specific rules of accountancy and accounting plan for state budget, local government units budget, budget entities, budgets of local self-government entities, local budgetary establishments, appropriated state funds and state budget entities with premises outside Poland.


Accounting records carried out on Project account - examples:

1. Income of funds from Joint Managing Authority (Ministry of Regional Development)

Dr Cr
137 Account for funds from foreign countries which will not be recoverable 228 Settlement of funds from foreign countries which will not be recoverable

 


2. Transfer of funds to the partner

 

Dr Cr
228 Settlement of funds from foreign countries which will not be recoverable 137 Account for funds from foreign countries which will not be recoverable


3. Return of funds to Joint Managing Authority (Ministry of Regional Development)

 

Dr Cr
128 Account for funds from foreign countries which will not be recoverable 137 Account for funds from foreign countries which will not be recoverable



Q: Do we have to, as budgetary unit and Lead Partner, secure in our financial plan amounts equal to whole expenditure planned in the Project?

A: In the financial plan there should be foreseen only expenditure expected to be  used by the unit. Transfer executed by the partner do not constitute unit expenditure therefore should not be included in the financial plan of the unit.


Q: As the Lead Beneficiary we received a tranche of funds from the JMA (installment/ refund) less than requested. We have not received additional explanation of the ineligibility of expenses submitted for funding. What could be the reason of that situation?

A: Most likely, the transfer has been reduced by the correspondent bank charges which mediates the transfer of funds between the National Polish Bank (NBP) and the Beneficiary bank. Correspondent bank is most common in the case of foreign transfers. Correspondent bank charges do not occur if NBP and Beneficiary bank cooperate directly under the contract or if those two banks are in the same transfer system. Costs of the correspondent bank incurred during project implementation period are eligible for co-financing. Beneficiary can include them into the  Interim Progress Raport.


Q: As a project Partner we received tranche of funds from the Lead Beneficiary. The amount is not consistent with the amount requested by us in accordance with a request for an installment/ payment. What can be the reason of that?

A: Most likely, the transfer has been reduced by the correspondent bank charges, which mediates the transfer of funds between bank partners. Correspondent bank is most common in the case of foreign transfers. Correspondent bank charges do not occur if partners banks cooperate directly under the contract or if those two banks are in the same transfer system. Costs of the correspondent bank incurred during project implementation period are eligible for co-financing. Beneficiary can include them into the  Interim Progress Raport.


Q: Is the applicant obliged to monitor interests on his/her EUR project account and account in national currency, after transfer of project funds to this account from the EUR project account?

A: General conditions state that “interest accruing from pre-financing" has to be taken into account, and it is further specified in the Article 16.1 "Accounts and expenditure relating to the Action must be easily identifiable and verifiable. This can be done by using separate accounts for the Action concerned or by ensuring that expenditure for the Action concerned can be easily identified and traced to and within the beneficiary’s accounting and bookkeeping systems. Accounts must provide details of interest accruing on funds paid by the Contracting Authority. Therefore, all interest on all accounts (irrespective the currency) has to be monitored.


Q: According what exchange rate the amounts of the project indicated in the information boards are to be converted?

A: The average monthly exchange rate of the month when the contract was signed from the InforEuro should be applied: http://ec.europa.eu/budget/contracts_grants/info_contracts/inforeuro/inforeuro_en.cfm
On the other hand please be aware that there is no obligation to put the amount of contract on the information board.


Q: Does  the use of contingency reserve lead to an addendum to the contract? Or is it enough to get a letter from the JMA giving prior approval?

A: The use of the contingency reserve usually leads to an addendum to the contract. Nevertheless, the JMA may decide to give its prior approval through a letter if the amount is not significant.


Q: What if ineligible activities and/or expenditures are identified by the JTS after the verification of expenditures is concluded?

A: The JMA is responsible for the decision on the final amount of accepted eligible expenditure, which has to be taken on the basis of the Expenditure Verification Report issued by the auditor, but also on the revision work carried out by the JTS. Therefore, if the ineligibility is identified by the JTS before the payment of the grant, the amount has to be communicated to the JMA, who will take the final decision on the issue and will reduce the amount of the grant if the conditions indicated in Article 15 of the General Conditions require it.


Q: What supporting documents are required to submit to prove administrative costs in the financial report?  

A: It is not required to submit any supporting documents for administrative costs in the financial report, only the amount spent should be indicated. Administrative costs should be spent in accordance with the methodology agreed during the contracting process; in addition these costs should be easily traceable in the accounting system of the organization. 


Q: Is the Beneficiary obliged to spend 10% of own co-financing and report it in the interim report in order to receive next pre-financing payment? 

A:
Yes, the Beneficiary is obliged to spend and report project’s financial contribution equivalent to the project’s own co-financing rate indicated in the GC in article 3.4 of the Special Conditions (at least 10% ) with each financial report.


 



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