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Introduction

Experience with past framework programmes has shown that the main areas for error in the costs claimed by beneficiaries relate to the personnel costs and indirect costs, often calculated according to a methodology which does not conform to the grant agreement provisions.
The objective of the certification on the methodology is to promote the use of correct methodologies by beneficiaries when calculating personnel costs and indirect costs, in particular in those cases when average costs for personnel are claimed. This way, the expected error rate detected by Commission services after, for example, an ex-post audit should be limited.

Types of Certificate on the Methodology

There are two types of Certificate on the Methodology:

  • Certificate on the Methodology for Personnel and Indirect Costs (CoM) This certification is optional but highly useful for organisations involved in multiple research projects. If a (CoM) has been submitted to, and accepted by Commission Services, Certification of Financial Statements (CFSs) are no longer required by this beneficiary for intermediate payments.
    Beneficiaries qualifying for an application for a CoM shall fall within one or more of the following situations:
    • The beneficiary has taken part in at least eight FP6 EU projects with an EU contribution for each project is greater than or equal to €375,000.
      or
    • The beneficiary has participated at least in 4 FP7 Grant agreements signed before the first of January 2010 with a EU contribution for each grant agreement greater than or equal to €375 000.
      or
    • The beneficiary has participated in at least 8 FP7 grant agreements at anytime during The implementation of the FP7 with a EU contribution for each grant agreement greater than or equal to €375 000.
  • Certificate on the Methodology on Average Personnel Costs (CoMAv) Some beneficiaries, as standard practice in the organisation, have developed management and accounting practices based on personnel categories (average rates), rather than the individual salaries of employees. This practice is covered by the FP7 rules for participation. However, in order to claim average personnel costs the beneficiaries must get advance approval of the methodology (CoMav) they intend to use to report these rates. (Click here for more information). The advantage of getting the methodology approved is that in the case on an audit ex-post, the auditors will not verify the calculation of the hourly rate charged for each employee working on the project individually but will check only whether the methodology has been properly applied.
    The Commission has defined acceptability criteria for average personnel cost methodologies which are applicable for the assessment of the methodologies submitted by the beneficiaries for approval (as per Form E of Annex VII of FP7 model grant agreement.
    The minimum requirements are:
    • Methodologies in which, for each personnel category, the difference between the average rate and the extreme values (upper and lower rates) is equal to or below 5%: the methodology is acceptable.
    • Methodologies in which, for any personnel category, the difference between the average rate and the extreme values (upper and lower rates) is above 25%: the methodology is not acceptable.
    • Methodologies not fulfilling the first criterion and in which, for each personnel category, the difference between the average rate and the extreme values (upper and lower rates) is equal to or below 25%: only methodologies applied by beneficiaries having participated in at least four FP6 projects with an EC contribution in each of them equal to or above €375.000 or at least four FP7 projects with an EC contribution in each of them equal to or above €375.000 are acceptable.

Further, there is the specific case of physical persons and SME owners who do not receive a salary recorded as such in the accounts. Those beneficiaries need to request the approval of the Commission on the way they claim personnel costs. This approval is to be requested through the certification on the methodology for average personnel costs by providing information on how the hourly personnel rate is calculated. There are several methods mentioned in the guidance notes for beneficiaries and auditors under point 5.3.3.
(info) Note: The Certificate on the Methodology for Personnel and Indirect Costs (CoM) and The Certificate on the Methodology on Average Personnel Costs (CoMAv) are independent reports of factual findings produced by an external auditor (or in the case of a public body it may be provided by a competent public officer) according to the requirements of Article II.4.4 of the grant agreement.

Advantages of Certificates on the Methodology

Both CoMs and CoMAvs offer advantages for participants,as follows:

  • Participants will gain legal security if their methodology is approved.
  • Participants in many projects will have to submit less audit certificates.

Table 1, below provides a more detailed list of participant advantages:

Table 1 - Summary: With and without Certificate

With Com/CoMAv

Without Com/CoMAv

The participant is permitted to use average costs for personnel costs.

The participant cannot use average costs for personnel costs.

Where average personnel costs have been used, no recalculation of individual actual costs for personnel in the Certificate on the Financial Statements (CFS) for the final payment or during ex-post audit.

Individual calculation of actual costs for personnel in the Certificate on the Financial Statements (CFS).

Early detection and correction of possible errors in personnel and indirect costs claimed.

Errors in costs claimed are detected when processing payments or during ex-post audits.

Early assessment of compliance to contractual provisions of methodology applied to calculate personnel and indirect costs.

No guarantee that the methodology used by the beneficiary to calculate their claims, conforms to the provisions of the Grant Agreement.

In the case of a CoM no CFS not required for Interim payments.

One CFS is required for each interim payment exceeding €375,000 when cumulated with any previous payments for which a CFS has not been submitted, unless the project duration is less than two years, in which case a CFS is required only at the end of the project.

CoM/CoMAv valid throughout all FP7 projects ongoing at the time of approval of COM and signed after the approval of the CoM/CoMAv. In the case of a CoMAv for physical persons and SME owners who do not receive a salary, the validity is retroactive as of the fist day of FP7 provided that the said methodology was in use since the beginning of the project or that the costs already reported are adjusted according to the approved methodology.

CFS valid only for the relevant costs claimed.

With CoM, reduced costs for the whole certification system.

 

With CoM, simplification of administrative burden both for beneficiaries and EC operational services (less certificates to provide/process)

 


(info) Note: The cost of the Certificate on the Methodology (CoM and CoMAv) is an eligible cost in any of the financial statements submitted in any FP7 Grant Agreement in which the beneficiary participates, after the acceptance of the Certificate on the Methodology by the Commission. The cost of the Certificate on the Methodology can be claimed only once in the lifetime of FP7 unless, due to a change of the methodology, the submission of a new certificate is required.

Validity of the different Certificates on the Methodology

  • CoM The approved CoM will be valid for all FP7 grant agreements signed by the beneficiary after the date of approval of the CoM (unless the methodology changes fundamentally). The approved methodology may also be used retroactively for all ongoing FP7 grant agreements signed by the beneficiary before the date of approval of the CoM. This retroactive effect will be applicable only to projects for which notification of the CoM approval has been received before the end of the period for submission of final reports (i.e. time-limit for retroactive effect is 60 days after the project end-date).
  • CoMAv The approved CoMAv will be valid for all FP7 grant agreements signed by the beneficiary after date of approval of the CoMAv.(unless the methodology changes fundamentally) The approved methodology may also be used retroactively for all ongoing FP7 grant agreements signed by the beneficiary before the date of approval of the CoMAv. This retroactive effect will be applicable only to projects for which notification of the CoM approval has been received before the end of the period for submission of final reports (i.e. time-limit for retroactive effect is 60 days after the project end-date).
    The validity of the certificate approved by the Commission for physical persons and SME owners is retroactive as of the first day of FP7 provided that the said methodology was in use since the beginning of the project or that the costs already reported are adjusted according to the approved methodology.

Submission of the Certificates on the Methodology

This section describes what the beneficiary must do to submit a Certificate on the Methodology.

Certificate on the Methodology for personnel and indirect costs (CoM)

The process for submission of a CoM is as follows:

  1. Request to the Commission: Beneficiaries who consider to meet the minimum criteria described in the section "Types of Certificate on the Methodology" above, may send a request, by electronic mail only to the following email address:
    RTD-FP7-Cost-Methodology-Certification@ec.europa.eu
    containing the Grant Agreement/contract numbers (FP7 and/or FP6) in which they participate.
  2. Acceptance/rejection of the request by the Commission: Acceptance or rejection will be given within 30 calendar days (an extension of this time-limit is possible).
  3. Submission of the certificate: If the request is accepted by the Commission, the certified methodology should be sent in the form of a report of factual findings, as foreseen in the Grant Agreement (Annex VII to the Grant Agreement, Form E), to the following email address:
    RTD-FP7-Cost-Methodology-Certification@ec.europa.eu
    This can be done at any time during the implementation of FP7, and at the earliest on the project start date detailed in the first Grant Agreement signed by the beneficiary under FP7.
  4. Acceptance/rejection of the certificate by the Commission: Acceptance or rejection will be given within 60 calendar days (an extension of this time-limit is possible).

(info) Note: The auditors need a sound basis on which to carry out their procedures (e.g. a pro-forma statement of costs). The certified methodology must be the one which is used for FP7 projects.

Certificate on the Methodology for Average personnel costs (CoMAv)

The process for submission of a CoMAv is as follows:

  1. Submission of the certificate: The certified methodology should be sent in the form of a report of factual findings, as foreseen in the Grant Agreement (Annex VII to the Grant Agreement, Form E), to the following email address:
    RTD-FP7-Cost-Methodology-Certification@ec.europa.eu
    This can be done at any time during the implementation of FP7, and at the earliest on the project start date detailed in the first Grant Agreement signed by the beneficiary under FP7. However, as average personnel costs can only be used if the methodology is approved by the Commission, Beneficiaries are advised to submit the certification as soon as possible.
    Note: No request to the Commission is required as the certificate is mandatory if the Beneficiary is using average personnel costs.
  2. Acceptance/rejection of the certificate by the Commission: Acceptance or rejection will be given within 60 calendar days (an extension of this time-limit is possible).

(info) Note: The auditors need a sound basis on which to carry out their procedures (e.g. a pro-forma statement of costs). The certified methodology must be the one which is used for FP7 projects.

Visibility in DG CONNECT (former DG INFSO) Applications

If any of the the methodology has been accepted by Commission Services, this will be reflected in NEF.


Image 1 - NEF Form C: Beneficiary with CoM for Average Personnel Costs

 

If the YES option is selected, it means that the beneficiary has introduced to Commission services a Certificate of Methodology in which he described the way he is calculating his costs. If this Certificate has been accepted by the Commission, the beneficiary is no longer required to submit a Certificate on Financial Statement at each reporting period (if cumulated payments exceed €375.000), but only at the end of the project.

(info) Note: These flags are read-only and are pre-filled by the system based on URF/PDM.


Image 2 - Printed Form C: Beneficiary with CoM for Average Personnel Costs

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