Meeûs – a self-help resource for the FP7 user community

This relates to the earlier post about productive hours in FP6 projects.

The Commission has issued guidance to auditors that states, inter alia, “It is impossible to define a general correct figure for productive time … The auditor must use his professional judgment to decide if the productive time used for calculation is reasonable.” Elsewhere in its guidance, though, the Commission suggests that a typical figure for productive time is around 210 days per year.

A lot of organisations normally consider a much smaller number of days as productive, e.g. figures as low as 150 or 170 days are not unusual. There is accumulating evidence of ex-post auditors tending to challenge such figures, because they apply the Commission’s indicative figure quite rigidly.

The other day I heard about a university  that for years has typically applied a figure of around 160-165 productive days in its FP6 projects. The figure had never been challenged by the Commission’s Financial Officers, but now it has been challenged in an audit, together with a recommendation that all of the university’s FP6 projects must now be recalculated on the basis of  a figure nearer 210 days. This is ridiculous: the Commission/auditors are in effect re-writing the rules retrospectively.

It would be interesting to learn about how many productive days other organisations have typically claimed successfully in their FP6 cost statements to the Commission.

It would also be interesting to hear from anybody who has had their FP6 productive hours calculation challenged by the auditors, and with what consequences.

Hello, I have been coordinating an FP6 coordination action (CA). The EC funding was 100% with a flat rate of 20% for overheads. We developed the budget according to that and did the 2 first cost statements also with that rule. Then they informed us that we followed a wrong practice and we should actually (for the FC and AC partners) report the real overhead rate and then request from the EC only the 20%. What followed was a mess as we had to introduce adjustments to previous periods to correct this for the whole duration of the project.

Now I am a partner in an FP7 CA where the funding is 100% and the overheads a flat rate of 7%. the coordinator is assuring us that we should report only the 7% and not the real rate. Has something changed in FP7 in this regards? Does anyone have relevant experience or inforation?

Thank you

I know this is about an FP6 subject, but it is also very relevant for FP7.

EARTO (www.earto.eu) has reported that several of its members have recently had FP6 projects audited and that many of them have been seriously criticised by the auditors.

There have been two main points of criticism.

One is that many of these research organisations have been using average personnel costs. Audit checks on individual projects have shown that the claimed costs were out of line with the real costs. The research organisations seem to have worked on the principle that over a number of FP6 projects the average and real costs would be more or less in line and therefore acceptable to the Commission. Clearly, the Commission expects costs to be accurate for each individual project. In other words: you can use average costs for interim reporting, but you need to correct for real costs at the latest when you make your final claim.

The other issue is more fundamental and potentially of very grave consequences. It has to do with the definition of “productive time” (“invoiceable days”). Many research organisations count as productive time only the hours that are available for invoicing to customers. So they deduct things like holidays, weekends, public holidays and sick leave, of course, but also internal management time, training and education time, equipment maintenance time, marketing time and so on. Some auditors, at least, have refused this, saying that things like general management time and marketing time have to be included. This can have big consequences: one research organisation calculated its number of productive hours per employee to be around 1,100 hours per year; the auditors said it should have included general management and marketing time, which gives a total nearer 1,600 hours per year. It makes a big difference to the reimbursed daily rate if you divide your total salary bill by 1,100 or 1,600.

EARTO is organising a workshop for its members on December 10th about these issues. Maybe there will be some more information after then.

In the meantime, has anybody else experienced FP6 audits recently? If so, what issues have been raised and with what consequences?   

I have heard from two other organisations that the Commission will not allow the inclusion of “marketing costs” in the calculation of overhead (indirect costs). I don’t understand this, because the FP7 rule is that you should use your usual “accounting principles and practices”. It is usual practice for my organization to include our marketing costs in our overhead: I can prove from our accounting system that we charge all our customers some overhead including marketing costs. So is it safe to charge the Commission in the same way or must I expect that the Commission will refuse to pay?