Request for further pre-financing
The European Commission shall pay an initial and further pre-financing of the grant to the partner following the provisions specified in Article 4 of the Special Conditions.
In order to cover the financing needs for each 12-month period of implementation of the Action, the partner may ask, at the intermediate report stage, for a further pre-financing. The template to be used for this request is the ANNEX V - Request for payment for grant Contract European Community external actions. Further pre-financing may only be given if the part of the expenditure actually incurred which is financed by the EC (by applying the percentage set out in Article 3.2 of the Special Conditions) stands at 70% at least of the previous payment (and at 100% of any previous payments) as supported by the corresponding interim report and, where applicable, by an expenditure verification report as specified in Article 15.6 of the General conditions.
Where the consumption of the previous pre-financing is less than 70%, the amount of the new pre-financing payment shall be reduced by the unused amounts of the previous pre-financing payment.
The total sum of pre-financing under the Contract may not exceed 90% of the amount referred to in Article 3.2 of the Special Conditions.
Expenditure verification report
A report on the verification of the Action’s expenditure, produced by an approved auditor who meets the specific conditions of the Terms of Reference for the expenditure verification, shall be attached to any request for pre-financing payments per financial year in case of grants of EUR 750 000 or more or any request for payment of over EUR 100 000 for the financial year, in the case of an operating grant.
The expenditure verification is a sound proof that the expenses reported on the standard financial report correspond to the partner accounting and bookkeeping system and to underlying accounts and records.
The auditor verifies that the funds provided by the grant were spent in accordance with the terms and conditions of the grant contract and that the different procedures were respected. He examines whether the costs declared by the partner are real, accurately recorded and eligible in accordance with the Contract, as well as the revenue of the Action and issues an expenditure verification report.
The partner must draft Terms of Reference and select an auditor/auditing firm with the task of verifying that all information reported in the financial report is accurate and eligible. The beneficiary should annex to the ToR of the expenditure verification a fiche containing key project information.
As per EuropeAid's standard form, the scope of work and procedures to be adopted by the auditor are:
- obtaining a sufficient understanding of the action and of the Terms and Conditions of the grant contract;
- verifying that the eligibility of expenditure claimed by the beneficiary in the financial report complies with the the rules for accounting and record keeping of the Grant Contract, notably with article 16 of the General Conditions. By the same token the auditor shall reconcile the information provided in the financial report to the beneficiary's accounting system and records, and verify that the correct exchange rates had been used (as per article 15.9 of the General Conditions).
- verifying that the budget expressed in the financial report corresponds to the one authorised by the Contracting Authority in phase of signature of the Grant Contract, and that any eventual amendment to the budget - both unilateral and my means of an addendum - comply with the conditions set out in article 9 of the General Conditions.
- substantiating that expenses incurred are eligible and that indirect (administrative) costs do not exceed the allowed threshold of 7% of the total direct eligible costs;
- verifying that the Beneficiary complied with the rules of procurement, nationality and origin for given expenses and, in case of non-compliance, assessing the effect on the eligibility of expenditure.
Sources and useful links:
- General conditions, Article 15