Author: Jelena Kajganovic
Whether you are an experienced applicant or just starting to consider Horizon Europe, it is always good to start from the basic financial principles so that our budgeting, implementation, and reporting can be according to the rules.
There are elements of the financial management in the project which are more straightforward, such as budgeting; however, reporting can also come easy if the rules are followed during the implementation and resource planning.
1. Take the taxpayers into consideration
There are three main rules or principles to keep in mind, and the first and perhaps most relevant one is that we are spending taxpayers' money. This is because the EU budget, contributed by the member states and associated countries participating in the programme, comes from the taxpayers. Hence, as a minimum, the Commission expects us to follow the principles of good accounting, value for money, that national and institutional rules are being followed, and that cost-effectiveness and efficiency are always taken into consideration when spending the allocated budget.
Here, you would need to be in line with the national legislation. There may be some cases when you must follow the EU rules, but those will not contradict or conflict but complement them. You may have a cost that would be eligible according to your internal and national rules but not the EU or programme rules.
2. Cost vs price
We first need to learn the difference between cost and price to present the second rule. Namely, the difference between cost and price is that the price also includes profit. In the context of EU grants, you cannot charge the Commission your commercial rates for your services; you can only reimburse costs of the expenses you had to implement the project. This would mean, for example, that the hourly or daily rate of employees of a company for a particular service they provide could not be charged here, but rather their salary.
This means that all the internal costs to be charged on the project must be free of any overheads or profit margins. In short - the actual salary according to the time spent on the project, the actual price of a plane ticket, and so on. It would be a mistake to charge a rate with overheads as if it were a service contract or a tender.
Rule number three is that all costs reported must be eligible. Perhaps according to your internal rules, you could charge a trip or a ticket, maybe an excessive restaurant cost, but perhaps for the EU, this wouldn't be acceptable.
Our CEO, Gabor Kitley touches upon eligible costs in this free video but stay tuned to read what is eligible in the second part of this blog post series. Additionally, Europa Media is dealing with finance and budgeting in several courses this autumn:
- Horizon Europe Project Management and Financial Reporting in Brussels
- Horizon Europe Academy in Brussels
- Horizon Europe/H2020 Master of Finance and EC Audits in Barcelona
We are happy to invite you to join us online or in person! See the full list of courses here.