• H2020
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As usual, the implementation of a new framework programme comes with its onset of regulation. Horizon 2020 did too and, although simplification has been taken into account, the actual implementation can be anything but simplified. Accounting principles and set procedures for FP7 research projects can cross the new set of rules. What to do next? At MeSo Consultants we see a tremendous increase in training project controllers and administrators to cope with the differences and adjust the accounting principles to suit the regulation.

Organisations contact MeSo Consultants for assistance (or can we say a cry for help?) to get them through the maze of Horizon 2020 on a daily basis. Our clients get easily lost in the implementation of the new financial regulation in comparison to what they were used under its predecessor, FP7. So, what has effectively changed?

Under FP7 many organisations have adjusted their (project) administrations to comply with the rules of the programme. For the projects within Horizon 2020, project administrations have to be in compliance with the set rules as well. The main cause for these changes is the lack of supporting information that the organisations can retrieve from their systems and project administration. This supporting information is needed in case of being audited.

During audits, especially those who are directed by the European Commission, many errors arise. In FP7 most mistakes occurred in the field of personnel costs (structural errors), sub-contracting and the calculation of indirect costs. Participation in an FP7 research project was more complicated due to the fact that, although there was a high standard, the details for implementation were not always provided, which would leave room for error. This would cause tremendous problems for inexperienced organisations, most of whom were unaware of even making mistakes. We will set out below the major differences and their effects on implementation, and investigate whether or not it’s becoming more complicated to comply with the rules.

Within Horizon 2020, there are more options to work with in relation to annual productive hours, which could definitely lead to fewer mistakes. During audits, mistakes in the calculation or usage of the organisation’s productive hours’ standard lead to the largest corrections. This is due to the fact that mistakes are of a structural nature and frequently need to be corrected

throughout all running projects. At MeSo Consultants we always advise our clients to double-check or, preferably, audit the standard method used to calculate the annual productivity. Participants should be aware that they ought to comply with all applicable sets of regulations.

Also, the use of a single flat percentage is truly a simplified method. Although many of the calculations were done automatically when reporting, some aspects in the area of budgeting have of course become much easier. When taking into account that there are no differences in the type of activities when it comes down to the funding rate, participation and administration of the grant has become much simpler than it was under FP7 regulation. This simplification makes it more interesting and easier for new participants, especially SME and non-profit organisations. Typically, those organisations tend to have fewer state-of-the-art administrations and resources to manage research and innovation grants. It looks like the simplified rules do impact these target groups (for the European Commission) in a positive way when looking at the increased participation of these type of organisations.

But is it all sunshine in Horizon 2020? No. Many organisations suffer from the rule to use personnel costs for a closed fiscal year only. This means that, when your project ends in, for example, April 2018, you will have to use the personnel costs from 2016 as that would be the last closed fiscal year. When it comes down to salary costs for a PhD or postdoc, you will have to take into account real losses. Here we can identify that the rules, and their implementation therewith, have been written with an over-cautious attitude.

At MeSo Consultants we promote the idea to work with, at least, quarterly figures as most organisations close their books on a quarterly basis. We would prefer to use the actual, most recent numbers to work with as afterwards regarding staff costs, or do they? A strong lobby is committed to changing the rules and their implementation. MeSo Consultants assists organisations in promoting this lobby, and, on the practical side, in determining the correct usage of personnel costs.

When it comes to the implementation and compliance of research and innovation projects, we can see that the effects of simplified rules can be identified in comparison to FP7 research projects. Most rules reach their objectives and make the implementation less complicated. However, there is a downside as well, especially when looking at the over-detailed and demanding rules such as the one concerning staff costs and closed books. Let’s work towards less complicated compliance for the duration of Horizon 2020. At MeSo Consultants we are happy to discuss the necessary compliance effects for your organisation.

Merel-Marlijn Sondervan
Managing director
MeSo Consultants
Galjoen 22-29
8243 LM Lelystad

The Netherlands
+31 (0)320 22 12 02
[email protected]

http://www.meso.nl