The European Sustainable Competitiveness Programme
for Northern Ireland 2007 - 2013

What does ERDF mean?

ERDF stands for European Regional Development Fund. It is a fund designed to help stimulate economic development and regeneration in the least prosperous regions of the European Union

What is the cut-off date for eligible expenditure under the Programme?

Expenditure must have been incurred and paid by the project beneficiary by 31^st December 2015, as evidenced by payment records indicating the money has left the bank account of the project beneficiary by 31^st December 2015. 

Earlier deadlines can be imposed through terms and conditions of Letters of Offer or contracts as appropriate. Additionally, Intermediate Bodies can stipulate an earlier deadline for administrative purposes. Where a beneficiary has continued to make payments up to and including 31 December 2015, every effort should be made to submit financial claims and corresponding papers to the appropriate Intermediate Body as soon as possible thereafter to facilitate essential management verification, vouching and payment processes.    

Why do I have to apply through an Intermediate Body?

Intermediate Bodies have been delegated the responsibility of identifying projects that are in line with the 3 main priorities. This will enable effective delivery of the Competitiveness Programme.

Is there a maximum amount of money available for projects through the Programme?

The total funding available through the Programme is € 613 million, which has been divided between the various Intermediate Bodies. In turn, each Intermediate Body will have agreed a budget allocation for each of their activities, and subject to that limitation, the Intermediate Bodies will make offers of funding to successful project applications.

Why are credit notes subject to the Programme's irregularity procedures?

It is an EU requirement to ensure that all costs are fully vouched and eligible and that ineligible costs are identified and excluded prior to payment.  As such any ineligible expenditure included in the calculation of grant paid or grant claimed is subject to irregularity procedures including invoices against which a credit note is subsequently submitted.  Further guidance is available within DFP's Guidance Note 4 on the treatment of Irregularities.   

What basis should be used for calculating food/drink expenditure which can be supported? Is there an upper limit per head?

It is sometimes necessary to host morning or afternoon meetings to which representatives of external organisations are in attendance.  Generally speaking, the provision of tea or coffee and biscuits at meetings of this kind can be charged to the Programme.  Expenditure incurred should be justified and reasonable, and should be consistent with NICS guidance.  When guests are entertained at hotels or restaurants, the total cost per head including drink should not exceed £40, which should be regarded as an upper figure.  The element for drink should not normally exceed one-third of the total bill, however if the food element is for some reason very economically priced, then a drinks charge up to a maximum of £12 per head may be admissible.  If no service charge is included in the bill, a tip of 12.5% would be reasonable, but this should be contained within the maximum cost of £40.  (DETI Guidelines on the Provision of Hospitality PS 2/93, rev 12/97, 6/03 and 1/07 refers). Click here for the Managing Authority Guidance on Eligibility of Hospitality Expenditure.

Are insurance costs eligible for funding?

Insurance of buildings, contents and for public indemnity are eligible provided that it can be clearly demonstrated that these are directly related to the delivery of the Project or are a requirement of the offer of funding.  Where insurance policies are only provided on an annual basis and the project termination date precedes the end date of the insurance policy, the entire cost for the year remains eligible as this is the actual cost to the project and was a requirement of the offer.

Can internal journal transfers be accepted as evidence of expenditure?

ERDF funding can only be claimed on expenditure that has been paid by the final beneficiary.  As such journal transfers should only be accepted as evidence of expenditure if they can be traced back to the original cost incurred by the final beneficiary.  The transfer must be supported by documentation indicating that the service/goods have been requested, supplied and delivered and that the cost has been transferred from the cost centre of the project (department delivering the activity) and can be traced back to the relevant expenditure incurred by the final beneficiary (which will need to be evidenced through bank statements, receipted invoices or accounting documents of equivalent probative value).

Land costs - should these always be limited to a maximum of 10% of total eligible expenditure of the project?

The land purchase (freehold or leasehold) must not represent more than 10% of the total eligible expenditure of the project, unless in "exceptional and duly justified cases", a higher percentage may be permitted for environmental conservation projects.  This rule will also apply to any in-kind donations of land to a project.  (DFP Guidance Note 5 (Northern Ireland Rules on the Eligibility of Expenditure for the 2007-2013 Structural Funds Programmes)

Are legal mortgages required for purposes of Letters of Offer etc?

Not specifically, however Letters of Offer should contain appropriate clauses to protect investment of public funds in a proportionate manner, in line with Managing Public Money Northern Ireland (MPMNI).  It may, for instance, be appropriate to require security against a building where grant is being provided for the actual cost of construction or renovation.

Which newspapers should be used to advertise for services under the Programme?

The issue (which is a national ruling rather than a specifically European one) is addressed through each Department's Equality Scheme - in the case of DETI's scheme (which is used to govern the Competitiveness Programme), the position is reproduced below.                                                 

When disseminating information through the local press, the Department will ensure that press statements and public advertisements are carried by all three Belfast daily newspapers, including the North West version of the Belfast Telegraph.  Where press statements or public advertisements are aimed at a particular geographical area within Northern Ireland, the Department will ensure that the information is available through at least two local newspapers circulating in that area.  The Department will also ensure that specialist press receive copies of press releases to disseminate, as they consider appropriate, to their particular readership.

This practice should equally be applied when publishing notifications of the opportunity to tender through an e-tender web facility.

Can proforma invoices be considered as being part of the audit trail?

Proforma invoices are abridged or estimated invoices sent by a seller to a buyer in advance of a shipment or delivery of goods. It notes the kind and quantity of goods, their value, and other important information such as weight and transportation charges. Pro forma invoices are commonly used as preliminary invoices with a quotation, or for customs purposes in importation, however the agreed price may change prior to final sale.  It is clear that in terms of proof of payment, these would not be considered as documents of equivalent probative value to an actual invoice.  They would only be acceptable in place of a purchase order. The audit trail should demonstrate that the purchase had been approved (if appropriate in terms of internal procedures e.g. Managing Public Money Northern Ireland), and should provide evidence of payment.  Evidence of payment is usually obtained from a combination of a valid invoice and the actual payment record (bank statement or BACS system record).  Most organisations would require valid invoices for their accounting records.  However, it may be that a combination of the pro-forma invoice and a corresponding payment record or receipt from the seller could be considered sufficient in terms of the audit trail.

What specific publicity requirements apply to infrastructure or construction projects?

Prominent site signage must be displayed throughout the period of all infrastructure or construction projects where the ERDF funding is equal to or greater than €500,000.  The signage must include the official ERDF logo and the strapline "Project part financed by the European Regional Development Fund under the European Sustainable Competitiveness Programme for Northern Ireland."  On billboards and plaques the official logo must be on the same scale as any other logos used and the total EU reference should occupy 25% of the total space.  All such Projects must erect a permanent explanatory plaque within six months of completion. 

Are retail operations eligible for funding under the Programme?

Sub-paragragh 3.3.2 of DFP Guidance Note 5 states that "activities which add nothing to regional development but displace similar existing activities are ineligible."  Generally support to specific retail businesses (including capital development) is viewed as causing displacement and is therefore normally ineligible for ERDF support. It may be possible for ERDF to support retailers in acquiring advice on e.g. improving their performance in environmental sustainability or equal opportunities or in respect of an operation which provides generic business advice support but examples like this require to be considered on a case by case basis and you should contact the Managing Authority directly for advice.

What are the circumstances in which sick or maternity pay may be claimed?

Sick or maternity pay can be claimed if it is in line with the organisation's staff policy or contained within the individual's contract of employment and is not recoverable by the employer from the state.  (DFP Guidance Note 5 (Eligibility of Expenditure) sub -para 4.4.1).

Is Sick Pay/Maternity Pay eligible for ERDF and are salary costs for a 'stand-in' employee eligible?

Sick/maternity pay can be claimed if it satisfies the following criteria:

• Salary costs are included in the Letter of Offer;
• Sick/maternity pay is in line with the organisation's staff policy and is contained in the individual's contract of employment; and
• The organisation cannot recover the sick/maternity pay from the State.

It is not permissible to use ERDF funding in respect of two employee salary costs for a single post.  Where an employee is absent on sick/maternity pay, the use of ERDF should be limited to reimbursement of either the salary costs for the absent employee or the salary costs of the replacement employee.

All salary claims must be eligible in terms of National Rules and fully compliant with every aspect of the Letter of Offer.

Are salary costs for Pay in Lieu of Notice eligible for ERDF?

The cost of Pay in Lieu of Notice (PILON) is considered eligible under ERDF provided that:

(1) the specific salary costs are approved for grant during the notice period; and

(2) that PILON is a contractual arrangement appropriate to the employee's termination arrangements (and not included in a redundancy arrangement).

If the payment of PILON is to be grant funded, then the period of notice is treated as a ‘funded’ period of employment subject to the start and end dates applicable under the Letter of Offer.

What if an organisation proposes using an existing employee to fill a vacancy for which they will seek ERDF funding?

Eligibility of public sector staff is covered by the DFP published "Northern Ireland Rules on the Eligibility of Expenditure for the 2007-2013 Structural Funds Programme" (DFP Guidance Note 5 para 4.1.3  Guidance website link http://www.eucompni.gov.uk/resource-library/guidance) This paragraph states that "expenditure incurred by public administrations, including the civil service, in implementing projects is eligible providing that the activity represents an additional obligation to the organisation". This is consistent with the need to demonstrate additionality in any project funded using public money. Generally, evidence of additional cost would take the form of verification that headcount has increased or that a post would have ceased to exist without the funding. Generally written assurance from the organisation's HR is sufficient for the records. The organisation will itself be responsible for ensuring and demonstrating adherence to wider statutory employment obligations.

What is considered to be an acceptable ceiling for employers' pension contributions which is eligible for inclusion in the Programme?

DFP guidance note 5 states that "Staff costs are calculated on the basis of actual payroll costs which include gross salary, national insurance contributions and may include employers’ pension costs where there is an established pension scheme which applies to all staff. There should be a clear audit trail created for staff costs from timesheet to payroll record.  Staff costs can include reasonable costs arising from the contract of employment".

Analysis of public sector pension schemes has indicated that rates average around 20%. Some public sector schemes contribute 25% and therefore a rate at this level could be considered reasonable. Where a contract of employment indicates that the employer has agreed to make a higher contribution, expenditure included within the Programme should normally be capped at the upper limit of 25%. Where an Intermediate Body proposes to include contributions exceeding 25%, the case must be referred to the Managing Authority in advance for consideration.

What is the required vouching process in relation to percentage of time spent working on a project?

Staff working part-time on a Project will come under one of the following 3 categories:

1. Staff contracted to work part-time and working 100% of that time specifically on the Project;
2. Staff contracted to work full-time but with a stipulated percentage of their time apportioned to working on the Project;   
3. Staff contracted to work full-time where part of that time is spent working on the Project and the amount of that time varies  over the period of funding.

For A: There is no requirement under the Programme to maintain additional time records.

For B: In order to be able to correctly determine the amount of grant payable iro Category B staff, staff will need to maintain time records covering 100% of their time. These records should be signed by the employee and appropriately authorised.

For C: Time records need to be maintained which detail as a minimum, the date/s of the Project activity, a description of that activity and the specific hours spent on that activity.  These should contain sufficient detail to permit calculation of salary costs on the basis of the hourly/daily rate.  The records should be signed by the employee and appropriately authorised.

For details regarding “appropriate authorisation” of time records and on how to calculate daily/hourly rates please refer to Managing Authority “Guidance On Requirements For An Adequate Audit Trail."

Are drawings eligible for ERDF?

Drawings can be easily withdrawn and then reinvested in the business and cannot therefore be used as an appropriate basis to confirm earnings.  As such drawings are ineligible for funding through the Competitiveness Programme.  Verification of salary for self-employed persons or sole traders not being paid a "traditional" salary is inherently very difficult.  The development of a unit cost methodology is recommended where these types of costs are proposed or necessary and the unit cost must be calculated in accordance with the relevant guidance provided by COCOF (Cocof 09/0025/04-EN) and approved in advance by the Member State through the Managaing and Audit Authorities.

Are capital depreciation costs eligible?

Yes as long as it has been agreed that the asset/equipment will only be used for the project being supported.  Each case is viewed on an individual basis.  A depreciation schedule is used to inform whether or not the asset will have a value at the end of the project.  All documentary evidence in relation to the purchase of the asset will also need to be available as well as project duration.  The outcome of this exercise will determine what amount should be paid to the beneficiary.  Further clarification, if required, should be sought from the Managing Authority.

To Note: No depreciation can be claimed in respect of property / goods which have benefited from national or European grants at the time of their purchase – ie there must be no double funding

(DFP Guidance Note 5 para 4.4.7 Guidance website link  http://www.eucompni.gov.uk/resource-library/guidance)

Is second-hand equipment eligible for funding under the Programme?

The purchase cost of second-hand equipment is eligible provided that: it is clearly linked to the delivery of the Project and, where appropriate, has been properly procured.  The equipment must not have been purchased previously with the aid of national or European grants.  The price of the equipment must not exceed its market value and be less than the cost of similar new equipment and be technically appropriate and comply with any relevant legislation (e.g. health & safety).  The calculation of the eligible expenditure relating to the purchase of second-hand equipment should be based on its current value.

Is training eligible for ERDF support?

Staff training costs are eligible if the training is directly required for the project.  However mandatory training required by statutory provisions is ineligible.

Up to 10% of the ERDF funded Programme can be spent on activities which would have historically been funded under ESF provisions.  Such activity should be brought to the attention of the Managing Authority so that overall Programme ceilings can be monitored as appropriate.

What value of travel and subsistence can be funded under the Programme?

In all instances, only travel and subsistence costs which are capped at the Northern Ireland Civil Service (NICS) rates will be considered eligible.  Organisations can choose to exceed these limits under their own policies but should be aware that only the amount up to the NICS ceiling will be eligible for funding under the Programme.  In terms of subsistence, the published NICS rates are only to be used to determine the appropriate ceiling.  A link to the NICS subsistence policy is set out below. The specific ceilings which apply are included in the policy at Annex 1.
http://www.dfpni.gov.uk/9.13_subsistence_allowances.pdf

Where can I find the ceilings which should apply to overseas accommodation and meals?

These are published at: http://online.nigov.net/wwsr-bench.pdf

In what circumstances is VAT eligible for funding under the Programme?

Value Added Tax (VAT) generally applies to the provision of all goods and services; including hospitality.  DFP Guidance Note 5 (Northern Ireland Rules on the Eligibility of Expenditure) states under paragraph 4.1.2:    "VAT which is recoverable, by whatever means, is ineligible, even if it is not actually recovered by the sponsor or individual recipient.  Irrecoverable VAT can be claimed as an eligible cost provided the claim is substantiated by suitable evidence from the organisation’s auditors or accountants."  Proof that the VAT is irrecoverable would need to be retained for the audit trail.