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European Commission

EUROPEAN CIVIL PROTECTION AND HUMANITARIAN AID OPERATIONS

WORKING WITH DG ECHO AS AN NGO PARTNER | 2021 - 2027

ELIGIBILITY OF COSTS

FINAL REPORT

As stated in the Article 6.1 (a) (ii) of the MGA, costs related to the preparation of the final report shall be deemed eligible even if incurred after the eligibility period of the Action.

Therefore, if linked to the preparation of the final report, office running costs may be eligible, provided that they are reasonable, justified and compliant with the principle of sound financial management, in particular regarding economy and efficiency. In order to avoid costs to be charged twice, in case of follow-up action, these costs are no more eligibile. 

DEPRECIATION

It's possible to charge a depreciation rate related to the local office building. This is different from a mortgage loan, which is not eligible under the MGA.

Art. 6.2 C of the MGA: [...] If such equipment, infrastructure or other assets are rented or leased, full costs for renting or  leasing are eligible, if they do not exceed the depreciation costs of similar equipment, infrastructure or assets and do not include any financing fees.

There is no fixed threshold applicable to personnel costs, but they must respect the eligibility conditions listed in Article 6.2 (A) of the MGA (e.g. being directly linked and necessary for the Action). If the costs devoted to human resources are very high (for example, in the case of protection activities), it may be advisable to explain the reason in the Single Form.

IMPLEMENTING PARTNERS | DEPRECIATION

Depreciation or rental costs for the use of durable equipment may be charged to the ECHO Action in proportion to its actual use as long as the rules on eligibility in Article 6.2 (C.2) are observed. This possibility applies regardless of who owns the durable equipment as long as it was necessary for use in the ECHO funded Action and the normal financial safeguards were ensured. 

The depreciation/rental costs must be reflected in the accounting system in a consistent and verifiable way.


An important exception to this is if the durable equipment was bought using ECHO Funding. In cases where ECHO has already covered or contributed to the purchase cost of  a piece of durable equipment the related depreciation or rental costs can never be charged to a future ECHO funded Action - to do so would be contrary to normal financial safeguards and would constitute double funding. 


In cases where it is not possible to charge rent/depreciation to an ECHO funded Action it may still possible to charge the maintenance and running costs of that durable equipment to the Action's budget.

CASH AND VOUCHERS

Under the general applicable rules on cost eligibility, the Commission can only pay for a cost when it has, amongst other criteria, been correctly "incurred". 
In humanitarian aid actions, provisions exist to determine the moment that a cost has been incurred with regard to goods, equipment, services or works used in connection with the Action. No guidance or interpretation, however, exists as yet to determine when, in the context of Actions involving cash distribution to final beneficiaries, the cash transfer or financial transaction is considered complete and the cost is therefore deemed 'incurred'.   


It is widely established that the fact that a legal commitment has been made (e.g. signature of a legally binding agreement or issuing a purchase order) is not sufficient for the costs to be deemed 'incurred'. Likewise the fact that an accounting provision has been made (e.g. money has been placed in an account with a view to being distributed) cannot be sufficient to deem those costs as 'incurred'.
In the case of humanitarian supplies ECHO's provisions require that the costs should relate to supplies distributed/made available to the beneficiaries during the eligibility period of the Action. It would seem appropriate to extend this approach also to cash-based distributions with the following context-specific qualification:


a) where the money to be distributed to the final beneficiaries is held in a bank or other equivalent holding mechanism used by mobile phone operators, hawala agents, etc in the name of one or more humanitarian organisations - the cost shall be deemed incurred when the money has been distributed to the final beneficiary or his/her representative. Money is considered 'distributed' the moment that the beneficiary has access to it.  For example, money does not actually need to be withdrawn for costs to be considered as incurred. 
It is however good practice to provide a specific timeframe to beneficiaries during which the money may be accessed;


b) where the money to be distributed to the final beneficiaries is deposited directly into a bank or equivalent account in the name of the final beneficiaries, or is handed over directly to the beneficiary - the cost shall be deemed incurred at that point.
Partner should be prepared to demonstrate that a cost has been actually incurred, for instance, during ECHO audits or verifications. Auditors or Verifiers may ask to visit specific Action locations (distribution points etc.) to verify that the money has been deposited during the eligibility period. During an HQ audit/verification, Commission representatives may check all the supporting documents related to the Action and the relevant dates (including bank accounts and statements). 

FIELD OFFICE COSTS | AMENDMENT

No. Field office costs have to be declared as unit costs in accordance with the Partners' usual accounting practices. It is enough if Partner fill in the column D2 in Annex 2.

No additional details need to be provided in the SF. The methodology and application of the usual accounting practices will be verified at audit stage.

If for the purpose of the grant they have to travel to other locations, then the travel costs and per diem are justified under the condition that they are not getting paid twice  (once by their employer and another time by the beneficiary (ECHO partner). Some 
supporting documents/declarations can be requested at final report stage or audit. 

REMAINING SUPPLIES

Low value equipment (equipment with a value below EUR 1000, instead of previous EUR 750 per item) is exempted from the obligation of transfer or donation.
If the cost of the item is between EUR 1001 and EUR 2500 per item, the exception applies  if the total costs of the items does not exceed EUR 15 000. Remaining goods at the end of the Action should, ideally, be distributed by requesting a  no cost extension of the Action. If this is not possible and the results of the Action have  been achieved, remaining goods not exceeding 20% of goods purchased during the  action can be considered as eligible and need to be transferred (or donated, if agreed  by DG ECHO). In case the value per category is less than 1,000 EUR, remaining goods are excluded from the obligation of transfer or donation.

REMAINING SUPPLIES

In the MGA, reimbursement of full price of equipment and goods is the rule, with the  obligation to transfer or donate them after the end of the action, unless exempted by 
DG ECHO. If transfer to another ongoing action is not possible and if agreed by DG ECHO,  the Partner can transfer or donate the equipment or goods to the final recipients,  non-profit organisations, international non-profit organisations, international 
organisations, or local authorities. If not, only the depreciation costs are eligible (regardless of the fact the Commission is the single largest donor of the action). 

REMAINING SUPPLIES

In the MGA, reimbursement of full price of equipment and goods is the rule, with the  obligation to transfer or donate them after the end of the action, unless exempted by 
DG ECHO. If transfer to another ongoing action is not possible and if agreed by DG ECHO,  the Partner can transfer or donate the equipment or goods to the final recipients,  non-profit organisations, international non-profit organisations, international 
organisations, or local authorities. If not, only the depreciation costs are eligible (regardless of the fact the Commission is the single largest donor of the action). 

Yes. Preparation of final report, post-distribution monitoring, final evaluation and audit  costs are eligible. Those costs are eligible maximum 3 months after the end of the action (deadline for 
submission of the final report). In principle, costs related to the final report are eligible  only after the end of the Action (or at the earliest one month before the end of the  Action).

CONSORTIUM

Co-beneficiaries decide on the allocation of the budget of the action among themselves.

Yes. The costs of leave are to be added to the daily rate.

No. Cost will be eligible only when incurred after the project starting date. 

Yes, staff costs will be calculated on the basis of actual costs and for all staff (HQ and field) in accordance with the following formula, provided for in the Model Grant 
Agreement: 


{daily rate for the person 
multiplied by 
number of day-equivalents worked on the action (rounded up or down to the 
nearest half-day)}. 
The daily rate must be calculated as: 
{annual personnel costs for the person 
divided by  215} 


The number of day-equivalents declared for a person must be identifiable and verifiable  (for instance through time sheets). Further explanations will be provided in the AGA. 

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