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Decision in case 1344/2014/JAS on the eligibility of certain costs for a project under the Lifelong Learning Programme managed by the Education, Audiovisual and Culture Executive Agency

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Cette plainte a été traitée de façon confidentielle. La décision a par conséquent été rendue anonyme.

  • Affaire : 1344/2014/JAS
    Ouvert le 15 sept. 2014 - Décision le 16 nov. 2017
  • Institution(s) concernée(s) : Agence exécutive «Éducation, audiovisuel et culture»

The case was brought to the Ombudsman by an Austrian non-profit association that participated in a project under the Lifelong Learning Programme, the EU’s 2007-2013 programme for education and training. The complainant disagreed with the decision of the Education, Audiovisual and Culture Executive Agency (EACEA), which manages the programme, to declare as ineligible for funding all staff costs and certain travel and subsistence costs declared by the complainant.

The main point of contention was that the staff costs claimed by the complainant had not been incurred on the basis of an employment contract but on the basis of a contract for services. Following a solution proposal by the Ombudsman, the EACEA agreed that the staff costs claimed by the complainant could, in principle, be reimbursed. However, the documents submitted by the complainant thus far have not allowed the EACA to identify and verify the costs.

The Ombudsman welcomes the EACEA’s agreement in principle and closes the case. She suggests that the EACEA reconsider its position on the complainant’s “staff costs”, taking into account the accounting records and supporting documents submitted by the complainant both during the project and during the Ombudsman’s inquiry. The Ombudsman also suggests that the EACEA reassess certain subsistence costs.

Background to the complaint

1. This case concerns an EU grant made under the Lifelong Learning Programme, the EU’s 2007-2013 programme for education and training[1]. The complainant is an Austrian non-profit association. It was a member of a consortium chosen to carry out a project under a grant agreement managed by the Education, Audiovisual and Culture Executive Agency (EACEA). The project ran from November 2010 to March 2013.

2. In November 2013, the EACEA decided that all staff costs and certain travel and subsistence costs declared by the complainant were ineligible for funding.

3. The EACEA re-examined the matter following an appeal, but maintained its conclusion that the complainant’s staff costs were ineligible. The EACEA took the view that the complainant’s travel and subsistence costs had not been part of the appeal.

4. In July 2014, the complainant turned to the Ombudsman. The Ombudsman opened an inquiry into the complaint that (a) the EACEA’s decision on the complainant’s staff costs and travel and subsistence costs was wrong and (b) that the EACEA committed substantive and procedural errors in its assessment of the appeal.

5. In the course of the inquiry, the Ombudsman received the reply of the EACEA on the complaint and the comments of the complainant in response to the EACEA’s reply. The Ombudsman’s inquiry team also met with the EACEA’s staff and carried out an inspection of the EACEA’s file.

6. On the basis of her findings, and the arguments and views put forward by the parties, the Ombudsman made a proposal for a solution[2], which was partially accepted by the EACEA.

The Ombudsman’s proposal for a solution

7. The main point of contention in the complaint is the EACEA’s view that the complainant’s “staff costs” had not been incurred on the basis of an employment contract—typically the prerequisite for costs to be considered as staff costs—but on the basis of a contract for services.

8. The Ombudsman noted, however, that the project in question had been completed successfully. The work declared by the complainant, to which the complainant’s “staff costs” related, corresponded to about a fifth of the entire management working time declared by all project partners. Taking this into account, and given that no argument had been put forward by the EACEA to suggest that the complainant had not actually spent the declared time on the project, the Ombudsman found it unlikely that the project would have been successful without the contribution of the complainant.

9. The Ombudsman therefore concluded that it appeared fair[3] that the complainant receive at least some compensation for contributing to the success of the project, provided the costs were verifiable and identifiable[4].

10. The Ombudsman thus proposed the following solution to the EACEA:

The EACEA should reimburse those “staff costs” of the complainant that are duly supported and justified by time-sheets and by bank statements clearly linked to the project in question.

11. The EACEA did not, in principle, challenge the Ombudsman’s conclusions. It acknowledged that the complainant had provided it with timesheets, contracts and bank statements regarding its “staff costs”. However, according to the EACEA, the complainant had not submitted copies of the accounting records that would prove the transactions (bank transfers) in relation to the staff costs connected to the project. The EACEA argued that in the absence of this evidence, the claimed costs could not be identified and verified[5].

12. The complainant argued that it had submitted accounting records for the years 2011 and 2012, together with a cash audit (Kassenprüfung) for both years. No accounting records were submitted for 2013, as these were not available when the final report was submitted. The complainant stated that since it was a non-profit association with an annual turnover of under €1 million, national law allowed for it to use cash basis accounting (Einnahmen-Ausgaben-Rechnung)[6]. The complainant submitted to the Ombudsman a detailed breakdown of the accounts and bank transfers.

13. The complainant disagreed with the Ombudsman’s findings, in the solution proposal, that certain of the complainant’s travel and subsistence costs were not reimbursable[7]. It argued that the EACEA should have accepted the complainant’s “travel policy” as the basis for the reimbursement. The complainant also argued that the EACEA had accepted similar costs for another beneficiary of the project. Finally, the complainant put forward arguments concerning the EACEA’s rejection of certain individual subsistence cost claims.

The Ombudsman’s assessment after the proposal for a solution

14. The Ombudsman welcomes the fact that the EACEA has agreed, in principle, that the complainant’s “staff costs” can be reimbursed, provided they are identifiable and verifiable.

Further suggestion regarding “staff costs”

15. In its reply to the Ombudsman’s solution proposal, the EACEA said that it had not been provided with accounting records that showed the payments of staff costs which were connected to the project.

16. Having reviewed the documents submitted by the complainant, during the project as well as during the Ombudsman’s inquiry, it appears that the amounts on the bank statements and the accounting records can be reconciled: While the accounting records contain just a single amount for all expenditure covering a number of different EU projects, the detailed breakdown of the accounting records shows which part of these costs was for the “staff costs” related to the present project. The cash audit confirms that there was proper recording. However, this detailed breakdown has not yet been made available to the EACEA.

17. The Ombudsman thus suggests that the EACEA reconsider its position on the complainant’s “staff costs”, taking into account the accounting records and supporting documents submitted by the complainant, both during the project and in the course of the Ombudsman’s inquiry. Based on the findings in the Ombudsman’s solution proposal[8], these costs appear to amount to €21,880.

Further suggestion regarding subsistence costs

18. Concerning the complainant’s subsistence costs, the Ombudsman maintains the position outlined in her solution proposal regarding the complainant’s “travel policy”[9]. The complainant wanted the EACEA to accept that policy as the basis for reimbursing subsistence costs; however, the Ombudsman found that the EACEA was correct in its decision not to accept that policy.

19. In particular, the Ombudsman notes that the contract concluded between the complainant and the contractor—who at the same time is also the Secretary General of the complainant—for the management of the project did not make any reference to the complainant’s “travel policy” (which was part of the complainant’s by-laws). This contract clearly formed the basis for the contractor’s work on the project and the complainant’s reimbursement claim for “staff costs”. The fact that the contractor would have been subject to the complainant’s travel policy when acting in her role as Secretary General does not appear relevant, since any travel and subsistence costs incurred when carrying out the project were incurred under the corresponding project management contract and not while acting as Secretary General of the complainant.

20. The EACEA was thus correct to reject the complainant’s cost claims based on its “travel policy”. The complainant’s argument, that the EACEA had reimbursed similar costs claimed by another project partner on the basis of that partner’s own travel policy, has no bearing on the present case. The documents submitted by the complainant show that the staff of the other partner worked on the basis of employment contracts, and such staff are typically bound by the travel policy of their employer.

21. In any event, the EACEA did not simply reject the complainant’s travel and substance costs. It reimbursed all costs that were supported by evidence, such as hotel and flight bills.

22. The complainant also puts forward additional arguments as to why the EACEA should have reimbursed the subsistence costs claimed for two cost items. Considering that the EACEA overlooked the appeal against the decision to consider certain subsistence costs as ineligible[10], the Ombudsman suggests that the EACEA reassess these two cost items (items 4 and 29).

23. Concerning cost item 29 in particular, the Ombudsman notes that the EACEA’s rejection of part of the costs claimed was based on the fact that the copy of the supporting document submitted was illegible. The Ombudsman thus suggests that the EACEA reassess that cost item on the basis of the legible copy submitted by the complainant during the Ombudsman’s inquiry.

On the alleged substantive and procedural errors

24. In the proposal for a solution, the Ombudsman concluded that there was no maladministration concerning certain procedural aspects[11], and no reason to inquiry further into other procedural aspects,[12] of the complainant’s concern that the EACEA committed substantive and procedural errors in its assessment of the appeal.

25. The complainant did not challenge the Ombudsman’s conclusions on this point. It merely questioned the Ombudsman’s statement, made in her solution proposal, that the EACEA had kept the project partners informed of its delay in processing the partners’ appeal against the EACEA decision on the final project report. The Ombudsman maintains her statement in this regard. The documents inspected by the Ombudsman during the inquiry contain two e-mails from the EACEA to one of the project partners in which the EACEA confirmed that the initial deadline had expired and that it required additional time to finish its analysis due to the complexity of the file.

Conclusion

Based on the inquiry, the Ombudsman closes this case with the following conclusion:

By agreeing, in principle, that the complainant’s “staff costs” can be reimbursed, provided they are identifiable and verifiable, the EACEA has taken steps to resolve the issues raised by the Ombudsman in her solution proposal. No further inquiries are therefore justified.

The complainant and the EACEA will be informed of this decision.

Suggestions

The Ombudsman suggests that the EACEA reconsider its position on the complainant’s “staff costs”, taking into account the accounting records and supporting documents submitted by the complainant both during the project and during the Ombudsman’s inquiry.

The Ombudsman suggests that the EACEA reassess the subsistence costs claimed by the complainant under cost items 4 and 29, taking into account the arguments put forward by the complainant during the Ombudsman’s inquiry.

 

Emily O'Reilly

European Ombudsman

Strasbourg, 16/11/2017

 

 

 

[1] http://ec.europa.eu/education/lifelong-learning-programme_en

[2] For further information on the background to the complaint, the parties’ arguments and the Ombudsman’s inquiry, please refer to the full text of the Ombudsman’s solution proposal available at: https://www.ombudsman.europa.eu/cases/solution.faces/en/86070/html.bookmark

[3] See, for example, Article 91 of the Financial Regulation’s Rules of Application: „The authorising officer responsible may waive recovery of all or part of an established amount receivable only in the following cases: [...] where recovery is inconsistent with the principle of proportionality.” (Commission Delegated Regulation (EU) No 1268/2012 of 29 October 2012 on the rules of application of Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council on the financial rules applicable to the general budget of the Union, OJ 2012 L 362, p. 1, available at: http://eur-lex.europa.eu/eli/reg_del/2012/1268/oj)

[4] Article II.14.1 of the grant agreement.

[5] Article II.14.1 of the grant agreement: “Eligible costs of the action are costs actually incurred by a beneficiary, which meet the following criteria: [...] they are identifiable and verifiable, in particular being recorded in the accounting records of a beneficiary and determined according to the applicable accounting standards of the country where the beneficiary is established and according to the usual cost-accounting practices of the beneficiary;” (emphasis added).

[6] See §21(1) Vereinsgesetz 2002 (Austrian Law on Associations of 2002): “Zum Ende des Rechnungsjahrs hat das Leitungsorgan innerhalb von fünf Monaten eine Einnahmen- und Ausgabenrechnung samt Vermögensübersicht zu erstellen.

[7] See paragraphs 43-54 of the Ombudsman’s solution proposal.

[8] See paragraphs 37-39 of the Ombudsman’s solution proposal.

[9] See paragraphs 47-51 of the Ombudsman’s solution proposal.

[10] See paragraph 73 of the Ombudsman’s solution proposal.

[11] See paragraphs 55-71 of the Ombudsman’s solution proposal.

[12] See paragraphs 72-75 of the Ombudsman’s solution proposal.