Made in accordance with Article 3(5) of the Statute of the European Ombudsman[1]

The background to the complaint

1. The complainant, a small German company, participated in two EU funded projects (hereinafter referred to as project A and project B) under the Lifelong Learning Programme[2]. The EU grant for the projects was managed by the Education, Audiovisual and Culture Executive Agency (EACEA). The complaint concerns the EACEA's decision to declare as ineligible for EU funding the costs claimed by the company for work done by the complainant’s Managing Partner on projects A and B.

Project A

2. The complainant took part in the project from October 2010.

3. In July 2013, after the project was completed, EACEA considered that 22.946,87 EUR of the costs, related to the work done by the complainant's Managing Partner, were ineligible. The complainant had not been reimbursed for the work done by its Managing Partner. The EACEA stated that the complainant had subcontracted the management of the project to the Managing Partner, even though such subcontracting was not allowed. In addition, the number of days declared for the subcontracted “project management” for the purposes of claiming costs did not correspond to the number of days declared for “project management” in the final report[3]. Furthermore, EACEA notes, the complainant had not provided any invoices for the “project management” costs. Finally, the timesheets submitted by the complainant could not be linked to the project and had been signed only by the Managing Partner (they had not been validated by any third person).

4.  In September 2013, the complainant submitted additional supporting documents. It also explained that its Managing Partner was a permanent Executive Director, co-owner and co-founder of the company. He was thus, in the complainant’s view, “statutory staff”. The complainant stated that it paid its Managing Partner on the basis of the hours worked on each project, under a contract drawn up with him for each project. When the complainant signed the contract with the Managing Partner for project A, the total number of man-days needed for this project was estimated.

5. The complainant then explained that separate timesheets were drawn up for each project. The timesheets were scanned. The scanned copies had the acronym of project A written on them and were signed by the Managing Partner. These timesheets also contained information about the activities carried out under the project and referred to the relevant project work package. The complainant argued that the timesheets were thus clearly attributable to project A[4].

6. The EACEA maintained that the costs related to the work done by the complainant's Managing Partner were ineligible. The Managing Partner had no fixed monthly salary and the payment scheme that the complainant had established for each project could not be considered as equivalent to a “salary”. The EACEA also argued that the complainant had not provided any proof of payments having been made to the Managing Partner for project A.

7. In December 2013, the complainant wrote again to the EACEA saying that under German law, the Managing Partner of a 'Kommanditgesellschaft' (that is, a “partnership”) cannot have an employment contract or receive a fixed remuneration. The complainant then argued that the rules for staff costs to be eligible for funding under the Lifelong Learning Programme do not require the remuneration to be regular.

8. In January 2014, the EACEA met with the complainant. According to the EACEA, it explained that it can indeed consider the remuneration of business owners as “staff costs” provided: i) there is a statutory link between the business owner and the company; ii) the payment to the business owner is traceable in the company's bookkeeping; iii) it is clear that these payments are not made from company profits; and iv) the time declared is properly recorded and justified, such as through a timesheet system. The EACEA asked the complainant to provide documents to prove that the remuneration paid to the Managing Partner should be considered as “staff costs” in accordance with these rules.

9. In April 2014, the EACEA again concluded that the costs related to the work done by the complainant's Managing Partner could not be covered by the grant. The EACEA maintained that the payments made to the Managing Partner could not be considered a “salary” under the rules of the Lifelong Learning Programme[5]. In addition, the proof of bank transfers that the complainant had provided did not correspond to the amounts referred to as remuneration in the complainant’s bookkeeping.

10. In May 2014, the EACEA arranged for an external audit to be carried out of project A.

Project B

11. The complainant was a co-beneficiary of project B. The complainant was involved in the project from its beginning in 2011.

12. The EACEA also considered the costs related to the work done by the complainant's Managing Partner on project B, amounting to 41.475.00 EUR, to be ineligible. The EACEA referred to the supporting documents covering the Managing Partner’s employment status that it had analysed in the context of project A. The EACEA found no reason to take a different position on the payments made to the Managing Partner in the context of project B.

13. In December 2014, the complainant informed the EACEA that EACEA had failed to justify properly its decision. It insisted that a simple reference to the decision taken in relation to project A was not adequate. The complainant then repeated its arguments in relation to project A. The complainant argued that the decision to reject costs related to the work done by its Managing Partner to be particularly harsh since its Managing Partner was responsible for the overall coordination of project B. The complainant also argued that the EACEA had ignored its argument that the Frequently Asked Questions (FAQs) on financial and contractual issues applicable to projects under the Lifelong Learning Programme, published by the EACEA in June 2011, supported its view that the remuneration of its Managing Partner could be considered as “staff costs” to be covered by the grant.

14. In December 2014, the EACEA decided to await the outcome of the external audit of project A before deciding on the appeal regarding project B.

Relevant to both projects

15. In December 2015, the complainant informed the Ombudsman that all costs related to the work done by the complainant's Managing Partner had been declared ineligible following the external audit of project A. However, the reasons for rejecting these costs were, according to the complainant, different from those previously put forward by the EACEA. The external auditor was of the view that the “financial handbook”[6], as well as the FAQs published on the EACEA's website, applied to projects selected in 2009 only. Project A had been selected for financing in 2010.

The inquiry

16. The Ombudsman opened an inquiry into the complaint and identified the following allegation and claims:

Allegation:

The EACEA wrongly rejected as ineligible costs related to the work done by the complainant's Managing Partner on two Lifelong Learning Programme projects.

Claims:

EACEA should:

(i) accept as eligible the personnel costs of managing owners;

(ii) pay the amounts due in projects A and B with interest;

(iii) reimburse the complainant's legal and travel costs as well as other damage resulting from EACEA's maladministration; and

(iv) apologise for the maladministration and take steps to avoid such maladministration in the future.

17. The complainant, in support of its allegation, made the following supporting arguments:

1.1 The EACEA discriminated against the complainant as an SME.

1.2 The EACEA abused its power and breached the principles of transparency and legitimate expectations.

1.3 The EACEA breached Article 41 of the Charter of Fundamental Rights ('the Charter') by not having acted in accordance with the principle of good administration.

18. In the course of the inquiry, the Ombudsman received the opinion of the EACEA on the complaint and, subsequently, the observations of the complainant in response to the EACEA's opinion. The Ombudsman's solution proposal takes into account the arguments and opinions put forward by the parties.

Allegation that the EACEA wrongly rejected as ineligible costs related to the work done by the complainant's Managing Partner

Arguments presented to the Ombudsman

19. The complainant argued that the costs of its Managing Partner should have been considered as “staff costs” in line with question 1.5 of the Frequently Asked Questions (FAQs) on financial and contractual issues applicable to projects under the Lifelong Learning Programme: "Managers and directors without an employment contract can be considered as staff costs insofar as they have a legal bind with the organisation (statutes, nominated by the board of directors). See also question 1.3 for actual remuneration of directors and managers". These FAQs were published by the EACEA on its website in the “beneficiaries' space”. According to the complainant, they were supposed to be retroactively valid for projects as of 2009, and to provide clear guidance as to what should be considered as staff costs within the Lifelong Learning Programme. The complainant argued that it had acted in accordance with these FAQs. An arbitrary change, with retroactive effect, of the interpretation of the term ‘staff costs’ would violate the principles of legal certainty, legitimate expectations and transparency.

20. The complainant argued that the status of its Managing Partner was defined in its statutes (in German 'Gesellschaftsvertrag') and that the situation of its Managing Partner thus corresponds with the situation outlined in question 1.5 of the FAQs. In respect of the relevant remuneration policy, the statutes provide that salaries shall be paid to the Managing Partners on the basis of the hours/days worked on the company's projects. The remuneration policy has to be fixed by a shareholders' decision. Such a decision was taken in October 2008, determining a daily rate of 350 EUR for all projects or contracts to which the Managing Partners contribute. The shareholders' decision also sets out that the Managing Partners have to provide evidence of the time spent working (timesheets). Consequently, the Managing Partners are accountable to the complainant and to the members of the General Assembly. Accordingly, the Managing Partner’s staff costs in this case comply with the definition of staff costs set out by the EACEA in the FAQs.

21.  The complainant stated that in Germany 86% of all companies are run by Manager-Owners. Not accepting the costs for the work carried out by business owners and managing partners would mean that all these companies cannot participate in projects under the Lifelong Learning Programme. This would discriminate against German SMEs in favour of larger organisations.  

22. Regarding the EACEA's argument that the payments made did not correspond to the amounts in the complainant's bookkeeping accounts, the complainant stated that all payments registered in its bookkeeping accounts on the salary account of the Managing Partners correspond to the net amounts on the Managing Partners' invoices. The VAT amount is included in the VAT account.

23. In its reply to the Ombudsman, the EACEA insisted that it specifically addressed the situation of business owners in its FAQs. It noted that question 1.5 of the FAQs deals specifically with the costs of managers and directors who do not have an employment contract with the relevant company (it allows for such costs). In addition, it pointed out that question 1.6 of the FAQs addresses the situation of company owners who do not earn a fixed wage[7].

24. As the Lifelong Learning Programme 2007-2014 was nearing conclusion, the FAQs were taken off the EACEA's website in April 2014. However, this did not affect the EACEA's view on the eligibility of managing owners’ remuneration.

25. The EACEA explained that there are several ways for company owners, including owners of SMEs, to declare their costs for work done on a Lifelong Learning Programme project. If the owner does not have an employment contract, FAQ question 1.5 clarifies under which conditions the relevant costs are considered eligible for the grant. It added that the general eligibility criteria set out in the relevant implementing rule of the Financial Regulation,[8] and in the relevant provisions of the Grant Agreements, also need to be complied with.

26. According to the EACEA, it had made every effort to find a way to consider as “eligible” the costs declared by the complainant for its Managing Partner. However, the EACEA did not consider the eligibility criteria set out in the implementing rules to the Financial Regulation[9] and in the Grant Agreements[10] to have been met.

27. According to the Grant Agreement, the costs must be verifiable and justified[11]. The Lifelong Learning Programme Handbook (‘the Handbook’) specifies that the necessary supporting documents include "timesheets signed by both the worker and the responsible of the organization mentioning name, function and tasks fulfilled, reference to the work plan's activities, number of hours per day and days per month allocated to the project". According to the EACEA, the timesheets originally submitted by the complainant contained no project reference and often did not specify a link with the work package concerned. In addition, the description in the timesheets of the tasks performed was too vague to allow the project activities to be identified and verified. The EACEA argued that timesheets cannot be rectified retroactively[12]. The EACEA was therefore unable to verify that the timesheets submitted by the complainant related to work performed under project A. Certain descriptions of tasks on the timesheets did indeed refer to meetings related to project A. However, on some of these timesheets more hours than the actual length of the meeting had been declared.

28. The EACEA agreed to conduct a new detailed analysis of the complainant’s costs for the Managing Partner to determine whether certain days could be deemed to relate to the project and thus be accepted as eligible costs.

29. In this context, the EACEA stated that the complainant had not provided full and coherent probative documents from the outset, thereby creating some confusion[13]. The EACEA insisted that it had acted in an open and transparent manner. It had analysed the complainant’s appeals, organised a meeting to clarify matters and granted the complainant ample time to provide additional supporting documents. It had also informed the complainant of the reasons for rejecting costs at each stage.  Thus, it considered its position on project A to be justified.

30. Regarding project B, the EACEA noted that it had not received invoices from the complainant stating the name of the project, the number of days spent on the project and the period when work was done on the project. Therefore, it could not link the costs declared for the project with the complainant’s bookkeeping accounts. The costs for the Managing Partner were thus ineligible.

31. Regarding the alleged discrimination against SMEs by the EACEA, the EACEA noted that the relevant question in the FAQs (Question 1.5) was put into the FAQs to take account of the fact that SMEs may use grant funding under the Lifelong Learning Programme to cover the costs of directors and managers not working under an employment contract. The answer provided to the question explains that those directors and managers can be considered in the same way as managing owners who work under an employment contract, provided that certain conditions are met. According to the EACEA, these conditions were not met as regards the complainant’s Managing Partner. The costs declared by the complainant did not correspond to the complainant’s bookkeeping accounts or the supporting documents. Among other things, the supporting documents did not allow the EACEA to link the number of days for which costs were claimed with the days actually worked on project A.

32. The EACEA also noted - as regards projects to be carried out under the Erasmus+ programme (the successor to the LLP) - that it was considering if it should reimburse the personnel costs of SME owners who do not receive a salary on the basis of unit costs[14].

33. In its comments on the EACEA's reply, the complainant acknowledged that it had not originally referred to project A in the header of the relevant timesheets. However, since the timesheets set out clearly, in chronological order, the tasks that had been carried out, the timesheets were clearly attributable to this project. The complainant said that the EACEA had not provided any timesheet template. A simple failure to reference the project name in the timesheet header should not result in all of the costs being rejected. As regards the EACEA's remark about more hours being declared than the length of the relevant meetings, the complainant explained that the hours declared included the travelling time to and from the meeting venue, which is in line with German law. In addition, the complainant noted that it had been added as a co-beneficiary to project A, replacing another partner, at a stage when the budget had already been established. The complainant completed its tasks under project A in 87.56 days, whereas the partner it had replaced had planned to spend 247 days on the project. 

34. In respect of project B, the complainant argued that it had submitted all the relevant documentation[15] to the EACEA. The EACEA should have informed the complainant in the event that some documents were missing, as it had done for other project partners. The complainant also provided the Ombudsman with the relevant financial documents:  i) invoices for project B; ii) account statements regarding payments to the Managing Partner; iii) bank account statements to show transfers of the relevant amounts to the Managing Partner. The complainant clarified that only net amounts were charged to project B.

The Ombudsman's preliminary assessment leading to the solution proposal

35. The EACEA has acknowledged in its reply to the Ombudsman, that the principles and guidance set out in the FAQs on financial and contractual issues applicable to projects under the Lifelong Learning Programme do indeed apply to project A.

36. The EACEA thus agrees that the complainant's Managing Partner can be “assimilated to” a staff member, as described in the FAQs, and that the costs related to the work done by the Managing Partner can be considered as staff costs, or “assimilated to” staff costs, provided certain criteria are respected in relation to those costs.

37. Thus, contrary to the view taken by the complainant, the EACEA does not exclude the costs related to work done on projects by the managing partners of SMEs. Rather, it simply makes the payments for such costs subject to certain reasonable conditions aimed at ensuring that the payments are justified. Such costs can be covered only if the work is duly identified and verified as having been done on the specific project in question and if the remuneration for that work is identified and verified as being linked to that specific work. Such conditions are important in terms of ensuring that EU public money is properly used. The Ombudsman recognises and supports this prudent approach to the spending of public money.

38. The EACEA argued that, based primarily on deficiencies in the complainant’s timesheets and bookkeeping accounts, the costs claimed cannot be identified and verified. Regarding project A, the EACEA argues 1) that the timesheets do not refer to project A, 2) that links to work packages are absent, 3) that the tasks are described too vaguely and 4) that the links to the bookkeeping accounts are insufficient.

39. The EACEA, however, had shown its willingness to engage on the issue of whether certain costs might, on review, be considered eligible. It stated in its reply to the Ombudsman that it: “ … commits to assess the justifying documents provided once again and verify whether part of the costs declared by [the complainant] for the work of [its Managing Partner] may be accepted as eligible” for project A. The Ombudsman commends the EACEA for this constructive attitude.

40. The EACEA thus asked external auditors to review the documentation submitted by the complainant.

41. The external auditor gave its report on project A after the EACEA had replied to the Ombudsman in the present case. The Ombudsman notes that the external auditor did not, in fact, review the documentation provided by the complainant. Rather, it put forward a separate and new reason for rejecting the costs of the work done by the complainant’s Managing Partner: The external auditor considers that the “financial handbook”, as well as the FAQs published on the EACEA's website, applied to projects selected in 2009 only, whereas project A was selected for financing in 2010.

42. The Ombudsman takes no view on whether the FAQs apply to a project selected in 2010. Indeed, she does not consider that this point is key to resolving the issue. Resolving the issue involves, simply, checking if the documentation provided by the complainant is sufficient to justify the costs claimed. The EACEA has made a commitment to do that. The Ombudsman considers, therefore, that the complainant has a legitimate expectation that the EACEA will maintain its views in this regard, and will thus honour its commitment to conduct a detailed analysis of the costs related to the Managing Partner. It would be reasonable for the EACEA to carry out, or have carried out, that detailed analysis, in order to determine whether at least some of the costs of the complainant's Managing Partner are eligible for EU funding

43. The Ombudsman agrees with the EACEA as presented in its reply to the Ombudsman, that the eligibility of the relevant costs needs to be determined on the basis of the guidance provided in the FAQs[16] and the Handbook, together with the relevant provisions of the Grant Agreements and the general eligibility criteria set out in the implementing rules to the Financial Regulation.

44. Both the relevant provisions of the Grant Agreements^[17] and the general eligibility criteria set out in the implementing rules to the Financial Regulation^[18] specify that costs need to be identifiable and verifiable[19]. In addition, as regards the general eligibility criteria, the Handbook states that: “Expenses must be recorded in the accounting system on the basis of adequate supporting documents at the time the costs were incurred. Documents created after the period in which the costs were incurred, will be declared ineligible”. The Handbook also gives examples of necessary supporting documents.[20]

45. The complainant acknowledges that the timesheets did not originally include the project A acronym in the heading; the acronym was added at a later stage. The Ombudsman does not agree that the lack of an explicit reference to the particular project should automatically and always render the costs described in the relevant timesheets ineligible. It remains possible that, despite the lack of an explicit reference to the project in the title of a timesheet, the costs will be sufficiently identifiable and verifiable. The Ombudsman notes that some timesheets seem to contain at least explicit references to project A in the description of the work carried out (for example a meeting on project A) or to the specific work package. Thus, at least some costs could be considered, after a careful and balanced review, to be identifiable and verifiable despite the lack of an explicit project reference in the heading of the timesheets.

46. As regards the meeting referred to the in previous paragraph, the Ombudsman notes that the complainant declared more hours than the actual length of the meeting. The Ombudsman believes that it would be appropriate for the EACEA to assess, in the context of its commitment to conduct a detailed analysis of the costs related to the Managing Partner, the complainant’s argument that the hours declared for this meeting included travel time. If such travel time cannot be sufficiently proven by contemporaneous evidence, the EACEA should at least consider taking due account of the time spent at the meeting itself.

47. The EACEA should also carefully consider the complainant's explanation that the payments made to the Managing Partner differ from the corresponding entries in its bookkeeping accounts because of deductions for taxes (that is, the compensation net and gross).

48. In addition, the entries in the complainant's bookkeeping accounts do contain an invoice number. This suggests that, in accordance with the Handbook, the "expenses [are] recorded in the accounting system on the basis of adequate supporting documents".  This should be checked.

49. Regarding project B, the EACEA has suspended its assessment of costs, pending the Ombudsman’s assessment in relation to project A. Thus, it would be useful and consistent to carry out a similar review of the costs incurred on project B.

50. The Ombudsman acknowledges the EACEA's efforts to be flexible and to find a reasonable solution. Given the further developments and additional clarifications, the Ombudsman considers it reasonable for the EACEA to, once again, assess the complainant’s costs.

Preliminary conclusion

51. It appears to the Ombudsman at this stage that the EACEA’s decision to reject all of the costs of the complainant's Managing Partner lacks consistency. In line with her mission to seek fair outcomes to complaints, the Ombudsman invites the EACEA to reconsider the eligibility of costs related to the work done by the complainant's Managing Partner, both in project A and project B, and to pay the complainant the amounts found eligible for EU funding, including interest if applicable.

52. The Ombudsman considers that it is premature to address the complainant’s claims for compensation for costs and damages (claim 3) and its request for an apology (claim 4).

53. Regarding the complainant’s claim that the EACEA should take action to avoid similar problems in the future, the Ombudsman notes that, the EACEA has said that it is reflecting on the possibility of reimbursing, on the basis of unit costs, the personnel costs of SME owners who do not receive a salary, in order to better accommodate the needs of SMEs.

54. On the basis of the above, the Ombudsman makes the following proposal for a solution, in accordance with Article 3(5) of the Statute of the European Ombudsman.

The proposal for a solution

The Ombudsman proposes that the EACEA:

Reconsiders the eligibility of costs related to the work done by the complainant's Managing Partner, both in project A and project B, and pays the complainant the amounts found to be eligible for EU funding, including interest.

 

Emily O'Reilly

European Ombudsman

Strasbourg, 19/09/2016

 

Annex:

Footnote 8:

Article 172a (1) of the implementing rules of the 2002 Financial Regulation: "Eligible costs are costs actually incurred by the beneficiary of a grant which meet all of the following criteria:

- they are incurred during the duration of the action or of the work programme, with the exception of costs relating to final reports and audit certificates;

- they are indicated in the estimated overall budget of the action or work programme;

- they are necessary for the implementation of the action or of the work programme which is the subject of the grant;

- they are identifiable and verifiable, in particular being recorded in the accounting records of the 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;

- they comply with the requirements of applicable tax and social legislation;

- they are reasonable, justified, and comply with the principle of sound financial management, in particular regarding economy and efficiency".

Footnote 10:

Article II.14.1 of the relevant Grant Agreements:

“Eligible costs of the action are costs actually incurred by a beneficiary, which meet the following

criteria:

- they are incurred during the duration of the action as specified in Article 1.2.2 of the agreement, with the exception of costs relating to final reports and external audit reports on the action's financial statements and underlying accounts;

- they are connected with the subject of the agreement and they are indicated in the estimated overall budget of the action;

- they are necessary for the implementation of the action which is the subject of the grant;

- 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;

- they comply with the requirements of applicable tax and social legislation;

- they are reasonable, justified, and comply with the requirements of sound financial management, in particular regarding economy and efficiency.

The beneficiaries' accounting and internal auditing procedures must permit direct reconciliation of the costs and revenue declared in respect of the action with the corresponding accounting statements and supporting documents.”

 

[1] Decision of the European Parliament of 9 March 1994 on the regulations and general conditions governing the performance of the Ombudsman's duties (94/262/ECSC, EC, Euratom), OJ 1994 L 113, p. 15.

[2] This programme entails several sub-programmes and actions, including the Leonardo da Vinci action which covers projects in the vocational education and training sector.

[3] 36 days according to the contract and 65,56 days declared in the final report.

[4] As part of its appeal, the complainant resubmitted the timesheets adding a heading with the relevant project acronym l.

[5] The EACEA argued that the payments made to the Managing Partner were included under "other costs" as 'Einkünfte aus Gewerbebetrieb' which under the German Income Tax Act is income from independent work. Although the payments made to the Managing Partner were referred to as 'remuneration' (in German 'Vergütung'), they could not be considered as salary under the rules of the Lifelong Learning Programme. The EACEA argued that the Managing Partner’s remuneration was to be considered as income from independent work, as the contract between the complainant and the Managing Partner was a service contract (in German 'Dienstleistungsvertrag').

[6] Although not entirely clear, the Ombudsman understands this term to refer to the Handbook for the Lifelong Learning Programme

[7] "The daily staff cost must be calculated on the basis of the annual salary paid by the company, and charged in the annual accounts, divided by the number of working days (see Q.1.2 above). The cost must of course be equivalent to the market value for the tasks done in the country of this partner (proof to be provided). The annual accounts may be requested by the Agency as a supporting document".

[8] Article 172a (1) of Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of Council Regulation (EC, Euratom) No 1605/2002 on the Financial Regulation applicable to the general budget of the European Communities (now article 126(2) of the 2012 Financial Regulation).

[9] Article 172a (1) of the implementing rules to the 2002 Financial Regulation. For the relevant provisions, see Annex.

[10] Article II.14.1 of the Grant Agreements

[11] Article II.14.1 of the Grant Agreements. For the relevant provisions, see Annex.

[12] Section 2.2.2. of the LLP Handbook reads as follows:

Timely recoding of costs: Expenses must be recorded in the accounting system on the basis of adequate supporting documents at the time the costs were incurred. Documents created after the period in which the costs were incurred, will be declared ineligible.

[13]  From the complainant’s submissions and those of the EACEA it appears that by March 2014 the complainant had provided the EACEA with:

1) the invoices issued by the complainant’s Managing Partner (for the total net amount of 22 946.87 EUR/gross amount of 27 308.78 EUR);

2) the timesheets;

2) the preliminary internal account statements relating to the payment made to the Managing Partner (in German 'Vergütung an Mitunernehmer §15EStG - Remuneration to co-entrepreneurs),

3) the Managing Partner's bank account statements aiming to confirm the transfer of requested amounts to his bank account for all three invoices (payment of gross amount).

4) the complainant's explanatory note to justify late payment of the last project invoice; as explained this invoice was settled after the EACEA informed the complainant that only costs that have been paid out before the final payment of the EU contribution are accepted by the EACEA as eligible.

5) the self-declaration from the complainant’s chartered accountant explaining that invoices from the complainant’s Managing Partner were recorded as invoices of staff in the bookkeeping accounts. However, according to the EACEA there was no mention on the amount recorded in the bookkeeping as remuneration.

In February 2014, the EACEA requested additional documents from the complainant:

6) A print out of the complainant's bookkeeping system showing in which accounts all invoices of the Managing Partner were recorded;

7) The complainant's tax declaration,

8) Evidence such as bank statements, print out of accounts, etc. to prove that the complainant’s Managing Partner’s social security was paid by the complainant.

As stated by the EACEA, these documents were received in March 2014.  

[14] Under Article 124(5) of the 2012 Financial Regulation.

[15] The complainant mentioned in particular: the Statues of the complainant company (in German 'Gesellschaftsvergrag), the shareholders' resolution on partners' remuneration (in German 'Gesellschafterbeschluss über Vergütungen der Geschäftsführer) and copies of bookkeeping accounts.

[16] Questions 1.5. and 1.6. of the FAQs

[17] Article II.14.1 of the Grant Agreements

[18] Article 172a (1) of the implementing rules of the 2002 Financial Regulation,

[19] Section 2.2.2. of the Handbook

[20] “The timesheets signed by both the worker and the responsible of the organization mentioning name, function and tasks fulfilled, reference to the work plan's activities, number of hours per day and days per month allocated to the project”