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Recommendations of the European Ombudsman in case 646/2017/JAP concerning the European Commission’s decision to reject personnel costs of a participant in an EU project on older people and ICT (SENIOR project)

Línguas disponíveis :  en
  • Caso :  646/2017/JAP
    Deschis la 3/Jul/2017 - Recomendação sobre 31/Jan/2018

Made in accordance with Article 3(6) of the Statute of the European Ombudsman[1]

The complainant, a Belgian-based non-profit organisation, took part in an EU-funded project that aimed to address issues faced by older people in using ICT solutions.

A financial audit found that the system used by the complainant for recording working time was entirely unreliable. As a consequence, the European Commission sought to recover all of the personnel costs claimed by the complainant in relation to the work carried out.

In dealing with the complaint, the Ombudsman split the issues into two separate cases. In a separate case (1688/2015/JAP), relating to two of the ten ‘deliverables’ under the project, the Commission agreed to reduce the amount of funds it was seeking to recover related to personnel costs by nearly EUR 37 000.

This case deals with the remaining eight ‘deliverables’ under the project. The auditors considered that the complainant overstated the working time related to these deliverables. As the Commission considered that the complainant did not provide sufficient evidence to justify these personnel costs, it rejected the costs entirely.

The Ombudsman found that the Commission did not follow the principles of fairness and proportionality by rejecting all of the complainant’s personnel costs, since it had previously deemed that the work carried out by the complainant was satisfactory.

The Ombudsman considers that the Commission was wrong to have rejected all the personnel costs even though the work in question was delivered satisfactorily. The Ombudsman recommends that the Commission should re-assess the alternative evidence provided by the complainant with a view to finding a basis on which at least some of the costs claimed can be accepted.

Background to the complaint

1. The complainant, a Belgian-based non-profit organisation, took part in an EU-funded project, SENIOR, which aimed to address the issues faced by older people in using ICT solutions[2]. The complainant provided expert reports on ethical issues to the project. However, not all of the complainant’s actions in the project required a ‘deliverable’ report.  

2. During a subsequent financial audit, the auditors found that the time recording system used by the complainant was “entirely unreliable”. On the basis of this, the European Commission rejected all of the complainant’s personnel costs related to ten[3] ‘deliverables’ submitted under the project, and sought to recover the related funds. Dissatisfied with the Commission’s stance, the complainant turned to the Ombudsman.

3. The complainant met with the Commission in September 2016 to try to find an amicable solution. The Ombudsman’s inquiry team attended the meeting as observers. Subsequently, the Commission and the complainant entered into confidential negotiations without the Ombudsman’s participation, which failed to yield a satisfactory outcome.

4. In March 2017, on the complainant’s request, the Ombudsman resumed her examination of the complaint. The Ombudsman decided to split the issues raised into two separate cases: this case, which deals with eight of the deliverables, and a separate case concerning the remaining two deliverables under the contract (complaint 1688/2015/JP[4]).

5. This case deals with the personnel costs related to those eight deliverables, which the auditors considered had been overstated because the complainant’s time-recording system was flawed and the timesheets unreliable. As a consequence of this, the Commission had asked the complainant for alternative evidence to prove that the declared working hours had actually been spent on the project. Having examined the evidence, the auditors concluded that the personnel costs were overstated and thus ineligible for funding.

6. The complainant carried out its work on the project, including intellectual work in good faith. The Commission acknowledged the high standard of the complainant’s work, as it considered the project to be ”good to excellent”[5] in the technical review report. Moreover, it accepted all of the reports and ‘deliverables’ prepared by the complainant for the project.

7. The complainant noted that it was not possible to quantify the research and intellectual work for some of the activities, which included, inter alia, reviewing the scientific literature and audio-visual material, developing hypotheses, carrying out discussions and “finding paradigms”. The complainant explained that “the volume of hours of academic work simply cannot be translated into documents”.

The inquiry

8. The inquiry looked at whether the Commission was wrong to reject the complainant’s personnel costs related to eight deliverables because it failed to take into consideration alternative evidence put forward by the complainant for the ‘intellectual work’ it performed in the context of the project.

9. In the course of the inquiry, the Ombudsman reviewed all of the documents submitted in this complaint, as well as those in complaint 1688/2015/JAP that are also relevant for this inquiry. The Ombudsman’s inquiry team inspected the Commission’s file on this case and asked the Commission to clarify some of the issues raised. The Ombudsman's recommendation takes into account the arguments and views put forward by the parties.

Rejection of personnel costs and verification of alternative evidence

Arguments presented to the Ombudsman

10. The complainant argued that not all of its work in the project required a written ‘deliverable’. It claimed that, in the course of the audit procedure, the Commission asked for an ”impossible material proof” of the exact time spent on the project. In this context, the complainant noted that the Commission merely sought “traces” and ”indications” of its activities to ”track the work progress”. In the complainant’s view, the Commission was not interested in seeing the entire work it had delivered. The complainant also observed that “the actual performance [of intellectual work] is not reflected in an amount of pages that were produced”.

11. The complainant stated that, in calculating its personnel costs, it had applied the principle of ‘capped hours’[6], which was reflected in the contracts with its employees. Accordingly, overtime hours are not compensated[7], which is a standard practice in the academic and research field[8]. The complainant clarified that the cost of registered hours for the project is equal to its entire personnel budget. It regrets that its intention not to exceed the budget is considered by the Commission as an unreliable or even untrue recording of hours spent on the project.

12. Finally, the complainant expressed its doubts as to whether the Commission had examined the alternative supporting documents it had submitted, given the brief nature of the explanations provided by the Commission. It noted that the auditors changed in the course of the audit, and that this had an impact on how documents were assessed under the audit.

13. In its reply of 15 April 2016, the Commission confirmed the auditor’s conclusion that the complainant had overstated the working time on the timesheets relating to the eight ‘deliverables’. In the Commission’s view, the complainant itself confirmed that it had “computed the personnel costs”. Since the applicable rules of the grant agreement require that eligible costs “be actually incurred”, the auditors could not accept any “estimated, budgeted or imputed” costs. In this context, the financial audit in question “aims at validating the eligibility of the costs” and the auditors need to certify that “there is a reasonable assurance that the figures are plausible”.

14. In view of the unreliability of the time-recording system”, the auditors asked the complainant for alternative evidence that would serve as a basis for their assessment. The Commission noted that it sent a number of reminders before the complainant submitted the requested evidence.

15. The Commission went on to explain that “[i]n the absence of reliable timesheets, the Beneficiary must substantiate the costs claimed by reasonable means (alternative evidence) giving an equivalent level off assurance, to be assessed by the auditor”.

16. Based on the available evidence, the auditors could not conclude that the complainant’s timesheets represented the actual hours worked. In their assessment, the auditors took into account the available information and the nature of the complainant’s tasks (including research, demonstration, administrative and organisational tasks), the content of the documents, the timing, the link with the timesheets and possible overlaps between the documents. The auditors also bore in mind that not all of the complainant’s tasks required a written ‘deliverable’.

17. Having assessed the alternative evidence submitted by the complainant, the auditors concluded that the hours declared for the eight deliverables in question were overstated[9]. Since “the time-recording system was unreliable” for the entire project, the auditors were not in a position to identify and quantify the personnel costs actually incurred for the complainant’s work [10].

18. The auditors thus rejected all the complainant’s personnel costs. In support of its position, the Commission referred to Article II.14.1 of the General Conditions, which sets out a number of eligibility conditions for costs claimed under grant agreements under the Seventh Framework Programme for Research and Technological Development[11].

19. Finally, the Commission noted that it had given the complainant an “exceptional possibility” to provide alternative evidence, “on some occasions even outside the prescribed deadlines”. It stated that this evidence was nevertheless thoroughly analysed.

The Ombudsman's inspection meeting

20. The Ombudsman’s inquiry team organised an inspection meeting with the Commission on 20 July 2017. The inquiry team inspected a number of documents held by the Commission in relation to this case.

21. The Ombudsman’s inquiry team also asked a number of questions to clarify the Commission’s general approach and methods used in dealing with audits. In this context, the inquiry team requested clarifications on the Commission’s analysis of the complainant’s time-recording system, the alternative evidence provided by the complainant, and other methods used to assess the complainant’s participation in the project. 

22. The Commission said that, as a matter of principle, the timesheets should reflect the actual working time. The auditors found that the hours declared by the complainant were capped and corresponded to the maximum working hours budgeted for in the project. Consequently, the auditors could not verify that the declared hours reflected the work done on the project.

23. The Commission stated that, when it detects flaws or errors in the time-recording system, the project participants are requested to provide supporting documents or alternative evidence to ensure that the declared working hours correspond to the actual time spent on the work. Moreover, the working time must be linked to the ‘deliverables’ or actions under the grant agreement. The burden of proof in this exercise rests with the beneficiary.

24. The Commission said that it had followed this same procedure in the complainant’s case. Since the auditors could not determine the actual hours worked by the complainant’s staff, they requested alternative evidence to assess the reliability of the time-recording system.

25. The Commission listed a number of factors which it takes into account to verify the reliability of time-recording systems. It stated that the principles of due diligence, accountability and responsibility serve as the guiding yardstick. It also argued that the auditors must reach a conclusion, based on reasonable assurance, whether the claimed hours are plausible or not.

26. In this case, the auditors could not reconcile the hours claimed by the complainant with the alternative evidence provided. Therefore, the Commission maintained its view that the time-recording system was flawed, making it impossible to ascertain the reliability of the timesheets and whether the personnel costs claimed corresponded to the declared work.

27. Finally, the Commission insisted that, in rejecting the complainant’s personnel costs, it was not calling into question, or casting doubt on, the quality of the work delivered by the complainant in the context of the SENIOR project[12].

28. On 25 July 2017, the Commission sent a number of documents to the Ombudsman’s inquiry team. Based on the inspection and the additional clarification, the Ombudsman’s inquiry team was satisfied that both the external auditors and the Commission’s staff had duly examined the evidence sent by the complainant.

29. The Ombudsman invited the complainant to comment on her inspection meeting report. However, the complainant did not avail itself of this opportunity.

The Ombudsman's assessment leading to a recommendation

30. The Ombudsman notes that the Commission’s financial audit practice consists of a two-stage verification process. The auditors verify whether the beneficiaries complied with the conditions of the grant agreement by examining their timesheets and linking them with the actions and ‘deliverables’ under the project. Should the timesheets be unreliable or insufficient, the Commission asks for alternative evidence that could prove that the costs are eligible. The Commission aims to ensure that all declared working hours spent on the projects are reflected in the timesheets or can be reconciled on the basis of the alternative evidence. If the Commission cannot satisfy itself that the declared time corresponds to the delivered work, it rejects the corresponding personnel costs.

31. In this case, the Commission concluded that the time-recording system used by the complainant did not comply with the applicable rules, and that the alternative evidence provided by the complainant was not sufficient to overturn this conclusion.

32. However, the Commission noted that the statements in the financial audit did not suggest that the complainant had not carried out its work. Nor did the financial audit question the quality of the complainant’s work in the project. In fact, the Commission had previously accepted the complainant’s reports and contributions. However, it subsequently decided not to cover any personnel costs for the eight ‘deliverables’ at issue in this case.

33. The Ombudsman appreciates that the Commission provided the complainant with several opportunities to submit additional evidence for the time spent on its work in the project. She also welcomes the Commission’s willingness to find an amicable solution in this case.

34. However, the Commission’s conclusions do not nullify the actual work delivered in the project and the time devoted to it by the complainant. The Ombudsman finds it unacceptable that the Commission would refuse to provide any remuneration for personnel costs related to work carried out by the complainant, which the Commission had previously praised.

35. The Ombudsman notes that it is beyond any doubt that the complainant carried out its work on the project. She understands that the complainant struggled to quantify the ‘intellectual work’ performed in the course of the project or prove every trace of the progress made. The Ombudsman recognises that the very nature of intellectual work makes it difficult for the complainant to transform it into a demonstrable work output or a ‘deliverable’ at each stage.

36. Since the complainant provided insufficient evidence to justify all the working time for which it was claiming remuneration under the project in its entirety, the Ombudsman accepts that the Commission cannot reimburse all of the personnel costs. However, given the context above, the Commission should make a reasonable re-assessment of the alternative evidence and agree to accept the corresponding personnel costs on the basis of the time spent on the actions, as proven by the evidence received. While it is a duty of the Commission to safeguard the financial interests of the EU, it is disproportionate to take this duty to the extreme of refusing any payment when the Commission acknowledges that the work has been done. It cannot be acceptable that no payment is made for work which has been completed and delivered satisfactorily.

37. It is clear that time was spent by the complainant and its employees on the ‘deliverables’ in question. It is clear that the complainant incurred costs in delivering its contribution to the project.  In these circumstances, the Ombudsman finds it contrary to the principles of fairness and proportionality, set out in the applicable rules[13], that the Commission would not recognise the time spent on the project to the extent that this can be reconciled with the evidence submitted by the complainant.

38. The Ombudsman thus finds maladministration on the part of the Commission arising from its refusal to reimburse any of the personnel costs related to work on the eight ‘deliverables’ under the project. She therefore makes corresponding recommendations below, in accordance with Article 3(6) of the Statute of the European Ombudsman.


On the basis of the inquiry into this complaint, the Ombudsman makes the following recommendations to the Commission:

(i) The Commission should exercise its powers, in line with the principles of fairness and proportionality, to: reassess the alternative evidence submitted by the complainant with a view to finding a basis on which to determine the hours worked on the eight ‘deliverables’ in question.

(ii) Following this reassessment, the Commission should accept the corresponding personnel costs related to the hours worked, as determined, and adjust the amount of funds it is seeking to recover accordingly, including the late-payment interest.

The Commission and the complainant will be informed of these recommendations. In accordance with Article 3(6) of the Statute of the European Ombudsman, the Commission shall send a detailed opinion by 30 April 2018.


Emily O'Reilly

European Ombudsman

Strasbourg, 31/01/2018


[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] The complainant took part in the project between 1 January 2008 and 31 December 2009.

[3] Ten ‘deliverables’ were identified by the auditors on the basis of the complainant’s alternative evidence submitted in the course of the audit procedure.

[4] Decision of the European Ombudsman in case 1688/2015/JAP on the European Commission’s decision to recover funds from a participant in an EU project on older people and ICT (SENIOR) is available at: https://www.ombudsman.europa.eu/cases/decision.faces/en/84419/html.bookmark. The case dealt with two ‘deliverables’ submitted by the complainant under the SENIOR project. The Commission rejected the costs related to those ‘deliverables’ even though the auditors found them justified. The Ombudsman found maladministration in this regard and made a recommendation to the Commission to reduce the recovery. Since the Commission accepted her recommendation, the Ombudsman closed the case on 6 October 2017.

[5] This means that the project fully achieved its objectives and technical goals for the period, and even exceeded expectations.

[6] To this effect, the complainant explained in an e-mail of 28 July 2013 to the external auditor that “taking account of all contractual or budgetary or any other limit that was imposed, not all time worked was claimed for reimbursement but only time that is not exceeding the imposed limit”. Using an example of several meetings, the complainant noted that “while the real workload was a full-working day (and more), the time mentioned on the timesheets was restricted to the contractual maximum”, in one case of 1.51 hours and in another of zero hour on the timesheet.

[7] In an e-mail of 7 June 2013 from the complainant to the external auditor, the complainant explained that it did not “pay [for] the hours going beyond 8 (or 7.6) hours a day, or hours worked on Saturdays, Sundays and national holidays. Still researchers typically work more, including on evenings, weekends, and holidays. When claiming the cost of ‘actual hours’ for a project, [it did] not claim the cost for ‘hours actually worked’ that [it did] not have to pay (even though the employee [had] actually worked during these hours) or that [went] beyond the limits of the budgets. The result may appear arbitrary or as an empty division of budgeted hours. But it [was] not. The hours on the timesheet represent actual work”.

[8] The complainant explicitly mentions this argument in its letter of 7 April 2014 to the Commission.

[9] The auditors noted that “timesheets [were] not plausible, hours claimed [did] not represent the actual hours. The budgeted hours per period [were] divided by the number of working days inserted into the timesheet for every day. [They had] asked the [complainant] for alternative evidence that could support the reality and the reliability of the hours claims, but the alternative evidence (...) could not substantiate the hours claimed”.

[10] The auditors deemed as insufficient alternative evidence submitted by the complainant to try to prove that the personnel costs claimed were legitimate. Given that the “time recording system in its entirety [was] unreliable” and “the hours recorded in the time sheets and linked to the different deliverables and activities [were] in most of the cases clearly overstated”, the auditors rejected all of the complainant’s personnel costs. 

[11] Article II.14 Eligible costs of the project

1. “Costs incurred for the implementation of the project shall meet the following conditions in order to be considered eligible:

a) they must be actual;

b) they must be incurred by the beneficiary;

c) they must be incurred during the duration of the project, with the exception of costs incurred in relation to final reports and reports corresponding to the last period as well as certificates on the financial statements when requested at the last period and final reviews if applicable, which may be incurred during the period of up to 60 days after the end of the project or the date of termination whichever is earlier;

d) they must be determined in accordance with the usual accounting and management principles and practices of the beneficiary. The accounting procedures used in the recording of costs and receipts shall respect the accounting rules of the State in which the beneficiary is established. The beneficiary’s internal accounting and auditing procedures must permit direct reconciliation of the costs and receipts declared in respect of the project with the corresponding financial statements and supporting documents;

e) they must be used for the sole purpose of achieving the objectives of the project and its expected  results, in a manner consistent with the principles of economy, efficiency and effectiveness;

f) they must be recorded in the accounts of the beneficiary; in the case of any contribution from third parties, they must be recorded in the accounts of the third parties;

g) they must be indicated in the estimated overall budget in Annex I (...)”.

[12] In this regard, in its letter to the complainant of 21 January 2017, the Commission clarified that its issues with personnel costs did not “reflect in any way badly on [its] reputation”. The Commission reassured that complainant that it could participate in proposals in the future.

[13] These principles are embodied in Article 80 of the EU Financial Regulation as well as Article 91 of the Rules of Application of the Financial Regulation.