- 17 Mar 2016
As a grant fund manager you should note the following:
Grant recipient eligibility status
The organisation should be eligible in line with the approved Operation/Strategic Intervention. Where the Operation can only support SMEs the GFM must make an assessment of the SME status of the applicant organisation. EC SME Definition is available at: http://ec.europa.eu/small-business/faq/index_en.htm#theme-1
Organisations which do not fit within the definition of an SME will not be considered eligible to receive a grant with European Structural Fund support. This assessment should be done as standard and the documentation to confirm this held on file for any future audit. The system for doing this will be assessed by SG as part of an Article 125(5) visit.
Purpose/eligibility of grant
The GFM must make an assessment of the request for a grant to ensure that the proposed activity adheres to the overall objectives of the approved European Structural Funds Operation. This should also include assessment of State Aid. Please note the State Aid Guidance issued by SG and published on the ESFD website.
All systems and processes be assessed by SG as part of an Article 125(5) visit.
VAT status of the grant recipient
The GFM must be aware of the grant recipient's VAT status. VAT is an eligible item of expenditure but only where the recipient cannot re-claim this VAT. As a consequence if the grant recipient is including VAT as part of their grant request then they must provide confirmation of their VAT status to the GFM. This evidence would be in the form of a letter from either HMRC, their Auditors or their Accountant confirming that they are not VAT registered or exempt from VAT for this type of activity.
Award approval documentation to grant recipient
The GFM will be obliged to retain the following documents/provide the following information for every grant that is issued via a European Funded Grant Scheme Operation:
- the application from the grant recipient requesting an award from the grant scheme;
- evidence on how the application was assessed;
- information on who assesses and authorises the awards;
- information on the aim and objectives of the grant scheme/awards;
- evidence of the notification given to the recipient of the approval of an award including value and conditions of the offer to the recipient;
- claim form(s) used by recipient to draw down grant;
- bank statement showing defrayment of the grant to the recipient; and
- invoices from the recipient along with the bank statements showing defrayment of the invoice amounts.
Further clarification on how to verify a grant:
From the grant fund manager
As the GFM you must be able to provide SG with your bank statement showing the grant awarded to any particular recipient being deducted from your account. If the amount on the bank statement is more than the grant amount to be verified i.e. relates to more than one payment, then BACS/Ledger run(s) that show the grant amount to be verified and the total that appears on the bank statement must be provided.
From the grant recipient
As the GFM you will need to provide evidence of how the recipient claimed the grant (you must ensure the recipient has defrayed the expenditure before claiming it back through your EU funded operation) – this includes keeping records on:
- the recipient's invoice(s) for the services/equipment purchased with the grant;
- evidence of documentation for staff salaries of staff working 100% on the activity claimed as grant recipient costs. There should be a clear audit trail for staff costs through payroll records, via BACS to the bank statement.
- the recipient's bank statement(s) showing defrayment of these invoices and/or salaries. (SG need only see those items that refer to the grant, all other entries on the recipient's bank statement can be blacked out).
European Structural Funds acknowledgement
As the GFM you must be able to provide evidence on what was done to ensure the recipient was aware that their grant was part funded by either ERDF (European Regional Development Fund) or ESF (European Social Fund). As a minimum all grant applications and award letters must carry the European Logo relevant to the particular fund and the award letter itself should in writing acknowledge the European involvement in the project. Please refer to the Publicity Guidance on the ESFD Website.
Requirements for the verification checks
SG will make two selections from the declared grant scheme expenditure. The first selection will be a GFM defrayal check and from this, SG will then select an appropriate level for a further final recipient defrayal check. These two selections will be clearly shown on the verification sample form issued prior to the on-site visit.
For the GFM defrayal check, SG will require the following information/documents to be made available for each item selected:
- the name of the grant recipient;
- confirmation that the recipient is eligible;
- the claim form in which the grant verified is contained;
- the GFM bank statement showing the money being paid to the recipient, and BACS run if required;
- confirmation that the eligibility status of the recipient has been confirmed;
For the Final Recipient defrayal check, SG will require the following additional information/documents for each item selected:
- the application from the recipient requesting a Grant
- the award letter from the GFM
- the recipient's invoices (from their suppliers) and/or evidence of staff salaries of staff working 100% on the activity claimed as grant recipient costs and bank statements showing the payment of these invoices/salaries. If the amount on the bank statement is more than what is being asked for as part of the Verification Check then BACS/Ledger runs that show the invoice amount and the total that appears on the bank statement must be provided;
- evidence of ERDF/ESF acknowledgement at both GFM and Final Recipient level; and
- confirmation of the recipient's business type.