The monitoring that is involved with a European Structural Investment Fund (ESIF) direct spend project is notoriously tiresome, complicated and onerous. As mentioned in the Budgeting a Direct Spend Project how-to-guide, grant recipients must submit a quarterly claim in order to receive the money they have spent each quarter.
There are many pitfalls when submitting a claim which can lead to ineligible expenditure. This guide will help you understand the different forms that need to be completed and help you to organise and prepare for the end of the quarter to reduce the chances of ineligible expenditure.
Each Managing Authority (MA) and Contract Manager will expect the monitoring to be completed in a certain way, always check their guidance to ensure that you submit your claim correctly. This guide provides an overview of what to expect and the information you will be required to give will often change over time.
Navigate the guide
1. Claim Forms
2. Transaction list
3. Expenditure Description
4. Evidencing Expenditure
5. Keeping Records of Expenditure
6. Support and Guidance
1. Claim Forms
When submitting a quarterly claim, you will usually submit five forms:
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- Progress report
- Transaction list
- Financial forecast form
- Output forecast form
- Results forecast form
Progress Report
This is where you record the details about what your project has achieved physically and financially in the last quarter. You will also specify any changes that need to be made, milestones and planned activity.
Transaction List
This form details all direct expenditure that has been defrayed that quarter. Defrayal is when the money you have spent has left your bank account, it is not the date in which you were invoiced. You may receive an invoice in one quarter and process it, but if the money has not been defrayed in that quarter in cannot be claimed until the end of the next quarter.
If you are using the 15% simplified cost option you will record all of the direct project purchases on the transaction list such as staff salaries, room hire, travel ect. If you are using the 40% simplified cost option, you only need to record staff salaries as all other costs are regarded as indirect costs.
Have a look at our Budgeting a Direct Spend Programme guide to see a list of all direct and indirect project costs.
Financial Forecast Form
Your allocated percentage of indirect costs will be calculated on the transaction list form for you so you will know what your total claim value will be. If your project contains a match funding element you will still claim for the total cost of the quarter and you will receive the percentage of what ESIF funding is allocated to you. You will record all previous and forecast claims on this form to highlight any potential over/underspend.
Output and Results Forecast Forms
As part of your bid you would have either been given a set of outputs and results to adhere to or you would have created ones. Each quarter you will need to record how you are getting on with each of those to see if you are on course to meet them by the end of the project.
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- Outputs: The activities and services you will deliver or the number and demographics of participants supported on the project.
- Results: This is the impact that participant’s involvement in the project has had on them, such as moving in to job searching, finding employment or going into training.
Depending on the type of project you are running and who the MA is, there may additional information that needs to be evidenced. Always check with the MA about what they expect you to provide them before submitting a claim.
2. Transaction list
The transaction list is possibly the most difficult and time consuming form to complete and is often where the MA will come back and ask for amendments to be made. Below is a list of the possible elements that are included in a transaction list and what they mean.
The first few cells will typically be information about the project and delivery partners.
The following cells you will need to be recorded manually as this will be specific to the expenditure you are claiming for.
Supplier Name
The full name of where the service or item was purchased
Supplier VAT Number
Anyone selling goods or services must have a VAT number which should be stated on a receipt or invoice. If you are not sure, ask for a VAT receipt
Invoice Reference Number
All invoices and receipts will have a number on them to identify to which purchase it refers to. For payslips this may be difficult to find, but there is usually a way to identify each payslip so speak to your finance team to see how they record the information.
Invoice Date
The date the invoice was created.
Defrayal Date
Defrayal refers to when the money has left the bank account. If you receive an invoice, you would not claim for when you received the invoice, but when you paid the invoice and you can see the money has left the account. If you are paying in cash, you would use the day that you paid for the item.
Defrayal Method
The method in which the invoice was paid. You can choose from the following:
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- BACS
- Cheque
- Bank Transfer
- CHAPS
- Direct Debit
- Debit Card
- Credit Card
- Cash
Defrayal Reference
Payment reference relevant to the transaction.
Expenditure Detail/Description
The item for which funding is being claimed must have a clear description. The description must be detailed enough to allow the reader to consider its validity without the need to see the actual evidence at this stage.
Apportionment Details
Indicate how the eligible value is derived from the original invoice / receipt value i.e. the method of apportionment, ineligible costs removed etc. When claiming for all of a staff member’s salary you would put 100.
If you are claiming for part of a staff member’s monthly salary, check with the MA on how they would like you to record this information. It is most likely they will ask for timesheet and the number of hours being claimed for in that month to be entered into this box.
Total Invoice Value (excluding VAT)
Indicate the total Net expenditure value of the invoice or receipt, (total documented value excluding VAT).
Total Irrecoverable VAT
State the irrecoverable VAT value which cannot be recovered from another source (HMRC) of the invoice/receipt following any adjustments for apportionments or ineligible costs.
Total Eligible value
Enter the project eligible expenditure amount after any apportionment or adjustments have been applied and irrecoverable VAT added in. This is the expenditure value minus adjustments for which ESIF is being claimed against.
Eligible for Flat Rate Indirect Costs
Select from drop down menu Yes or No. This is if you are using the 15% or 40% Simplified cost option. See How to Budget a Direct Spend project for more information.
3. Expenditure Description
The expenditure description item needs to be comprehensive enough so the auditor knows exactly what the claim is for.
Information about dates, location and names are really important so they can cross reference it with the activities that are described in the progress report.
Download the example expenditure descriptions (PDF).
4. Evidencing Expenditure
Once all the forms are completed and you have sent them to the Managing Authority, they will then process them and come back to you with any queries they have.
Once they are happy with the forms, the MA will ask you to submit between 5 and 15 pieces of evidence, depending on what risk rating they give you. Your risk rating will depend on the number of staff, delivery partners and the financial procedures your project has. The evidence that will be asked for will be selected items claimed for on the transaction list.
Direct Staff Costs
If a member of staff’s salary is asked to be evidenced for you will need to provide either some or all of the following
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- Payslip
- Bank statement showing defrayment
- Job description
- HR letter confirming appointment
- Timesheet (for staff working part of their time on the project)
- Hourly rate calculation (for staff working part of their time on the project)
It will be dependent on who the MA is as to what they will ask for, but it is important to retain all this information for audit purposes.
Other Direct Costs
For all other direct spend costs on the transaction list you will need to provide evidence of expenditure and that it has been defrayed. The defrayal method that was stated in the transaction list is the method in which you must evidence. The evidence will include:
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- Original invoice or receipt
- BACs
- Bank Statement
- Credit Card Statement
All these documents will need to be stamp with “Certified True Copies” and signed by the appropriate signatories.
Please note if the line selected is a participant cost the evidence of expenditure required will extend to evidence to demonstrate the eligibility of the participant associated with the cost. This may include the participant referral form, participant registration form and attendance records.
If you cannot provide appropriate evidence of expenditure or defrayment, then that claim will be deemed ineligible and you will not receive the money for it. This is particularly the case when claiming for participant costs when a participant is not deemed eligible by the MA.
5. Keeping Records of Expenditure
How you decide to keep hold of all the documents needed for each claim is up to each organisation and their processes.
However here are some top tips to avoid any ineligible spend and complete the monitoring as quickly as possible.
Paper Filing
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- Get a “Certified True Copy” stamp and stamp everything, it does not hurt to be overly cautious
- Have a dedicated folder to place a photocopy of all invoices in and divide them by the quarter that they were defrayed in. This means they are easily accessible at the end of the quarter and you not have to go through your finance teams filing.
- Make sure to keep copies of all staff expenses
- Keep all participant information together, ensure all participants fill out the same forms and all the information is completed to avoid it being deemed ineligible
- On invoices related to participant expenses record which participant it refers to. Participant numbers are the best way to do this to avoid data protection breeches.
Computer Filing
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- Have different folders for each quarter of the year to store all the monitoring information
- Within the quarter folder have folders for claim forms, evidence required and invoices
- Version control all claim forms to ensure that you are submitting all the right information.
- Scan all invoices that have been received, once they have been stamped, and store them in the invoice folder of the corresponding quarter. When they have been inputted onto the transaction list, label them with their line number to make finding the right evidence a lot quicker.
Defrayment
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- Create a spreadsheet with all the invoices and payments made, use the transaction list as a guide, to keep on top of when invoices have been defrayed. This also helps budget management
- Have a meeting with your finance department on a monthly/quarterly basis to go through all the invoices and payments to see when items have been defrayed. Take this opportunity to take copies of bank and credit card statements and any invoices you don’t have.
- Designate a dedicated member of staff for monitoring
- The last top tip is to have a dedicated person who is responsible for collating all the information needed for monitoring, evidencing and completing the monitoring forms. This will make the process smoother and they can be checked and verified by the project manager and your finance team before they are submitted.
6. Support and Guidance
If you need additional support with monitoring your direct spend project, you can contact James Smalley, Development Officer for the Economic Impact team, directly at:
james.s@valonline.org.uk
0116 2575025