ELC PPT Presentation 2024 PDF
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This presentation, labeled as an Expenditure Lifecycle (ELC) presentation for 2024, details aspects of financial management within the European Commission. It discusses the process of budgeting, planning, and executing financial actions, demonstrating the procedures for operational expenditure, including grant processes.
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The Expenditure LifeCycle (ELC) And So It Begins - Artificial.Music - AudioLibrary - Youtube 1 DG BUDGET Quiz in SLIDO Share, learn, apply Unlocking the power of financial knowledge 2 The Expen...
The Expenditure LifeCycle (ELC) And So It Begins - Artificial.Music - AudioLibrary - Youtube 1 DG BUDGET Quiz in SLIDO Share, learn, apply Unlocking the power of financial knowledge 2 The Expenditure Lifecycle (ELC) Planning Multiannual Financial Framework (MFF) Strategic plans Management plans Commission Work programme Share, learn, apply Unlocking the power of financial knowledge 3 ELC - Preparation: legal framework Share, learn, apply Unlocking the power of financial knowledge 4 Preparation: legal framework Derogation from the FR should be set in the basic act Share, learn, apply Unlocking the power of financial knowledge 5 Quiz in SLIDO Share, learn, apply Unlocking the power of financial knowledge 6 Preparation: the budget Share, learn, apply Unlocking the power of financial knowledge 7 Preparation: the budget Share, learn, apply Unlocking the power of financial knowledge 8 Preparation: the budget Multiannual Financial Framework (MFF) 7-year spending plan On the EU’s financial priorities Ceilings For every big spending category Annual budgets Part of the Multiannual Financial Framework Share, learn, apply Unlocking the power of financial knowledge 9 Preparation: the budget 2018 prices Share, learn, apply Unlocking the power of financial knowledge 10 Preparation: the budget 1st phase Dec N-2 Feb N-1 March N-1 +/- May N-1 Budget circular Budget hearings College adoption of the Draft budget Annual adoption Oct N-1 Jul N-1 2nd phase Nov N-1 Conciliation Parliament examines Council examines Draft budget Draft budget Dec N-1 Annual budget adoption Share, learn, apply Unlocking the power of financial knowledge 11 Preparation: the budget Revenue 2024 = €142.6 billion Others 4% Custom duties 17% VAT 17% GNI 57% Plastic 5% Share, learn, apply Unlocking the power of financial knowledge 12 Quiz in SLIDO Share, learn, apply Unlocking the power of financial knowledge 13 Preparation: the budget Types of appropriation €189.39 billion €142.6 billion Commitment Payment appropriations appropriations Share, learn, apply Unlocking the power of financial knowledge 14 Exercise - Appropriations Your hierarchy promotes a new programme to develop solar panels integrated into glazing. A proposal for a basic act is in the final stage of reading by the Council and the European Parliament. It states that the programme will start in 2024 and grants will be awarded for a total amount of €250 million over 3 years (2024-2026): A 1st call for proposals worth €100 million will be launched in 2024 A 2nd of € 100 million in the second year A 3rd of € 50 million in the third year of the programme. A pre-financing of 40% is provided at the signing of each agreement, Followed by an intermediate payment of 30% after 12 months. The balance being paid after 24 months (=the project is completed). Share, learn, apply Unlocking the power of financial knowledge 15 CA PA Commitment appropriations Payment appropriations 2024 2025 2026 2027 2028 2024 100 40 30 30 2025 100 40 30 30 2026 50 20 15 15 Total 250 40 70 80 45 15 Payments for the 2nd grant starting in 2025, for which we committed €100M. We award grants of: The payment Payments for the first grant, forscheme which we is: committed €100M. Considering the 3 calls for proposals from the €250M programme, €100M for the 1 call => commitment the first st payments scheme40% Theyear is: pre-financing payment at the signature of the agreement (2024) payment appropriations 30% take place intoa be Payments period madeof for 5 years. For grant the 3rd every starting in 2026, for which we 40% €100M for the 2nd call => commitment the second pre-financing year interim payment at payment in 2025 the signature of the agreement (2024) year, the total amount Balance of PAs equals committed the €50M.sum of The every paymentGrant PAs scheme for is: €50M for the 3 call => commitment the 3 year30% interim payment rd rd payment the second at the end (2026) year that year. The total amount committed equals the total worth Balance of thepayment programmeat the =>end (2026) 40% pre-financing payment at the signature of this agreement (2026) €250M. 30% interim payment in 2027 Balance payment at the end (2028) Share, learn, apply Unlocking the power of financial knowledge 16 Budget requirements for commitments and payments in 2027 if the program is not renewed? CA PA 2024 2025 2026 2027 2028 2024 100 40 30 30 2025 100 40 30 30 2026 50 20 15 15 Total 250 40 70 80 45 15 Year 2027 CA = €0 No CA in 2027. CA only in 2024, 2025, 2026. PA = €45M Payment appropriations in 2027 equal the sum of payment appropriations for that year for the 2nd and 3rd grants. Share, learn, apply Unlocking the power of financial knowledge 17 What will be the RAL (reste à liquider) on this budget line at the end of 2025, if all goes according to plan? CA PA 2024 2025 2026 2027 2028 2024 100 40 30 30 2025 100 40 30 30 2026 50 20 15 15 Total 250 40 70 80 45 15 RAL (2025) = €90M The RAL = the remaining amount to pay on budgetary commitments. This is the difference between the committed amount and the paid amount. At the end of 2025, payments = €110M, from a total amount committed of €200M. The difference or RAL is thus €90M (200-40-40-30) Share, learn, apply Unlocking the power of financial knowledge 18 In which year will be the peak workload for staff managing the program? CA PA 2024 2025 2026 2027 2028 2024 100 40 30 30 2025 100 40 30 30 2026 50 20 15 15 Total 250 40 70 80 45 15 In 2026 as it is: - the closure year + balance payment for the 1st grant - the 2nd year and interim payment for the 2nd grant - the beginning year and pre-financing payment for the 3rd grant. It is the only year with the three grants’ implementation running at the same time, and with the highest due payment amount. Share, learn, apply Unlocking the power of financial knowledge 19 Preparation: the budget Administrative expenditure Operational expenditure Non-differentiated appropriations Differentiated appropriations Commitment in year N Commitment in year N Payments in year N and N+1 max Payments in year N, N+1, N+2, N+3,… Share, learn, apply Unlocking the power of financial knowledge 20 Preparation: the budget Share, learn, apply Unlocking the power of financial knowledge 21 Preparation: the budget Share, learn, apply Unlocking the power of financial knowledge 22 Preparation: the budget Share, learn, apply Unlocking the power of financial knowledge 23 Preparation: the budget Share, learn, apply Unlocking the power of financial knowledge 24 Preparation: the budget A transfer = moving money from one budget line to another Budgetary Authority Commission Chapters (FR defines Titles Chapters Articles Items specific limits and ceilings) Share, learn, apply Unlocking the power of financial knowledge 25 Quiz in SLIDO Share, learn, apply Unlocking the power of financial knowledge 26 Preparation: Financing Decision (FD) & Work Programme (WP) FD & WP adopted FD may be annual or simultaneously multiannual (at least 2 years) FD=College’s authorisation for all operational expenditure (mandatory) Share, learn, apply Unlocking the power of financial knowledge 27 Quiz Under operational expenditure, before awarding a contract or grant I need 3 green lights: which ones? From the legislative authority: the Basic act From the budgetary authority: the Budget From the Commission: the Financing decision Share, learn, apply Unlocking the power of financial knowledge 28 ELC - Implementation Share, learn, apply Unlocking the power of financial knowledge 29 Implementation: management modes Shared management Direct management Indirect management Share, learn, apply Unlocking the power of financial knowledge 30 Implementation: conflict of interests The provisions on conflict of interests are set in: The Financial Regulation (art.61) applies to EU staff members (EU Institutions, Agencies, and bodies) and also to other persons, including national authorities at any level, involved in EU budget implementation under direct, indirect and shared management The Staff Regulations (applies to all EU staff) + Commission notice Guidance on the avoidance and management of conflicts of interest under the Financial Regulation Share, learn, apply Unlocking the power of financial knowledge 31 Implementation: ways to implement Routine Financial admin. instrument expenditure Trust funds Prizes Procurement Grants Share, learn, apply Unlocking the power of financial knowledge 32 Implementation: routine admin. expenditure Share, learn, apply Unlocking the power of financial knowledge 33 Implementation: financial instruments Financial instruments (FIs) can take the form of: Loans Guarantees Equity Share, learn, apply Unlocking the power of financial knowledge 34 Implementation: trust fund External action Development projects Direct management and humanitarian aid (INTPA) EU and multiple donors for a joint Beneficiaries = NGOs action Share, learn, apply Unlocking the power of financial knowledge 35 Implementation: prizes Share, learn, apply Unlocking the power of financial knowledge 36 Implementation: grants Grant = donation Share, learn, apply Unlocking the power of financial knowledge 37 Implementation: procurement Procurement = buying services/supplies Share, learn, apply Unlocking the power of financial knowledge 38 Implementation: grants & procurement Similar set of actions Common principles Transparency Equal treatment Inform Non-discrimination Evaluate Award Share, learn, apply Unlocking the power of financial knowledge 39 Implementation: grants & procurement Economy Efficiency Sound financial management Internal control Effectiveness principles Share, learn, apply Unlocking the power of financial knowledge 40 Implementation: procurement Proportionality = Competition = principle allows for better price fewer requirements for small purchases Procurement = buying Share, learn, apply Unlocking the power of financial knowledge 41 Implementation: grants Grant = donation to finance: the an action functioning of (action grant) an entity (operating grant) Share, learn, apply Unlocking the power of financial knowledge 42 Implementation: grants Non retro-activity principle Built in 2023 and grant requested in 2024 Share, learn, apply Unlocking the power of financial knowledge 43 Implementation: grants Non cumulative principle: one grant per beneficiary per action EU Grant EU Grant Share, learn, apply Unlocking the power of financial knowledge 44 Implementation: grants co-financing and non profit Profit? Share, learn, apply Unlocking the power of financial knowledge 45 Quiz in SLIDO Share, learn, apply Unlocking the power of financial knowledge 46 Recap: procurement or grants? Procurement Grants Buying Purpose Giving money Commission Ownership Beneficiary Agreed price Payment Co-financing Profit Principle Non-profit Share, learn, apply Unlocking the power of financial knowledge 47 ELC - Management Framework: actors Share, learn, apply Unlocking the power of financial knowledge 48 Quiz in Slido Share, learn, apply Unlocking the power of financial knowledge 49 Management Framework: actors AOR at different hierarchical level Authorising officer AO by delegation AO by subdelegation AO delegates AOD sub-delegates AOSD College of Commisioners Director General Director Director of Executive Agency HoU AD AST Adopts the FD Financial management The authorising officer responsible (AOR) manages & decides Share, learn, apply Unlocking the power of financial knowledge 50 ELC - Management Framework: financial circuits Share, learn, apply Unlocking the power of financial knowledge 51 Management Framework: financial circuits Authorising Officer by Delegation (AOD) is responsible for the choice of financial circuit(s). Operational and financial functions must be defined to avoid any overlap and confusion in responsibilities. Share, learn, apply Unlocking the power of financial knowledge 52 Management Framework: financial circuits 4 main Financial transactions Commitment Payment Recovery Decommitment Share, learn, apply Unlocking the power of financial knowledge 53 Management Framework: financial circuits « 4 eyes » principle: Initiating agent ≠ Verifying agent For both operational and financial aspects Verifying agent cannot be subordinated to the initiating agent Share, learn, apply Unlocking the power of financial knowledge 54 Management Framework: financial circuits Often, financial circuits involve more persons Financial unit Financial IT tools Operational unit Share, learn, apply Unlocking the power of financial knowledge 55 Management Framework: financial circuits Director General RAO Financial Unit Operational Unit OVA FIA OIA FVA Share, learn, apply Unlocking the power of financial knowledge 56 Management Framework: financial circuits Share, learn, apply Unlocking the power of financial knowledge 57 Management Framework: accounting system Each financial transaction is recorded in the accounting system SUMMA training Share, learn, apply Unlocking the power of financial knowledge 58 Management Framework: financial circuits Legal entity and bank account In SUMMA = Business partner Share, learn, apply Unlocking the power of financial knowledge 59 Management Framework: financial circuits Share, learn, apply Unlocking the power of financial knowledge 60 Quiz in SLIDO Share, learn, apply Unlocking the power of financial knowledge 61 Management Framework: Internal Control Share, learn, apply Unlocking the power of financial knowledge 62 Management Framework: Internal control (IC) Share, learn, apply Unlocking the power of financial knowledge 63 Management Framework: Internal Audit (IA) IA Checks if IC works Share, learn, apply Unlocking the power of financial knowledge 64 Implementation: commitments Share, learn, apply Unlocking the power of financial knowledge 65 Implementation: commitments 2 types of commitments Share, learn, apply Unlocking the power of financial knowledge 66 Implementation: commitments 3 types of budgetary commitments Individual Provisional Global Amount Amount? Amount? Beneficiary Beneficiary? Beneficiary? Administrative Operational expenditure expenditure Share, learn, apply Unlocking the power of financial knowledge 67 Implementation: commitments When to do budgetary commitments in Grants? 1. Basic act: Solar-cells in windows 2. Budget: CA 100 – PA 40 3. FINANCING DECISION: Call for proposals - amount 100 Global 4. Launch call for proposals 5. Evaluation of applications 6. AWARD DECISION Individual Individual, individual, individual,… Share, learn, apply Unlocking the power of financial knowledge 68 Implementation: commitments Deadlines to sign legal commitments Individual / Global Provisional 31/12/N 31/12/N+1 Share, learn, apply Unlocking the power of financial knowledge 69 Implementation: commitments Final date of implementation (FDI) Project Project contingency FDI starts ends Share, learn, apply Unlocking the power of financial knowledge 70 Implementation: commitments Legal commitments Procurement procedure Grant procedure Direct Purchase Grant Framework Framework contract contract order agreement partnership Specific Order form contract Share, learn, apply Unlocking the power of financial knowledge 71 Implementation: Commitments Structure of legal commitments (procurement) Special conditions General conditions Annexes Share, learn, apply Unlocking the power of financial knowledge 72 Implementation: commitments Share, learn, apply Unlocking the power of financial knowledge 73 Quiz in SLIDO Share, learn, apply Unlocking the power of financial knowledge 74 Implementation: payments Single 1 payment Multiple Prefinancing Interim Balance Share, learn, apply Unlocking the power of financial knowledge 75 Implementation: payments Before the payment, acceptance of: commercial invoice (procurement) cost claim (grants) Share, learn, apply Unlocking the power of financial knowledge 76 Implementation: payments Share, learn, apply Unlocking the power of financial knowledge 77 Implementation: payments Problems with deliverables? Info to 3rd party Stop the clock in Abac Avoid interest on late payment! Share, learn, apply Unlocking the power of financial knowledge 78 Quiz in SLIDO Share, learn, apply Unlocking the power of financial knowledge 79 Implementation: payments Accounting officer Pays and recovers Responsible for ABAC Collects revenue from Member States Maintains, prepares and presents the accounts Share, learn, apply Unlocking the power of financial knowledge 80 Implementation: payments VAT? NO! Share, learn, apply Unlocking the power of financial knowledge 81 Implementation: recoveries Recovery order = retrieve money overpaid Pre-information letter Amount certain, fixed and due? Recovery order Debit note Share, learn, apply Unlocking the power of financial knowledge 82 Implementation: recoveries Share, learn, apply Unlocking the power of financial knowledge 83 Implementation: De-commitment Cancellation of an existing budgetary commitment Funds de-committed in the same year of the budgetary commitment can be used to fund something else Important measure to ensure that the accounts reflect the actual situation Share, learn, apply Unlocking the power of financial knowledge 84 Quiz in SLIDO Share, learn, apply Unlocking the power of financial knowledge 85 ELC – Reporting Share, learn, apply Unlocking the power of financial knowledge 86 Reporting: AAR Annual activity report (AAR) by DG/EA: Achievement of the key policy objectives and core activities Management report of the Director-General (AOD) Reasonable assurance as regards legality and regularity and SFM of all financial transactions Share, learn, apply Unlocking the power of financial knowledge 87 Reporting: IFAR Integrated Financial and Accountability Reporting Annual management & Consolidated annual performance report Discharge follow-up accounts (AMPR) Internal audit report 5 years forecasts Share, learn, apply Unlocking the power of financial knowledge 88 Reporting: Discharge Share, learn, apply Unlocking the power of financial knowledge 89 Quiz in SLIDO Share, learn, apply Unlocking the power of financial knowledge 90 BUDGpedia Share, learn, apply Unlocking the power of financial knowledge 91 Final messages Let’s work together by using handover notes Update files and info sheets Keep track of expiry dates and deadlines Find more information: BUDGpedia Share, learn, apply Unlocking the power of financial knowledge 92 The Expenditure Lifecycle (ELC) Share, learn, apply Unlocking the power of financial knowledge 93 Thank you Slide 1: music “And So It Begins” - Artificial.Music source - AudioLibrary – Youtube; Slide 48: source: Pixaby. 94