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Project Implementation Handbook

for the
Hungary-Croatia IPA Cross-border Co-operation Programme
2007-2013
CCI Number: 2007 CB16 IPO 003
Approved by the Managing Authority on 1 February 2013
Regarding the projects selected in the frame of the
3rd Call for Proposals

List of contents
1
Introduction, background ...............................................................................3
2
Responsibilities and tasks of the Lead Beneficiary.........................................4
2.1 Lead Beneficiary principle and co-operation among partners (practical guidance)..4
2.1.1 Partnership Agreement...........................................................................................5
2.2 Concluding the Subsidy Contract for EU Contribution.............................................6
2.2.1 Modification of the EU Contribution Subsidy Contract, other project changes.......11
2.3 Reporting and Reimbursement Process of the EU Contribution............................16
2.3.1 Preparation costs .................................................................................................16
2.3.2 Progress Report ...................................................................................................17
2.3.3 Preparation and content of the Application for Reimbursement ............................20
2.3.4 Procedure of reimbursement of EU Contribution ..................................................21
2.3.5 Final Project Progress Report...............................................................................22
2.3.6 Project Follow-up Report ......................................................................................24
2.3.7 Monitoring visits....................................................................................................25
3
ANNEXES .....................................................................................................26

1 Introduction, background
The Project Implementation Handbook of the Hungary-Croatia IPA Cross-border Cooperation Programme 2007-2013 was developed on programme level and based on the
followings:
COUNCIL REGULATION (EC) No 1085/2006 of the 17th of July 2006
establishing an Instrument for Pre-Accession Assistance (IPA);
COMMISSION REGULATION (EC) No 718/2007 of the 12th of June 2007
implementing Council Regulation (EC) No 1085/2006 of the 17th of July 2006
establishing an Instrument for Pre-Accession Assistance (IPA) (hereinafter
referred to as the IPA Implementing Regulation);


Hungary-Croatia IPA Cross-border Co-operation Programme 2007-2013,


approved by the European Commission on 13 March 2008, Decision No.
C(2008)911 (hereinafter referred to as the Programme);

Call for Proposals package of the 3rd Call for Proposals launched on 22
November 2011, with special attention to the Guidelines for Applicants and the
Handbook to Tourism Projects;

Experience gained during the implementation of the 1st and 2nd Call projects of
the Hungary-Croatia IPA CBC Programme and the past programmes: Interreg
IIIA in Hungary and Phare CBC in Croatia.

The Project Implementation Handbook is intended to guide Lead Beneficiaries (LB) and
Project Partners (PP) of operations in the implementation phase on questions related to
administrative and financial management, on monitoring, reporting and control
procedures and on other programme related requirements. It gives advice on questions
of general importance to all actions.
Should there be any amendments made to the Handbook due to legislative changes or
other requirements which influence implementation of already approved projects, they
will be available on the official website of the Hungary-Croatia IPA Cross-border Cooperation Programme 2007-2013, www.hu-hr-ipa.com.
For specific problems related to your project please contact the Joint Technical
Secretariat (JTS) for advice. You can find the contact details on the above-mentioned
official website.
We wish you success in the implementation of your project!

2 Responsibilities and tasks of the Lead Beneficiary


2.1 Lead Beneficiary principle
partners (practical guidance)

and

co-operation

among

All projects must follow the so-called Lead Beneficiary Principle:


The Lead Beneficiary principle introduces responsibilities on partner level, meaning that
each PP has its own responsibility till the limit of the tasks undertaken and funds
requested. The aim of this main programme level principle is to contribute to the proper
and effective functioning of cross-border partnerships, to emphasize the sustainable
cross-border co-operation leading to sustainable actions, results and impacts.
The LB shall be solely responsible towards the programme management structure for
the implementation of the terms of the EU Contribution Subsidy Contract, as well as for
the timely and correct reporting towards the JTS.
The delegated LB shall manage the project implementation process, shall co-ordinate
the work of the partnership, and shall fulfil administrative and professional tasks. The cooperation between the PP-s shall be established in order to serve the successful
implementation of project activities. The LB shall guarantee that the PP-s understand
and are aware of the activities that have to be fulfilled and shall find and develop the
most efficient way and source of communication.
The overall tasks of an LB are the following:


Conclusion of the EU Contribution Subsidy Contract;

Overall project co-ordination;

Activities linked to project management;

Continuous contact and information of PP-s on project progress;

Preparation of Progress Reports (PR) and Applications for Reimbursement (AfR);

Submission of the PR-s and AfR-s to the JTS and making revisions if required;

Receiving the EU contribution and transfer the relevant amounts to the PP-s;

Maintenance of separate accounting for project implementation purposes in a


manner ensuring the identification of each financial operation within the project;

Complying with European Union regulations and with the relevant national
legislation for the whole partnership, with special regard to public procurement,
State Aid, publicity, furthermore rules on sustainable development and equal
opportunities;

Handling irregularities;

Managing activities related to project closure;

Follow-up of the project results after project closure, ensuring the sustainability of
the project results.
.

2.1.1

Partnership Agreement

The LB and the PP-s shall lay down the arrangements for their relation and
responsibilities in the project in an agreement. As the EU Contribution Subsidy Contract
establishes a legal base between the Managing Authority (MA) and the LB, the
Partnership Agreement establishes a legal base between the LB and all PP-s;
accordingly, the LB should ensure that the Partnership Agreement has been signed by
all legally authorised representatives of the PP-s included in the partnership consortium.
The Partnership Agreement shall give an overview of the PPs role in the project,
activities to be fulfilled, timeframe of the activities, and relationship between the PP-s, as
well as the procedure used in case of disputes. The agreement shall be prepared in a
way to cover all the special situations that might occur during the project implementation
phase, as well as steps to be taken following project closure. The PP-s shall agree on
the ownership of the project results, on the ways to ensure the achievement and
sustainability of the project results, and on solutions regarding the handling of risk
situations. The PP-s shall be fully committed towards successful project implementation.
The Partnership Agreement lays down provisions regarding:


Activities of the LB and the PP-s in the Project,

Specific obligations of the LB,

Obligations of the PP-s,

Specific obligations of the Project Partners from Adjacent Region,

Responsibilities of the LB and of the PP-s,

Reporting obligations of the PP-s,

Audits,

Information and publicity,

Ownership Use of Results,

Changes in the project partnership,

Irregularities and the repayment of funds,

Co-operation with third parties, assignment.

It is important to point out that the Partnership Agreement can be further amended by
the PP-s. Modifications of the Partnership Agreement might cause the necessity of
modifications to the EU Contribution Subsidy Contract as well. Due to this LB-s and PP-s
are required to carefully plan the division of tasks and finances in the framework of their
partnerships.
In a case where the LB organisation is dissolved without a legal successor, the
maintenance of project results shall be ensured by the remaining PP(s) who have to
conclude a written agreement (property rights agreement) and have to submit it to the
MA while in parallel time notifying the JTS.
In a case where one of the PP-s is dissolved without a legal successor, the LB bears the
responsibility for reaching the written agreement (property rights agreement) with the
remaining PP(s), and it has to submit it to the MA while in parallel notifying the JTS. In
case there was only one PP in the project and it is dissolved, after the project

implementation the LB has to maintain the project results, of which it is obliged to inform
the MA and the JTS in an official letter.

2.2 Concluding the Subsidy Contract for EU Contribution


The EU Contribution Subsidy Contract is due to guarantee on one hand the rights and
obligations of the LB, on the other the rights and duties of the MA, being the responsible
body for the correct use of EU Contribution within the framework of the Programme.
After the Joint Monitoring Committee (JMC) decision, the EU Contribution Subsidy
Contract shall be concluded between the LB and the MA. As a first step the letter on
the award of subsidy issued by the MA, constituting the legal basis for contracting is
sent to the successful LB; it contains all relevant information and condition(s) essential
for contracting. For concluding the EU Contribution Subsidy Contract the LB has to
submit all listed documents and has to fulfil all conditions stipulated in the letter
on the award of subsidy, in general within 30 or 60 calendar days following the
receipt of the respective letter. The completion is calculated on the basis of the
date of the stamp of posting (in case of postal or courier service delivery) or on
the basis of the proof or receipt issued by the JTS (in case of personal delivery).
Upon negotiation between the LB and the JTS, the fulfilment of conditions can also be
accepted without request for missing documents within seven working days from the
receipt of documents submitted by the LB (see registry number (iktatszm) of VTI
Nonprofit Ltd. or proof or receipt issued by the JTS).
In duly justified cases, before the expiration date, the LB can ask the JTS in written
form for the extension of the deadline for fulfilment of contracting conditions only once,
for a maximum of 30 calendar days period.
Lack of complete fulfilment of stipulated documents and conditions after the expiration of
the deadline might result in the withdrawal of the awarded subsidy by the MA.
The documents listed in the letter on the award of subsidy for concluding the EU
Contribution Subsidy Contract which have to be submitted to the JTS are the following:
No

Document

Comment
Only relevant if the project was approved
with conditions.

1.

2.

(e.g. modified AF Sheets, other


documents, declarations,
explanations etc.)

Original documents connected to the


fulfilment of the conditions set by the JMC
for contracting in the form required in the
formulation of the conditions, each
document being certified by the legally
authorised representative of the LB (except
for letters of support / other declarations
which are issued by third parties).
Compulsory templates will be provided by
the JTS if applicable.

Information on eventual changes in


the data as supplied in the

In form of original declarations, certified by


the legally authorised representative of the

Original documents proving the


fulfilment of the conditions set by
the JMC in its co-financing decision

No

Document
application, concerning the LB or
any of the PP-s

Comment
individual LB/PP affected by the change(s).
There are no compulsory templates.

(e.g. name of legally authorised


representative, specimen of
signature, address, contact details
etc.; VAT status of Hungarian LB
and/or PPs)

Declarations on VAT status (only relevant in


Hungary) have only to be submitted if
changes have occurred since the
submission of the project proposal. (In these
cases the template of the VAT declaration
as published with the application package of
the 3rd Call for Proposals has to be used.)

3.

Original declarations of the LB and


of the PP-s, certified by the legally
authorised representative,
concerning the current nonexistence of the reasons for
exclusion as listed in Chapter 3.1.2
of the Guidelines for Applicants

4.

Updated spending forecast


according to the 4-month periods of
project implementation per each
PP / LB recipient of subsidy

5.

Data of the bank account opened


by the LB for the purposes of the
project in EUR currency

Declarations will have to be submitted only


for those organisations where changes in
the compliance with the exclusion criteria
have eventually occurred. There is no
compulsory template.
Cases when an organisation does not
submit a declaration, although it is not
anymore in compliance with the exclusion
criteria, shall belong under the legal
responsibility of the affected organisation.
The data have to be provided in an updated
Sheet 14 of the Application Form.
To be submitted in form of an original
statement signed by the bank. There is no
compulsory template.
Minimum data requirements: name and
address of bank, IBAN number and SWIFT
code of the account.
Only relevant if the signatory party to the EU
Contribution Subsidy Contract is not
identical with the person who certified the
AF.

6.

Original specimen of signature,


certified by a public notary, of the
legally authorised representative of
the LB

The document has to be original, meaning


that the stamp and signature of the public
notary are present on the document with
blue ink.
In case the person in question does not
possess a specimen of signature or in case
of local governments who would like to
submit a specimen of signature provided by
a bank, the same document can be
accepted which was deemed proper in the

No

Document

Comment
formal completion phase of the actual
project.
Compulsory for every project. The template
provided to the LB can be extended but the
compulsory content has to be present.

7.

Partnership Agreement, signed by


the LB and all PP-s
(Optional to sign for Associated
Partners.)

In case of substantial extensions the JTS


has to be consulted in order to avoid
contradictions between the extended
Partnership Agreement and provisions of
the Subsidy Contract and/or the applicable
Community and national legislation.
Three originals have to be submitted to the
JTS.

8.

Land or building registration


certificates

They have to be original documents (issued


and certified by the respective institution
which issues land or building registration
certificates) or copies, certified by a public
notary.
The certificates cannot be older than 30
calendar days and must be in the original
language.

9.

Legally binding building permit


documents

Environmental impact assessment


10. and environmental permits (if
relevant)

Approval of the responsible body


for the acceptance of the
intervention in the environment, or
11. approval of the responsible body
that the conduction of an
environmental assessment is not
relevant

They have to be originals or copies certified


by a public notary.
If relevant, the environmental permit already
is taken into consideration in the issuing of
the building permit in Hungary.
The documents have to be originals or
copies, certified by a public notary.
In case the works component is not subject
to permission procedures, the documents
certifying this fact should be requested.
Relevant only in Croatia. The document has
to be an original or a certified copy.
In the case of exemption from
environmental impact assessment, the
original approval (or a certified copy thereof)
of the responsible body can also be
accepted if it states that the conduction of
an environmental assessment is not
relevant in the respective case.

Among these documents the signing of the EU Contribution Subsidy Contract might be
conditioned based on the decision of the JMC as for instance presentation of a revised
budget or timeframe for the project. In case the project is approved conditionally by the
JMC, previous to contracting, the JTS will update the contract details and start the
negotiations on the fulfilment of the conditions in accordance with the JMC decision
within a specific deadline. In case the LB shall not be able to present and fulfil the
specified conditions, the programme management bodies shall withdraw from
contracting.
Through the contracting process the delegated programme manager / financial manager
of the JTS may request further additional information or completion of documents if
proven necessary for the proper understanding and approval of the submitted
documents. In general, in cases of completion of documents or further data for
concluding the EU Contribution Subsidy Contract, the JTS will ask the LB to submit
requested documents in 7 working days from the receipt of the documents submitted by
the LB.
If deemed necessary, the JTS and/or the MA can decide to carry out an on-the-spot visit
at the premises of the LB (and of the PP-s, if needed) or on other location(s) of
implementation. The main purpose of the on-the-spot visit is to check whether the
contents of the Application Form are in line with the findings of JTS/MA staff in case of
any irregularity and/or feasibility suspicion.
The on-the-spot visit is carried out on the date agreed with the LB. A letter of
commission is handed over to the LB, a signed copy of which is kept by the programme
manager. During the visit minutes are to be prepared (to be stored in the project
dossier), containing the observations of the JTS/MA staff.
If the content of the EU Contribution Subsidy Contract is agreed by the contracting
parties, it will be signed first by the MA and will be sent in 3 originals to the LB. The LB
has to sign it during 7 working days from the receipt of the contract from the JTS and
has to send back the Subsidy Contract in 2 originals either personally (with proof of
receipt) or by registered mail, certified (dated, stamped and signed) by the legal
representative of the LB organisation.

Concluding EU Contribution Subsidy Contract (SC)

Assessment of applications received

Decision on funding

Sending the letter on award of


subsidy to the LB

Updating the contact details,

LB

JTS

JTS
/
MA

Submitting the requested


documents
Checking the documents
submitted and the
fulfilment of conditions
(conditional approval of
project)

On-the-spot visit
(optional)

JTS

JMC

MA

JTS

requesting necessary documents


from the LB

Latest deadline for


signing the Partnership
Agreement

LB,
PP-s

Preparation of Subsidy
Contract

JTS

Signature of the Subsidy


Contract

MA

Signature of the Subsidy


Contract

Entering the SC into IMIS


2007-2013

LB

JTS

The EU Contribution Subsidy Contract shall serve as a basis for the monitoring activities,
and it is a core document in the event of settlement of disputes.
From the date of signature by the LB the contract enters into force and the project shall
start on the date indicated in the EU Contribution Subsidy Contract. The starting date
generally cannot be later than 2 months upon the signature of the contract. (At the same
time, a project can be started by the partnership also before the stipulation of the EU
Contribution Subsidy Contract but after the receipt of the project proposal by the JTS
see Chapter 3.3.1.1 of the Guidelines for Applicants.)

10

After signing the Subsidy Contract, the Applicant becomes a Lead Beneficiary
responsible for implementing the EU co-financed operation. All other PP-s are also
beneficiaries of European funds. If relevant, the LB and the PP-s will each sign a
separate contract for state contribution.
Please note that costs incurred during the implementation period of projects are
eligible in Croatia from 1 February 2013, the date from when the Financing
Agreement between the European Commission and the Republic of Croatia is
applicable.
2.2.1

Modification of the EU Contribution Subsidy Contract, other project


changes

Even if well planned and prepared, the implementation of a project might face the
necessity of modifications for several reasons. The LB has to request the modification
of the EU Contribution Subsidy Contract in case of substantial changes in the project
specified in the EU Contribution Subsidy Contract, which are the following:
a) changes in the composition of project partnership (excluding changes
related to Associated Partners);
b) substantial changes in the content of the project (resulting in a more than
20% deviation from the quantified outputs);
c) changes to activities (introducing new or replacing old ones);
d) budget reallocation between budget lines exceeding 20% of either
effected main budget lines1 and exceeding 5.000 EUR within the budget
of the LB or the particular Project Partner;
e) prolongation of the project duration.
Additional Project Partners above the number designated in the approved Application
Form cannot be included in the project. Furthermore, budget reallocation between PP-s
is not allowed.
The project changes with the corresponding outcomes are presented in the tables
below.
Modifications of the Subsidy Contract
a)

b)

Outcomes

Changes in the composition of project


partnership (e.g. replacement of
partner resigned/backed out from the

project);

Any other cases decided upon by MA


/ JTS to be considered by JMC.

Written approval of the JMC,


Addendum to the Subsidy Contract,
Revised Application Form.

Written approval of the MA and JTS (in

Main budget lines are: 1 Preparation costs; 2 Staff cost; 3 Travel and accommodation; 4 Service; 5
Equipment / Supply; 6.Investment / Works; 7 Administrative costs.

11

Modifications of the Subsidy Contract


c)

d)

e)
f)

Outcomes

Substantial changes in the content of


the project (resulting in a more than
20% deviation from the quantified
outputs);

Budget reallocation between main


budget lines exceeding 20% of
either budget line and exceeding
5.000 EUR within the budget of the
LB / PP;
Changes to activities (introducing
new ones or replacing old ones);
Prolongation of project duration2
within the maximum project duration
as defined in the Guidelines for
Applicants.

Other changes

Outcomes

a) Changes in the LB data (e.g. contact


person, address, bank account);
b) Changes in the content of the project

(resulting in 20% or less than 20%


deviation from the quantified outputs;
e.g. output, result, indicator);
c) Changes in the activities of the project
(e.g. slight changes in the terms or
quality);
d) changes in the timeframe of the
project
(shortening
the
project
duration which does not affect the
number of implementation periods);
e) Budget reallocation between budget
lines not exceeding 20% of either
effected main budget lines or not
exceeding 5.000 EUR within the
budget of the particular LB/PP.
f)

Changes in the PP data (contact


persons, etc.);

consultation with first level controllers,


if necessary),
Addendum to the Subsidy Contract,
Revised Application Form.

Request for other changes in the


project, submitted by the LB to the JTS
and confirmed by JTS;
Revised Application Form.

- Approval of the respective Control Body.

Prolongation of project implementation/duration over the maximum project duration period as defined in
rd
the Guidelines for Applicants for the 3 Call for Proposals / Handbook to Tourism projects is not possible
rd
for projects selected within the framework of the 3 Call for Proposals.

12

g) Changes in the project management


staff;
h) Changes in the PP bank account.

Any budget modification should be carefully prepared by involving all PP-s and by
clarifying their needs.
The limit of budget reallocation is calculated from the concluded original EU
Contribution Subsidy Contract, so the accumulation of changes is counted together
and rules are applied accordingly. By its nature, any increase of budget of a budget
line(s) on one side leads to a reduction of budget of other budget line(s) on the other
side, therefore each affected budget line is taken into consideration, in line with the
respective rule.
Given the case of a project that wants to do budget increases within the 20% limit:

Budget line

Original
budget

Modified
budget

Increased
amount

EU
Contribution
Subsidy
Contract rule

Approval
by

4 Service

20 000 EUR

22 000 EUR

2 000 EUR

10% increase

JTS

98 000 EUR

2 000 EUR

2% decrease

JTS

5 Equipment
100 000 EUR
/ Supply

The following requests for increase will be subject to a case-by-case decision by the MA:

Budget line

Original
budget

Modified
budget

Increased
amount

EU
Contribution
Subsidy
Contract rule

Approval
by

4 Service

20 000 EUR

30 000 EUR

10 000 EUR

50% increase

MA

90 000 EUR

10 000 EUR

10% decrease MA

5 Equipment
100 000 EUR
/ Supply

All indicated changes in the project have to respect the rules of the Call for Proposals as
laid down in the Guidelines for Applicants, meaning that if a limit for a certain type of cost
had been given in the Guidelines for Applicants, the notified (initiated) change also has
to respect the limit.

13

The PP-s have to bear in mind that new activities cannot be budgeted in the project.
Also, in general, budget items which have been affected by budget cuts are not eligible
for the increase of their amount.
Modifications of the Subsidy Contract
Maximum project duration, defined per Actions in the Guidelines for Applicants for
the 3rd Call for Proposals / Handbook to Tourism projects for the projects selected within
the framework of the 3rd Call for Proposals, cannot be exceeded.
Subsidy Contract modification can be requested only once during the project life
cycle for projects whose duration is up to 12 months, while for those projects
whose duration is 16 to 24 months, modifications can be made two times.
(Concerning these longer projects it is possible to request one modification in the first 12
months of implementation and one in the remaining period.)
In any case the request for modification has to be submitted to the JTS at least 45
calendar days before the project end date (end of the last reporting period), as well as
45 calendar days before the end of any of the reporting periods. Requests for Subsidy
contract modification which are submitted after these deadlines will be subject to
automatic rejection.
Any request for modification of the EU contribution Subsidy Contract has to be justified
and submitted by the LB to the JTS in a written form using the given form (Annex 1,
Request for Subsidy Contract modification). The JTS will revise the request of
modification and in the above-detailed cases will submit it for approval to the MA or the
JMC, depending on the type of the modification requested.
After the approval of the MA/JMC the finalised Addendum to the EU Contribution
Subsidy Contract has to be signed by both parties (i.e. LB and MA). The date from which
the changes contained in the Addendum shall be effective is to be identified in the text of
the Addendum.
It is important to note that modification of the EU Contribution Subsidy Contract needs
approximately 30 calendar days in regular cases, and the verification of costs on project
part level is not possible if the content of the modification is related to the given reporting
period.
Other project changes
Other changes in the project will not require EU Contribution Subsidy Contract
modification, but the LB has to notify in written the JTS, within maximum 30 calendar
days before the end date of the project (end of last reporting period) and within
maximum 30 days before the end of the any of the reporting periods. Requests for other
changes, submitted after these deadlines for will be subject to automatic rejection.
In every case the JTS has to confirm that the project change is accepted. The
confirmation on acceptance shall explicitly identify the date from which the project
change is effective. This date cannot be earlier than the starting date of the

14

reporting period in which the given change has been requested. Before the
changes are proposed by the LB to the JTS for confirmation, it is advised for the
respective PP to discuss the changes in question with the designated first level
controllers.
Please note that only the LB is entitled to request and discuss other changes from the
designated programme manager / project manager of the JTS the PP-s have to
discuss and finalise the request for other changes with the LB who is responsible for
channelling information and documents with the JTS.
In general, the LB is entitled to initiate only one round of administration of other changes
only once during the project life cycle for projects whose duration is up to 12 months,
while for those projects whose duration is 16 to 24 months, changes can be made two
times. (In case of these longer projects it is possible to request one change in the first 12
months of implementation and one in the remaining period.) Exceptions are possible
only in duly justified and urgent cases (i.e. Subsidy Contract addendum has not been
requested at all) or in case changes are affecting LB/PP data (referred to as type a,
Changes in the partner data; e.g. in AF or change of the separate project bank account).
Procedure wise the initiation of other changes is the following:

The LB fills in Annex 2, Request for other changes in the project, officially
certifies it and sends it in scanned form to the respective JTS programme
manager via e-mail; (in case content wise confirmation of the changes will be
needed, it is advised to send the proposal to the programme manager in Word
format preceding the signature of the request, for the discussion of possible
solutions);

The respective programme manager of the JTS sends back the confirmed
decision on the signed and scanned Request for other changes in the project
document to the LB via e-mail, indicating the confirmation or rejection of the
requested other changes;

The LB informs the respective PP(s) about the outcome of the request by
sending them the scanned Annex 2, Request for other changes in the project
document;

In case of a confirmed request, the programme manager of the JTS informs the
respective first level controllers of the related PP(s) about the outcome of the
request by sending the scanned Annex 2, Request for other changes in the
project document via e-mail.

The LB has to officially, in written form notify the JTS in case of a change in the separate
project bank account within 15 calendar days counted from the change incurred, or with
the submission of the Application for Reimbursement at the latest. In case the LB fails to
properly inform the JTS on the details of its separate project bank account, all
consequences, including those of financial nature, shall be borne by the LB.

15

2.3

Reporting and Reimbursement Process of the EU


Contribution

The payment of EU Contribution is connected to the submission and approval of PR-s.


The aim of the PR-s is to present the progress in the implementation of the project and
the way PP-s acted in order to obtain these results. The PR furthermore underpins the
content of the Application for Reimbursement, proving that the costs incurred are directly
linked to the tasks and activities stipulated in the EU Contribution Subsidy Contract.
Each PR submitted to the JTS will have to be prepared by the LB and will have to be
accompanied by an Application for Reimbursement which indicates the amount of EU
Contribution the PP-s are requesting for reimbursement. An essential condition of the
transfer of EU Contribution is the timely submission of PR-s in the right format and with
the correct information, together with the necessary supporting documents / annexes. In
case of delays in submitting the PR and AfR (or request for modification in due time)
defined in Article 4.14 of the EU Contribution Subsidy Contract, or in case multiple
completions of the PR and/or AfR are required attributable to the LP and/or any of the
PP-s, the MA is entitled to apply a proportional reduction to costs related to project
management up to 25%.
The PR-s shall be submitted on a regular basis according to the dates specified in the
EU Contribution Subsidy Contract. In order to help the successful preparation of the PRs, the Head of JTS nominates a programme manager for each project, being the
responsible colleague for the proper follow-up of a given project. The programme
manager sends an e-mail to the LB 30 calendar days before each PR / AfR submission
deadline as defined in the EU Contribution Subsidy Contract.
Following the receipt of the notification, the LB shall inform the PP-s on the required and
necessary partner level information to be introduced in the PR. To support the work of
the LB, all PP-s shall submit the partner level activity report and its annexes which were
previously submitted and approved by the nominated first level controllers.
Additional obligatory deadlines to submit an Application for Reimbursement above those
regulated in Article 4.14 of the Contribution Subsidy Contract may be set by the MA in
order to avoid decommitment of EU contribution at programme level.
The EU Contribution will be transferred directly to the LBs bank account (sub-account)
exclusively opened for the project.
2.3.1 Preparation costs
Preparation costs represent special eligible expenditure which may incur in the
preparation / development phase of the project These costs entangle activities achieved
before the start date of the project as stipulated in the Subsidy Contract.
Preparation costs can only be eligible if they were incurred on or after 1 January 2007
for projects or parts of projects implemented in Hungary, and for projects or parts of
projects implemented in Croatia on or after the date of the signature of the Financing
Agreements (1 December 2008 and 25 March 2011), furthermore for both countries
before the start date of the project.
Only budget lines foreseen in the Application Form and only PP-s affected by the
preparation costs according to the AF can be considered entitled for the reimbursement
of these costs.

16

During project implementation, in general, preparation costs cannot be reallocated to


any other sub-budget line if not reimbursed, and they can only be reimbursed during the
first Project PR.
2.3.2 Progress Report
At the end of each reporting period of the implementation (after every 4 months), the LB
will have to prepare a Project PR, informing the programme management bodies about
the activities carried out and the expenditure that has occurred since the last reporting.
In order to elaborate a comprehensive report, the LB will have to gather data and
documents regarding the entire project from all PP-s, they also will have to prepare their
own Partner Reports concerning their part of the activities implemented, necessary for
the validation of their own expenditures by the Control Bodies. The PP-s should be
aware that this is a time- and resource consuming process, therefore the precise
preparation of the documents is essential for the successful reimbursement process.
With the submission of the PR (which includes an activity- and a financial report as well)
the LB has to submit the AfR, the Declaration on Validation of Expenditure (DOVE) and
documents relevant for the given period, for every project part, as well as other relevant
compulsory annexes, supporting documents etc.
The deadline for the LB to submit to the JTS the PR and the AfR for each four-month
reporting period is 90 calendar days from the end date of each reporting period. The
project starting date wherefrom the reporting periods are counted, the reporting periods
and the actual deadlines for submission are indicated in the EU Contribution Subsidy
Contract.
Preparation and content of the Project PR, procedures
The Project PR is developed and required in order to follow regularly the implementation
of project activities in a given period of time. The report shall provide an overview of the
project implementation status as well as present the inefficiencies and unaccomplishments (deviations, delays) in comparison with the planned project evolution
presented in the EU Contribution Subsidy Contract. On programme level the report shall
serve as an information source on the progress of the Programme towards the European
Commission and programme management structure.
The Project PR has two main parts: a technical- and a financial report. The technical
part shall contain information on the steps taken in the given reported period regarding
the professional implementation of the project, emphasising especially the following:
-

presentation of the ongoing and implemented activities (including activities


related to EU horizontal policy on equal opportunities and sustainable
development);

presentation of the process on choosing the designated sub-contractors;

progress in the fulfilment of the project indicators;

comparison of initially established targets and those achieved;

differences / deviations in terms of activities and timeframe;

problems encountered within the partnership;

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presentation of the information and publicity actions;

presentation of the changes in the project.

The financial report shall contain information and give a general overview on the
expenditure incurred by the activities implemented in the reporting period. The report
must contain information on the expenditure paid out during the reporting period,
supported by invoices or accounting documents of equivalent probative value and
validated by the controllers in the frame of the first level control process. The LB shall
ensure that the expenditure presented by the PP-s for reimbursement is not double
financed, is in compliance with the principle of sound financial management and is
included in the approved budget of the project. The financial report shall present the
costs incurred and revenues gained in the reported period on partner level main
budgetary lines, a summary on project level only on main budgetary lines. This part shall
contain also information on the transfer of the EU Contribution by the LB to the PP-s
regarding the preceding reporting period.
The following documents are to be submitted with the Project Progress Report:
1. Declaration on Validation of Expenditure of all PP-s (in this respect the LB is also
a PP) uploading of the scanned versions of the originally certified DOVE-s to
the Monitoring and Information System (IMIS) and submission of the original
documents in hard copy as well;
2. Documents supporting the reported progress related to the indicators planned on
Sheet 10 of the Application Form (e.g. in form of own declarations, photos,
newspaper articles etc.) with clear reference to the given indicator specified in
the Application Form, to be submitted in hard copy where both pages have to
bear the signature of the LB;
3. One issue/piece of the published publication, brochure, book, study, database
etc. in hard copy and in electronic format (on CD-Rom, DVD or pen drive) with
clear reference to the original activity indicated in the Application Form;
4. Photo documentation of the works or equipment/supplies in electronic format (on
CD-Rom, DVD or pen drive) with clear reference to Sheet 16 of the Application
Form (Location of works) and/or to budget line 5 and 6 (Equipment/Supply
Investment/Works) of the individual PPs budgets (AF Sheets 11), if relevant;
5. Bank statement of the LB proving the transfer of EU Contribution to PP-s (related
to the antecedent reporting period) in hard copy, if relevant.
The language of reporting is English.
Please note that the Project PR, the AfR, as well as all other relevant supporting
documents have to be certified by the LB.
Deadlines for submitting the Project PR, the AfR and the supporting documents through
the IMIS are to be in line with the deadlines indicated in the EU Contribution Subsidy
Contract (Article 4, point 14). The spending forecasts indicated in Article 4 point 14 must

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be respected. In case of deviation from the spending forecasts the MA is entitled to


decommit the project by reducing the original project budget and the corresponding EU
contribution if underspending compared to the spending forecast result in n+3
decommitment.
The hard copy format of the Project PR (in one original certified copy), AfR (in two
original certified copies) and its compulsory annexes, either in hard copy or recorded
in electronic form (on CD-Rom, DVD or pen drive), shall be submitted to the JTS in line
with the deadlines indicated in the EU Contribution Subsidy Contract (Article 4, point 14).
The date on the stamp of the post office where the package was submitted will prove the
keeping of the submission deadline.
The Project PR, the AfR and all other relevant supporting documents should be sent to
the following postal address:
VTI Nonprofit Kft.
HUNGARY-CROATIA JOINT TECHNICAL SECRETARIAT
Gellrthegy u. 30-32, 1016 Budapest, Hungary
The envelope has to be sealed and properly marked in such a way that it includes all
these elements:

The full name and address of the LB


The project ID number (HUHR/1101//)
The acronym of the project proposal (as indicated in the Application Form)
the wording: Do not open Project Progress Report and Application for
Reimbursement for the Hungary-Croatia IPA Cross-Border Co-operation
Programme 2007-2013

Following the receipt of the documents, the nominated programme manager / financial
manager starts the necessary formal and technical (professional) verification. Through
the verification process the delegated manager of the JTS may request further additional
information or the completion of documents if that will be necessary for the proper
understanding and approval of the submitted documents. The verification process stops
in case a completion of documents or further data are needed for decision.
The verification process is divided into two main phases: verification of the Project PR
and verification of the AfR. The documents will be considered ready to be forwarded to
the next step of the reimbursement process only in case both the Project PR and the
AfR are checked and approved.
The verification of the documents starts with the formal and technical check. In the
verification process of the Project PR, special attention will be paid to the following:
Technical check:
-

Activities detailed in the Project PR correspond with the approved application and
the Subsidy Contract;

the objectives of the project described in the application are completed within the
given activities in the reporting period;

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the indicators reported in the application are in accordance with the progress of
the project implementation;

the progress of the project is in line with the time plan stated in the approved
application;

the activities have been implemented by the assigned PP-s indicated in the
application;

the obligations for information and publicity are completed,

the obligations for horizontal policies are met.

Financial check:
-

The expenditure stated in the report is in line with the items approved in the
budget;

the financial report is in line with the DOVE-s submitted with the Project PR (e.g.
do not contain calculation mistakes; the costs affected by State Aid stipulations
are concerned, revenues are deducted).

In case the Project PR is not appropriate in content and/or in its format, the programme
manager of the JTS shall request for completion or for further documents that shall
clarify the content questions. The LB has 7 working days at its disposal after receiving
the notice to submit the required clarifications and/or missing documents. The
documents may be submitted according to the needs by post, fax or in electronic form.
(In general, completed / corrected documents have to be submitted in the way and form
as it is described for the given type of document in this section.) If the LB does not
respond to the request of the JTS to complete the missing documents, the delegated
programme manager shall send a warning notice again, emphasizing the expected
consequences. After the second, unsuccessful notice the Project PR and the AfR will be
rejected.
2.3.3 Preparation and content of the Application for Reimbursement
The AfR shall be prepared and shall summarize the expenditure incurred by the LB / PPs following their approval in the frame of the control process by the designated first level
controllers. The reimbursement shall cover costs arisen by PP-s in a given period of time
and shall incorporate the amount planned to be reimbursed from EU Contribution.
The AfR submitted by the LB shall contain only validated expenditure and shall be
supported by the DOVE-s issued by the Control Bodies. The LB shall ensure that the
expenditure presented by the PP-s participating in the project has been incurred for the
purpose of implementing the project and that it corresponds to the activities agreed
between those PP-s.
In case the DOVE-s are not received from each PP for a given reporting period, the LB
shall submit the AfR on the basis of the DOVE-s that are available for the reporting
deadline. The expenditure of the PP-s not validated for the given reporting period within
the deadline can be requested only for the next reporting deadline to the reporting period
concerned.
The AfR shall be filled in and submitted electronically as well as in paper format (in two
original signed copies where both pages have to bear the signature of the LB) with its
compulsory annexes to the JTS together with the Project PR. The AfR shall be prepared

20

in the required format, having calculations set in EUR for the given reported period. The
document shall be submitted to the JTS having as compulsory annexes the DOVE-s for
PP-s where costs were incurred. In the verification process of the AfR special attention
will be paid to the following aspects:
a) The AfR does not contain any formal or calculation mistakes and is in line with the
DOVE-s received;
b) The DOVE for each PP indicated in the AfR is attached to it;
c) The DOVE-s do not contain any formal or calculation mistakes;
d) The DOVE-s are issued by the designated controllers and signed by the authorized
person;
e) The subsidy requested in the AfR is within the frame of the approved amount of
subsidy.
In case the AfR or the DOVE-s are not appropriate in content and/or in format, the LB
will be required in writing to correct the discovered mistakes. The LB has 7 working days
at its disposal after receiving the notice to correct the mistakes and to submit the
corrected documents. If the LB does not respond to the request of the JTS to complete
the missing documents, a renewed warning notice (5 working days after the deadline for
submitting the missing documents expired) shall be sent out, emphasizing the expected
consequences. After the second, unsuccessful notice the PR and the AfR will be
rejected and the LB notified.
Handling deductions from the AfR:
The amount of the AfR shall be reduced and the DOVE has to be reissued due to the
following reasons:
a) Ineligible expenditure in the actual PR;
b) DOVE not issued by the designated controller or not signed by the responsible
person in the respective Control Body.
In case of any correction to the amount of the AfR the LB has to reissue and sign the
AfR in order to ensure that the LB is aware of the accepted amount.
In case the JTS does not receive the corrected and signed DOVE and AfR within 30
calendar days from the notification of the LB at the latest, the total amount of the given
DOVE will be deducted from the AfR.
Any financial correction of requested EU Contribution related to irregularities in previous
periods has to be made at this point as well.
2.3.4 Procedure of reimbursement of EU Contribution
Once the monitoring of the PR and AfR has been completed, the JTS is in charge of
initiating the payment of the EU Contribution to the LB through the Financial Transfer
Unit (FTU).
The MA, after having verified that all contractual clauses and other requirements of the
audit trail have been respected, will make arrangements in co-operation with the
Certifying Authority for the availability of the EU Contribution and they will transfer the

21

requested payment to the FTU. Finally the FTU will launch the payment procedure for
the amount claimed from the EU Contribution to the LBs bank account (sub-account),
exclusively opened for the project.
It should be noted that the controls performed by the MA may result in additional
requests for clarification to the LB even if the report was technically approved by the
JTS.
After receiving the EU Contribution the LB is obliged to transfer in time and in full the
share of the EU Contribution that corresponds to each PP according to the approved
AfR, within the timeframe agreed in the signed Partnership Agreement. In case there are
specific national rules concerning the use of the national currency, the LB has to comply
with these rules while not violating the provisions of Article 40 of the IPA Implementing
Regulation. Assistance to the LB-s such transfers of EU contribution are specified in the
national level Project Partner Guidelines.(Applicable only in case of Croatian LB-s).
2.3.5 Final Project Progress Report
The JTS programme manager sends an e-mail to the LB 30 calendar days before the
deadline for submission of the Final PR and AfR, as well as the listed requirements that
have to be fulfilled as defined in the concluded Subsidy Contract.
The LB has to submit the Final PR and AfR within 90 calendar days from the end date of
the project as indicated in the EU Contribution Subsidy Contract. The Final PR has to be
submitted in the pre-defined format. The JTS verifies the Final PR submitted and checks
whether all the activities are fulfilled according to the approved Application Form, and
whether all the requirements arising from the EU Contribution Subsidy Contract are
fulfilled. If the Final PPR is not appropriate in content and/or in its format, the programme
manager asks the LB in writing (by e-mail or by fax/post, if needed) to submit the
missing documents and/or to clarify the content questions. The LB has 7 working days
after receiving the notice to submit the clarifications and/or missing documents. The
documents may be submitted according to the needs by post, fax or in electronic form
(in general, completed / corrected documents have to be submitted in the way and form
as it is described for the type of document in this section).
The following documents are to be submitted with the Final PR:
1. DOVE of all PP-s (from this respect the LB is also a PP) uploading the scanned
versions of the originally certified DOVE-s to the IMIS and submission of the
original documents in hard copy as well;
2. Documents supporting the reported progress related to the indicators planned on
Sheet 10 of the Application Form (e.g. in form of own declarations, photos,
newspaper articles, etc.) with clear reference to the given indicator specified in
the Application Form; documents are to be submitted in hard copy;
3. One issue/piece of the published publication, brochure, book, study, database
etc. in hard copy and in electronic format (on CD-Rom, DVD or pen drive) with
clear reference to the original activity indicated in the Application Form;
4. Photo documentation of the works or equipment/ supplies in electronic format (on
CD-Rom, DVD or pen drive) with clear reference to Sheet 16 of the Application

22

Form (Location of works) and/or to budget line 5 and 6 (Equipment/Supply


Investment/Works) of the individual PPs budgets (AF Sheets 11), if relevant;
5. Bank statement of the LB proving the transfer of EU Contribution to PP-s (related
to the antecedent reporting period) in hard copy, if relevant.
6. Valid permission of use (hasznlatba vteli engedly / uporabna dozvola); record
of the technological delivery session (mszaki tads-tvteli nyilatkozat /
zapisnik o primopredaji radova); any other permits prescribed by regulations, if
relevant;
7. Other project specific documents described by the JTS, if relevant.
The language of reporting is English.
Please note that the Final PR, the AfR, as well as all other relevant supporting
documents have to be certified by the LB.
Deadlines for submitting the Final PR, the AfR and the supporting documents through
the IMIS are to be in line with the deadlines indicated in the EU Contribution Subsidy
Contract (Article 4, point 14).
The hard copy format of the Final PR (in one original certified copy), AfR (in two
original certified copies where both pages have to bear the signature of the LB)
and the compulsory annexes either in hard copy or recorded in electronic form (on CDRom, DVD or pen drive) shall be submitted to the JTS in line with the deadlines
indicated in the EU Contribution Subsidy Contract (Article 4, point 14). The date on the
stamp of the post office where the package was submitted will prove the keeping of the
submission deadline.
The Final PR, AfR and all other relevant supporting documents should be sent to the
following postal address:
VTI Nonprofit Kft.
HUNGARY-CROATIA JOINT TECHNICAL SECRETARIAT
Gellrthegy u. 30-32, 1016 Budapest, Hungary
The envelope has to be sealed and properly marked in such a way that it includes all
these elements:

The full name and address of the LB


The project ID number (HUHR/1101.//)
The acronym of the project proposal (as indicated in the Application Form)
the wording: Do not open Final Project Progress Report and Application for
Reimbursement for the Hungary-Croatia IPA Cross-Border Co-operation
Programme 2007-2013

If the LB does not fulfil the request for the missing documents, the JTS programme
manager sends a warning notice again. After the second, unsuccessful notice the
Final PR and the final AfR will be rejected and the LB will be informed about the
possible/applied sanctions (e.g. suspension of last payment, repayment of subsidy,

23

withdrawal from Subsidy Contract). If the Final PR contains ineligible expenditures, the
amount of these shall be deducted from the AfR.
The project closure procedure, as the final step of the project implementation period,
means the procedure related to the payment of the EU Contribution based on the final
AfR. While project closing, the JTS verifies the Final PR submitted by the LB and checks
whether all activities are fulfilled according to the approved Application Form, and
whether all requirements arising from the EU Contribution Subsidy Contract are fulfilled.
(E.g. the project has been fully implemented by carrying out the planned activities, the
planned outputs and results, the project is developed in due time, etc.) Following the
approval of the Final PR the JTS initiates the financial closing of the project in the IMIS
in order to calculate the exact amount of EU Contribution to be paid to the project.
After the final payment to the LB the project is considered closed and the LB is informed
about the closure within 5 calendar days after approval of the AfR by the Certifying
Authority. The project folders are also archived. Financial closing cannot be initiated in
case other processes such as irregularity and recovery procedures related to the project
are not closed.
While the project is considered closed, the project data in the IMIS are available for
further audits during the programme period and after 3 years from the closure date of the
Programme. During this period, irregularity procedures and repayments can be initiated
related to the project.
2.3.6 Project Follow-up Report
The project retains the EU Contribution only if it does not, within five years from the end
date the project, undergo a substantial modification
a) affecting its nature or its implementation conditions or giving to a firm or a
public body an undue advantage;
b) resulting either from a change in the nature of ownership of an item of
infrastructure or the cessation of a productive activity.
The LB is obliged to notify the JTS of any such changes described beforehand.
In general outputs and results of the project and budget items in budget line 5
(Equipment/Supply) and 6 (Investment/Works) are considered to be subject to the
obligation for sustainment, which can be deviated by the JTS at the time of the closure of
the project. The JTS considers the depreciation of the budget item, the importance of the
given output/result and the aim of the project among other circumstances when deciding
about deviation.
The Project Follow-up Reports have to be filled by the LB-s after they finished their
projects successfully. In this report the LB submits professional and financial information
about indicators in the project, their effect on the partnership co-operation, generated
revenues etc. in order to prove to the JTS the sustenance of the project outputs.
Project Follow-up Reports shall cover 12-month periods from the end date of the project
and shall be submitted to the JTS within 15 calendar days from the end of these periods.
If the Project Follow-up Report is not appropriate in content and/or in its format, the JTS
programme manager asks the LB in writing (by e-mail or by fax/post, if needed) to

24

complete it. The LB has 7 working days after receiving the notice to submit the
clarifications and/or missing documents.
Even if the project was closed, all the activities were implemented, the Final PR was
accepted and the final payment claim was paid, the obligations of the beneficiaries
towards the Programme are not totally fulfilled. There are still some tasks to be
completed by the LB and the PP-s, such as keeping the project documentation in a safe
place for the possible second level control or controls from the European institutions, or
preparing and submitting the Project Follow-up Reports. Additional financial controls are
still possible during the entire programme period and three years after the programme
closure (expected date 2021), and the PP-s shall be able to provide documentation
proving expenditure incurred and payments received.
2.3.7 Monitoring visits
The JTS performs monitoring visits in order to check the progress of the project from a
professional point of view. The monitoring visit takes place at least once during the
implementation period, or multiple times, if necessary. The visit may also be
connected to a project event where the PP-s are participating. The goal of the visit is for
the JTS to check the professional accomplishment and the reality of the project, and it
also provides possibility for the partners for project consultation. The monitoring visit is
not considered as an audit but it contains checking criteria related to the implementation
of the project. Therefore the JTS can propose specific actions, including suspending
payments or withdrawal from the Subsidy Contract, in case the project implementation is
significantly different from the objectives indicated in the Subsidy Contract, or if an
irregularity is suspected.
The aim of the monitoring visit:
On-the-spot monitoring of the project progress, personal consultation of problems
occurred as well as identifying reasons of significant delay (if any);
To clarify and gain more information about occurred professional/technological
changes in the project (e.g. to gain sufficient information for a modification of the
EU Contribution Subsidy Contract);
To clarify information included in the Project PR, Final PR and Project Follow-up
Report in case there are conflicting or not properly elaborated data;
To visit the main or important event(s) of the project;

The enquiry of obligations borne on the PP-s connected to the implementation of


the project (e.g. publicity, safekeeping of documents etc.)

In case of investment projects a preliminary monitoring visit can be organised to check


the level of readiness before concluding the Subsidy Contract.
The JTS notifies the LB (by e-mail or by fax/post) about the monitoring visit and the
proposed date at least 5 calendar days before the monitoring visit.
As a result of the monitoring visit the JTS programme manager prepares a report on the
monitoring visit, to which he or she attaches the attendance sheet of the event (if
relevant), signed by all participants.

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3 ANNEXES
Annex 1: Request for Subsidy Contract modification
Annex 2: Request for other changes in the project

26