Bosnia and Herzegovina / South East Europe (SEE) Transnational Cooperation Programme – Control Guidelines at national level
Ministry of Finance and Treasury (MoFT
Sector for financingEU programmes and projects (CFCU) / Version 2 / Date: February 2013 / Page 1 of 43

BOSNA I HERCEGOVINA БОСНА И ХЕРЦЕГОВИНА

MINISTARSTVO FINANCIJA/ MИНИСТАРСТВО ФИНАНСИЈА

FINANSIJA I TREZORA И ТРЕЗОРА

BOSNIA AND HERZEGOVINA

MINISTRY OF FINANCE

Control Guidelines at national level

National First Level Control Office (FLCO)

South East Europe (SEE) Transnational Cooperation Programme

Version 1.0, June 2012

Version 2.0 February 2013

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Bosnia and Herzegovina / South East Europe (SEE) Transnational Cooperation Programme – Control Guidelines at national level
Ministry of Finance and Treasury (MoFT
Sector for financingEU programmes and projects (CFCU) / Version 2 / Date: February 2013 / Page 1 of 43

TABLE OF CONTENTS

1.INTRODUCTION

2.LEGAL BASIS...... 6

2.1EU LEGISLATION...... 6

2.2NATIONAL LEGISLATION...... 7

2.3PROGRAMME RULES

3.STATE CO-FINANCING

4.FIRST LEVEL CONTROL IN BOSNIA AND HERZEGOVINA

5.CONTROL PROCEDURE IN SEE PROGRAMME

6.REPORTING

6.1BASIC RULES

6.1.1.Deadline for the submission of reports

6.1.2Language

6.1.3Currency

6.1.4Lead Partner (LP) principle

6.1.5Principle of reimbursement

6.1.6Progress Report from Project Partner to First Level Controllers

6.1.6.1.Reporting schedule

6.1.6.2 Nature of report

6.1.6.3 Report template

6.1.6.4 Reporting flow

6.1.6.5 Declaration on Validation of Expenditure (DVE)

6.2DEADLINE FOR REPORTING

6.3DEADLINE FOR THE EXECUTION OF FIRST LEVEL CONTROL

7.BASIC RULES RELATED TO THE ELIGIBILITY OF COSTS

7.1ELIGIBILITY RELATED TO AREA AND TIMEFRAME

7.2GENERAL PRINCIPLES AND RULES RELATED TO ELIGIBILITY

7.2.1Preparation costs

7.2.2EC regulations relevant for the eligibility of expenditure - ERDF

7.2.3EC regulations relevant for the eligibility of expenditure - IPA

7.2.4General principles

7.3INELIGIBLE COSTS

7.4VALUE ADDED TAX (VAT)

7.5RULES ON EXCHANGE RATES

7.6ACCOUNTING FOR THE PROJECT

8.TRANSFER OF FUNDS

8.1PRE-FINANCING

8.2APPLICATIONS FOR REIMBURSEMENT

9.TYPES OF DOCUMENTS REQUIRED FOR EXPENSES TO BE ELIGIBLE

9.1Staff costs

9.2Overheads

9.3Travel and accommodation costs

9.4External expertise and services

9.5Equipment

9.6Small scale investments

9.7Financial charges and guarantee costs

10.RETENTION OF DOCUMENTS

11.PUBLIC PROCUREMENT

12.PROJECT CHANGES

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Bosnia and Herzegovina / South East Europe (SEE) Transnational Cooperation Programme – Control Guidelines at national level
Ministry of Finance and Treasury (MoFT
Sector for financingEU programmes and projects (CFCU) / Version 2 / Date: February 2013 / Page 1 of 43

List of abbreviations (in alphabetical order)

AF / Application Form
AfR / Application for Reimbursement
AR / Activity Report
BIC / Bank Identification Code
BiH / Bosnia and Herzegovina
BL / Budget Line
CA / Certifying Authority
CBC / Cross Border Co-operation
CF / Cohesion Fund
CFCU / Central Financing and Contracting Unit
CfP / Call for Proposals
DEI / Directorate for European Integration
DVE / Declaration on Validation of Expenditure
EC / European Commission
ERDF / European Regional Development Fund
ESF / European Social Fund
EU / European Union
FA / Financing Agreement
FLC / First Level Control(ler)
FLCO / First Level Control Office
FR / Financial Report
FTU / Financial Transfer Unit
FWA / Framework Agreement
IBAN / International Bank Account Number
IPA / Instrument for Pre-accession Assistance
IPA IR / Implementing Regulations of the Instrument for Pre-accession Assistance
JTS / Joint Technical Secretariat
LPA / Lead Partner
MA / Managing Authority
MC / Monitoring Committee
MIS / Management Information System
MoFT / Ministry of Finance and Treasury
MS / MemberState (of the European Union)
NCP / National Contact Point
PP / Project Partner
PR / Progress Report
SEE / South East Europe Programme
TA / Technical Assistance
VAT / Value added tax
WP / Work Package

1

Bosnia and Herzegovina / South East Europe (SEE) Transnational Cooperation Programme – Control Guidelines at national level
Ministry of Finance and Treasury (MoFT
Sector for financing EU programmes and projects (CFCU) / Version 2 / Date: February 2013 / Page 1 of 43

1.INTRODUCTION

These Control Guidelines at national level for Project Partners (PP) from Bosnia and Herzegovina (B&H) who participate in projects funded under the South East Europe (SEE) Transnational Cooperation Programme (hereinafter “the Programme”) have been developed by the Central Financing and Contracting Unit (CFCU) within the Ministry of Finance and Treasury (MoFT) in its role as national First Level Control Office (FLCO) for cross border cooperation (CBC) programmes implemented under shared management.

These guidelines are intended for Project Partners (PP) from Bosnia and Herzegovina (B&H) involved in the implementation of projects financed under the Programme.[1]

The main purpose of this document is to provide a general overview of the main duties and responsibilities of the partnersfrom Bosnia and Herzegovina (B&H) and draws attention to inter alia the legal framework, the first level control system in place in Bosnia and Herzegovina (B&H), reporting obligations of the partners, the mechanisms underlying the transfer of funds within the Programme, rules regarding the eligibility of costs thereby taking into account any national legislation that may have an impact, obligations with respect to the retention of project documentation etc.

The Programme Authorities, based in Hungary, have developed so-called “SEE Control Guidelines” which the first level controllers useand which can be consulted on the Programme website on the following link:

The last updated version of the Control Guidelines has been issued in May 2012.

Thesenational Control Guidelines aim to amplify and complement the above-mentioned documents in particular by incorporating national and / or entity legislation wherever applicable and goes beyond the simple ticking off on checklists. In view of this it is important to note that controllers must develop knowledge about the legal status, size, organisational structure etc of the institution of the Partner, the nature, content, kind of activities envisaged and objective(s) of the project and the staff involved and this is something that goes quite outside the scope of a checklist. Therefore attention is drawn to the Partners that Controllers quite often will have to use professional judgment and personal experience to rule on issues not fully covered by the rules or checklists.

2.LEGAL BASIS

2.1EU LEGISLATION

The main EC regulations and documents related to the control system and the verification of expenditure of the Programme are:

  • Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund (ERDF), the European Social Fund (ESF)and the Cohesion Fund and repealing Regulation (EC) No 1260/1999 (“General Provisions”) and the most relevant articles include (non-exhaustive list):
  • Article 2 (5) and Directive 2004/18/C: Public procurement
  • Article 16: Equality between men and women and non-discrimination
  • Article 17:Sustainable development
  • Article 54: State Aid
  • Article 55:Generation of revenue
  • Article 56
  • Article 58 (A):Requirement on defining functions of the bodies involved in control
  • Article 58 (B):Requirement on separation of functions, independence of controllers
  • Regulation (EC) No 1080/2006 of the European Parliament and the Council of 5 July 2006 on the European Regional Development Fund (ERDF) and repealing Regulation (EC) No 1783/1999 (“ERDF Regulation”) and the most relevant articles include (non-exhaustive list):
  • Article 7
  • Article 13
  • Article 16 (1):Requirement on designation of the Controller by the MS, setting of the control system, timeframe of the verification process
  • Commission Regulation (EC) No 1828/2006 of 8 December 2006 setting out rules for the implementation of Council Regulation (EC) No 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and of Regulation (EC) No 1080/2006 of the European Parliament and of the Council on the European Regional Development Fund (“Implementing Regulation”) and the most relevant articles include (non-exhaustive list):
  • Article 9: Publicity
  • Article 13 (2): Criteria on verification procedures
  • Article 13 (3): Criteria on the verification procedures for on-the-spot checks
  • Article 13 (4): Requirement for written procedures and standards for the control activities
  • Article 24: Legality and regularity of expenditure paid outside the Community
  • Article 48 - 53
  • Regulation (EC) No 1085/2006 establishing an Instrument for Pre Accession Assistance, as Regulation (EC) No 718/2007 implementing Council Regulation No 1085/2006 establishing an instrument for pre-accession assistance and its subsequent amendments and modifications:
  • Article 108 (1)
  • Article 108 (2)
  • Article 101 (b)
  • Article 28(2)(j)
  • Article 34
  • Article 89

2.2NATIONAL LEGISLATION

The main specific national provisions according to legislation in place in Bosnia and Herzegovina (BH) and which may have an impact on the financial management and verification of expenditure are, per budget line and per government level (non-exhaustive list):[2]

STAFF COSTS:

BiH institutions (state level)

  • Zakon o radu u institucijama BiH, Sl.glasnik BiH, broj 26/04, 7/05, 48/05 i 60/10
  • Zakon o državnoj službi u institucijama BiH, Službeni glasnik BIH, 19/02, 35/03, 4/04, 17/04, 26/04, 37/04, 48/05, 2/06, 32/07, 43/09 i 8/10
  • Zakon o platama I naknadama u institucijama BiH, Sl. Glasnik BiH, 50/08, 35/09 i 75/09
  • Odluka o visini osnovice za obračun plate zaposlenim u institucijama BiH
  • Odluka o visini novčane naknade zaposlenim u institucijama BiH za ishranu u toku rada
  • Odluka o načinu I postupku ostvarivanja prava na godišnji odmor u institucijama BiH
  • Odluka o načinu I postupku ostvarivanja prava na naknadu za godišnji odmor I plaćeno odsustvo u institucijama BiH
  • Odluka o dopuni odluke o načinu I postupku ostvarivanja prava na regres za godišnji odmor u institucijama BiH
  • Odluka o visini, načinu I postupku ostvarivanja prava na naknadu za prevoz na posao I prevoz sa posla u institucijama BiH,
  • Odluka o izmjenama I dopunama odluke o visini, načinu I postupku ostvarivanja prava na naknadu za prevoz na posao I sa posla u institucijama BiH,Sl. Glasnik BiH, br 4/09,58/09 6/12
  • Odluka o postupku ostvarivanja prava na naknadu za prekovremeni rad, rad u neradne dane, noćni rad I rad u dane državnih praznika u institucijama BiH
  • Odluka o okvirnim kriterijima za dodjelu novčane nagrade zaposlenim u institucijama BiH
  • Odluka o načinu I postupku ostvarivanja prava na naknadu za bolovanje u institucijama BiH
  • Odluka o načinu I postupku ostvarivanja prava na naknadu državnih službenika za obavljanje poslova drugog radnog mjesta u institucijama BiH

Federation of Bosnia and Herzegovina

  • Zakon o radu FBiH, Službene novine FBiH, broj 43/99,32/00,29/03
  • Zakon o obligacionim odnosima , Sl list RBiH, broj 2/92,13/93, 13/94 i Sl novine FBiH, broj 29/03 i 42/11
  • Zakon o namjestenicima u organima drzavne sluzbe u FBiH, Sl.novine FBiH, 49/05
  • Zakon o državnoj službi FBIH, Službene novine FBIH, broj 29/03,23/04.39/04,54/04,67/05, 08/06 i 4/12
  • Zakon o mirovinskom i invalidskom osiguranju, Sluzbene novine FBiH, broj 29/98, 49/00, 32/01, 73/05, 59/06 i 4/09
  • Zakon o plaćama i naknadama u organima vlasti FBiH, Sluzbene novine FBiH, broj 45/10
  • Uredba o naknadama koje nemaju karakter place ,Sl novine FBiH, broj 63/10 i 22/11
  • Uredba o naknadama koje pripadaju članovima Vlade Federacije Bosne i Hercegovine i njihovim savjetnicima koje nemaju karakter plaće ("Službene novine Federacije BiH", broj 87/10,22/11)
  • Opšti kolektivni ugovor za teritoriju Federacije BiH,Sl novine FBiH, broj 54/05
  • Zakon o poreznoj upravi Federacije BiH, Sl. novine FBiH, broj 33/02, 28/04, 57/09 i 40/10
  • Zakon o porezu na dohodak, Sluzbene novine FBiH, broj 10/08, 9/10, 44/11
  • Pravilnik o primjeni Zakona o porezu na dohodak,Službene novine FBiH 67/08, 4/10, 86/10 i 10/11 i 53/11
  • Zakon o doprinosima,Sl novine FBiH, broj 35/98, 16/01, 37/01, 1/02, 17/06 i 14/08
  • Zakon o vodama,Službene novine FBiH, broj 70/06 (OVN je 0,5% na osnovicu koju cini neto plata i naknada isplacena po osnovu ugovora o djelu. Isplaćuje uz isplatu neto plate)
  • Pravilnik o načinu obračunavanja , postupku i rokovima za obračunavanje i plaćanje i kontrolu izmirivanja obaveza po osnovu OVN i posebnih vodnih naknada, Sl.novine FBiH,broj 92/07 46/09
  • Uputstvo o načinu obračunavanja i uplati posebne naknade za zaštitu od prirodnih i drugih nesreća (Sl novine FBiH broj 81/08 (Naknada za nepogode je 0,5% na zbirni iznos neto plata, plaća je poslodavac uz isplatu neto plata)
  • Zakon o zastiti i spašavanju ljudi i materijalnih dobara od prirodnih i drugih nesreća, Sl. novine FBiH, broj 39/03, 22/06 i 43/10
  • Pravilnik o načinu obračunavanja i uplate doprinosa,Sl novine FBiH, broj 64/08 i 81/08
  • Pravilnik o podnošenju prijava za upis i promjene upisa u jedinstveni sistem registracije i kontrole i naplate doprinosa, Sl. novine FBiH, broj 73/09, 38/10, 77/10, 9/11

Republika Srpska

  • Zakon o radu, Sluzbeni glasnik RS broj 55/07
  • Zakon o obligacionim odnosima (''Službeni list SFRJ'', broj 27/78 i ''Službeni glasnik Republike Srpske'', broj 17/93,74/04
  • Zakon o drzavnim sluzbenicima,Sl glasnik RS broj 118/08 i 117/11
  • Zakon o administrativnoj sluzbi u upravi RS, Sl glasnik RS broj 16/02,38/03, 42/04 I 49/06
  • Zakon o PIO, Sluzbeni glasnik RS, broj 134/11
  • Zakon o platama zaposlenih u organima uprave RS, Sl glasnik RS, broj 118/07,116/09 i 1/11
  • Posebni kolektivni ugovori za zaposlene u oblasti uprave u RS, Sl. Glasnik RS, broj 16/98 37/01
  • Opštikolektivniugovor, Sl.glasnikRS, broj 40/10
  • Odlukaonajnizojplati, Sl.glasnikRSbroj 127/08
  • Zakon o poreskoj upravi,Sl.glasnik RS, broj 112/07, 22/08 i 34/09
  • Zakon o porezu na dohodak, Sl.glasnik RS, broj 91/06, 128/06, 120/08, 71/10 i 1/11
  • Pravilnik o primjeni Zakona o porezu na dohodak , Sl.glasnik RS, broj 22/11
  • Zakon o doprinosima - prečišcćeni tekst, Sl.glasnik RS, broj 31/09 i 1/11
  • Pravilnik o uslovima, nacinu obavjestavanja,obracunavanja i uplate doprinosa, Sl.glasnik RS, broj 19/11
  • Pravilnik o registraciji u Jedinstveni sistem registracije, kontrole i naplate doprinosa , Sl glasnik RS, broj 110/09 i 78/10
  • Uredba o uslovima, nacinu i postupku odgadjanja placanja poreskih obaveza ,Sl glasnik RS broj 13/12

TRAVEL AND ACCOMMODATION:

BiH institutions (state level)

  • OdlukaovisinidnevnicezaslužbenoputovanjeSlglasnikBiH, broj 32/07, 6/12
  • OdlukaonačinuipostupkuostvarivanjapravazaposlenihuinstitucijamaBiHnanaknaduzaslužbenoputovanjeSlglasnikBiH, broj 6/12

Federation of Bosnia and Herzegovina

  • Uredbaonaknadamatroskovazaslužbenaputovanja , SlužbenenovineFBiH, broj 84/10, 11/11 i 83/11
  • Odlukao visinidnevnice (smanjenjednevnicena 25,00 KM), nijeobjavljenouSlužbenimnovinamaFBiH)
  • OdlukaovisinidnevnicazaslužbenaputovanjazabudžetskekorisnikeuFBiH, SlužbenenovineFBiHbroj 50/07 (Ova Odluka je vezna za Uredbu koja je stavljena van snage ali nova nije donešena)

Republika Srpska

  • Uredbaonaknadamazaslužbenaputovanjauzemljiiinostranstvu, zazaposleneujavnomsektoruRS, SlužbeniglasnikRS, broj 73/10

LEGISLATION RELATED TO VALUE ADDED TAX (VAT):

  • Zakon o porezu na dodatnu vrijednost, Sl. Glasnik BiH, broj 9/05, 35/05 i 100/08
  • Instrukcija o postupku ostvarivanja carinskih i poreskih oslobadjanja u skladu sa Okvirnim sporazumom između BiH i Komisije EZ o pravilima saradnje koja se odnosi na finansijsku pomoć BiH u okviru pružanja pomoći putem instrumenta predpristupne pomoci (IPA),Sl. Glasnik BiH broj 74/11

LEGISLATION RELATED TO PUBLIC PROCUREMENT:

  • ZakonojavnimnabavkamaBiH, SlužbeniglasnikBiH, broj 49/04,19/05,52/05,8/06,24/06,70/06,12/09 i 60/10.

LEGISLATION RELATED TO DEPRECIATION:

Federation of Bosnia and Herzegovina

  • Law on tax on profit of enterprises (Official Gazette FBiH Nr 32a/97)
  • Decision on the amount and method of calculating depreciation and the revaluation of fixed assets that are recognised as expenditures in tax balance (Official Gazette FBiH No. 27/98)

Republika Srpska

  • Law on tax on profit of legal entities (Official Gazette RS No. 25/2001, 80/2002, 43/2003, 84/2004 and 18/2010
  • Manual of methods of classifying fixed assets according to group and method of determining depreciation for tax purposes (Official Gazette No. 116/2004 and 99/2010)

In case of contradictions between EU and national legislation the stricter rules apply and Beneficiaries are obliged to establish this themselves.

2.3PROGRAMME RULES

The main documents which guide the First Level Controllers in their work related to the South East Europe (SEE) Transnational CooperationProgramme are:[3]

  • South East Europe Transnational Cooperation Programme as approved by the European Commission on 20 December 2007, Decision No. C(2007)6590
  • SEE Programme Manual (for the relevant Call for Proposals) which contains the programme specific rules for the eligibility of expenditure
  • SEE Implementation Manual laying down the programme specific rules for the implementation of the SEE projects (version of May 2009 as amended in July 2009, January 2011, May 2011, September 2011 and the latest version – version No. 4 – which was adopted in February 2012)
  • IPA Subsidy Contract applicable under the Call for Proposals (CfP) under which the project is financed
  • IPA Partnership Agreement
  • latest approved Application Form(AF) for each project
  • SEE Control Guidelines (latest approved version No. 4 of May 2012)

The above list of EU and national legislation and programme specific rules and documents is not exhaustive and may have to be amended and/or complemented during the implementation of the Programme due to changes in the regulatory framework.

3.STATE CO-FINANCING

Under the South East Europe Transnational Cooperation Programme (SEE) Bosnia and Herzegovina (BH) does not provide state contribution and therefore project applicants / partners are themselves responsible for ensuring funds for co-financing their project activities for a minimum of 15% of the grant.

Applicants are suggested to contact the National Contact Point (NCP) in Bosnia and Herzegovina (B&H) at:

Directorate for European Integration (DEI)

Division for EU Assistance Coordination

CBC department

Trg BiH 1 / XVIII, 71000 Sarajevo, Bosnia and Herzegovina

Ms. Mersiha Zuban

Expert Advisor

Tel. +387 33 703 190

Fax. +387 33 703 196

Email:

Web:

4.FIRST LEVEL CONTROL IN BOSNIA AND HERZEGOVINA

In line with Article 108 of Commission Regulation (EC) No. 718/2007 (the “IPA Implementing Regulations”) and according to Article 16 of Regulation (EC) No. 1080/2006 (“ERDF Regulation”) each participating country has to set up a national control system making it possible to verify the delivery of products and services, the soundness of the expenditure declared and the compliance of such expenditure with Community and, where relevant, national rules. For this purpose each participating country shall designate the controllers responsible for verifying the legality and regularity of the expenditure declared by each final beneficiary.

In view of the above Bosnia and Herzegovina (BH) has opted to use a centralised control system at national level through a public administrative body.

To this end the body designated as the national First Level Control Office (FLCO) in Bosnia and Herzegovina (BH) with respect to the Programme is the Central Financing and Contracting Unit (CFCU) within the Ministry of Finance and Treasury (MoFT). This decision was taken by the Council of Ministers (Session 153) on 14 June 2011 and formally announced in the Official Gazette No 66/11 of 22 August 2011.

Since First Level Control (FLC) is assured by means of a centralised control system at national level by a public administrative body, the costs related to FLC in Bosnia and Herzegovina are not borne by the partners.

The Head of the CFCU, who is also Assistant Minister, is the sole responsible person for the formal issuance of the Declarations on Validation of Expenditure (DVE) whereas the actual verification will be carried out by a number of his/her staff as determined by him/her whereby each controller will be assigned the responsibility for the verification of a dedicated number of projects.

The B&H First Level Controllers are civil servants and their salaries are paid out of the national budget. Other costs related to the execution of first level control (such as those related to on-the-spot checks, participation of controllers in training/seminars either within the territory of B&H or abroad, participation in events organised by Interact in Vienna etcetera, participation in the workgroup of controllers SEE) may be financed out of the budget allocated by means of a Technical Assistance (TA) Subsidy Contract which will be signed with respect to the SEE Programme between the Central Financing and Contracting Unit (CFCU) and the Managing Authority (MA).[4]

First Level Controllers verify 100% of the expenditure declared by Project Partners(PP) in their Partners Reports in hard and electronic version of which is sent to the first level controllers, accompanied by all original supporting documentation, as per the timing defined at programme level (see section 5.2 below). Based on this comprehensive and detailed desk-based administrative verification, complemented by on-the-spot checks on a sample basis, the First Level Controllers issue a Declaration on Validation of Expenditure (DVE) in the template developed by the programme.