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ESIF & ERDF: Streamlining the funding process with simplified cost options

The Common Provisions Regulation of the European Structural Funds defines, inter alia, accounting and control procedures for funded projects. In recent years, member states have criticised the regulations on the grounds that they are too complex. Now the Simplified Cost Options (SCOs) have been introduced to streamline the funding process. We asked Christian Debach, former head of the EU Financial Control Unit at the Independent Audit Control for EU Structural Funding in Karlsruhe, to assess the new regulations.

Mr Debach, what is your assessment of the Simplified Cost Options? Does the streamlined accounting procedure go far enough for project owners?

Christian Debach: Public funding, and that includes EU funding, is mostly tax revenue that European taxpayers have been willing to make available, more or less voluntarily, to finance sustainable and effective projects. Simplified cost options represent a real opportunity, both for the administration and for the recipients, to benefit from a simplified approach whereby at least part of the eligible expenses – possibly even the entire project costs – no longer have to be documented by the beneficiary and checked by the administration.

In my opinion, the offer of SCOs – the use of which is partly mandatory – is a truly generous gesture on the part of the European administration. The member states (administrative and control systems as well as beneficiaries) must now justify this trust by applying SCOs on a fair and correct basis.

The aim is to save time and money, not only for the project owners, but also for the funding agencies and control bodies. Would you have expected greater potential for these bodies?

Only a few years ago, it was almost inconceivable to obtain subsidies without the submission of paid invoices!

I believe that the current approach at the European level, namely to facilitate the application of SCOs step by step, is highly commendable. The EU is breaking completely new ground by introducing the option under the Omnibus Regulation, and now establishing this option under the new Common Provisions Regulation, to pay out subsidies, for example if certain conditions or results have been achieved and can be proven, instead of requiring paid invoices. At present, offering even more potential would not be justifiable from the taxpayer's point of view - after all, it is primarily their money that is at stake. It is also my personal view that this is not justifiable.

Despite the simplifications, it is still important to ensure that EU funds are used legitimately. How can this be guaranteed?

The lawful and proper use of funding is a central element of any public funding. Responsible bodies, in particular the internal control system (ICS) which has to be set up as an essential part of the management and control system (MCS), must therefore ensure correct use through appropriate auditing of the funded projects, in my opinion preferably through on-site visits (including appropriate documentation!) to verify that the funded project actually exists.

How can project owners find out which Simplified Cost Options apply to their project?

As a first step, it may be a good idea to take a look at the homepage of the respective administrative authority or the responsible intermediary or implementing body. When planning to apply for funding, it may also make sense to obtain information by making a phone call or, even better, visiting the responsible office and discussing the matter in person.

Thank you for the interview, Mr Debach.

Christian Debach was Head of the EU Financial Control Unit at the Independent Audit Control for EU Structural Funding of the Oberfinanzdirektion Karlsruhe from 2015 to 2017. Prior to that, he worked in the Ministry of Finance and Economics of Baden-Württemberg. Since 2011, Christian Debach has headed the EU Financial Control Unit – Policy Issues, Audit Authority Structural Funding, INTERREG, EU Special Programmes.

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