Request of pre-financing(s)

✔ Upon signature of the contract, the first pre-financing is provided to Beneficiary(ies). Further pre-financing payments are provided generally every year
✔ To request further pre-financing, narrative & financial reports, the budget forecast for the following period are to be submitted (expenditure verification if required)

The European Commission shall pay an initial and further pre-financing of the grant following the provisions specified in Article 4 of the Special Conditions (in compliance with the art. 15.1 of the General Conditions).
In order to cover the financing needs for each 12-month period of implementation of the Action, the partner may ask, at the intermediate report stage, for a further pre-financing. The template to be used for this request is the Request for payment (Annex V): a narrative and financial report is to be enclosed, together with a forecast budget for the following reporting period and an expenditure verification report or a detailed breakdown of expenditure if required.

Further pre-financing may only be given if the part of the expenditure actually incurred which is financed by the EC (by applying the percentage set out in Article 3.2 of the Special Conditions) stands at 70% at least of the previous payment (and at 100% of any previous payments) as supported by the corresponding interim report and, where applicable, by an expenditure verification report as specified in Article 15.6 of the General Conditions.

Where the consumption of the previous pre-financing is less than 70%, the amount of the new pre-financing payment shall be reduced by the unused amounts of the previous pre-financing payment.
The total sum of pre-financing under the Contract may never exceed 90% of the amount referred to in Article 3.2 of the Special Conditions.

Expenditure verification report
A report on the verification of the Action’s expenditure, produced by an approved auditor who meets the specific conditions of the Terms of Reference (ToR) for the expenditure verification (Annex VII), must be attached to any request for pre-financing payments per financial year in case of any request for further pre-financing payments in case of grants of more than 5,000,000 € and for any final report in case of a grant of more than 100,000 euro. The expenditure verification is a sound proof that the expenses reported on the standard financial report correspond to the partner accounting and bookkeeping system and to underlying accounts and records.
The auditor verifies that the funds provided by the grant were spent in accordance with the terms and conditions of the grant contract and that the different procedures were respected. He examines whether the costs declared by the partner are real, accurately recorded and eligible in accordance with the Contract, and issues an expenditure verification report.
The Grant Beneficiary should annex to the ToR of the expenditure verification a fiche containing key project information.

As per EuropeAid's standard form, the scope of the work of the auditor are:

  • obtaining a sufficient understanding of the action and of the Terms and Conditions of the Grant Contract;
  • verifying that the eligibility of expenditure claimed by the beneficiary in the financial report complies with the rules for accounting and record keeping of the Grant Contract, notably with article 16 of the General Conditions. By the same token, the auditor shall reconcile the information provided in the financial report to the Grant Beneficiary's accounting system and records, and verify that the correct exchange rates have been used (as per article 15.9 of the General Conditions).
  • verifying that the budget expressed in the financial report corresponds to the one authorised by the Contracting Authority in phase of signature of the Grant Contract, and that any eventual amendment to the budget - both unilateral and by means of an addendum - comply with the conditions set out in article 9 of the General Conditions.
  • substantiating that expenses incurred are eligible and that indirect (administrative) costs do not exceed the allowed threshold of 7% of the total direct eligible costs;
  • verifying that the Beneficiary complied with the rules of procurement, nationality and origin for given expenses and, in case of non-compliance, assessing the effect on the eligibility of expenditure.

Resources and useful links:
General Conditions(Annex II)
Special Conditions
Request for payment (Annex V)
Expenditure verification (Annex VII)