Preparing for Programme Closure

WESTERN SCOTLAND PROGRAMME 2000-2006
CLYDE WATERFRONT URBAN II COMMUNITY INITIATIVE
COUNTDOWN TO PROGRAMME CLOSURE - UPDATE MARCH 2008

SEP Ltd continues to work towards the closure of the 2000-2006 Programmes which is a complex task requiring the co-operation of all partner organisations. The information in the September and December 2007 updates detailed below is still valid and must be complied with if the Programmes are to be closed efficiently and effectively.

SEP Ltd issued this message seeking financial progress updates for individual projects to all project sponsors on 31 January 2008 with a response deadline of 29 February 2008. The information gathered from this exercise should SEP Ltd to have a better indication of both the final commitment and declaration levels for the Programmes at closure. Both of these will be affected by the extreme movement in the exchange rate currently being experienced.

The Scottish Government issued this letter to all project sponsors in February 2008 reinforcing the timetable and consequences of non-compliance.

The absolute deadlines for Programme Closure are as follows:
 All project expenditure to be included in Final Claims must be defrayed 30 June 2008.
 All Final Claims must be submitted to SEP Ltd not later than 31 July 2008 and accompanied by a composite transaction list covering the full project value.
 Last date for final claims to be submitted to the Managing Authority by SEP Ltd is 31 August 2008.

This timetable is very tight and there will be no flexibility with deadlines and less scope available to provide support for correcting claims. It is therefore essential that during 2008 all claims submitted to SEP Ltd are on time, correct and accompanied by an accurate transaction list. The SEP Ltd priority during 2008 will be processing correct claims. Incorrect claims received will be put on hold and referred to The Scottish Government.

The 2008 N+2 deadline is also 31 July 2008. Any ERDF/ESF not declared by that date will be lost to the Programmes and as a consequence to projects. A further risk is that if project sponsors fail to meet the Programme Closure timetable there may be insufficient staff resources to process claims which may in turn result in restricted and/or non-payment of claims and, as a consequence, shortfall of funding to projects.

As part of the Programme Closure Action Plan SEP Ltd has prepared this Guidance Update with top tips for submitting claims and streamlining the notification of change process. In addition projects sponsors are recommended to click on the relevant sections of the SEP Ltd website for further updates on:
 Document Retention
 Article 4 Monitoring Visits

The Scottish Government has decided that in the run up the closure of the 2000-2006 Programmes the recovery of overpayments and/or decommitted projects under these Programmes will no longer be offset against future claims that are submitted. The advice is that with immediate effect a letter will be sent to project sponsors requesting that any overpaid/claimed amounts be re-paid by cheque or BACS payment. A sample of the letter is attached for information.

FINAL CLAIMS – AUDIT CERTIFICATION & TRANSACTION LISTS
UPDATE – SEPTEMBER 2007

In April 2007 the requirement for final claims audit certification was relaxed and replaced by the submission of a comprehensive transaction list covering all cumulative expenditure declared in the final claim.

In general this should be relatively simple for claims submitted after 1 June 2006 when the requirement for transaction lists was introduced. However, for projects with claims submitted before this date the position may be more complicated and in order to address this The Scottish Government has provided the following additional guidance.

For projects with the final claim above the audit threshold:

For projects with the final claim below the audit threshold:

1. Transaction lists are required for all claims submitted from June 2006 onwards as per previous instructions. 
2. For projects with all claims submitted after June 2006 and supported by a transaction lists a final claim breakdown is no longer required.
3. For projects with claims submitted before June 2006 a final claim breakdown will still be required.

Audit thresholds:

• ESF projects approved prior to April 2004 final claims where total grant award exceeds £150,000 required an external audit.
• ESF projects approved after April 2004, final claims where total grant award exceeds £50,000 required an external audit.
• All ERDF projects approved prior to April 2004 required an external audit.
• ERDF projects approved after April 2004 where total  grant award exceeds £50,000 required an external audit.

2000-2006 WESTERN SCOTLAND OBJECTIVE 2 AND CLYDE WATERFRONT URBAN II PROGRAMMES

The 2000-06 Western Scotland Objective 2 and URBAN II Programmes are moving into the Programme Closure period. This update gives details about the timescales and requirements during this time.

Both Programmes achieved full commitment by the end of 2006. This means there will be no further calls for new project applications and the key focus of activity for SEP Ltd is now working towards Programme closure at the end of 2008.

Programme Closure is a complex task and requires the co-operation of a number of organisations. The timetable was confirmed in January 2007 and a summary of the key milestone dates is as follows:

• 1 June 2007 – last date for issuing Offers of Grant under the current Programmes which means that any remaining outstanding approved subject to issues must have been resolved before this date
• 1 September 2007 - last date for project sponsors to notify SEP Ltd of decommitment or underspends for recycling
• 1 October 2007 – last date for submitting increased grant requests for existing approved projects
• 30 June 2008 – final date for defrayed expenditure to be included in final claims and SEP Ltd completing all Article 4 monitoring visits
• 31 July 2008 – last date for final claims to be submitted to SEP Ltd and 2008 expenditure targets (N+2) deadline
• 30 September 2008 – date for The Scottish Executive completing all Article 10 (VAC) visits
• 31 December 2012 – date until which all documentation for projects approved under the current Programmes must be retained and available for inspection.

For venture capital and key funds, 31 December 2008 has been identified as the last date for expenditure to be declared – please contact SEP Ltd for specific advice on these projects.

The key implications of this timetable for project sponsors are that:

• all projects need to have reached both practical and financial completion by 30 June 2008 – the final date for defraying expenditure
• for ERDF revenue and ESF projects it may be necessary to reduce project implementation dates to reflect the closure timetable requirements
• for ERDF capital projects it will not be possible to include retention payments in final claims if the retention period falls after 30 June 2008

Final Claim Audit Certification – Relaxation of Requirement

Final claims received by SEP Ltd after 31 March 2007 will no longer require final claim audit certification. Project sponsors will instead be required to submit a comprehensive transaction list for the full amount of cumulative expenditure declared in the final claim.

For final claims that are in the process of obtaining certificates, the following arrangements may be applied:

• final claim audit work may be cancelled and any call-off fee and/or other audit costs incurred to date will not be eligible for grant
• final claim may be submitted with a comprehensive transaction list
• any provision within the approved application for audit costs that will not be incurred may be used to off-set cost overruns for other existing approved cost headings

For project sponsors that have already secured a final claim audit certificate the normal arrangements for claiming grant and processing the claim will apply. The associated audit costs will remain eligible for grant.

Further advice and information can be obtained from Alan.Bain@wsep.co.uk, tel 0141 572 4463.

Summary

SEP Ltd will be undertaking the following actions as part of the Programme Closure preparations:

• contacting all project sponsors with projects currently showing 2008 financial completion dates to reinforce the timetable and implications for individual projects
• on-going monitoring of projects in relation to potential slippage and notifications of change, including the subsequent impact on claims processing.

In return, project sponsors should ensure that SEP Ltd is notified immediately of any delays and slippage in the implementation of projects that may affect the closure timetable.

The Programme Closure timetable takes into a range of interrelated activities that need to be completed in order to ensure that the Programme is closed efficiently and effectively. There are dedicated sections on the SEP Ltd web site to provide guidance and updates.

• Maintaining Maximum Commitment – Process for Increased Grant Requests
• Meeting Expenditure Targets N+2 – 2007 Action Plan
• Article 4 Monitoring Visits 2007/2008

It is recognised that there will be competing priorities for SEP Ltd, project sponsors and the Scottish Executive in the lead up to Programme Closure. Following the outcome of the tender process to manage the 2007-2013 Programmes, the most significant impact for SEP Ltd is the uncertainty for staff that may result in the potential loss of experience and skills during this important period. The SEP Ltd Board of Directors is committed to ensuring that every effort is made to retain appropriate experience and skills in order to maintain the high levels of professionalism and service for partners and the Scottish Executive throughout the closure period.

Please contact Sallyann Low or telephone 0141 572 4421 if you have any further questions regarding Programme Closure.