Ex ante assessment of simplified cost options and partnerships between managing authorities and audit authorities : how to do it?
Date: 2021-11-23
Institutions: Directorate-General for Employment, Social Affairs and Inclusion
Subjects: EU Member State, European Social Fund, financial audit, financial management, fund (EU), simplification of formalities, user guide

Ex ante assessment of Simplified 
Cost Options and partnerships 
between managing authorities and 
audit authorities – How to do it? 

ESF Transnational  Cooperation  Platform 

Community  of Practice on Results-based Management   

Written  by Luca Santin,  Lead  Thematic  Expert  of the ESF  Community  of Practice  on Results-based  Management   
November 2021 

 
EUROPEAN  COMMISSION 

Directorate-General  for Employment,  Social  Affairs and Inclusion   
Unit  G.1 — European  Social Fund  +  

Contact: Michael  Grosse 

E-mail:  Michael.Grosse@ec.europa.eu   

European  Commission 

B-1049 Brussels 

 
 
 
EUROPEAN COMMISSION 

Ex ante assessment of Simplified 
Cost Options and partnerships 
between managing authorities and 
audit authorities – How to do it? 
ESF Transnational  Cooperation  Platform 

Community  of Practice on Results-based Management   

2021 

Directorate-General  for Employment,  social affairs and inclusion 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Manuscript  completed  in July 2021 

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PDF 

ISBN  978-92-76-40706-5 

doi:10.2767/113929 

KE-03-21-360-EN- N 

 
 
 
 
 
 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

What is the European Social Fund (ESF) Transnational Cooperation Platform?  

Mutual learning is at the core of the ESF Transnational Cooperation Platform and its four 
Communities  of  Practice  (CoP):  employment,  education and  skills;  social  inclusion; 
results-based management; and social innovation. 

The ESF Transnational Cooperation Platform gives CoP members, including managing 
authorities,  intermediate  bodies  and  other  ESF  stakeholders,  the  opportunity  to 
participate in  mutual learning activities and tackle common  challenges together. The 
CoPs  were  created as  a  place  for  members  to  share ideas  and  concerns, deepen 
knowledge  and  expertise,  and  help  one  another  to  solve  problems  with  practical 
approaches. 

The  mutual  learning activities  generate hands-on outputs  such  as  toolkits,  guides, 
practice mapping, checklists and recommendation papers that can inspire practitioners 
and policymakers alike. 

Acknowledgements 

This document has  been prepared by Luca  Santin, Lead Thematic Expert  of  the  ESF 
Community  of  Practice  on Results-based Management, as  established under the  ESF 
Transnational Platform.  

The manual is based on the experience of ESF managing authorities, audit authorities, and 
national coordination bodies from all (27) EU Member States, which shared good (and not-
so-good) practices and recommendations within the 2015-2019 ESF Thematic Network on 
Simplification and the ESF Community of Practice on Results-based Management (CoP 
RBM).  Key  contributions for  the  preparation of  the  document have  been  provided by 
managing and audit authorities from Estonia, Portugal, Sweden and The Netherlands - good 
practices of collaboration between authorities-, by members of the CoP RBM’s subgroup 
on ‘Simplified Cost Options’ and by officials of the European Commission DG EMPL – Units 
G1 ‘European Social Fund +’ and former G2 ‘Audit - Shared Management I’1. This document 
would not have been possible without your engagement and support!  

1 DG EMPL Unit G2 ‘Audit - Shared Management I’ is now part of the Joint Audit Directorate for Cohesion (Direction d'audit 

de la Cohésion - DAC) 

2021 

Directorate-General  for Employment,  social affairs and inclusion 

 
 
 
 
 
 
                                              
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Table of Contents 

1. 

Introduction.................................................................................................... 3 

2.  Purpose, scope and legal basis of ex ante assessments ...................... 5 

3.  State of play  of assessments  and collaborations  between managing 

authorities and audit authorities ................................................................ 8 

4.  Roles and responsibilities of authorities ................................................ 10 

5.  Ex ante assessments and partnerships in practice  .............................. 11 

5.1.  Ex ante assessment process and tools ................................................... 11 

5.2.  Examples of (potential) findings............................................................... 13 

5.3.  Partnerships between  managing  authorities  and audit  authorities:  issues 
and practical solutions .............................................................................. 16 

6.  Conclusions and ke y recommendations................................................. 21 

Annex  I – Example  of terms of reference for collaboration  between managing 

authorities and audit authorities .............................................................. 22 

Annex  II – Checklist for the assessment  of Simplified  Cost Options under the 

2014-2020 period ......................................................................................... 24 

Annex  III – Case reports on partnerships between managing  authorities and 

audit authorities .......................................................................................... 38 

1 

 
 
 
 
 
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List of abbreviations 

CoP RBM: ESF Community of Practices on Results-based Management 

CPR: Common Provisions Regulation  

EC: European Commission  

ERDF: European Regional Development Fund  

ESF: European Social Fund  

ESIF: European Structural and Investment Funds 

IB: Intermediate body 

MA: Managing authority  

MS: Member State 

NCB: National Coordination Body for Cohesion Policy / EU Funds  

OP: Operational Programme 

OTS: Off-the-shelf option  

SCO: Simplified Cost Option  

SSUC: Standard Scales of Unit Costs 

TN: ESF Thematic Network on Simplification 

ToR: Terms of reference 

 
 
 
 
EX ANTE ASSESSMENT OF SIMPLIFIED COST OPTIONS AND PARTNERSHIPS BETWEEN 
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1.  Introduction  

The concept and key contents of this document on ‘Ex ante assessments of Simplified Cost 
Options and partnerships between managing authority and audit authority – how to do it?’ 
were designed by the European Social Fund (ESF) Thematic Network (TN) on Simplification 
and further developed by its successor, the ESF Community of Practice on Results-based 
Management (CoP RBM), which  built on the experience carried out by the TN  between 
2015 and 2020.  

Established under the ESF Transnational Cooperation Platform, the Simplification TN and 
the CoP RBM  carried out work  programmes involving ESF managing authorities (MAs), 
intermediate bodies (IBs) and audit authorities (AAs), National Coordination Bodies (NCBs) 
and ESF stakeholders from all Member States (MS) of the European Union (EU), as well 
as several Directorates-General of the European Commission (EC), coordinated by DG 
EMPL Unit G.1.   

Aim of the document 

The aim of this document is to encourage and support ESF authorities in carrying out the 
assessment of the legality, regularity and eligibility of Simplified Cost Options (SCO s) before 
they are actually implemented. This manual also provides examples and references on the 
scope and functioning of this assessment. It draws from the draft position paper prepared 
by the European Commission2 and the experiences of four good practices identified within 
the ESF TN on Simplification. Potential pitfalls and not-so-good practices are also presented 
in this document.   

Besides technicalities regarding the assessment, the document also addresses the wider 
theme of collaboration between MAs and AAs, which has been identified as a key issue for 
enhancing legal certainty and achieving simpler and more effective implementation of the 
ESF (and EU Funds, in general).    

Target audience 

This manual is primarily aimed at representatives of ESF authorities who have little or no 
experience of ex ante assessments and partnerships between MAs and AAs. The target 
audience would also include ‘more experienced’ ESF MAs and AAs as well as authorities 
from other EU Funds and programmes.  

Approach 

The document was developed around the following key assumptions, validated by TN and 
CoP RBM members: 

2 Draft ‘position paper on the advisory role of the audit authorities in the preparation of Simplified Cost Options’ (European 
Structural and Investment Funds – Programming period 2014-2020). Prepared by services of the European Commission.  

3 

 
 
                                              
 
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  The manual should present practical information and tips and should include links 

to actual practices carried out by ESF authorities.  

  Contents of this manual must not constitute, in any way, (additional) requirements 
or interpretation of legal provisions on  audit and assessment of  SCO s. In  other 
words, the document should not be seen as a source of ‘gold-plating’3. 

  The manual should present both good and not-so-good practices (do’s and don’ts). 

Sources and legal framework 

Main sources considered for the preparation of this document: 

  Case reports on the four best practices on collaboration between ESF MAs & AAs. 

  Outcomes of peer-to-peer interviews and group discussions carried out within the 

ESF TN on Simplification. 

  Maps and case reports on SCOs prepared by the TN on Simplification and maps of 

practices further developed within the CoP RBM. 

  European Commission draft position paper on ex  ante assessments and checklist 

for the assessment of SCOs. 

  European Commission  Guidance Note  on SCOs  –  also  taking into  account the 
outcomes of the Q&A session at the joint ESF/ERDF meeting organised by the CoP 
RBM, on 6 November 2020, to present the draft revised Guidance Note.  

  Outcomes of CoP RBM’s plenary and subgroup meetings. 

  Studies carried out by the EC on the use of SCOs and other simplification measures. 

The manual refers to provisions under the legal framework of the European Structural and 
Investment (ESI) Funds for the 2014-2020 programming period and, in particular, to the 
Common Provisions Regulation (CPR) adopted for the 2014-2020 period4 as amended by 

3 Gold-plating describes a process by which a Member State which has to transpose EU Directives into its national law, or 

has to implement EU legislation, uses the opportunity to impose additional requirements, obligations or standards on the 
addresses  of its national law that go beyond the requirements or standards foreseen in the transposed EU legislation. 
(Source: European Commission. (2015). Communication from the Commission to the European Parliament, the Council, 
The European Economic and Social Committee and the Committee of the Regions. Better regulation for better results - 
An EU agenda. COM(2015) 215 final. Strasbourg). And also, Gold-plating is a term used in the context of the 
implementation of the European Structural and Investment Funds (ESIFs) o ften to describe the administrative extra 
requirements and burden imposed on beneficiaries by the ESIF national and sub -national authorities. (omissis) Gold-
plating is being created not only as a response by national and sub -national authorities to EU level procedures, but also 
as burden coming from their own national administrative traditions and customs.   (Source: High-Level-Group  on 
Simplification – Report on Gold Plating– June 2016 Brussels) 

4 Regulation (EU) No 1303/2013 of the European Parliament and  of the Council of 17 December 2013 laying down common 

provisions on the ERDF, the ESF, the CF, the EARDF, and the EMFF and laying down general provisions on the 
European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and 
Fisheries Fund and repealing Council Regulation (EC) No 1083/2006. 

 
 
                                              
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the Omnibus Regulation5. The document also includes references to the CPR for the 2021-
2027 period6.    

Structure of the document 

The document is organised as follows: 

  Section 2 presents key aspects of ex ante assessments, in terms of purpose, scope 

and legal basis.    

  Section 3  illustrates the state of  play of  ex  ante assessments and collaboration 

between MAs and AAs at EU Level. 

  Section 4 provides a description of the roles and responsibilities of authorities . 

  Section  5  describes how  ex  ante assessments and  partnerships could  work  in 

practice. 

  Section 6 presents a set of recommendations based on the experience of CoP RBM 

members. 

2.  Purpose, scope and legal basis of ex ante 

assessments 

SCOs must be established by the MA in advance (at the latest in the document setting out 
the conditions for support7).  

The ex ante assessment is the assessment carried out by the AA on the legality, regularity 
and eligibility of a SCO proposed by the MA, before the SCO is actually implemented8. 

The assessment should cover the calculation methodology and amounts as well  as the 
arrangements to ensure the verification, quality and storage of data used to establish the 
SCO. It should aim to verify that the SCO was set up in compliance with the requirements 
for calculation methods specified in the CPR and relevant provisions defined by programme 
authorities for such SCOs.  

5 Regulation (EU, Euratom) No 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial 

rules applicable to the general budget of the Union. 

6 Regulation (EU) 2021/1060 of the European Parliament and of the Council of 24 June 2021 laying down common provisions 
on the European Regional Development Fund, the European Social Fund Plus, the Cohesion Fund, the Just Transition 
Fund and the European Maritime, Fisheries and Aquaculture Fund and financial rules for those  and for  the Asylum, 
Migration  and  Integration  Fund,  the  Internal  Security  Fund  and  the  Instrument  for  Financial  Support  for  Border 
Management and Visa Policy. 

7 European Commission - Guidance on Simplified Cost Options (SCOs) Flat rate financing, Standard scale of unit costs, Lump 

sums. (Revised Edition following the entry into force of Regulation (EU, Euratom) 2018/1046 ). 

8 Draft ‘position paper on the advisory role of the audit authorities in the preparation of Simplified Cost Options’ (European 

Structural and Investment Funds – Programming period 2014-2020). Prepared by services of the European 
Commission. 

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The experience of the ESF TN  on Simplification and CoP  RBM  shows  that  an ex  ante 
assessment is a key factor in achieving the objective of wider use of SCOs in the ESF (and 
EU  Funds in general). This conclusion is supported by several studies 9 carried out by the 
European Commission (EC) around SCOs and simplification. 

The draft position paper prepared by the EC points out that: 

The role of the audit authorities in assessing the legality, regularity and eligibility of the 
proposed simplified cost options is, for the managing authorities concerned, a key factor in 
obtaining  legal  certainty  that  the  SCOs  comply  with  the  applicable  regulations  and 
requirements. 

The ex  ante assessment of  SCOs  was  not  mandatory in  the  2014-2020 programming 
period, but was highly recommended both by the EC and those ESF audit authorities that 
had carried out  the first  experiences of  assessing SCOs  prior to  their implementation. 
Building on this recommendation and on said experiences, provisions for the 2021-2027 
period makes ex ante assessments mandatory, as per the framework of article 94 of the 
CPR. Proposals for the adoption of SCOs submitted by MSs under this article, as part of 
either  the  programme  or  resulting  from  a  request for  its  amendment,  should  provide 
information on the assessment carried out by the audit authority10. In practice, proposals 
under article 88 would only be considered if they included evidence that the assessment 
was carried out with clear and positive conclusions.    

Although not constituting an obligation during the 2014-2020 period, several AAs chose to 
carry out the assessment and validate SCOs proposals prior to their implementation (see 
section 3). Good practices of collaboration between MAs and AAs suggest that enhancing 
legal certainty around SCOs (and any activity/measure involved in the management of EU 
programmes) is a key objective for all authorities, not only for the MAs. This is particularly 
the case for programmes under shared management as legal certainty also involves joint 
efforts by national and programme authorities. 

Furthermore, on a more practical level, it is important to note that carrying out  an ex ante 
assessments does not necessarily involve additional work for the AA. 

In this sense, the EC draft position paper clarifies that: 

‘If the ex ante assessment is carried out in sufficient depth and in a well-defined framework, 
and the audit authority comes to a positive conclusion (i.e. formal validation of the SCO 
methodology), the audit authority can use the result of its assessment for future (ass urance) 
audits, when operations are sampled where the SCO methodology is applied. ’ 

This means that with ex ante assessments, the AA anticipates the check of the methodology 
and  does not  have  to  re-assess the  methodology following  the  implementation of  the 
operation.  

9 See ‘Use and intended use of simplified cost options in European Social Fund  (ESF), European Regional Development Fund 
(ERDF),  Cohesion Fund (CF) and European Agricultural Fund for Rural Development (EAFRD)’, European Commission 
(2018) available at:  http://ec.europa.eu/regional_policy/sources/docgener/studies/pdf/use_sco_esif_en.pdf  
and  
‘New  assessment  of  ESIF  administrative  costs  and  burden’,  European  Commission  (2018)  available  at:  
https://ec.europa.eu/regional_policy/en/information/publications/studies/2018/new-assessment-of-esif-administrative-
costs-and-burden  

10 According to art. 94 of the CPR for the 2021-2027 period – SCO proposals should be submitted in accordance with the 
template set out in Annex V – Appendix 1 of the CPR. Section C.5 requires to provide information on the assessmen t 
carried out by the audit authority(ies) on the calculation methodology, the amounts and the arrangement to ensure the 
verification, quality, collection and storage of data. 

 
 
                                              
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Moreover, the  different timing  of  the assessment makes  a  clear difference in  terms  of 
potential consequences of errors or deficiencies in the methodology. 

Figure 1 – Potential consequences of errors or deficiencies in the methodology 

Although this may seem to be a ‘common sense’ reflection, discussions concerning SCOs 
and assessments carried out in the ESF TN  and several other settings suggest that it is 
worth mentioning it in this manual.   

A few other relevant points, often discussed within the ESF TN and CoP RBM, should also 
be mentioned with a view to defining the legal framework of ex ante assessments. 

Figure 2 – Potential consequences of errors or deficiencies in the methodology 

 11  

11 In terms of assumptions, indicators, amounts, conditions for reimbursement, aud it trail and any other aspect of the SCO 

proposal. 

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3.  State of play of assessments and collaboration 

between MA and AA 

A survey of ESF managing authorities launched in September 201712 on the implementation 
of  Simplified  Cost  Options  -  to  which  authorities  for  75%  of  the  ESF  Operational 
Programmes (OP) responded -, shows that, in 36% of the cases, the audit authorities were 
either consulted for the design or carried out an ex ante evaluation of the SCO methodology.  

Details on the outcomes of the assessment provided by the survey are presented below in 
Table 1. 

Table 2 – Outcomes of EC survey on ex ante assessment 

Activities and outcomes 

Share of SCO practices 

Was the audit authority involved in the design or did it carry out 
an ex ante validation of the SCO methodology?  

Did it give informal feedback? 

Did it give a formal opinion? 

36% 

27% 

18% 

Source: Study on the ‘Use and intended  use of simplified  cost options in European  Social Fund (ESF),  European 
Regional  Development  Fund  (ERDF),  Cohesion  Fund  (CF)  and  European  Agricultural  Fund  for  Rural 
Development  (EAFRD)’  – European  Commission  (2018). 

A  survey  on  ‘Audit  of  SCO’,  which  included questions  on  ex  ante  assessments and 
relationships between MAs and AAs, was launched in 2018 by the ESF TN on Simplification, 
following the involvement of AA representatives in the network. Responses were provided 
by MAs and AAs from 23 MSs (88% of the MSs represented in the TN at the time the survey 
was launched). 

The survey’s questionnaire included questions on the following points:  

  Formal/informal meetings between MAs and AAs.  

  Ex ante assessments of SCO: experiences and outcomes.  

  Joint or crossed training between both authorities.  

Key outcomes of the TN survey are presented below in Table 2. 

12 See ‘Use and intended use of simplified cost options in European Social Fund (ESF), European Regional Development 
Fund (ERDF), Cohesion Fund (CF) and European Agricultural Fund for Rural Development (EAFRD)’, European 
Commission (2018) available at:  http://ec.europa.eu/regional_policy/sources/docgener/studies/pdf/use_sco_esif_en.pdf   

 
 
                                              
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Table 2 – TN survey on audit of SCOs and partnerships between MAs and AAs.  

Survey questions  

Key outcomes 

The m ajority of respondents have declared that both form al and 
inform al m eetings are held between MAs and AAs .  Around 85% of 
the authorities  (28 out of 33) involved in the survey have participated  in 
formal meetings,  w hereas informal  meetings  w ere mentioned  by 67% 
of respondents.   

Frequency  of  m eetings:  around  57%  of  (28)  respondents  w ho 
provided  information  about  meetings  declared  that these w ere held  on 
a  regular  basis  (at  least  ‘once  a  month’  in  36%  of  the  cases  and 
‘quarterly’  for 21% of respondents). Around 25% of authorities  reported 
that  meetings  w ere  not  organised  regularly,  but  they  w ere held  if 
required (e.g. to discuss specific issues). In 18% of the cases, meetings  
w ere usually held once a year. 

Key points discussed between MAs and AAs:  

Interpretation  of EU  regulation  (and national  provisions)   

 
  Ex ante assessments of SCOs   
  Management  and  control  system  and  planning  of  audit 

activities  

  Audit findings and corrective measures   
  Potential  risks (fraud and irregularities)   

Principles  and  process of  ex  ante  assessment:  The  scope  and 
functioning of ex ante assessments of SCOs  have been formalised  in a 
limited  number  of cases. Only  tw o respondents declared  that the rules  
for ex ante assessments  had been  formally  set out.  One  MS  declared 
that  the  scope of the  ex ante  assessment  had  been  set in  a dialogue 
betw een the MA and AA) but w as not formalised.  A fourth MS  declared 
that  the AA w as in the process of  draw ing up a document, w herein all 
aspects  w ould  be  set  out:  roles,  responsibilities,  key  steps  of  the 
process, timing,  risk  assessment,  result  (form  of report), addressees, 
etc.   

The vast m ajority of authorities considered both joint and crossed 
training sessions to constitute an effective solution to im proving 
know ledge, m utual  understanding and  ultim ately  relationships 
betw een  MAs  and  AAs.  How ever,  in  m ost  cases  (70%  of 
respondents), such training sessions did not take place.  In some 
cases,  the  tw o authorities  attended  only  training  sessions/seminar s  
organised  by the Commission.   

Joint training sessions w ere m ore frequent (30% of respondents), 
w hereas crossed training  sessions w ere reported only in 4 cases.  

Have form al/inform al m eetings 
been held betw een MA and 
AA? If yes, how  often are they 
organised and w hat are the 
key points discussed? 

Are the principles and/or the 
process of ex ante 
assessments of SCOs set out 
in any form al docum ent/act 
jointly prepared/adopted by 
both authorities? If yes, w hat 
aspects are covered by the 
docum ent/act (e.g. roles, 
responsibilities, key steps of 
the process, tim ing, risk 
assessment, others)?   

Have joint/crossed training 
sessions been organised 
betw een the tw o authorities? 

Source: ESF  Thematic  Netw ork on Simplification,  2018. 

Further information on the state of play of assessments will  be provided by the mapping 
exercise of SCO proposals under art. 94 of the Common Provisions Regulation (CPR) for 
the 2021-2027 period, which at the time of writing was  being carried out by the ESF CoP 

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RBM.  Preliminary results13 of  the mapping exercise show  that  ex  ante assessment has 
already been carried out for around 40% of the SCO proposals14  under art. 94.  

4.  Roles and responsibilities of authorities 

As  mentioned in  section  2,  carrying out  ex  ante  assessments  would  not  breach the 
independence of the AA, provided that the distinction of roles and responsibilities between 
authorities is respected. 

Good practices of  collaboration between MAs  and  AAs  show  that  informal exchanges, 
including discussions around ’a cup of coffee’, are possible and highly recommended to 
build partnerships and trust. However, good practices also demonstrated that partnerships 
should be based on a clear and mutually agreed division of roles and responsibilities.  

Figure 3 – Key aspects to be considered 

15 

As highlighted in some of the good practices (see Table 2) identified by the ESF TN  on 
Simplification, the adoption of a formal document, jointly prepared and agreed by the MA 
and AA, which sets out the roles and responsibilities as well as the principles and functioning 
of collaboration and assessments proved to be beneficial. In practice, the document was 
structured as a sort of ‘terms of reference’ (ToR) for collaboration between MAs and AAs. 
This solution would be particularly useful in cases where authorities were subject to frequent 

13  It should be noted that those results are provisional (the mapping exercise had not been completed at the time of writing) 
and do not cover all potential SCO practices to be developed during the 2021-2027 period (as the mapping exercise 
does not include SCOs under art. 53 CPR). 

14 The percentage does not consider SCO proposals which were already covered by a Delegated Act adopted under art. 

14(1) ESF Regulation during the 2014-2020 programming period. 

15 As clarified in the EC draft position paper: independence: being free of limitations that threaten the ability of the internal 
audit function or of the head of the internal audit function to impartially carry out the responsibilities of the internal au dit 
function; Objectivity/being unbiased: an unbiased attitude that allows internal auditors to perform their duties in such a 
manner that they believe in the outcome of their work and that no compromises are made on quality.  

 
 
 
                                              
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changes  of  staff.  As  observed  by  several  MSs,  high  staff  turnover  could  undermine 
agreements reached by the two authorities. Adopting shared ToR would bolster the stability 
of decisions around principles as well as shore up processes of collaboration over time. An 
example of ToR structure is provided in Annex I.  

Indeed, agreeing upon ToR for collaboration could be a useful step towards partnerships 
between MAs and AAs. Nevertheless, it should be noted that in other good practices, MSs 
did not adopt any formal document as they did not see the need for it. Rath er, they simply 
started collaborating and built trust over time, even when initial relations between authorities 
were far from collaborative. 

The following is a key recommendation upon which all good practices can be established:  

5.  Ex ante assessments and partnerships in practice 

5.1.  Ex ante assessment  process and tools  

The  approach, scope  and  process of  ex  ante  assessments  are  described in  the  EC 
guidance note on SCO16, which provides key references on the correct establishment of the 
calculation method. 

While addressing the general audit approach for SCOs, the guidance note specifies that 
audit and control are carried out at two levels: 

1.  Verification of the correct establishment of the calculation method for establishing 

the simplified cost option, and 

2.  Verification of the correct application of the established rate(s) and amount(s).  

The two levels correspond to the key phases of the SCO process preceding management 
verification and audit: 1) Setting up and 2) Implementation of SCOs.  

As mentioned in section 2 of this note, the ex  ante assessment covers the setting up of 
SCOs before it is implemented. Thus, it refers to the first level of control.  

16 European Commission - Guidance on Simplified Cost Options (SCOs) Flat rate financing, Standard scale of unit costs, 

Lump sums. (Revised Edition following the entry into force of Regulation (EU, Euratom) 2018/1046 ). 

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Figure 4 – Elements to be included in the assessment of the methodology 

The guidance note also clarifies that: 

 

In  case  ‘off-the-shelf’17 options  are  used,  the  assessment should  focus  on  the 
definition of categories of costs (e.g. direct costs, indirect costs, direct staff costs) 
covered by the SCO. 

  The assessment should not involve questioning the reasons for select ing a specific 
methodology  over  another, as  the  choice  of  the  method  (among  the  several 
possibilities available in the CPR18) remains the sole responsibility of the MA.  

On the second point, it is worth noting that constructive relations between MAs and AAs , 
based on mutual respect of roles and responsibilities, enhance the quality of decision-
making around SCO design. Good practices of collaboration between authorities indicate 
that suggestions from the AA  are very effective in supporting the MA  when it  comes to 
selecting the best possible options and improving methodological approaches. Further to 
addressing potential compliance issues, in practice, AAs’ suggestions often contribute to 
defining simpler and clearer requirements for SCO implementation and ver ification. Such 
an approach results in clear advantages in terms of legal certainty and simplification for 
authorities and stakeholders.             

To facilitate the work of the AA, the Commission services prepared a checklist19 (available 
in Annex II)  for the assessment of SCOs under the 2014-2020 programming period. The 
checklist is composed of three sections: 

  Section 1 – on the overview of SCOs applied in the audited operation 

  Section 2 – dedicated to the assessment of the SCO methodology 

17 ‘Off-the-shelf’ options are SCOs which are included in the  EC Regulation relevant for the Fund/Programme. They do not 

require the MA to perform any calculations.  

18  See  the  ‘Manual  on  Simplified  Cost  Options’,  ESF  Community  of  Practices  on  Results-based  Management 

(2021).https://ec.europa.eu/european-social-fund-plus/en/publications. 

19 ‘Checklist for the assessment  of SCOs under the 2014-2020 period’, prepared by Commission Services (2019) 

 
 
 
                                              
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  Section 3 – concerning the application of the established methodology. 

For  each  section,  the  checklist  includes  references  to  relevant  legal  provisions, 
questions/items 
the  assessment  as  well  as 
comments/references on how  to fill in  the document. The checklist also includes a final 
section on Conclusions, where the AA could list all points to be included in the audit report, 
if relevant. 

to  be  addressed/verified  within 

It is important to note that a similar checklist is also being prepared for the 2021-2027 period. 
It will be finalised, together with a template for the assessment of SCOs implemented in the 
framework of art. 94 of the CPR for the 2021-2027 programming period.  

5.2.  Examples  of (potential) findings   

As mentioned in section 2, performing an ex ante assessment is highly recommended for 
several reasons. In  particular, carrying out  the  assessment before the  methodology is 
implemented allows  for correcting of errors/deficiencies, in addition to avoiding financial 
consequences (and potential systemic errors).  

In practical terms, the timing of the assessment determines whether an observation by the 
AA remains a ‘comment’ to be addressed by the MA or becomes a ‘finding’, thus leading to 
financial consequences.  Indeed, the difference is not negligible. 

This section presents the most frequent types of comments discussed between auditors 
and auditees, with  regard to assessing SCO methodologies before their implementation. 
Thanks to ex ante assessments, the comments below did not become findings. 

It  is  important  to  clarify  that  the  types  of  comments  included  in  this  section  are  not 
theoretical, but stem from actual experiences shared within the ESF TN on Simplification.  

In particular, the list below presents examples of comments discussed between:  

  The European Commission and the MSs within the assessment of SCO proposals 

submitted under art. 14(1) ESF 20. 

  MAs  and  AAs  regarding  SCO  methodologies  developed  and  assessed  at 

national/programme level.  

Table 3. Comments on SCO methodologies  

Source  

Comments 

On ‘Calculation  Method – Sources’ 

European 
Com m ission 

  Continued  validity  concerning the use of national SCOs can no longer  be 
demonstrated  (e.g. for ESF  operations to be implemented  in 2020 the MA  
intended  to  use  ‘similar’  SCOs  w hich w ere established  under  national 
schemes  w hich  have  not  been  in  use  since  2015,  w ithout  providing 

20 Art. 14(1) of the ESF Regulation for the 2014-2020 period provides the possibility of reimbursing expenditure paid by 
Member States on the basis of standard scales of unit costs and lump sums defined by European Commission and 
adopted by delegated acts.  

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Source  

Comments 

evidence 
approximate  actual costs).  

that  the  amounts  and/or  conditions  are  still  suitable 

to 

  Verifiable  data  and  sources: references to  any online w ebsites are not 
accepted (e.g. providing links to w eb pages / information  w hich is no longer  
available  online  and  cannot be  verified, or making  reference to  data and 
information  from sources w hose reliability  cannot be demonstrated).    
  Confirm  official w ebsites i.e. in  relation  to  national  w ages (updates  on 
cost of living),  social  security, inflation,  etc. i.e.  for adjustment  purposes 
(e.g. Eurostat,  National  Statistical  Offices, Official w ebsite of the Ministr y  
of Labour or Ministry  of Economy  and Finances).   

  Methodology  includes  budgeted am ounts as opposed to certified  costs 
(i.e.  w here historical  data  from  previous  ESF  operations  is  used,  the 
methodology  should  be  based  on  data  w hich has  been  verified  by the 
competent  MA).   

  Most  recent and relevant  data  are not  used (e.g.  SCOs  implemented  in 
Year 2018 based on data from Year 2012) and supporting arguments  are 
not  provided  (e.g. by demonstrating,  such as through  the use of specific 
data  collected  from  reliable  sources, that  the  costs to be  covered by the 
SCOs  w ere not subject to significant fluctuations over time).   

On ‘Transparency of calculation m ethod’ 

  Unclear/incomplete  definition  of w hat costs are in  and  out,  are (in)direct 
e.g.  the  MA  intends  to  use  a  flat  rate  to  cover  indirect  costs  w ithout 
providing  a  clear  and  unequivocal  definition  of  all  specific  costs w hich 
w ould fall into  that category. This  w ould make  it impossible  for the AA to 
verify that there is a clear distinction  betw een cost categories (i.e. w hat is 
‘direct’  and  w hat is ‘indirect)  and  to exclude  the risk of overlaps  betw een 
the concerned categories.)  

  Lack  of completeness:  SCOs  are not  reconciled  w ith total  historical  data 
on  costs (e.g.  the  MA  does  not  provide  adequate  information  on  how  
historical data have been cleaned and processed to calculate the SCO  and 
it is not possible for the AA to trace data  on w hich calculations  are based 
back to their source).  

  Revenues  are not taken  into account (to reduce the cost). 
  Unsupported  differences w ith source data.   
  The  use  of  assumptions:  statements  lacking  argumentation  (e.g.  ‘Y1 
results are not relevant’ or ‘Y2 is expected to be in line  w ith results of Y0’).  
  Using  data on one type of training for other types of training  believed to be 
more  expensive (e.g. accredited vs non-accredited training  sessions). 

  Consistent  application  of historical conditions: 

o  Class sizes as a condition  in line  w ith historical  data;   
o  Calculated  SSUCs  for different types of organisation  and size of  
project  based  on studies  that  do  not  have sufficient data  on all 
types and sizes (w ithout providing  evidence that,  for the specific 
operation  to  be  covered  by  SCOs,  to  changes  in  types  of 
organisation  or size of project do not cause costs to vary).   

  Amounts calculated  based on only a part of data lacking  argumentation  as 

to w hy other data have not been considered. 

  Method  description (assumption/calculations)  not comprehensible  to third 

parties. 

On ‘Audit trail – outputs (paym ent trigger)’ 

  Documents  to be checked are incomplete  and/or not clearly specified. 
  Milestones  are  unclear  or  trigger  disproportionate  payments  (e.g.  90%  
payment  set at the start of action (milestone)  w hen services (training) have 
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Source  

Comments 

  Process/tools  to collect data  for management  verification  not specified or 

not suitable  to collect complete,  consistent and reliable  data. 

  Unnecessary  conditions/documents 

required  (e.g.  timesheets  (output)  

required to demonstrate  a certificate (result) has been aw arded).  

On ‘Risks (perverse incentives)’  

  Training  sessions replacing national  funding are barely contributing  to OP 

objectives and targets (OP  alignment). 

  Unit  Costs per training  session per person leading  to bigger classes (e.g.  
the MA intends to adopt a unit cost of X EUR  per trainee  hour, covering all 
eligible  costs of the operation,  w ithout setting any limits  in terms of size of 
class.  This  w ould  potentially 
lead  to  reimbursing  amounts  that  are 
disproportionate  compared  to actual  costs incurred by the beneficiary). 

  Proposed  measures 

to  address  possible  risks  appear  unclear  or 
ineffective. (e.g.  the  MA  intends  to set  up  a  results -based  unit  cost per  
participant  employed  at the end of a training  course and does not provide 
information  on how  the risk of creaming  w ould be addressed). 

  Definitions  of  eligible  target  groups/participants  and/or  of  criteria  and 
conditions  to  verify  eligibility  are  incomplete  or  unclear  (e.g.  the  MA  
establishes  a  unit  cost for training  targeting  ‘young  unemployed’  w ithout 
specifying  the  exact  criteria  for  eligibility  of  participants  (e.g.  age, 
education)  and the conditions  to verify their actual eligibility).       

  Lack  of information  on  the  fulfilment  of the  principle  of equal  treatment: 
w hy different amounts/rates  have been (or have not been) established  for 
different target  groups and  how ? (e.g. a 10% flat rate for indirect  costs is 
established  at  10%  for projects  implemented  by universities,  w hereas a 
14% flat rate is applied  if the project is implemented  by a private company  
w ithout providing  justification for the different rate applied).      

  Unclear  or incomplete  definitions  of results to be  achieved (or processes 
to  be  implemented)  w ithin  the  operation  (conditions  and  verification 
criteria)  (e.g.  training  courses  for ‘small  groups’  w ithout  specifying  the 
maximum  number  or participant  per  class; setting  up a  unit  cost ‘for the 
successful completion  of a training course including  a mix of individual  and 
group  training’  w ithout specifying (i) the  criteria for defining  and verifying 
‘successful completion’  (ii)  the  distribution  (%) of eligible  hours  betw een 
individual  and group training).           

  Completeness  and correctness of underlying  data  (e.g. methodologies  for 
SCOs  covering operations to be implemented  at national  level in MSs w ith 
relevant  territorial  disparities,  based  on  data  w ith insufficient geographic  
coverage or types of actions referred to w hich are not similar  to the object 
of calculation).    

  Suggestions  from the AA not included  in the calculation  methodology  (i.e. 
in case the MA opts for other solutions than those suggested by the AA, it 
should  at least  explain  the rationale  and added  value of the decision  w ith 
a  view   to  reaching  an  agreement  w ithin  the  framew ork  of  ex  ante 
assessment).   

  Supporting  documents 

incomplete. 

justifying 

the  calculations  are  missing  or 

Managing 
authorities and 
audit authorities  

  The  methodology  and,  more 

importantly, 

its  result  (amounts  and 
to  understand 
conditions)  are  too  complicated  and  unclear/difficult 
(particularly  for beneficiaries) (i.e. this is often the case w hen the MA has 
not  clearly  defined  the  fundamental  aspects  qualifying  the  operation 
(rationale,  objectives,  interventions,  target(s),  expected  outcomes  etc.) 
and/or  w hen it  aims  to  reach the  ‘perfect  approximation  of actual  costs 
under any possible  conditions’).    

  Choice  of statistical  functions (e.g.  mean,  median,  mode)  is not  justified 
(supported  by objective  assumptions/reasons)  (e.g. the  mean  should not 

15 

 
 
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Source  

Comments 

be  used  w hen data  includes  several  outliers/the  distribution  is  strongly 
skew ed). 

  The  inclusion  or exclusion  of outliers  w ithin the  data  cleaning  process is 
not  addressed/justified  (based  on  objective  qualitative  assumptions  or 
sound statistical analysis).   

  Criteria  to define milestones  (e.g. in case lump sums are used) are missing 
or unclear (e.g. 25% of the lump  sum  is aw arded w hen ‘initial  guidance  to 
job seekers is completed’,  w ithout specifying w hen/under w hich conditions  
the initial  guidance phase is actually  considered ‘completed’). 

  Criteria  for adjustment/update  of the methodology  are missing  or it  is not 
clear  how  and  w hen they should  be  applied  (e.g.  automatic  adjustment 
linked  to national  provisions or macro-economic  indicators  w hich are not 
specified in the methodology). 
  Definition  of aid intensity is missing.   
  Minimum/standard  requirements  for  staff/experts to  be  involved  in  the 
implementation  of the operation  are not set out or are not clear (e.g. a unit 
cost  is  established  to  cover  ‘senior  experts’  fees  w ithout  establishing 
conditions  to  assess/verify  the  level  of  expertise  (years  of  relevant 
experience etc.). 

  Unit  costs established by national  law  are not correctly transposed into the 
methodology  (e.g. use of different definitions  or conditions)  (e.g. unit cost 
established  at national  level to support interventions  specific for long-ter m 
unemployed  applied  to  operations  targeting  other  groups  and  requiring 
other types of interventions).   

5.3.  Partnerships  between MAs and AAs: issues  and 

practical solutions   

Experiences of good (and not-so-good) practices shared by MAs and AAs within the ESF 
TN on Simplification allowed for the identification of key references for the development of 
collaborative relationships (and eventually partnership) between MAs  and AAs. A  list  of 
main issues and potential solutions identified by TN members is presented below in table 
4. 

Table 4. Issues and solutions around partnerships between MAs and AAs  

Key issues 

Possible solutions 

1. Lack of 
communication/trust/mutual 
understanding  of roles and 
responsibilities 

2.  Assessing data coming  from 
the MA (i.e. not collected  by the 
AA as usual) 

3.  Time  pressure (related to 
programming  and reporting  cycle) 

1.a Regular  (formal and informal)  joint  meetings   

1.b Charter/terms  of reference setting  out roles, responsibilities  and 
collaboration  process (key steps, timing) 

2. Definition  of key principles/criteria  for data collection  and 
assessment 

3. Joint definition  of realistic timetable  for ex ante assessments to be 
included  in the charter/terms of reference  (e.g. could be based on 
reverse engineering  approach: starting from the launch of the call for 
proposal and going  back to the first step of the assessment)   

4.  Lack of resources and need  for 
change management  (staff) 

4. Adopt lean organisation  principles to simplify  the process  

 
 
 
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Key issues 

Possible solutions 

5.  Gold-plating  = national  rules 
and/or administrative 
customs/practices resulting  in 
complicated/burdensome 
approach or hindering 
relationships  (e.g. 1 AA dealing 
w ith 20+ MAs’ approaches) 

6.  The scope of the  ex ante 
assessment is not completely  clear   

5.a Identify gold-plating  issues and respective 
solutions/countermeasures    

5. b Establish  coordination  units/teams  composed  of MAs and AAs 
to harmonise  approaches and processes (particularly  in the case of 
MS  w here the AA is responsible  for several OPs)   

6. Preparation  of a TN  position  paper on the scope and functioning  of 
ex ante assessment, based on best approaches as developed  by the 
good practices and the EC  position  paper and supported  by 
guidance/further information  from the EC   

7.  Uncertainty  around 
consequences in case errors are 
found afterw ards 

7.  Identification  of the main  risk areas and related  potential 
consequences to be discussed among  MAs, AAs and EC 
representatives 

8.  Lack of 
experience/know ledge/training  on 
calculation  and/or designing 
operations  (e.g. innovative  actions) 

8.a Enhance  training  provided  by the EC  (advanced and hands-on 
training) 

8.b Exchange  on examples  and practices available  at EU  Level   

8.c Joint  and crossed (i.e. AAs training  MAs and vice-versa) training 
sessions across authorities 

TN members also identified concrete actions to implement the proposed solutions, thereby 
addressing issues related to either limiting or hindering collaboration between MAs and AAs 
(see table 5). 

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Table 5. Concrete actions to develop partnerships between MAs and AAs  

Solutions 

Concrete actions 

1.a Regular (form al and inform al) joint m eetings  

1.b   Charter/ToRs setting out roles, 
responsibilities and collaboration process (key 
steps, tim ing) 

2. Definition of key principles/criteria for data 
collection and assessment 

  Organise  formal and informal  joint  meetings  and  circulate memos 
  Regular  exchanges betw een TN  and AA (homologues  meetings) 
 
  Online  forum and SCO  database 
 

Information  on new  good practices 

Start w ith formal meetings  that are subject to a brief set of TOR,  informal  meetings  tend to follow  as relationships 
and trust develop and improve 

 

The  sub-group on Audit could precisely define the roles and responsibilities  of MAs and AAs w ithin the partnership 
relationships  (in general) and specifically for the purposes of ex ante assessment 

Explain  the difference betw een advising,  consulting and assurance (show ing pitfalls and possible  solutions)  
Elaborate  a sample  charter (key steps, timing) 

  Clarify the concept (scope) of independence 
 
 
  Clarify how  EC  looks at the advisory role of AA  
 

Provide  an overview  on how  AAs see their role and the role of the MA  

 

The  sub-group on Audit could precisely define the roles and responsibilities  of MAs and AAs w ithin the partnership 
relationships  (in general) and specifically for the purposes of ex ante assessment 

  Develop  soft audit guidelines  on how  to assess data 
  Definition  of key principles/criteria  for data collection  and assessment 
  Gather  good practices and problems  encountered  in the MS  and and use these to draw  up the key principles  and 

criteria 

  Define  an agreement  on the form and extent of data and information  to be provided 
 

Standard  Operating  Procedure  Manual 

3. Joint definition of realistic tim etable for ex ante 
assessments  

 
 

To be included  in the charter/ToR 
Timetable  to be included  in the Audit Strategy and MoU  betw een MAs, AAs and EC 

4. Adopt lean organisation principles to sim plify 
the process 

 
Explain  the difference betw een advising,  consulting and assurance (show ing pitfalls and possible  solutions)  
  Define  a plan/identify  concrete and lean  organisation  principles  w hich can help simplifying  the audit process  

 
 
 
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Solutions 

Concrete actions 

 

Forw ard planning  on both sides to help manage  tight resources and flexibility at the outset as the demands  can 
often be quite resource intensive 

5.a Identify gold-plating issues and respective 
solutions/countermeasures   

5. b Establish coordination units/team s 
com posed of MAs and AAs to harm onise 
approaches and processes (particularly in the 
case of MSs w here the AA is responsible for 
several OPs)  

6.     Preparation of a ‘TN position paper on the 
scope and functioning of ex  ante assessment’, 
based on best approaches as  developed by the 
good practices and the EC  position paper and 
supported by guidance/further information from 
the EC   

7.     Identification of the m ain risk areas and 
related potential consequences, to be discussed 
am ong MAs, AAs and EC  representatives  

8.a   Enhance training provided by the 
Com m ission (advanced and hands -on training) 

8.b   Exchange on exam ples and practices 
available at EU  level 

 

Identify gold-plating  practices to find an optimal  approach 

 

This point  could be included  in the Charter/ToR  (solution  1.b) 

 

 

The  paper should  be developed  to not only look  at good practices but to also consider the most  common  mistakes 
(findings) - including  those observed w ithin the assessment of the draft Delegated  Acts  
Preparation  of a TN  position  paper  – this w ould be a usef ul w ay of codifying emerging  practice and encouraging 
further debate 

Provide  concrete examples  on how  to deal w ith errors 
Explain  the difference betw een advising,  consulting and assurance (show ing pitfalls and possible  solutions)  
Position  paper of EC  (or TN)  on potential  consequences (risk analysis on SCO)  

 
 
 
  Overall  risk analysis regarding  the setup of SCOs 
  Gather,  systematise and analyse information  (practices) from the MSs on the main  risk areas and consequences  

 

 

 
 
 

 

Advice (and even consultancy) provided  by EC  approved consultants (a similar   scheme  is used under ERDF  for 
state aid) 
Enhance  role of the EC  in promoting  and supporting  know ledge sharing betw een AAs and harmonising  audit 
practices and cooperation  practices betw een MAs and AAs 
Enhance  role of the EC  in promoting  more  collaboration  by the AAs 
Prepare  a list of topics/issues/problems  (questions) to support EC  in setting  up the training 
Enhance  training  courses aimed  at unifying practices and understandings  among  MSs  

Advice (and even consultancy) provided  by EC  approved consultants (a similar  scheme  is used under ERDF  for 
state aid) 

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Solutions 

Concrete actions 

8.c   Joint and crossed (i.e. AAs training MAs and 
vice versa) - training sessions across authorities  

 

Enhance  role of the EC  in promoting  and supporting  know ledge sharing betw een AAs and harmonising  audit 
practices and cooperation  practices betw een MAs and AAs 

  Collect  a set of good practices 
 
  Make  available  not only recommendations  and examples  of good practices but also (different types of) common 

Set up an online  platform  w here authorities  can find examples  and ask questions/exchange  information 

mistakes 

 

 

 
 

Advice (and even consultancy) provided  by EC  approved consultants (a similar  scheme  is used under ERDF  for 
state aid) 
Enhance  role of the EC  in promoting  and supporting  know ledge sharing betw een AAs and harmonising  audit 
practices and cooperation  practices betw een MAs and AAs 
Peer-to-peer  training  events betw een MAs and AAs from different MSs 
Sharing  programmes  and relevant documents  of training  courses organised  by MAs and AAs 

 
 
 
 
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6.  Conclusions and key recommendations  

The  experience developed by  managing  authorities and  audit  authorities from  all  EU 
Member  States  involved in  the  ESF  Thematic Network  on  Simplification  and  the  ESF 
for  some  key 
Community  of  Practice  on  Results-based  Management  allow 
recommendations around ex ante assessments of SCOs and collaboration between the two 
authorities to be discerned. 

Lessons learned by the good and the not-so-good practices indicate that: 

I. 

Carrying out ex ante assessment by the AA on the legality, regularity and eligibility of 
SCOs  proposed  by  the  MA  before  they  are  actually  implemented  is  highly 
recommended, for the following reasons: 
a. 

It  enhances legal certainty around SCOs, thus preventing the risk of errors or 
deficiencies in the methodology, which could lead to financial corrections or even 
to a systemic error. 
It  improves decision making around SCO design, as suggestions from AAs  are 
very useful for the MA  to identify the most suitable options (types of SCO s and 
methods) and define clearer and simpler conditions for implementat ion (avoiding 
unnecessary requirements).    

b. 

II. 

An ex  ante assessment does not breach the independence of the AA and does not 
undermine the formal division of roles and responsibilities of the authorities.  

III.  Carrying out an ex ante assessment does not involve additional work for auditors, as 
the AA does not have to re-assess the methodology following the implementation of 
the operation.  

IV. 

In principle, European Commission auditors rely on the opinion of the AA. In practice, 
where an ex ante assessment was carried out, EC auditors did rely on the opinion of 
the AA. 

V.  Adopting common  terms of reference, setting out the principles and functioning of 
collaboration  and  assessment,  could  be  a  useful  solution,  particularly  where 
authorities are subject to high staff turnover.  

VI.  Building trust and partnerships between MAs and AAs is a key step towards a better 
design and implementation of the ESF (and EU  Funds in general). Good practices 
indicate that setting up partnerships requires: 
a.  Change in mindset: willingness to set and achieve common goals.  
b.  Open, transparent and timely communication. 
c. 
d.  Support from the EC and applying MSs’ successful examples which evidence the 

Informal exchanges, including discussions around a ‘cup of coffee’. 

concrete advantages of collaboration. 

e.  Time and effort: good practices were not created in one day. MAs and AAs built 
trust over time and invested in developing knowledge and mutua l understanding. 
However, they reported that the result was definitely worth the effort.  

VII. 

If you (MAs and AAs) still think that there are good reasons not to follow the example 
of the good practices, please go back to point VI.a above.  

21 

 
 
 
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Annex I – Example of terms of reference for 
collaboration between managing authorities and audit 
authorities  

ESF PROGRAMME, SCO STEERING GROUP 

TERMS OF REFERENCE 

Membership 

1.  The Steering group (hereafter: the Group) comprises senior representatives from the 
ESF managing authority (MA). senior representatives from the certifying authority (CA), 
audit authority (AA),  intermediate body/ies (IBs)  will  attend in  an advisory capacity. 
Where relevant, senior representatives of national coordination bodies and stakeholders 
could also attend in an advisory capacity. 

Purpose  

2.  The  Group  will  oversee  development of  the  methodology/ies and  implementation 
arrangements for the  use  of  simplified  cost  options (SCO) in  the ESF  Operational 
Programme with the aim of reducing the administrative burden on beneficiaries.  

Scope and process 

3.  The Group will agree to procedures and timetables for the process.  

4.  The process will take account of EC Regulations and relevant documents produced by 

the EC. 

5.  The SCO development, under the responsibility of the MA, would include:  

  Detailed analysis of EC Regulations, guidance and presentations available to date 

on SCO; 

  Detailed review of the proposed activities and nature of expenditure to be included 

 

in the Programme; 
Identification of suitable options: types of SCOs, calculation methods, conditions for 
reimbursement. ; 

  Analysis of the benefits and drawbacks/risks associated with each option;  
  Collection and analysis of relevant historical/industry data; 
  Development of appropriate SCOs where recommended and agreed.  

6.  The  Advisory  Group, which  includes  authorities and  stakeholders attending in  an 
advisory capacity, will provide observations during the meetings of the Steering Group 
which will include: 

  Ex  ante  advice  on  appropriateness of  approach  proposed  by  the  managing 

authority; and 

  Ex ante advice on the data sets proposed for analysis. 

 
 
 
 
 
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Responsibilities of Steering Group Members  

7.  The MA will be responsible for: 

  Chairing the Steering Group meetings; 
 
 
  Development of a final paper on the process and outcome, including any additional 

Identifying and providing reliable sources of data for analysis where appropriate;  
Identifying, approving and determining the SCO(s) to be developed;  

analysis undertaken and details of any proposed SCO(s);  

  Submission of  the  final paper and supporting audit trail documents to the  audit 
authority for formal audit which will  include an opinion on the outcome of the SCO 
development, including final solutions identified;  

  Following  the  approval  of  the  audit  authority,  development  of  appropriate 
guidance/administrative  procedures to  ensure correct application of  the  agreed 
SCO(s). 

8.  The MA (and/or, where relevant, the national coordination body) will adopt into eligibility 

rules the final SCOs approved by the audit authority.  

9.  The Steering Group, and in particular the MA, will be responsible for liaising with national 
audit  bodies  (with  support from  the  AA  as  necessary) throughout the  process as 
appropriate.  

Working method, timetable and deliverables 

The Group will meet physically every ___ weeks and it is anticipated that the process should 
be concluded within ___ months.    

23 

 
 
 
 
 
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Annex II – Checklist for the assessment of SCOs under the 2014-2020 period 

Checklist – Review of the Simplified Cost Options (SCO) 
04/12/2019 

This checklist has been developed by the Commission services for the audits carried out by the services of DG REGIO, EMPL and  MARE.  

The interested audit authorities or other bodies could also use this checklist (or a version adapted to their needs) in the framework of: 

1)  Audit of operations to help with the evaluation of eligibility of expenditure declared in the form of SCO s (sections 1-3) 

2)  System audits in order to help the auditor with the assessment of: 

- SCO methodology and its implementation, including tests of controls (sections 1.1-3.4) 

- the management verifications (sections 3.1-3.5) and follow-up of audits (sections 2.6 and 3.6) 

In the case of an assessment of the SCO methodology prior to the implementation of the SCO, section 2 could facilitate verification of the calculation 
methodology and amounts. 

The dedicated InfoRegio SCO website includes useful documentation concerning SCOs: 

https://ec.europa.eu/regional_policy/en/policy/how/improving-investment/simplified-cost-options/  

 
 
 
 
 
 
 
 
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OP  

DG/Fund 

Country / Region 

Managing authority/intermediate body 

Beneficiary 

Operation code and title 

Amount declared 

No 

Legal reference 

Question 

Yes/No/NA 

Comment/Reference21 

Section 1: Overview of SCO applied in the audited operation 

1.1 

Art. 67(2a) CPR22 

If  the public support for an operation or project under 
the  ERDF  or  ESF does not  exceed EUR  100  000, 
does the grant/repayable assistance take the form of 
a  standard  scales of  unit  costs, lump sums or  flat 
rates? 

If  not, please confirm that one  of the following cases 
is applicable: 

Please note that: 

Where the public procurement within an operation or project 
forming part of an operation is limited to certain categories of 
costs, SCO maybe applied for the whole operation or project 
forming a part of an operation. 

21 In case of audit findings, please include in the comment column a reference to the supporting working papers.  

22 Common Provisions Regulation (Regulation (EU) No 1303/2013) with further amendments. The consolidated version is available under the following link:   

https://eur-lex.europa.eu/legal-content/EN/TXT/?qid=1568881092396&uri=CELEX:02013R1303-20190511  

25 

 
 
 
 
 
 
 
 
 
 
 
 
 
  
                                              
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1) there is no obligation to apply SCOs as the 
operation receives State aid support23 

2) standard scales of units costs, lump sums 
and flat rates cannot be applied as an operation 
(or a project forming part of an operation) is 
implemented exclusively through the public 
procurement of works, goods or services 

3) MS notified the Commission of a decision to 
extend the transitional period for which SCOs 
are not applied24 

Art. 67(4) CPR 

Art. 152(7) CPR 

Where flat-rate financing is used, the  categories of costs to 
which the flat-rate is applied may be reimbursed as real costs. 

In case of application of a flat rate up to 40% of eligible staff 
costs  to  cover  the  remaining  costs  of  an  operation,  the 
allowances  and  salaries  paid 
to  participants  maybe 
reimbursed as real costs. 

1.2 

Art. 67(1) CPR 

Please  indicate the  form(s)  of  SCO  applied  in  the 
operation subject to the audit: 

1) standard scales of unit costs 
2) lump sums 
3) flat-rate financing, determined by the 
application of a percentage to one or more 
defined categories of costs 

Several SCO methodologies could be applied within the same 
operation. Please indicate in this section all SCO applied in 
the audited operation.  

The assessment of the methodology in section 2 should be 
carried out for each methodology separately. 

1.3 

Art. 67(3) CPR 

In case real costs, standard scales of unit costs, lump 
sums, flat rates or  financing not  linked to  costs are 
combined in one operation, do they cover either: 

1) different categories of costs 

This question aims at identifying or excluding double financing 
of  the  same  expenditure  (see  in  particular  information 
included in the grant agreement and available information on 
the declared expenditure).  

23 Although there is no obligation to apply SCOs for operations receiving State aid support, operations under de minimis aid are  subject to the obligatory use of SCOs. 

24 Obligatory application of SCOs in operations/projects not exceeding EUR 100 000 was introduced by the Omnibus regulation (Reg. 2018/1046) with a transitional period allowing MS to derogate from this 
obligation.The initial transitional period of up to 12 months starting from 2 August 2018 could be extended for a period considered appropriate (even till the end of the current programming period).  

 
 
 
 
 
 
 
 
 
 
 
 
 
                                              
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2) different projects forming a part of an 
operation  
3) successive phases of an operation 

1.4 

Art. 67(6) CPR 

Does  the  document  setting  out  the  conditions  for 
support for the operation/grant agreement set out the 
method  to  be  applied  for  determining  the  costs of 
operation and the conditions for payment of the grant? 

27 

It should be ensured that a specific type of expenditure for a 
beneficiary can only be reimbursed either based on real costs 
or one type of SCO: 

-  If an operation is partially reimbursed on real costs, verify 
that these costs are not taken into account for the calculation 
of SCOs. 

-  For  flat rates,  it  should be  ensured  that  there  is a  clear 
distinction between the cost categories to which the rate is 
applied and the cost category reimbursed by the flat rate. One 
or  more  categories of costs on which the flat rate is based 
should be pre-established and one should ensure clear and 
unequivocal definition of these cost categories. 

- If a lump sum and unit costs are used for the same type of 
operation, verify that the calculation of the lump sum does not 
cover the elements reimbursed based on unit costs. 

Example: 

Operation involving a  training project for young unemployed 
people, followed by a seminar for potential employers of the 
region: The costs related to the training could be paid on the 
basis of standard scales of unit costs (e.g. EUR 1 000/day of 
training). The  seminar would  be paid  on  the  basis of lump 
sums. Given that there are two different projects forming part 
of the same operation, there is no risk  of double financing as 
each project’s costs are clearly separated. 

SCO have  to  be defined ex ante  and  must be included for 
example  in  the  call  for  proposals  or  at  the  latest  in  the 
document setting out conditions for support. 

 
 
 
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In case of discrepancies between the  document setting out 
the  conditions  for  support/grant  agreement  and 
the 
methodology, please specify. 

Section 2: Assessment of the SCO methodology 

If  the methodology has been already verified in the framework of previous work on which reliance is placed within this audit,  please indicate and go 
directly to section 3 to verify the correctness  of implementation of the established methodology. 

This section should be completed per methodology. If more than one methodology is applied, please copy this section and dupli cate as needed. 

2.1 

Art. 67(5) CPR 

the  methodology  established  using  an 

Was 
appropriate method? 

Please go directly to section 3 to verify the correctness of the 
implementation, if: 

Art.  14  Reg. 
1304/2013 

Art. 68(b) CPR 

1) Was one of the off-the-shelf methodologies used 
as  proposed 
regulatory  framework?  
In particular: 

in  EU 

a) In case the MA uses a flat rate, is one of the 
off-the-shelf flat rates applied which do not 
require the MA to perform a calculation to 
determine the applicable rate25? 

(i) a flat rate of up to 15% of eligible 
direct staff costs in order to cover 
indirect costs 

  one of EU off-the-shelf methodologies is used29, or 

 

the methodology established by the MS was subject 
to Commission assessment and acceptance through 
a delegated act30. 

25 If the flat rate applied by the MS is above the indicated off-the-shelf rates listed below, a methodology established in one of the ways indicated be low under sub-question 2) could be used (in particular: 
fair, equitable and verifiable calculation method, a method applied under schemes for grants funded entirely by the MS for a similar type of operation and beneficiary or based on existing methods and 
corresponding rates applicable in Union policies for a similar type of operation and beneficiary). In such a case the methodo logy should be assessed in this section (please indicate the way the 
methodology was established and continue with the questions 2.2, 2.4 or 2.5 as relevant). 

29 Section 3.3-3.4 for flat rates and section 3.2 for staff hourly rate based on 1720 hours 

30 Section 3.1 for unit costs and lump sums 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                              
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Art. 68a(1) CPR 

Art.  19  Reg. 
1299/2013 

Art. 68b(1) CPR 

2 

Art. 
2019/1867 

Reg. 

Art. 68a(2) CPR 

Art. 67(5) CPR 

(ii) a flat rate of up to 20% of the direct 
costs other than the staff costs of that 
operation to cover direct staff costs26 

(iii) a flat rate of up to 40% of eligible 
direct staff costs in order to cover the 
remaining costs of an operation27  

(iv)  a flat rate of 4% (ERDF, CF, ESF) 
or 6% (EMFF, ERDF: ETC) for overall 
amount of TA operations in the 
programme on the basis of amounts of 
expenditure of operations under the 
priority axes other than TA 

b) In case the MA has chosen standard scales 
of unit costs for the calculation of the staff 
costs, is the hourly rate calculated by dividing 
the latest annual gross employment costs by 
1720 hours?28  

2) For any type of simplified costs options other than 
the 
those  mentioned  in  point  1  above,  was 
methodology  established  by  MA  in  one  of  the 
following ways? 

a) Fair, equitable and verifiable calculation 
method based on any of the following:  

(i) statistical data; other objective 
information or an expert judgement; 

For the methodologies established as described under point 
2),  please  assess  their  correctness  and  complete  the 
following questions below: 

26 MS are not required to perform a calculation to determine the applicable rate provided that the direct costs of the operation  do not include public works contracts which exceed in value the threshold set 

out in point (a) of Article 4 of Directive 2014/24/EU. 

27 Please note that: salaries and allowances paid to participants can be considered additional eligible costs not included in the  flat rate; this flat rate is not applied to staff costs calculated on the basis of a 

flat rate. 

28 Article 68a(2) CPR offers off-the-shelf unit cost for staff costs  calculated by dividing the latest annual gross employment costs by 1720 hours. In case the MA calculated differently the unit cost for staff 

costs,  please indicate how the amount was established by unswering the sub-question 2 and assess the methodology in line with questions 2.2, 2.4 or 2.5 as relevant.  

29 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                              
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2.2. fair, equitable and verifiable calculation method 
2.3 draft budget 
2.4 SCO applicable in Union policies for a similar type of 

operation and beneficiary 

2.5  SCO  applicable  in  Member  State  policies  for  a 

similar type of operation and beneficiary 

In case the audit scope covers the follow-up of previous audit 
work , complete in addition section 2.6. 

(ii) the verified  historical data of 
individual beneficiaries;  
(iii) the application of the usual cost 
accounting practices of individual 
beneficiaries 

b) A draft budget established on a case-by-
case basis and agreed ex ante by the MA 

c) In accordance with the rules for application of 
corresponding scales of unit costs, lump 
sums, and flat rates applicable in Union 
policies for a similar type of operation and 
beneficiary 

d) In accordance with the rules for application of 
corresponding scales of unit costs, lump 
sums and flat rates applied under schemes 
for grants funded entirely by the MS for a 
similar type of operation and beneficiary 

2.2 

Art. 67(5a) CPR 

In  the case of  SCO based on  a  fair, equitable and 
verifiable calculation method 

Please  indicate  the  source  of  information/the  basis  for 
establishing the methodology: 

1) Verify that the data used are reliable and relevant. 

2) Confirm that the SCO is established on the basis of 
a fair, equitable and verifiable method. 

3) In  case the SCO concerns a flat rate, established 
to cover  indirect costs on the  basis of  eligible direct 
costs, does this flat rate remain within the maximum 
threshold of 25%?  

  statistical  data,  other  objective  information  or  an 

 
 

expert judgement 
the verified historical data of individual beneficiaries 
the application of the usual cost accounting practices 
of individual beneficiaries 

In  the  case  of  SCO  based on  the  usual  cost  accounting 
practices,  confirm  on 
the  accounting 
policy/internal  procedures  of  the  beneficiary  and/or  other 
documentation that the  practice is  actually  applied  by  the 
beneficiary. 

the  basis  of 

 
 
 
 
 
 
 
 
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  Fair: the calculation has to be reasonable, i.e. based 

on reality, not excessive or extreme. 

  Equitable: it does not favour  some beneficiaries or 
operations over others, i.e. equal treatment principle 
is followed  (differences in treatment must be based 
on objective elements). 

  Verifiable: the determination of the SCO should  be 
based  on  documentary  evidence  which  can  be 
reviewed. 

Examine  the  basis  used  for  establishing  the  rates  and 
whether the rates finally set are indeed in line with this basis. 
Review  of  the  data/calculation could  be  carried  out  on  a 
sample basis if needed. 

2.3 

Art. 67(5aa) CPR 

In  the  case  of  SCO  based  on  the  draft  budget 
established on a case-by-case basis 

Review 
established by the draft budget. 

the  documentation  supporting 

the  amounts 

1) Verify that: 

a) the budget was reviewed and agreed ex ante 
by the MA 
b) the public support does not exceed EUR 
100,000  

2) Have changes in the budget/scope of the operation 
been introduced after grant agreement approval? 

3) If yes, is it acceptable in view of the initial conditions 
agreed? 

In order to assess that the overall budget is reasonable taking 
into  account the  planned  activities/outputs and  the  project 
duration,  different  documentation/  information  could  be 
helpful,  such  as  documents  demonstrating  that  the  MA 
assessed the budget/the sources of the data used by the MA 
for  analysis of  the  draft  budget, the  historical data  of  the 
beneficiary, the amounts obtained by application of its usual 
cost  accounting  practices,  any  available  data  on  market 
research, etc. 

2.4 

Art. 67(5b) CPR 

In  the  case  of  SCO  based  on  the  methodology 
applied under another EU policy 

Art.  20-21  Reg. 
480/2014 

Verify that: 

Specify the  reference  to  the  EU  policy  methodology.  The 
dedicated InfoRegio  SCO  website includes information  on 
SCO  applied under  other  EU  policies (see link  on the  first 
page of the check list). 

31 

 
 
 
 
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1) The EU policy methodology is still in force. 

Totality of the method: 

Art.  29(1)  Reg. 
1290/2013 

Art.  124(4)  Reg. 
966/2012 

2) The totality of the method is re-used. 

3) The EU policy methodology is applied for a similar 
type of beneficiary and operation.  

When  re-using  an  existing  EU  method,  the  managing 
authority should ensure that the totality of the method is re-
used  (for  instance  the  definition  of  direct/indirect  costs, 
eligible expenditure, scope) and not only its result (the rate of 
X %).  

This aims at avoiding overcompensation/double financing of 
the same expense. As a title of example, applying a flat rate 
of X% based on direct costs to cover indirect costs could lead 
to overcompensation in the case of differences in definitions 
of direct and indirect costs (in the methodology re-used by the 
MA some types of expenses could be treated as direct and be 
declared  as  real  costs  whereas  the  original  EU  policy 
methodology treated them as indirect and covered by the flat 
rate of X%). 

See  Art.  20-21  of  Reg.  480/2014  (as  amended)  for 
information/requirements related to the flat rate financing for 
indirect costs based on: 

-  Reg.  1290/2013  (Article 29(1),  Horizon  2020  flat-rate  of 
25%) 

- Reg. 966/2012 (Article 124(4), flat-rate of 7%) 

Specify the reference to the national policy methodology. 

For the totality of the method, see clarification under section 
2.4 above. 

2.5 

Art. 67(5c) CPR 

In  the  case  of  SCO  based  on  the  methodology 
applied under another national policy 

1) Verify that: 

a) The methodology under the national policy is 
still in force. 

b) The totality of the method is re-used. 

 
 
 
 
EX ANTE ASSESSMENT OF SIMPLIFIED COST OPTIONS AND PARTNERSHIPS BETWEEN MANAGING AUTHORITIES AND AUDIT AUTHORITIES – HOW 
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c) The methodology under the national policy is 
applied under schemes for grants funded 
entirely by the MS. 

d) The methodology under the national policy is 
applied for a similar type of beneficiary and 
operation. 

2) In case the SCO concerns a flat rate established to 
cover  indirect  costs on  the  basis  of  eligible  direct 
costs, does this flat rate remain within the maximum 
threshold of 25%? 

2.6 

In  case  the  audit  scope  covers  the  follow-up  of 
previous audit work: 

See also section 3.6 for follow-up of audit findings in relation 
to the individual operations selected for audit. 

If  the  methodology was previously assessed by the 
(either  ex  ante  or  during 
audit  authority 
implementation phase) : 

a)  Have  any recommendations been issued by 
the audit authority (risk or issues pointed out for 
consideration)?  

b)  If  yes,  have  they  been  addressed  by  the 
managing authority? 

c)  In  case  the  methodology  was  already 
assessed by the audit authority, are there  any 
changes after the assessment? 

To confirm the correctness of the SCO amounts declared, please fill in: 

  Sub-section 3.1 for unit costs and lump sums (except the unit costs  covered in sub-section 3.2)  

Section 3: Application of the established methodology 

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  Sub-section 3.2 for unit costs related to staff  costs  calculated on an hourly rate by dividing the latest annual gross employment costs by 1720 

hours 

  Sub-section 3.3 and 3.4. for flat rates 

If  the audit scope covers management verifications, fill in the sub-section 3.5 as  well as  the preceding sub-sections 3.1-3.4 as  relevant for operations 
selected  for tests  of  controls. Fill in section  3.6 (follow-up of audit findings), if there  have been in the past  audit findings in relation to the  audited 
operations. 

3.1 

Art. 
67(5) CPR 

67(1b,c), 

For lump sums and unit costs 

1) Verify that: 

Art.  14(1)  Reg. 
1304/2013 

  conditions  for  reimbursement  have  been 

 

fulfilled 
the pre-defined  deliverables/ milestones had 
been achieved  

the 
The  beneficiary  is  obliged  to  report  and  prove 
deliverables/number of actual units and not their actual costs 
incurred. 

In case the methodology established by the MA was subject 
to  Commission  assessment  and  acceptance  through  a 
delegated  act  based  on  Article  14(1)  of  Regulation 
1304/2013, please indicate its reference number. 

3.2 

Art. 68a CPR 

2) If relevant, check the number of actual eligible units 
and  confirm  that  the  amount  declared  equals  the 
standard  amount  per  unit  multiplied  by  the  actual 
number of units delivered. 

If for the purpose of determining staff costs, the MA is 
using the  possibility to calculate an hourly rate by 
dividing  the  latest  annual  gross  employment 
costs  by 1,720 hours 

1) Verify that: 

a)  Where annual  gross employment costs are 
available,  an  hourly  rate  was  calculated  by 
dividing  the  latest  documented  annual  gross 
employment costs by 1,720 hours  for  persons 
working full time, or by a corresponding pro-rata 
of 1,720 hours, for persons working part-time. 

 
 
 
 
 
 
 
 
 
 
 
 
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Art. 68a(2) CPR 

b)  Where annual  gross employment costs are 
not available, the calculation has been based on 
the  available  documented  gross  employment 
costs or from the contract for employment, duly 
adjusted for a 12-month period. 

c) The total number of hours declared per person 
for  a given  year does not exceed the number of 
hours  used  for  the  calculations of  that  hourly 
rate31. 

Art. 68a(4) CPR 

2)  Confirm correctness of calculation (the amount of 
SCO declared equals the hourly rate multiplied by the 
actual hours worked). 

Art. 68a(3) CPR 

3.3 

For  flat-rate  financing,  verify 
the  actual  costs 
incurred  and  paid  to  which  the  rate  is  applied  and 
ensure  that  these  are  in  accordance  with  the 
applicable methodology.  

1) In particular, in relation to the costs constituting the 
basis of calculation check that: 

a) The expenditure has been correctly 
allocated to the category(ies) of basis costs. 

b) There is no ineligible expenditure included 
in the basis costs. 

31 This does not apply to programmes under the European territorial cooperation goal for staff costs related to individuals who work on a part-time assignment on the operation. 

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c) There is no double declaration of the same 
cost items (i.e. that the basis cost or any other 
real cost do not include any cost item that 
normally falls under the flate rate). 

2)  Confirm  the  correctness  of  the  calculation  (the 
amount of  SCO declared equals the established flat 
rate multiplied by the amount of eligible basis costs). 

In case of financial corrections or other adjustments 
applied for the declared expenditure which constituted 
the  base  for  flat  rate  calculation  (e.g.  following 
detection  of  irregular  expenditure),  did  the  MA/IB 
adjusted also the amount declared  under  SCO (i.e. 
both  the  ineligible  expenditure  detected  and  the 
corresponding amount calculated on the basis of flat 
rate were corrected)? 

If  not,  please  re-calculate and  indicate  the  eligible 
SCO amount. 

In  case  the  audit  scope  covers  the  management 
verifications of the MA/IB: 

1)  Verify  what  is  checked  during  management 
verifications. 

3.4 

3.5 

In  particular, in  the  case of  standard scales of  unit 
costs and lump sums, establish on the basis of  the 
relevant documentation (such as internal procedures, 
instructions to beneficiaries, files  related  to  audited 
operations) what documents are used to confirm the 
achievement 
pre-defined 
deliverables/milestones. 

the 

of 

2) On the basis of verifications carried out in line with 
questions  3.1-3.4,  confirm  that  the  SCO  amounts 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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TO DO IT? 

This section focuses on the follow-up of audit findings related 
to the individual operations selected for the audit. See section 
2.6  for  a  follow-up  of  audit  findings  related  to  the  SCO 
methodology.  

approved  by  the  MA/IB  are  in  line  with  applicable 
methodology  and  rules,  and  there  is  a  proper 
treatment of ineligible expenditure. 

3.6 

Follow up of previous audits 

Point 1 

Point … 

Prepared by: 

Reviewed by: 

Are  there  any  SCO  audit  findings  for  the  audited 
operations? 

a) If yes, are the audit findings taken into account 
by the MA/IB?  

b) If  relevant, are  identified financial corrections 
accepted and implemented? 

Please list all points to be included in the audit report, if relevant. 

Conclusions 

Date: 

Date: 

37 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Annex III – Case reports on partnerships between 
managing authorities and audit authorities 

 The ESF Thematic Network on Simplification 

CASE REPORTS ON  
PARTNERSHIPS BETWEEN 
MANAGING AUTHORITIES & 
AUDIT AUTHORITIES  

Reports from: 
1. Estonia 
2. Portugal 
3. Sweden 
4. The Netherlands 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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The case reports were prepared in 2018 by managing authorities and audit authorities of 
the four countries, based on practices developed in the 2014-2020 programming period. 
Each report is structured around four key points: 

I.  Key preconditions and actions: How has it been possible to set up a collaborative 
scheme between the two Authorities? (i.e. what does it take to develop a partnership 
approach?) 

II.  Challenges, issues and solutions: What main challenges and issues have you 

been faced with and what solutions have been found? 

III.  Outcomes and  results: What  key  outcomes  and  results  have  been achieved 

through collaboration (i.e. added value of partnership)? 

IV. 

Lessons learned and recommendations: What lessons have you  learned and 
what recommendations would you share with your colleagues (both MAs and AAs) 
from other MSs and with the EC? 

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1. Estonia 

I. 

Key preconditions and actions 

The cooperation between the AA and the MA started with small steps. From the beginning 
of the 2007-2013 period, or even earlier, regular (twice a month) meetings between the MA. 
the certifying authority (CA) and the AA were held. The aim was to facilitate the exchange 
of information on the situation both on the ground and at EU level so that all parties were 
aware of ongoing developments in the field. During the first few years, the MA and the AA 
had  divided  opinions  on  some  contracts  regarding the  application  of  major  financial 
corrections. One of the specific cases related to the calculation method of Standard Scales 
of Unit Costs (SSUC) suggested by Article 67. An agreement was reached between both 
parties around 2011-2012. Thereafter, their relationship developed to the next stage. The 
role of auditors, from the MA  perspective, expanded beyond its primary narrow focus on 
auditing and  included consulting complicated  cases prior  to  making  final  decisions. A 
change  in  mindset  which  saw  a  move  away  from  interpreting the  principle  of  audit 
independence in a narrow way (that precluded the possibility for cooperation) was a crucial 
factor. Additionally, these disputes and their resolution set the basis for mutual trust and 
respect of each other’s competences and knowledge.    

Today, our cooperation includes: 

  sharing knowledge and information: formal and informal meetings between the MA, 
CA and AA allow for the discussion of potential issues, current works and provide 
an opportunity for giving an overview of their activities and plans; 

  consulting: regular meetings are also held with  the 2 nd level IB-s  wherein all the 
authorities are present. This allows  them to have direct contact with  the IB-s and 
share experiences/problems; 

  settling differences on audit findings – roundtables, discussions (if the beneficiary/IB 

has not accepted the audit findings); 

  advising: unit cost  methodologies prepared by the  MA/implementing bodies are 

reviewed by the AA before their implementation; and 

  co-operating in preparing the annual assurance package to EC. 

We do this for the following reasons: 

  sharing information (including from specific meetings at EU level) and harmonising 

practices; 

  avoiding mistakes during implementation; 

  preventing possible financial correction; 

  having a wider view of (potential) risks/the risk management process itself and  being 

able to react to potential risks quicker and more proactively; 

  avoiding duplication of controls;  

  aligning the time-schedules and work plans; 

 
 
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  sharing best practices; and 

 

reaching a common decision on difficult topics (in the case authorities have different 
opinions) 

Consent given by the AA by way of rather informal reflections in the form of consultation.  

II.  Challenges, issues and solutions  

Previously, collaboration was carried out mostly after the audits when the MA and the AA 
mainly discussed or argued about which authority was right. Now, relations rather resemble 
consultation or  advice  whereby  we  discuss  the  matters  beforehand. Neither  authority 
interferes in the other’s work, though we keep each other informed.    

As we work towards achieving the same goal, it is reasonable to set out to ensure the same 
understanding of the rules from the beginning.  Therefore, when the MA amends the internal 
guidelines,  the  AA  gives  an  opinion  on  whether  these  are  comprehensive  and  
understandable. The MA does not presume from the AA a final stance, but when the topics 
are difficult  (like  Financial Instruments), the  MA  seeks to  provide recommendations or 
advice to improve clarity. During the audits, the AA immediately notifies the MA when there 
might be more serious findings. The MA,  who knows every little detail about the system, 
can then explain the background or give an additional explanation where needed.  

The  AA  has  also  taken  a  more  active  consulting role  to  address various risk s  in  the 
implementation system proactively and to raise awareness of potential risks with regard to 
the IBs.  

The annual assurance package has to be presented on the same day by 3 different bodies 
– MA, CA , AA. To achieve this, we have agreed on internal deadlines concerning the stages 
of different reports. Information on main issues is disseminated as soon as possible to avoid 
any potential issues being encountered last minute. 

Since the beginning of 2017, the AA has participated (on a proposal from the MA) in the 
development of SSUC (art 67).   

III.  Outcomes and results 

As legal certainty is only achieved after the final audit, this kind of collaboration guarantees 
that some of the opinions will be similar, providing that practices are harmonised so that all 
have a  similar understanding of the rules. This approach helps to avoid mistakes being 
made during implementation and to prevent any possible financial corrections  - a more 
proactive role in preventing errors and financial corrections.  

Duplication of controls is avoided so that the MA and the AA do not carry out their controls 
on the same topics at the same time. Additionally, if the AA plans to start auditing the same 
project that falls under the AA’s remit, then the MA will not carry out its verification and will 
rely on the AA’s findings. 

For unit cost methodologies that the AA has reviewed, no separate methodology audits will 
be carried out.  

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IV.  Lessons learned and recommendations 

Partnerships and  cooperation are  stages of  a  growth  process, both  at  individu al and 
institutional level, whose value is enhanced by joint debates and common solutions. This 
also means a  change in the administrative culture of valuing common  goals more than 
individual ‘jewels in the crown’. To get to this point, both sides must develop the will to set 
and achieve a common goal and understand that cooperation is the only way  to achieve 
said goal. Moreover, realisation of the goal requires the presence of experts who are able 
to remain focussed and to take account of the arguments raised by their counterparts. To 
prevent potential financial corrections, it is very important to have a unified approach and to 
have an ongoing consultation on questions raised during the implementation process, so 
that the AA is also aware of potential risks and may be able to give its input (consultation 
services from the auditors). 

Checklists  on  different  levels  should  be  the  same  to  ensure  a  unified  approach  in 
management verification and audit and to avoid financial corrections.  

Open and timely  communication and sharing of best  practices is  key  to  fostering trust 
between the various authorities. 

 
 
 
 
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2. Portugal 

I. 

Key preconditions and actions 

The collaborative scheme reported here refers to the SCOs implemented through Article 67 
CPR for the 2014-2020 period and not to the SCOs implemented through a Delegated Act. 

Portugal  (PT)  started to  apply  unit  costs  in  the  programming period  2007 -2013,  with 
involvement of the AA  in  the discussions with  the MA  and stakeholders seen since the 
beginning of the process. The involvement of the AA was very important in the negotiations 
with the European Commission in view of the acceptance of the model. The MA and the AA 
in PT have benefitted from mutual learning over several years.   

The  key  factors  for  establishing  a  collaborative  scheme  between  the  AA  and  other 
stakeholders involved in the definition of SCOs include the existing relationship of trust and 
dialogue and the openness shown by the AA concerning simplified cost options as a way 
of making life easier for beneficiaries and also contributing to the reduction of error rates.  

For a good and functioning partnership in the process of defining a new methodology of 
SCOs, there are several crucial factors: trust, clear and transparent communication in all 
processes and involvement of all relevant stakeholders (MA/IB, AA,  coordinating entities, 
and Political decision-makers responsible for the methodological approvals). Exchanges of 
information and regular meetings are very important throughout the entirety of the process. 

II.  Challenges, issues and solutions  

Stakeholders’ approach aligned with  simplification objectives -  One  of  the  main 
challenges to SCO’s implementation is the change of paradigm – the move away from real 
cost principles - for all the stakeholders involved in the process of a SCO model definition 
and  implementation.  This  challenge  has  been  exacerbated  by  the  fact  that  not  all 
stakeholders have  the  same  level  of  information and  understanding of  simplified  cost 
options.  The  dilemma:  SCO  means  simplification  for  all/who  wins  and  who  loses? 
Commitment to simplification principles is crucial. 

Collaborative scheme - The establishment of a collaborative scheme between the AA and 
other stakeholders involved in the definition of SCOs cannot jeopardise the role of the AA. 
It is not the AA that approves the methodology. Approvals are decided at political level. The 
AA carries out an ex ante appraisal, has an advisory role, and signals possible audit risks. 
Although the AA  has an advisory role/ex ante appraisal signalling possible audit risks, it 
maintains its independence.  

MA’s primary responsibility for SCOs - All stakeholders, mainly the MA, should be aware 
that  the  primary  responsibility  for  SCOs  remains  the  MA,  namely  the  data  and  the 
calculations that support the methodologies, despite the ex ante appraisal of the model by 
the AA and the approval by political decision-makers. 

III.  Outcomes and results 

  The AA has an advisory role/ex ante appraisal signalling possible audit risks, namely 
compliance with  state aid rules and with  public procurement rules. Audit risks are 

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discussed and reduced or solved, in order to reduce legal uncertainty.  Since there 
is no formal approval by the European Commission (legal uncertainty), the national 
AA has a crucial role in providing some certainty and some comfort to stakeholders. 

  During the designation process, the AA identifies the simplified cost operations and 

does a preliminary analysis/assessment of the adopted models. 

  Secondly, the AA performs system audits by OP, which include the simplified costs 

options. 

 

In  a third phase, the AA  will  hold a thematic audit specifically targeting simplified 
costs, whereby it will also execute the follow-up of recommendations from previous 
audits. 

  These audit systems will focus on the following in particular: 

o  Validating the correct construction of the simplified costs option model 
o  Testing the correct application of the model in a sample of transactions 
o  Confirming  the  adequacy  of  management  checks  (quality  management 

checks is a key element in this process) 

o  Confirming  the  adequacy  of  the  audit  procedures developed  by  other 

auditors in the review simplified cost option implementation 

  Through audits on operations, the AA will: 

o  not check the expense documents 
o  verify  the  correct application  of  the  calculation  method  of  the  adopted 

simplified cost methodology  

o  confirm  the conditions for application of  the simplified  cost  method ( e.g. 
documents that demonstrate the fulfilment of the objectives and execution of 
the operation or of actual costs) 

IV.  Lessons learned and recommendations 

  The  importance  of  a  good  and  functioning  partnership  where  transparent 

communication and trust are crucial along throughout the process  

  The AA should be kept informed and involved in the process of defining a new SCO 

model from the beginning 

  The AA maintains its independence with regard to evaluating the model during the 

audit 

  The SCO model adoption (MA/political decision-makers) is improved by the AA’s ex 

ante appraisal, identifying audit risks 

  The involvement of all stakeholders (MA/IB/AA) is crucial in the whole process  i.e. 

from the beginning 

  The initial investment in the definition of the SCO model will save time and resources 
in management and audit checks (greater efficiency and simplification), and help to 
reduce the error rate. 

 
 
 
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3. Sweden 

I. 

Key preconditions and actions 

Sweden had the same AA for ESIF since 2007. In addition, the head of the AA has been 
the same person during this period, as is also the case for several of the auditors. Such 
stability  in  the  organisations and  commissions  has  been  key  for  the  development of 
cooperation built on mutual trust.  

A key aspect has been to find, over time, a common understanding of how to manage the 
funds correctly in relation to the costs of management and auditing the fund management.  
The AA and the MA need to sit down together to decide on the demarcation line regarding 
what is absolutely correct according to the regulations, and what is correct enough  within 
the spirit of the regulations.  

This has been done with mutual respect with regard to the fact that the MA knows how to 
manage funds, and the AA knows how to carry out audits. 

And, as always, relations boil down to an honest desire to cooperate and build trust among 
the individuals involved. 

II.  Challenges, issues and solutions  

Back in 2007, there was no trust between the MA and the AA. On the contrary, relations 
were tense and the authorities only spoke formally.  

Gradually, the MA  and the AA have moved forward, and they now  plan yearly activities 
together so that the MA knows when and what to do to provide the AA with figures, proofs 
etc., and vice versa. In this way, the MA and the AA collaborate and help each other conduct 
their respective missions.  

The planning concerns at which stage, during the year, the CA will send a declaration to the 
Commission. This provides a proper, functioning timeline for the AA to conduct their audits 
on the declaration. This way, the MA can reply duly in time so that the AA can finalise their 
yearly report to the Commission. It  is also about setting out a timetable for who  is doing 
what  and when  in  relation to the  schedule for the management declaration and yearly 
accounting. 

The MA and the AA also have informal meetings to discuss topics of common interest, and 
we do this with mutual respect for the roles we both play. 

In  addition to  the  above,  the  MA  consulted the  AA  when  preparing the SCOs  for  the 
Delegated Acts (DAs) under art. 14(1) ESF. Still, the MA only consulted, but did not ask for 
nor received formal consent from the AA regarding the proposed SCOs. The AA has also 
organised joint meetings with MAs on the ESI funds to discuss audit issues.  

Added to  this  is  a  kind  of  pragmatic attitude that  the authorities have  come  to  share; 
‘manage the funds correctly enough in relation to their costs’. In other words, this is our 
shared interpretation of ‘sound financial management’.  

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III.  Outcomes and results 

  Less frustration through the achievement of a common understanding of th e goal of 
the funds plus  mutual respect of  roles. A  low  error rate means  less audits and 
decreased administrative costs for both the MA and the AA. 

  Better predictability and conditions for the yearly overall planning.  

  A structure for problem solving between both parties on audit matters. 

  The MA believes that the low error rate is partly, but not solely, a result of common 

understanding and collaboration with the AA. 

 

In 2008-2009, the error rate was above 2 percent, which forced the authorities to 
make corrections. This taught the MA to be better at managing the funds and to 
build up a structure to meet audit reports.  

  The  MA  has  sharpened  management  and  control,  has  become  better  in 
management and replying to  the AA.  The mutual understanding of  overall fund 
management has evolved.  

 

Informal discussions over a cup of coffee. 

IV.  Lessons learned and recommendations 

  Find an informal space to discuss fund management and audit. 

  Discuss how to manage and audit funds in relation to the budget regulation’s r ule 

on ‘sound financial management’. 

  Build trust over time. 

 
 
 
 
 
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4. The Netherlands 

I. 

Key preconditions and actions 

  Both the MA and the AA see the need and advantages regarding simplifications.  

  Trust in each other’s competence.  

  Both the MA and the AA are involved in the whole process of the development of 
the SCO, wherein the MA develops and the AA points out the risks, verifiability and 
feasibility.   

  Clarity concerning the different roles each has: the MA is responsible for est ablishing 

the SCO methodology, the AA has an advisory role. 

  Also involve the beneficiary in the development of the SCO. 

  Simple structure in the Netherlands - only one OP, one MA, one AA and no IBs. 

  Regular meetings between the MA and the AA where the development of SCOs is 

discussed and audit issues are discussed beforehand. 

  Proposals are  discussed and  developed with  our  own  auditors (from  the  MA) 
beforehand so that when proposals are discussed with  the AA the proposals are 
more ‘audit’ proof. 

II.  Challenges, issues and solutions  

  Cooperation without jeopardising the roles of the MA  and the AA as auditee and 

auditor.  

  Primary responsibility for the SCO remains under the remit of the MA.  

  The AA is involved from start to finish in the process of making the SCO  with their 

advisory role. 

  Making use of historical information which has been subject to an audit by the AA is 

greatly advantageous.  

 

If  the  SCO  is  not  based on  historical information that was  already audited, the 
process of verifying and checking the data takes much longer. 

  More involvement of the auditors of the MA before discussing issues with the AA. 

(Auditors think alike). 

47 

 
 
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III.  Outcomes and results 

  Audit risks are discovered, discussed and solved proactively beforehand. As such, 
there are fewer discussions afterwards between the MA and the AA about the audit 
of the projects with SCOs. 

  The results of the SCO also makes the life of the MA, the beneficiary and the AA 

easier when it comes to verifying, auditing and administrating projects.  

IV.  Lessons learned and recommendations 

  The adoption process by the EC is made easier with a positive recommendation by 

the AA. 

  Build your relationship by involving the AA so they can point out the risks, verifiability 

and feasibility concerning SCOs.  

  While  developing SCOs,  the  discussions are  always  informal.  Only  when  the 
proposal is finished is an official statement from the AA  about the proposal sent 
together with the proposal to the Commission.  

 
 
 
 
 
 
 
 
 
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