Commission Decision of 20 December 2021 on the financial management of the mutual insurance mechanism established under Regulation (EU) 2021/695 of the European Parliament and of the Council for actions under the Seventh Framework Programme, Horizon 2020, Horizon Europe and Euratom Programmes 2021/C 514 I/03
Date: 2021-12-20
Institutions: Directorate-General for Research and Innovation, European Commission
Subjects: EU financing, Framework Programme for Research and Development, financial management, innovation, insurance, powers of the institutions (EU), reimbursement of aid, research and development




CI2021514EN.01000601.xml










21.12.2021   


EN


Official Journal of the European Union


CI 514/6






COMMISSION DECISION
of 20 December 2021
on the financial management of the mutual insurance mechanism established under Regulation (EU) 2021/695 of the European Parliament and of the Council for actions under the Seventh Framework Programme, Horizon 2020, Horizon Europe and Euratom Programmes
(2021/C 514 I/03)
THE EUROPEAN COMMISSION,
Having regard to the Treaty on the Functioning of the European Union,
Having regard to the Treaty establishing the European Atomic Energy Community,
Having regard to Regulation (EU) 2021/695 of the European Parliament and of the Council of 28 April 2021 establishing Horizon Europe – the Framework Programme for Research and Innovation, laying down its rules for participation and dissemination, and repealing Regulations (EU) No 1290/2013 and (EU) No 1291/2013 (1), in particular Article 37(2) thereof,
Having regard to Council Regulation (Euratom) 2021/765 of 10 May 2021 establishing the Research and Training Programme of the European Atomic Energy Community for the period 2021-2025 complementing Horizon Europe – the Framework Programme for Research and Innovation and repealing Regulation (Euratom) 2018/1563 (2), in particular Article 9(5) thereof,
Whereas:






(1)


A mutual insurance mechanism (the ‘MIM’) is to cover the risk associated with non-recovery of sums due by the beneficiaries under Decision No 1982/2006/EC of the European Parliament and of the Council (3) (the ‘Seventh Framework Programme’), Regulation (EU) No 1291/2013 of the European Parliament and of the Council (4) (the ‘Horizon 2020’), Regulation (EU) 2021/695 (the ‘Horizon Europe’), Council Decisions 2006/976/Euratom (5), 2012/93/Euratom (6) and Regulations (Euratom), 1314/2013 (7), 2018/1563 (8), 2021/765 (the ‘Euratom Programmes’). The Commission is to set up specific rules for the operation of the MIM.










(2)


For the efficient operation of the MIM, and the monitoring and supervision of the sound financial management of its financial transactions, it is necessary to appoint a manager of the MIM, which should be a designated service in charge with the overall management of the MIM, a financial asset manager of the MIM in charge with the implementation of the management of the assets, and an accountant of the MIM.










(3)


In order to ensure the legality of the transactions operated within the MIM, it is necessary to delegate the relevant powers from or within the Commission to persons consequently exercising tasks of authorising officers by delegation. The authorising officers by delegation should have the possibility to sub-delegate the relevant powers to authorising officers by sub-delegation in line with the Commission Internal Rules (9).










(4)


In order to ensure transparency and clarity on the functioning of the MIM, it is necessary to lay down the rules on the detailed roles and responsibilities of the different Commission services and authorising officers by delegation, and the procedures and rules governing in particular the contributions, the returns and the interventions of the MIM.










(5)


Given the environment of low or negative interest rates that prevails in financial markets already for several years, there is a material risk of periods during which negative financial returns (including administrative and bank fees, results of transactions and valuation of assets), may jeopardise the capacity of the MIM to operate. In order to preserve the MIM’s capacity to operate, those fees and costs may be paid from sources other than the financial returns of the MIM, which should be reserved for the purpose of covering the risk associated with non-recovery of sums due by the beneficiaries.










(6)


Any internal or external assigned revenues stemming from past and current Research and Innovation Framework Programmes, as well as from any other programme participating in the MIM, if necessary, should be used in order to pay negative interests, administrative and bank fees for the management of the MIM, results of transactions and valuation of assets of the MIM, as well as late payment interests on the return due to beneficiaries. It should also be possible, if necessary, to use those sources in order to honor legal and contractual obligations of the Union.










(7)


Since the MIM replaces the participant guarantee fund established by Regulation (EU) No 1290/2013 of the European Parliament and of the Council (10), Commission Decision C(2013) 9092 (11) should be repealed and replaced by this Decision,




HAS DECIDED AS FOLLOWS:

Article 1

1.   The Commission entrusts the financial and administrative management of the MIM to the Directorate General for Research and Innovation (‘DG RTD’ or ‘designated service’) for actions under the Seventh Framework Programme, Horizon 2020, Horizon Europe and Euratom Programmes.


2.   The Commission entrusts the tasks of financial assets manager of the MIM to the Directorate General for Budget.


3.   The division of tasks and duties between the designated service and the financial assets manager in relation to the MIM shall be set out in a service level agreement in conformity with the functions and responsibilities set out in this Decision.



Article 2
The Rules and Procedures of the MIM are set out in the Annex.


Article 3

1.   The Commission delegates to the authorising officers, as indicated in the Rules and Procedures of the MIM set out in the Annex, powers to authorise interventions from the MIM and the return of contributions to the beneficiaries.


2.   The Commission authorises the same authorising officers to implement revenue from the MIM under the Seventh Framework Programme, Horizon 2020, Horizon Europe and Euratom Programmes.


3.   The authorising officers by delegation may sub-delegate the relevant powers to authorising officers by sub-delegation in line with the Commission Decision C(2018)5120 of 3 August 2018 on the Internal Rules on the implementation of the general Budget of the European Union.


4.   The Commission delegates to the authorising officer by delegation of the designated service, the power to authorise payment orders for transferring the contribution collected by the AOD to the MIM and then to the Asset manager. The Commission also delegates to the authorising officer by delegation of the designated service, the power to issue recovery orders for transferring funds from the Asset manager to the MIM in order to ensure the returns of contributions and interventions. The authorising officer by delegation of the designated service may sub-delegate the relevant powers to authorising officers by sub-delegation.


5.   In its role as financial and administrative manager of the MIM, the designated service shall, after the verification of their conformity and regularity, validate or reject the transactions authorised by the authorising officers by delegation. Before validating the transaction, the designated service may issue a non-binding opinion on its opportunity. Where the opinion is negative, the transaction shall be validated by the designated service only if the authorising officer by delegation confirms the transaction in writing, providing a proper motivation.



Article 4
The Commission’s accounting officer is appointed the accounting officer of the MIM.


Article 5

1.   Where the designated service, in agreement with the financial assets manager, considers that the MIM’s funds are not sufficient to return the beneficiary contributions at the payment of the balance, the measures referred to in paragraph 2 shall be temporarily enacted.


2.   Any negative financial returns, including interests, net realised losses and valuation losses, administrative and bank fees for the management of the MIM such as, but not limited to, transaction fees, IT costs, account fees, custodian fees, external audit fees, costs, as well as any late payment interests on the return due to beneficiaries, may be covered by internal and/or external assigned revenues stemming from past and current Research and Innovation Framework Programmes, as well as from the budget of the participating programmes. Internal assigned revenues stemming from recoveries (both of the current financial year and carried over under Article 12(4)(b) of the Financial Regulation (12)), as well as available external assigned revenues from past Research Framework Programmes, shall be used in priority.


3.   The financial resources referred to in paragraph 2 shall not be used to finance the interventions of the MIM, except to cover the granting authority’s contractual obligations of previously signed Horizon 2020 grant agreements where, on the basis of the monthly financial statement of the MIM, the designated service, in agreement with the accountant of the MIM consider that the financial returns are not sufficient, or where the net financial returns available amount is less than EUR 15 million.


4.   Any transfers to the MIM under the temporary measures set out in paragraph 2 shall not result in the creation of a reserve exceeding EUR 60 million at any given time.



Article 6
Decision C(2013) 9092 is repealed.


Done at Brussels, 20 December 2021


For the Commission

Mariya GABRIEL

Member of the Commission





(1)  OJ L 170, 12.5.2021, p. 1.

(2)  OJ L 167, 12.5.2021, p. 81.

(3)  Decision No 1982/2006/EC of the European Parliament and the Council of 18 December 2006 concerning the Seventh Framework Programme of the European Community for research, technological development and demonstration activities (2007-2013) (OJ L 412, 30.12.2006, p. 1).

(4)  Regulation (EU) No 1291/2013 of the European Parliament and of the Council of 11 December 2013 establishing Horizon 2020 – the Framework Programme for Research and Innovation (2014-2020) and repealing Decision No 1982/2006/EC (OJ L 347, 20.12.2013, p. 104).

(5)  Council Decision of 19 December 2006 concerning the Specific Programme implementing the Seventh Framework Programme of the European Atomic Energy Community (Euratom) for nuclear research and training activities (2007 to 2011) (2006/976/Euratom) (OJ L 400, 30.12.2006, p. 404).

(6)  Council Decision of 19 December 2011 concerning the Framework Programme of the European Atomic Energy Community for nuclear research and training activities (2012 to 2013) (2012/93/Euratom) (OJ L 47, 18.2.2012, p. 25).

(7)  Council Regulation (Euratom) No 1314/2013 of 16 December 2013 on the Research and Training Programme of the European Atomic Energy Community (2014-2018) complementing the Horizon 2020 Framework Programme for Research and Innovation (OJ L 347, 20.12.2013, p. 948).

(8)  Council Regulation (Euratom) No 2018/1563 of 15 October 2018 on the Research and Training Programme of the European Atomic Energy Community (2019-2020) complementing the Horizon 2020 Framework Programme for Research and Innovation, and repealing Regulation (Euratom) No 1314/2013 (OJ L 262, 19.10.2018, p. 1).

(9)  Commission Decision C(2018)5120 of 3 August 2018 on the Internal Rules on the implementation of the general Budget of the European Union (European Commission section) for the attention of the Commission departments.

(10)  Regulation (EU) No 1290/2013 of the European Parliament and of the Council of 11 December 2013 laying down the rules for participation and dissemination in Horizon 2020 – the Framework Programme for Research and Innovation (2014-2020) and repealing Regulation (EC) No 1906/2006 (OJ L 347, 20.12.2013, p. 81).

(11)  Commission Decision C(2013) 9092 of 17 December 2013 on the financial management of the participant guarantee fund established under Regulation (EU) No [1290/2013] of the European Parliament and of the Council and amending Commission Decision C(2005) 2992.

(12)  Regulation (EU, Euratom) 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, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, p. 1).




ANNEX

Rules and Procedures of the mutual insurance mechanism

CONTENTS







1.

CONTEXT
11










1.2.

Budgetary structure, costs related to, and actors involved in managing the MIM
11










1.2.1.

The MIM’s specific budgetary structure
11










1.2.2.

Authorising officers
11










1.2.3.

The Commission’s designated service for managing the MIM
12










1.2.4.

The MIM’s accounting officer
12










1.2.5.

The financial assets manager
13










1.2.6.

Inter-Service Group of the Mutual Insurance Mechanism
13










2.

CONTRIBUTIONS TO THE MIM
13










2.1.

Procedure No 1 — Contribution
13










3.

RETURNING MIM’s CONTRIBUTIONS
14










3.1.

General rules
14










3.2.

Procedure No 2 – Returning
14










3.2.1.

Procedure 2a – Complete repayment to the beneficiaries
14










3.2.2.

Procedure 2b – Complete repayment to relevant budget line
14










3.2.3.

Procedure 2c – Partial repayment to the legal entities and to relevant budget line
14










4.

INTERVENTION OF THE MIM (DEFAULTS)
15










4.1.

Introduction
15










4.2.

Procedure No 3 – MIM intervention
15










4.2.1.

Procedure 3a — MIM intervention in ongoing actions (direct transfer to consortium)
15










4.2.2.

Procedure 3b — Other MIM interventions (transfer to budget line)
16










5.

ACCOUNTING SYSTEM
17










5.1.

Annual accounts
17










5.2.

Computerised accounting system
18










5.3.

Executing payments
18










5.4.

Collecting revenue and recovering debts
18










5.5.

Managing the ‘GF01’ bank accounts
18




INTRODUCTION

This Annex sets out the Rules and Procedures for all the services involved in the operations and the management of the mutual insurance mechanism (the ‘MIM’).
These Rules and Procedures apply to actions financed under the Seventh Framework Programme (1) (‘FP7’), Horizon 2020 (2) (‘H2020’), the Horizon Europe (3) (‘HE’), and the Euratom Research and Training Programme (4) (‘Euratom Programmes’).
A comprehensive user guide for staff responsible for implementing actions under the FP7, H2020, HE and Euratom Programmes will be included in the ‘MIM Guidance’.
1.   CONTEXT

1.2.   Budgetary structure, costs related to, and actors involved in managing the MIM

1.2.1.   The MIM’s specific budgetary structure

Although the MIM lacks legal personality, it has a structure and an accounting and a budgetary system (company code ‘GF01’) independent from that of the Commission (company code ‘BG32’) or other Union bodies.
1.2.2.   Authorising officers

The Commission is the authorising officer of the MIM.
For the purpose of this decision, the following are understood as ‘authorising officers by delegation’ (‘AOD’) for the operations of the MIM, each one responsible for the part of the FP7, H2020, HE budget or the Euratom Programmes budget that they implement:






—


Directors-general of the different Directorates General of the Commission;










—


For Euratom Programmes, the Director General of DG RTD,










—


Directors of the executive agencies,










—


Holders of equivalent positions in entities entrusted with budgetary implementation tasks, such as Executive Directors of joint undertakings and other relevant funding bodies on condition that the tasks related to the operations of the MIM are entrusted in accordance with Article 154 of the Financial Regulation (5) and subject to the conditions for MIM participation set out in the instrument entrusting budgetary implementation tasks.




AODs are responsible for retaining, from each initial pre-financing, the contribution to the MIM provided for in the grant agreements they manage.
They are also responsible for (i) returning MIM contributions to beneficiaries, (ii) for MIM interventions, including payments and recoveries. Consequently, they are also AODs in the ‘GF01’ accounting system.
They remain fully responsible for ensuring that the funds they manage are used correctly and that the expenditure placed under their control is legal and correct.
1.2.3.   The Commission’s designated service for managing the MIM

DG RTD, as the designated service, is responsible for monitoring and supervising the sound financial management of the MIM’s financial transactions. This does not relieve the AODs of their individual responsibility.
In particular, the designated service shall:






—


transfer beneficiaries’ contributions from the specific ‘BG32’ off-budget account to the ‘GF01’ (6) bank account;










—


transfer contributions from the ‘GF01’ bank account to the financial assets manager;










—


monitor that there is enough liquidity in the ‘GF01’ bank account to be able to promptly respond to requests for returns and to requests for interventions;










—


regularly provide the MIM’s accounting officer with all information needed to perform his or her duties;










—


ensure the detailed monitoring and follow-up of amounts transferred to or from the financial assets manager;










—


periodically provide the financial assets manager with a projection of the flow of contributions and returns, based on information provided by the services involved, and any other information reasonably required by the financial asset manager for the performance of his or her duties;










—


provide the AODs with quarterly reports on the MIM’s financial situation;










—


monitor the situation and evolution of the MIM to allow the Commission to take, if needed, appropriate mitigating measures in order to allow the MIM to continue its interventions for the protection of the financial interests of the Union and to return contributions to beneficiaries at the payment of the balance;










—


verify ex-post that the AODs have correctly retained the MIM contribution from each initial pre-financing and that the contribution is equal to the percentage specified in the grant agreement, applied to the maximum grant amount indicated in the grant agreement;










—


validate or reject the transactions authorised by the authorising officers by delegation, after the verification of their conformity and regularity. In case of disagreement on the opportunity of a transaction, the designated service, releases a non-binding opinion before its validation;










—


chair the MIM Inter-service Group referred to in point 1.2.6;










—


ensure that the MIM guidance content is up-to-date;










—


assist the financial officers of the relevant AOD.




1.2.4.   The MIM’s accounting officer

The MIM’s accounting officer carries out the role in accordance with principles set out in the ‘Charter of tasks and responsibilities of the Commission’s accounting officer’ (7).
The MIM’s specific accounting system is part of the Commission’s accounting system. However, its accountancy is distinct from that of the general budget of the Union.
The designated service and the financial assets manager referred to in point 1.2.5 provide the MIM’s accounting officer with all information necessary for compiling the accounts, which must give a true and fair view of the MIM’s assets and liabilities. The MIM’s accounting officer may verify the information received and carry out any further checks that are considered necessary before signing off the accounts. The MIM’s accounting officer may express reservations, specifying their nature and scope.
1.2.5.   The financial assets manager

The Directorate General for the Budget (DG BUDG), as the financial assets manager, manages the MIM’s assets in line with the service level agreement that it concludes with the designated service.
The service level agreement will establish the relationship between the designated service and the financial assets manager as well as the investment rules of the MIM, with a view to find the right balance between an acceptable level of investment risk and long term financial viability of the MIM (8).
The financial assets manager will monitor the funds in line with the rules set out in the service level agreement and report to the designated service any relevant information related to its mandate.
1.2.6.   Inter-Service Group of the Mutual Insurance Mechanism

The Inter-Service Group of the Mutual Insurance Mechanism (‘ISG-MIM’) is composed of the Directorates-General, Executive Agencies and Joint Undertakings involved in the operations of the MIM. Its members include also a representative of the Commission’s Legal Service, DG BUDG and the Common Legal Support Service (CLSS).
The ISG-MIM is chaired by the designated service. It has a consultative role.
2.   CONTRIBUTIONS TO THE MIM

In line with the relevant grant agreement, the contribution will be retained in full from the initial pre-financing. If the EU grant amount is increased through an amendment, an additional corresponding retention as contribution to the MIM will be applied (9).
2.1.   Procedure No 1 — Contribution

Step 1
When concluding a grant agreement, the AOD retains the contribution percentage from the pre-financing, as specified in the grant agreement.
The relevant financial initiating agent enters a pre-financing payment order (10) (‘PO’) in its own accounting system. The part of the amount of this PO intended for the MIM is recorded by the relevant financial initiating agent in a specific off-budget account in its own accounting system.
The PO follows the relevant authorising procedure and it is executed by the relevant accounting officer (11).
Step 2
The designated service regularly transfers the total cumulative contributions from the specific off-budget accounts to the accounting system ‘GF01’ (12) by means of a PO.
The PO is checked by a financial verifying agent, authorised by the AOSD of the designated service and executed by the Commission’s accounting officer.
Step 3
The designated service, by means of a PO, authorises the transfer of the contributions from the ‘GF01’ accounting system to the MIM’s financial assets manager, and ensures that the ‘GF01’ bank account has sufficient liquidity to be able to respond to requests for returns and interventions.
This PO is checked by a financial verifying agent, authorised by the AOD of the designated service and executed by the MIM’s accounting officer.
The designated service verifies ex-post that the AOD has correctly calculated and retained the contribution to the MIM from the initial pre-financing. If an error is detected, the designated service notifies the AOD responsible who corrects the amount.
3.   RETURNING MIM’s CONTRIBUTIONS

3.1.   General rules

Under Article 37(4) of Regulation (EU) 2021/695, the contribution transferred to the MIM must be returned to the beneficiaries at the payment of the balance. The amount to be returned includes late-payment interest on the retention, if applicable, but not interests generated by the MIM.
If the calculation of the payment of the balance does not justify repaying any or part of the initial contribution to the beneficiaries, the entire contribution, or the relevant part, is to be returned to the relevant budget line from which the initial commitment was authorised.
3.2.   Procedure No 2 – Returning

The return of the contributions shall be carried out according to the following three procedures:
3.2.1.   Procedure 2a – Complete repayment to the beneficiaries

If the calculation of the payment of the balance justifies a full repayment of the initial contribution, the relevant AOD repays the contribution to the beneficiaries via the coordinator of the action.
The financial initiating agent initiates in the ABAC (13)‘GF01’ accounting system a PO in favour of the coordinator of the action. The PO is then checked by a financial verifying agent, authorised by the AOD, validated by the designated service in ABAC SAP (14) and executed by the MIM’s accounting officer.
If an error is detected, the designated service rejects the transaction in ABAC SAP and notifies the relevant AOD.
3.2.2.   Procedure 2b – Complete repayment to relevant budget line

If the calculation of the payment of the balance after taking into account the requirements of the applicable grant agreement does not justify repaying any part of initial contribution to the beneficiaries, the relevant AOD fully repays it to the budget line from which the initial payment was made.
To do this, the relevant AOD authorises a recovery order (‘RO’) against the MIM in its accounting system. Once the RO is validated by the relevant accounting officer, the initiating agent initiates a PO in the GF01 accounting system.
The financial initiating agent initiates in the ABAC ‘GF01’ accounting system a PO in favour of the budget line from which the original payment was made. The PO is then checked by a financial verifying agent, authorised by the AOD, validated by the designated service in ABAC SAP and executed by the MIM’s accounting officer.
If an error is detected, the designated service rejects the transaction in ABAC SAP and notifies the relevant AOD.
3.2.3.   Procedure 2c – Partial repayment to the legal entities and to relevant budget line

If the calculation of the payment of the balance justifies partially repaying the initial contribution to the beneficiaries, the relevant AOD repays a partial amount to the action’s coordinator.
The relevant AOD repays the remaining amount to the budget line from which the initial payment was made.
To do this, the relevant AOD authorises a RO against the MIM in its accounting system. Once the RO is validated by the relevant accounting officer, the initiating agent initiates two POs in the ABAC GF01 accounting system. One in favour of the budget line, the other in favour of the action’s coordinator. Both POs are then checked by a financial verifying agent, authorised by the AOD, validated by the designated service in ABAC SAP and executed by the MIM’s accounting officer.
If an error is detected, the designated service rejects the transaction in ABAC SAP and notifies the relevant AOD.
4.   INTERVENTION OF THE MIM (DEFAULTS)

4.1.   Introduction

If a beneficiary (including the coordinator) defaults, – that is, it does not pay by the due date the whole or a part of the amount established in the debit note – and in the absence of guarantees or further possible offsets, the relevant AOD considers launching a MIM intervention in line with the relevant contractual provisions (FP7, H2020, Euratom Programme or HE). MIM interventions do not affect any administrative sanctions or measures that may be imposed on the defaulting legal entity under the Financial Regulation.
Except where the interventions of the MIM derive from a contractual provision of the H2020 grant agreement, if the financial return generated by the MIM is insufficient to cover the default, the MIM cannot intervene and the Commission, executive agency, joint undertaking or Union body concerned, must recover the amount due directly from the beneficiary or, if possible, its affiliated entity/linked third party.
A MIM intervention cannot be launched:






—


for ROs issued after the payment of the balance;










—


for ROs issued to recover liquidated damages and/or financial penalties owed by a legal entity.




If after the payment of the balance, the relevant AOD issues a RO against the coordinator for amounts of non-distributed pre-financing, interim payments or payments of the balance, the MIM will not intervene.
4.2.   Procedure No 3 – MIM intervention

4.2.1.   Procedure 3a — MIM intervention in ongoing actions (direct transfer to consortium)

In case of termination of a beneficiary (including the coordinator) of the consortium during an ongoing action (‘defaulting beneficiary’), and where the amounts unduly received by the defaulting beneficiary are not reimbursed by the latter to the consortium, the MIM will intervene by paying such amounts to the coordinator (in case the defaulting beneficiary is the coordinator, the amount due from that entity will be paid by the MIM to the new coordinator), if the following cumulative conditions are met:






(a)


the action is still on-going (15);










(b)


the relevant AOD considers that the intervention is necessary and opportune for the consortium to successfully complete the action;










(c)


the rest of the consortium agrees to implement the action with the same objectives;










(d)


an amendment to the grant agreement terminating the defaulting beneficiary (or coordinator) is signed;










(e)


if the defaulting beneficiary is the coordinator, that a new coordinator is appointed with the agreement of the remaining beneficiaries.




The relevant AOD is responsible for verifying the fulfilment of those conditions.
This procedure does not apply to amounts of pre-financing or interim payments undistributed by the coordinator.
In view of verifying and monitoring the conformity, the regularity and the opportunity of the transaction, the designated service controls the fulfilment of these conditions and rejects the transaction if the conditions are not fulfilled. When the designated service rejects the transaction, it notifies the reasons to the relevant AOD. If the designated service considers that the condition under (b) is not fulfilled, it will issue a non-binding opinion via note addressed to the AOD. In case the AOD disagrees, she or he confirms its position in writing in a motivated reply.
For each intervention, the designated service may request access to administrative and financial files.
Step 1
The financial initiating agent of the relevant AOD initiates a PO in favour of the coordinator (or the new coordinator) in the ‘GF01’ accounting system for the amount unduly received by the defaulting beneficiary. The PO is then checked by a financial verifying agent, authorised by the relevant AOD and, if validated by the designated service in ABAC SAP, executed by the MIM’s accounting officer.
From a legal point of view, the payment will be done by the Commission, executive agency, joint undertaking or other funding body concerned even though the payment is done by the accounting officer of the MIM via the ‘GF01’ account.
Step 2
In parallel, the financial initiating agent of the relevant AOD initiates a RO in the name of the Commission, executive agency, the joint undertaking or other funding body against the defaulting beneficiary in the ‘GF01’ accounting system, and must indicate the bank account of the MIM. This RO is then checked by a financial verifying agent, authorised by the relevant AOD and, if validated by the designated service in ABAC SAP, executed by the MIM’s accounting officer, who also ensures its follow-up.
If the defaulting beneficiary declares bankruptcy, insolvency or is in the process of dissolution or liquidation, the relevant AOD must send a declaration of debt to the liquidator as soon as possible (16). The relevant AOD must also send the liquidator the corresponding debit note.
4.2.2.   Procedure 3b — Other MIM interventions (transfer to budget line)

This procedure applies for the following cases, where debit notes established have not been honoured:






a)


termination of a beneficiary (including the coordinator (17)) before the payment of the balance, in cases where the procedure 3a does not apply;










b)


termination of a coordinator before the payment of the balance because the coordinator did not distribute the pre-financing or any interim payment to the other beneficiaries of the consortium;










c)


there is a debt resulting from a ‘negative payment of the balance’.




Step 1
The relevant AOD issues a RO against the beneficiary or the coordinator in its accounting system to recover the amount owed (in accordance with the relevant grant agreement).
Step 2
If the debit note is not reimbursed totally or partially within the specified deadline and if offsetting by the relevant accounting officer is not possible totally or partially, that accounting officer must inform the relevant AOD.
The relevant AOD then initiates, verifies and authorises a PO in the ‘GF01’ accounting system to pay the totality or the part of the debit note still pending to be paid. Then, if validated by the designated service in ABAC SAP, the PO is executed by the MIM’s accounting officer.
Step 3
In parallel, the relevant AOD initiates, verifies and authorises a new RO against the defaulting beneficiary in the ‘GF01’ accounting system. Then, if validated by the designated service in ABAC SAP, the RO is executed by the MIM’s accounting officer, who ensures its follow-up and takes the steps specified in the Financial Regulation to ensure recovery of the amount owed.
The relevant AOD generates a new debit note in the name of the Commission, executive agency, joint undertaking or another funding body concerned, in favour of the MIM, which simply replaces the initial debit note, keeping the same payment date and interest rate and properly informing the debtor.
If the beneficiary honours the debit note, the funds are paid to the ‘GF01’ bank account along with the default interest accrued.
If the beneficiary does not honour the debit note, other options for recovering the funds in question may be possible, such as offsetting the amounts due, holding affiliated entities of the beneficiary liable (18) or enforced recovery, if applicable (19), or, in the case of funding bodies, any other appropriate measure foreseen in accordance with its rules and procedure.
For step (2) and (3): in view of verifying and monitoring the conformity and the regularity of the transaction (PO and RO), the designated service may request access to administrative and financial files. If an error is detected, the designated service rejects the transaction and notifies the relevant AOD.
Notes to chapter 4.2






1.


In application of the principle of sound financial management, and in order to protect the financial interests of the Union, the AOD should verify whether the consortium or its members have fulfilled their obligation of timely (according to the grant agreement/annotated grant agreement) informing about the non-distribution of the pre-financing or of the interim payment by the coordinator. In particular, as soon as the relevant AOD receives such information, he or she must immediately take any possible measure to suspend any further payment to the defaulting coordinator. The relevant AOD could also consider whether any delay in this information, having as a consequence an additional financial exposure of the Union budget (i.e. a further payment) has to be attributed to the consortium members.










2.


Whenever the non-distribution is reported by the consortium’s members with unjustified delay, in order to trigger the intervention of the MIM, reasonable assurance must be gathered by the AOD, that the coordinator did not enter in any kind of bi or multi-lateral agreement with any of the unpaid beneficiaries, in particular for reducing or offsetting or compensating any part of the amount at stake. The AOD may if necessary ask the coordinator and/or beneficiaries for proof of transfer or receipt.










3.


Only applicable to 4.2.2. If a beneficiary declares bankruptcy, insolvency or is in the process of dissolution or liquidation, the Commission, executive agency, joint undertaking or another funding body’s AOD shall immediately initiate a MIM intervention before the specified deadline in the debit note (step 1). If the RO issued in ‘GF01’ has been issued or can be issued before any deadline, then only the debit note corresponding to this RO should be sent to the beneficiary, with a copy addressed to the liquidator, in the name of the Commission, executive agency, joint undertaking or another funding body concerned and in favour of the MIM.




In any case, no more payments to the coordinator shall be done until such situation is resolved.
5.   ACCOUNTING SYSTEM

5.1.   Annual accounts

The accounts must comply with the applicable rules, be accurate, comprehensive and present a true and fair view of MIM assets, the financial situation and the outturn of the financial year.
The MIM’s accounting officer sets out the accounting procedures and the chart of accounts.
5.2.   Computerised accounting system

The MIM’s accounting officer draws up the functional specifications of the accounting software and ensures that they comply with the accounting rules and practices before this system is being put into operation.
The AODs and designated service uses the central ABAC WORKFLOW system to make payments, collect revenue and recover debts. The ABAC SAP-ACCOUNTING system is used for keeping, preparing and presenting the accounts.
The accounting system and accounting procedures used must take into consideration procedures specific to the MIM, as described in sections 2, 3 and 4 of this Annex.
5.3.   Executing payments

Payments are made by the MIM’s accounting officer within the limits of the available funds.
The MIM’s accounting officer may make payments by bank transfer only if the beneficiary’s bank details and confirmation of its identity (or changes to it) were entered in the Commission’s central third-party database in advance.
5.4.   Collecting revenue and recovering debts

The MIM’s accounting officer is responsible for the ROs drawn up by the relevant AOD and acts with due diligence to ensure that they are collected.
If debts are not repaid by the deadline specified in the debit note, the MIM’s accounting officer implements the pre-litigation recovery procedure by sending reminders and letters of formal notice to the debtor.
The MIM’s accounting officer calculates and recovers the default interest due in accordance with the provisions included in the debit note.
If necessary, the MIM’s accounting officer may recover the debt by offsetting it or by calling in a guarantee lodged in advance (for FP7 actions), after informing the relevant AOD and the defaulting beneficiary.
If the debts are not recovered through the pre-litigation procedure, the MIM’s accounting officer either:






—


asks the relevant AOD to prepare an enforceable decision in accordance with Article 100 of the Financial Regulation or










—


if it is not possible to formalise the RO as an enforceable decision, instructs the Commission’s relevant service to obtain an enforcement order by judicial means, if in line with the Internal Rules (20).




The MIM’s accounting officer may grant the debtor additional time for payment, if the debtor commits to paying the default interest due and lodges a guarantee covering the principal amount and the interest.
If necessary, the MIM’s accounting officer may at any point in the procedure take steps to safeguard the Union’s financial interests.
5.5.   Managing the ‘GF01’ bank accounts

The MIM’s accounting officer is empowered to manage the bank accounts used to execute payments and to collect revenue. The MIM’s accounting officer is responsible for safeguarding the funds deposited on these accounts.
At least once a month, the MIM’s accounting officer must verify that the amounts entered into the accounting system match the amounts in these bank accounts. The MIM’s accounting officer must investigate and, if necessary, correct any differences found.


(1)  Decision No 1982/2006/EC of the European Parliament and of the Council of 18 December 2006 concerning the Seventh Framework Programme of the European Community for research, technological development and demonstration activities (2007-2013) (OJ L 412, 30.12.2006, p. 1).

(2)  Regulation (EU) No 1291/2013 of the European Parliament and of the Council of 11 December 2013 establishing Horizon 2020 - the Framework Programme for Research and Innovation (2014-2020) and repealing Decision No 1982/2006/EC (OJ L 347, 20.12.2013, p. 104).

(3)  Regulation (EU) 2021/695 of the European Parliament and of the Council of 28 April 2021 establishing Horizon Europe – the Framework Programme for Research and Innovation, laying down its rules for participation and dissemination, and repealing Regulations (EU) No 1290/2013 and (EU) No 1291/2013 (OJ L 170, 12.5.2021, p. 1).

(4)  Council Regulation (Euratom) 2021/765 of 10 May 2021 establishing the Research and Training Programme of the European Atomic Energy Community for the period 2021-2025 complementing Horizon Europe – the Framework Programme for Research and Innovation and repealing Regulation (Euratom) 2018/1563 (OJ L 167I, 12.05.2021, p. 81).

(5)  Regulation (EU, Euratom) 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, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, p. 1).

(6)  Except from the EUSPA (ex-GSA), EIT, joint undertakings.

(7)  Commission Decision C(2018) 5120 final of 3 August 2018 on the Internal Rules on the implementation of the general budget of the European Union (European Commission section) for the attention of the Commission departments, Annex 15 - Charter of financial actors, part 3 - Charter of tasks and responsibilities of the Commission’s accounting officer.

(8)  It is understood that the management of the MIM’s assets involves taking investment risk by the budget of the Union which implies that investment returns can be negative or positive depending on the future market conditions and behavior.

(9)  Except HE MSCA Programme.

(10)  Each reference to a PO in this Annex includes by default also the payment request(s) linked to it.

(11)  Joint undertakings and other funding bodies ensure the execution of the PO by their own accounting officer.

(12)  The GSA, EIT, the joint undertakings and other relevant funding bodies, transfer the MIM contributions directly to the ‘GF01’ accounting system.

(13)  ABAC (Accrual Based Accounting) is the acronym of the IT financial system of the European Commission.

(14)  SAP identifies the accounting module within ABAC.

(15)  The action’s duration is fixed in the grant agreement.

(16)  As specified in Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (OJ L 141, 5.6.2015, p. 19).

(17)  For the coordinator it covers the part of the funding received related to its own costs, not for the non-distribution of pre-financing/interim payments to the consortium’s members.

(18)  For H2020 and HE actions, if applicable under the grant agreement.

(19)  Internal procedure provisions for the recovery of amounts receivable arising from direct management and the recovery of fines, lump sums and penalty payments under the Treaties (Decision C(2018/5119) final of 3 August 2018).

(20)  Commission Decision C(2018) 5119 final of 3 August 2018 on the internal procedure provisions for the recovery of amounts receivable arising from direct management and the recovery of fines, lump sums and penalty payments under the Treaties.