Financial reporting in EU-funded projects is a structured, regulated process designed to ensure transparency, accountability and proper use of EU funds. Partners in so-called Actual cost projects submit financial reports every 12 or 18 months throughout the project. Below is an overview, based on our experience and the latest EU guidance and templates, of what it takes to prepare reporting. When done properly from the start, it should not present any insurmountable hurdles.
Prepare for financial reporting from Day 1 so costs are calculated correctly and records are complete. The work can be administrative, but it is manageable when you follow the guidelines and templates.
Keeping the the partner consortium of the project informed
Efficient financial reporting begins with clear communication and guidance to all partners as soon as the project starts. Provide practical instructions and proactive support so everyone understands their responsibilities and the EU’s requirements for format and content.
Cost tracking and reporting can be time-consuming, so attention to detail is crucial. Even when organisations have the know-how, they may lack resources or be reporting for the first time, so coaching, training and regular briefings help ensure accuracy and compliance.
Senior EU Finance Consultant Laura Hänninen from Spinverse shares her insights into the reporting process: "Without early guidance, the problems and possible misunderstandings of the rules may only come to light when it’s time to prepare the financial statement. This can be avoided by ensuring that all partners, especially newcomers and SMEs with less resources, know exactly what is expected from them. My experience has shown that when partners are properly briefed about the rules and requirements at the start, it can significantly streamline the reporting process and minimise risks of errors and unnecessary stress."
Advising the Coordinator and reminding partners of their responsibilities
The Coordinator plays an important role in financial reporting. They ensure partners submit their reports on time and review individual financial statements for consistency with work performed, as well as completeness and correctness, before submission to the EU.
The Coordinator also compiles the periodic report and submits it to the Commission for review, then responds centrally to any follow-up questions or update requests from EU reviewers on behalf of the Consortium.
Laura Hänninen adds: “When we support a consortium in financial reporting, we take some of the burden off the Coordinator’s shoulders by monitoring the completion of the reports by the partners and providing them 1to1 guidance on how to comply with the reporting rules. Because we know what the EU requires, we can reduce additional queries from the EU reviewers by helping partners report their costs in the correct format and with required level of detail.”
Key components of financial reporting
Financial reporting in projects funded by Horizon Europe involves several key components:
- Sufficient internal systems and records for tracking expenditure in the project: This is the starting point for good reporting! The EU expects each partner entity to comply with local and EU accounting standards, and to apply those when recording the costs incurred during the project. All costs reported to the EU must be identifiable and verifiable from the accounting and payroll records of the organisation, and work effort must be reported accurately for each person working on the project.
- Financial statements: These are structured individual and consolidated financial statements completed in the EU portal, to report the direct costs incurred during the reporting period, according to pre-defined categories. For grants above certain thresholds, an external audit of the reported costs is required, to provide a Certificate on Financial Statements to the EU at the end of the project.
- Detailed cost reporting: Most programmes require specifications of certain costs, either using a detailed cost reporting (Excel) template or the Use of Resources report online. Reported costs and work effort are compared to the budged, and deviations must be explained.
Monitoring the process and providing feedback
Continuous monitoring and feedback help keep reporting on track. This includes checking portal entries, giving partners targeted feedback and requesting clarifications when needed so reports are accurate and submitted on time.
Spinverse’s Project Manager for Finance, Mattias Lagerberg reflects on the importance of timeliness in reporting: "Instructing and supporting the partners in reporting is highly valued by them, as it enables the Consortium to submit their reports within deadlines and get grant payments as quickly as possible. Ensuring accuracy and timely submission not only reflects the Consortium’s commitment to compliance towards the EU officers but also enhances trust and collaboration within the Consortium."
Turn to Spinverse for support
Financial reporting takes time and effort, but it does not need to be painful. With good preparation and active management, you can get through reporting rounds efficiently and keep grant payments on schedule.
Spinverse’s financial experts and project managers can help when you need an extra pair of hands and eyes. Get in touch with John Sperryn to learn more about our project services for funded EU-projects!
John Sperryn
Director and Team Leader for Project Services, M.Sc. (Eng.)
john.sperryn@spinverse.com