During the lifetime of a project, participants have certain duties vis-à-vis the European Commission. One main obligation is reporting. Project participants need to keep records on time spent by staff on the project (timesheets) and on how financial resources are being spent.
A project can be subject to audit during its implementation or up to two years after the final payment of the Commission grant. Ineligible costs detected during an audit can be recovered or deducted from the next payments.
Funding for Horizon 2020 projects is based on the reimbursement of actual costs. However, in order to provide beneficiaries with an initial cash flow, certain amounts are paid out already at the beginning of the project. This is called the pre-financing payment. It is transferred from the European Commission to the coordinator, who then dispatches it to the project partners. The amount to be transferred to each partner will have to be outlined in the Grant Agreement. A certain amount of the pre-financing is transferred to a “Guarantee Fund”, a fund that insures against financial losses due to defaulting beneficiaries. The pre-financing can be reclaimed if costs that are subsequently declared turn out to be ineligible.