Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie
Hi there,
There is an issue with role permissions that is being worked on at the moment.
If you are having trouble with access or permissions on regional forums please post here to get access: https://www.boards.ie/discussion/2058365403/you-do-not-have-permission-for-that#latest

Complicated Accountancy Question, help needed

  • 23-01-2009 3:17pm
    #1
    Registered Users, Registered Users 2 Posts: 65 ✭✭


    Hello,

    I am involved in an European project and have the following question:

    the scenario should work as follows:

    The project is broken into two groups, small companies and research companies. Both grpoups are in various European Countries. The Coordinators sends the small companies all the money. The research companies then invoice each small company and sends them the money for the invoice. This method I have no problem understanding.

    However, the project I am involved is being run slightly differently. The Coordinator of the project received all the grant and they are distributing it to direct to the research companies directly in order to avoid sending money all over Europe. The research sompies still have to send the small companies invoices. My question is how should these small companies handle these invoices if the money they have all ready been paid by the coordinator? Will the small companies have a problem accounti this?

    Any help would be much appreciated as we have two irish companies involved.

    Cheers


Comments

  • Registered Users, Registered Users 2 Posts: 276 ✭✭swanvill


    Sorry can you please rephrase your question.
    My understanding is the grant is given directly to the research company. Why do the R&D company invoice the small company? Was the grant originally intended for the small company to pay for their R&D? If it was why is the invoice from R&D to small company necessary now, seeing as the R&D has been paid for?


  • Closed Accounts Posts: 20,649 ✭✭✭✭CDfm


    it might help to know what type of grant aid it is.

    is the co-ordinating body the applicant/sponsor - for example some EU Grant Applications are made by the Dept of Labour on behalf of Individual State Agencies (say FAS) for particular community schemes.So the distribution of funds follows the application criteria.

    So there is no problem with this per say- on one entity applying for the funds so the distribution of the funds needs to follow the trail as per the grant fund application. The coordinting company has no discretion over how the money is allocated and the small companies would need to sign a release for the funds to be allocated.You may not be able to bypass such entities.

    The other concern is this grant money specifically earmarked for the research companies.


    I am not an expert but an added problem is the VAT accounting which may vary per transaction. VAT rules vary country to country and while certain cross border transfers are zero rated or VAT exempt - it does not follow that transfers within a state are and may be subject to the rules and refund procedure in each state.

    So you want to create dummy invoices in a generic way for each to streamline payments to the end r & D company and this may not be possible.


  • Registered Users, Registered Users 2 Posts: 65 ✭✭Irishkid


    In order to answer swanvill the programme is Research for SME Association in the FP7 programme. ANd the resaons for this invoicing is that the Commission want to see this registered in the account of the small companies.


  • Registered Users, Registered Users 2 Posts: 65 ✭✭Irishkid


    Hi CDFM, this is for the Research for SME programme under FP7. Basically your have a consortium of 10 entities one of which is the coordinator. The others are either research centers or associations/small companies. The idea is that the grant is for the association/small comapnies to pay the research companies for research. The coordinator reseives the lump cum from the Commission and they then pass this money to the associations/small companies who are then invoiced by the research centers. The problem I am facing is that the associations/small companies want the coordinator to send the payment direct to the research centers. The reason behind this is to simplfiy things and not having large sums of money being transferred over europe and back. The problem is that the Commission still expects the research centers to invoice the associations/small companies for the money the coordinator sent directly. So I am wondering how this can be best approached?

    Many Thanks for your assistance.


  • Registered Users, Registered Users 2 Posts: 65 ✭✭Irishkid


    VAT will not be a problem as all members are from differing EU countries so are VAT exempt.


  • Advertisement
  • Closed Accounts Posts: 20,649 ✭✭✭✭CDfm


    This is more like a central purchase order system purchassing R & D then.Could you treat it like this.Or do you have to be invoiced.

    You would issue a purchass order number to the Small Company who purchasses the agreed services and recieves an invoice from R & D co.

    You hold the money as nominee or stakeholder on behalf of the purchaser and release it on instructions- just like paying from a bank account as you do not need formal invoices.You would issue a statement once the tranactions are complete.

    That way what you would have just your P/Os, copy or duplicate invoices from the purchassor and payment instructions from the purchassor (Small CXO) to pay the vendor (R & D).

    As I would see it your issue is having proper legal instructions in place to make the payments as nominee and verifying that the payments are reaching the correct bank accounts accounts.

    For these purposes you are operating a Clients Account and would treat the funds for accountancy in it as such.


  • Registered Users, Registered Users 2 Posts: 65 ✭✭Irishkid


    ok, let me try and clarify again:) ok, each small company signs teh grant agreement from the Commission, say for example each small company gets 100,000 grant. This is sent directly from the coordinator to the research companies. What the commission want is the research companies send an invoice to the small companies, this invoice needs to be logged in their accountancy books. This part is ok for the companies. But the question they are having is, in their books this invoice will show a negative 100,000. So as they have signed this grant agreement which states they are benefiting of 100,000 euros (even though they cash is administered by the coordinator) can they put this 100,000 grant through their books to balance the invoice, if you follow me.


  • Closed Accounts Posts: 20,649 ✭✭✭✭CDfm


    Irishkid wrote: »
    But the question they are having is, in their books this invoice will show a negative 100,000. So as they have signed this grant agreement which states they are benefiting of 100,000 euros (even though they cash is administered by the coordinator) can they put this 100,000 grant through their books to balance the invoice, if you follow me.


    if you treat it like a client account transaction the will have a debit from their "account" with you to match the invoice.You are the "banker" so currently you hold 100k to their order when they place their order and recieve the invoice you pay it and debit their account 100k. That should work.


  • Registered Users, Registered Users 2 Posts: 65 ✭✭Irishkid


    This is what teh Commision said to us

    "the RTD should send the invoice to the SME AG / SME; the SME AG should register the invoice in their accountancy, then send a letter to the coordinator to effect a payment directly to the RTD. In this way the funds do not enter the SME AG bank account but only their balance sheet"

    This is ok, but what the the small companies are saying is this create an imbalance in thier balance sheet as it has a -100,000 euros for eaxmple. So can they correct this imbalance by putting the 100,000 euros they were granted from the Commission into their accountancy system also so they cancel each other out?

    thats way teh commission is happy and the small companies are happy and I can sleep easy :)


Advertisement