The pitfalls of funding accounting – and how to avoid them

Funding for research projects is financed by taxpayers' money and is therefore subject to strict requirements. This makes it especially important to ensure professional, legally compliant and prudent accounting. The documents must be conclusive, complete and transparent for the project sponsor. On the other hand, companies want to ensure that no funds are lost due to oversights. In this blog article, we highlight the most common pitfalls and provide specific tips on how companies can proceed with their funding accounting.

Holistic grant management

There are many service providers and tax advisors on the market who can take over your grant management for you. However, a trustworthy provider should have an overview of all applied for and approved funds and carry out the accounting of the funded projects with the necessary care. They should treat these as if they were their own project and ultimately their own funding. This is precisely our aim in the grant management of EurA AG: we want to help you to exploit your full potential for government funding.

From our many years of experience, we know that since each project is individual, there is no standardised approach. As a rule, we provide comprehensive support to companies and build long-term customer relationships. In most cases, we not only apply for funding for a project – e.g. funding from the ZIM (Central Innovation Programme for SMEs) or the BMBF (Federal Ministry of Education and Research), the tax research allowance, state or EU funding – but also handle all funding applications and their accounting. We therefore take a holistic approach to your accounting concerns and are at your side in the event of an in-depth audit by the project management agency or the Federal Court of Auditors.

Three practical examples illustrate our approach:

1. Optimisation of personnel deployment:
   
   We analyse your staffing situation in advance and develop a plan based on the funding application. We then review the planned personnel deployment with you to ensure it is feasible. This makes it easier to decide whether an increase in capacity is required and, if necessary, whether additional employees can be deployed in the research project. Not only does optimal personnel planning enable you to efficiently utilise the approved funds, it also accelerates your project progress.
   
   
2. Overview of all R&D projects:
   
   We keep track of all your R&D activities – from ongoing applications to projects that have already been approved and new funding notifications. In doing so, we check that there is no double funding for the total costs estimated for the project, so you do not run the risk of committing subsidy fraud. This applies to both personnel costs and other costs that are eligible for funding within the framework of the research project (materials, external services, depreciation, etc.).
   
   
3. Correct determination of project costs:
   
   We will help you to correctly determine the eligible project costs. We are always up to date here: Due to the amendment of the GBER (General Block Exemption Regulation, 'AGVO' in German) in 2023, personnel costs can usually no longer be settled at a flat rate. This means that the flat-rate surcharge for overheads no longer applies. Personnel costs must now be accounted for on the basis of the guidelines for pricing ('LSP' in German). If you wish, we can also assist you in determining the overhead rate.

Typical mistakes in funding accounting

Many projects do not run smoothly in the accounting phase because the funding beneficiaries make typical mistakes. As mentioned above, personnel costs must be correctly determined in order to avoid claims for repayment or sanctions. But there are even more pitfalls. A premature project start can lead to the complete cancellation of funding. Also, missing deadlines carries the risk that planned funds cannot be accessed. Inaccurate amounts can also cause you to lose funding, for example, if 10,000 project hours are underestimated at 1 euro per hour. This can quickly add up to a large amount. This grant is then not claimed. Missing proof of payment can lead to disagreements with the project sponsor and additional bureaucratic work due to rework. The same applies in the event of an audit if there is no proper documentation. For these reasons, many companies outsource their accounting to us.

Tips for funding accounting

So what measures can help to avoid these risks? First of all, you can help to ensure that the accounting for your projects runs smoothly – and pay attention to the points mentioned. But you can also get external support with a partner at your side who will work with you to ensure a smooth funding accounting process. As professionals in this field, we provide you with first-class support. For example, we put together checklists with the necessary documents, provide you with templates for recording hours, ensure that double funding is avoided in the case of multiple projects, remind you to meet deadlines and keep a mirror file for audit purposes.

However, our commitment goes far beyond that: We check your accounting projects for financial ‘gaps’ that we can still exploit, help you to create proofs of use, apply for deadline extensions in good time or proactively suggest change requests. Because we treat your funded project as if it were our own. And it pays off for you as a customer when we fully exploit your funding potential. What's more, our efficient approach means that your investment in us pays off quickly.

So please feel free to contact us at any time with the details of your funded project. We will be happy to take over the grant management for you and will complete the accounting for your R&D projects professionally and on time, so that you only have to spend a small amount of time on it. You can focus on your core tasks and sleep peacefully at night, knowing that your accounting is in good hands with regard to subsidy law. We look forward to working with you to advance your company!

Text: Birgit Miriam Hering