Guidance

European Social Fund document retention guidance

Published 19 September 2019

Introduction

1. As stated in the European Social Fund (ESF) Funding Agreement, ESF Grant Recipients are required to provide records to evidence that the expenditure in claims complies with the relevant regulations, rules and terms of the Funding Agreement, to enable the Managing Authority (MA) to meet its reporting obligations and to demonstrate compliance with European Union (EU) requirements.

2. Good record keeping is an essential project management tool. By keeping orderly and comprehensive records, Grant Recipients will find it far easier to assess and report on the project status and progress in monitoring the project.

3. Record retention is an important consideration in the development and delivery of a project funded by ESF. Projects can be subject to an audit even after the project is completed and it is therefore a requirement of grant that core documents are retained and made available for inspection over the entire period. Failure to produce adequate and satisfactory evidence can result in the repayment of grant.

4. To ensure that this process is followed, all applicants are required to produce and provide as evidence, policies for specific areas including document retention. This reference can be included in current policies that the Grant Recipient already uses or separate policies specifically developed for the ESF project to follow.

5. For projects delivered by a consortium of partners, it is the Grant Recipient organisation that is responsible for the audit trail. The Grant Recipient must make sure that any delivery partners or sub-contractors keep adequate records. To do this, they will need to show that they have systems in place to verify the information provided and held by partners.

How long do records need to be kept?

6. All projects are required to retain documents for a period after the activity has ended and these should be kept in an acceptable format so that they can be inspected where necessary. The Grant Recipient will be informed of this retention period at the end of the project. The period will be dependent on the date at which the final claim is paid by the Managing Authority so the retention period will be unique to each project and this period cannot be specified at the outset of a given project.

7. Whilst the EU regulations state that, as a minimum, all documents must be retained for two years after the Audit Authority submits the Annual Control Report in which the final expenditure for the completed project is included, this is a potentially complex date to predict. To minimise risks of miscalculation and support Grant Recipients and the Managing Authority in simplifying processes, all projects under the ESF 2014 to 2020 Programme must ensure they keep all documents for 10 years after their final ESF claim is paid by the ESF Managing Authority. This is to ensure documents may be made available to the European Commission and European Court of Auditors upon request in accordance with Article 140 (1) of Regulation (EU) No 1303/2013.

8. Grant Recipients must also comply with and assist the Managing Authority to comply with document retention requirements under any applicable State Aid rules. Where Projects are operating under a State Aid scheme in accordance with the General Block Exemption Regulation (Commission Regulation (EU) No 651/2014) or De Minimis Regulation (Commission Regulation (EU) No 1407/2013), Grant Recipients must maintain detailed records with the information and supporting documentation necessary to establish that all the conditions laid down in the Regulation are fulfilled. Such records must be kept for 10 years after the last aid is granted under the scheme.

9. Prior to the destruction of any documents, confirmation should be sought from the Managing Authority.

What documentation should be retained?

10. Core documentation that must be retained will include:

• all ESF related documentation including work carried out during the development, pre application, application and during and after the project
• the Funding Agreement including any revised versions supported by appropriate correspondence from DWP of the approval of changes to the Funding Agreement
• correspondence from/to the Managing Authority
• quarterly or monthly claim forms
• working papers showing how claims were calculated, including any flat rate methodologies
• the audit trail for all procurement undertaken for the project
• the State Aid approved scheme used where relevant.

11. You must keep records of the following things, although this list is not exhaustive:

• evidence of all project expenditure. This must include invoices and bank statements or equivalent to show the payments were made
• where indirect overheads costs and salaries have been apportioned to the project, records must show the agreed methodology for calculating these costs
• records of eligible participants and any supporting evidence to confirm their eligibility to receive ESF support
• evidence of open and fair procurement of goods and services, including proof of advertising and contract notices, quotations or tenders received and the scoring methodology used for selecting the successful candidate (this will include details of all preparatory work prior to the procurement process and the delivery or use of the procured service and goods (read the national procurement guidance for further information on procurement requirements)
• evidence of auditable, accountable match funding, including copies of match funding acceptance letters and bank statements showing receipt of match funding
• compliance with publicity requirements, copies of all publicity materials, including press releases and marketing must be retained to demonstrate the correct use of the EU logo and required text (read the ESF publicity requirements for further information on publicity requirements)
• compliance with equal opportunities and environmental sustainability requirements
• clear records of businesses supported for state aid purposes, including signed declarations where an organisation is operating under any state aid rules, such as de minimis, or any other state aid ruling
• documentary evidence substantiating the outputs and results declared in ESF claims and on completion of projects
• a record of the identity and location of all bodies holding the supporting ESF project documentation and make this available on request to the Managing and Audit Authorities

Electronic data exchange: legislative requirements

12. Commission Implementing Regulation (EU) No 1011/2014, chapter II sets out the detailed rules concerning the electronic exchanges of Information between Grant Recipients (beneficiaries) and Managing Authorities, Certifying Authorities (CAs), Audit Authorities (AAs) and Intermediate Bodies.

13. Article 8 of the Regulation defines electronic data exchange systems as mechanisms and instruments allowing the electronic exchange of documents and data, including audio-visual media supports, scanned documents and electronic files. This exchange shall include reporting on progress, payment claims and exchanges of information related to management verifications and audits. Paper documents may only be requested by the MA, CA or AA in exceptional cases, following a risk analysis, and only if paper documents are the true source of the scanned documents uploaded in the electronic data exchange system.

14. The ESIF ECLAIMS system has been designed to comply with electronic data exchange systems requirements and will have the following functionalities:

• interactive forms and/or forms prefilled by the system on the basis of the data which are stored at consecutive steps of the procedures
• automatic calculations where applicable
• automatic embedded controls which reduce repeated exchanges of documents or information as far as possible
• system-generated alerts to inform the Grant Recipient that certain actions can be performed
• online status tracking allowing the Grant Recipient to monitor the current status of the project
• availability of all previous data and documents processed by the electronic data exchange system

Acceptable forms of documentation

15. Electronic document storage systems are therefore acceptable, indeed necessary, as most documents now are electronically generated and have no paper original and will need to be made available through the electronic data exchange system. They are acceptable as audit evidence, provided that they are subject at all times to an adequate system of control over their completeness and validity. These systems of control may be subject to audit so that assurances can be obtained in this respect.

16. Documents can be held either as originals or certified true copies of the originals, or on commonly accepted data carriers. Commonly accepted data carriers include electronic versions of original documents on optical data carriers and documents existing in electronic version only.

17. Grant Recipients should ensure that information kept on commonly accepted data carriers is kept secure and can be relied upon for audit purposes. As most documents exist in electronic version only, the underlying computer system on which the electronic versions are held must meet accepted security standards which ensure that the documents held meet with national legal requirements and can be relied upon for audit purposes. All electronic documents also need to have the equipment/software retained, to ensure it is functional for a two year period from 31 December following the submission of the annual accounts in which the final expenditure of the completed project is included.

18. Each version must be certified as conforming to the original document. A declaration by the Grant Recipient along the lines of the example below will satisfy this condition.

Example

I certify that this is a true copy of the original document:

Signed:
Date:
Position in organisation:
Name of organisation:

19. This is the minimum requirement and Grant Recipients may add to this declaration or include additional procedures in line with their organisations policies should they wish to do so.

20. This minimum certification procedure places the onus on the Grant Recipient for ensuring the authenticity of the electronic copy. It is the Grant Recipient’s responsibility to ensure the document can be retrieved and relied upon for audit purposes.

21. In instances where the Grant Recipient organisation is using an electronic Document Management System which involves the scanning of invoices and other documentation at the point of receipt, it is acceptable for the processes outlined above to be undertaken at the initial point of scanning by either the Grant Recipient or a third party acting on behalf of the organisation provided that the applicant organisation is satisfied with the procedures in place at the third party organisation.

22. All electronic documents must be kept for the same duration as required for paper copies.

23. Exchanges of data and transactions should bear an electronic signature compatible with Directive 1999/93/EC on a community framework for electronic signatures. This will be provided by the DWP electronic data exchange system.