The European Commission is attempting to recover some €18,000 from the Local Councils Association (LCA) after auditors for an EU-funded project covering the period when Jimmy Magro was the association’s executive secretary were unable to calculate the cost per hour since there were no attendance sheets to which to refer, The Malta Independent has learnt.

But according to Mr Magro – who is no longer executive secretary of the association but is still an LCA consultant for EU funds – the LCA is to contest the EC’s decision.

Contacted yesterday, Mr Magro said that the LCA maintains that the staff cost per hour must be based on the standard hours and there is no need to calculate the actual hours worked because overtime is not paid by the LCA.

The audit – carried out in accordance with standard procedure – was conducted by London-based auditors PKF Littlejohn for the European Commission’s executive agency for small and medium-sized enterprises (EASME). It covered the period from June 2010 to November 2012 and was in respect of an ENESCOM energy-related project.

The reason cited for the recovery of funds in the audit report was that an amount equivalent to €15,517 had been disallowed in respect of then LCA executive secretary Jimmy Magro due to the “impossibility of verifying the reliability and the appropriateness of the standard productive hours (1,792) used by the beneficiary in order to calculate hourly rates claimed”.

The agency has also “disallowed” travel costs since more than the stipulated number of people attended meetings overseas.

The report reads: “We have maintained the adjustment made by EASME at the final payment stage. The agency disallowed €3,298.90 due to the following reasons: €1,499.71 since two people participated in the relevant meeting while only one is acceptable; €739.51, since the cost of the flight concerned was incurred for a non-staff member and €1,059.68 since three people participated in the relevant meeting while only two are acceptable.”

The audit report queries the number of hours worked by the staff involved in the project at the offices of the beneficiary – in this case the LCA – and the internal system used to record those hours, which led to the issue that certain hours could not be verified.

However, it also transpires that Mr Magro, as executive secretary, was not required by the LCA to maintain an attendance sheet since the hours are established by the Human Resources Regulations and there is no payment for extra hours worked. The LCA has maintained that hourly staff costs must be calculated on the standard hours due to the fact that employees are paid for overtime and only the standard hours can be claimed under EU-funded projects.

But the audit report goes a step further and lists a number of recommendations to avoid a recurrence of the problem in the future.

It suggests that the recording of hours worked, being a part of the organisation’s internal control system, should be improved by firstly having each employee involved in a project supplying his personal details while completing the time sheet disclosing the time devoted to funded projects, specific job orders, any other administrative activity or any time of absence.

It also recommends that the beneficiary, the LCA, establishes a procedure in order to compare standard productive hours with those actually worked.

In PKF Littlejohn’s opinion, the system is not totally adequate to properly record the costs of projects co-financed by the EASME either.

The aim of ENESCOM is to promote widespread information and dissemination activities targeting 14 different EU countries aimed at increasing the number of EU local communities engaged in the mitigation of climate change through the promotion and adhesion of the Covenant of Mayors (CoM) initiative, among other objectives. The budget range for the project is around €100,000.

A letter dated 9 December 2015, sent to the association and seen by this newsroom, said that the Commission is requesting the recovery of €18,175. According to the audit report, the total amount of eligible costs is €76,739.85 while the amount accepted by the EASME at the time of final payment was €100,973.89 resulting in a difference of €24,234 in favour of the agency. The Union contribution calculated at 75 per cent results in an amount of 18,175.53 to be recovered.

Mr Magro has been asked to present his observations on the matter within 15 calendar days of having received the letter but he told this newsroom that the objections will be filed by 20 January after the deadline for submissions was extended. The Commission initially warned that if the payment is not received by the stipulated date, interest will be charged on the amount owed.