Under FP6 contractors were not permitted to use average employment costs. They are now permitted under FP7 – as long as the average is a fair representation of the salaries of those charging to the project. Averages are normally also used to estimate the project budget over its duration. All eligible costs must be determined in accordance with the beneficiaries' usual accounting principles. As far as productive hours are concerned, contracting parties must calculate their specific productive hours according to their normal procedures (taking into account national holidays, illness, training, etc.). Beneficiaries using direct staff hours would normally apply a utilisation rate (i.e. hours actually used after holidays, sickness, etc). This utilisation rate must be calculated for the life of the project and must reflect the real productive hours. If a legal entity established in a third country participates without receiving any EC funding, it has to calculate the person months and costs according to its usual accounting and management principles. This input should be identified in the technical annex to the grant agreement (Annex I) and the budget estimated for that beneficiaries' costs be included as part of the total costs of the project (but not part of the estimated maximum EC contribution). If a legal entity established in a third country receives EC funding, it is treated like any other beneficiary: it must meet all the provisions of the contract including those concerning the eligible costs. Working time to be charged must be recorded throughout the duration of the project through any effective tool (including time sheets), in accordance with the contractor’s normal accounting rules. The person in charge of the work designated by the contractor should certify the records. An estimation is insufficient. Employees normally record time sheets on a daily basis while the certification of the person in charge could be done monthly. Certified time sheets must include the person’s identity and her/his time spent on the project. If the person is working in different "activities" under the contract it is necessary to be able to distinguish among the tasks as they relate to each activity. (“activity” here means at a specific rate.) In addition, a full overview of the working time should be possible in the event of an audit (i.e. for persons working part-time on the project it should be possible to determine where their time was spent when not on the project).
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