What Simplified Cost Options Are
Simplified cost options (SCOs) are an innovative way of reimbursing grants and repayable assistance under the Cohesion Policy Funds.1 Instead of tracking every receipt and invoice, they let programmes reimburse expenditures according to predefined methods based on process, outputs or results.1
SCOs are among the most important simplification measures to reduce administrative costs in EU-funded programmes.8 They shift the focus from paperwork to actual policy outcomes.1
Three Main Forms
SCOs can take three forms: flat rate financing, standard scales of unit costs, and lump sums.1 Each one suits different types of projects and spending structures.
Flat rates covering indirect costs are one common application.2 A flat rate applied to eligible direct staff costs, for example, lets a programme calculate overhead without gathering individual receipts.6
Why This Matters for Beneficiaries
SCOs allow the tracing of co-financed expenditures without the need to provide individual supporting documents.1 That is a significant relief for project managers who would otherwise spend considerable time assembling audit trails.
They significantly reduce the administrative burden for both managing authorities and beneficiaries.1 Administrations can shift focus from collecting and verifying financial documents to achieving policy goals.1
The Verification Angle
Using SCOs is one of the key methods of simplifying implementation of projects, programmes, control and audit procedures within a programme.14 Auditors still check that the predefined method was applied correctly, but they no longer need to verify every underlying cost.6
One area auditors watch is whether an SCO has been structured as a genuine simplification rather than a proxy of real costs.6 Splitting a single flat rate into multiple sub-rates, for instance, can undermine the simplification purpose.6
The 2021–2027 Framework
For the 2021–2027 period, the condition for applying SCOs adopted under other Union Policies or schemes only refers to a similar type of operation.2 The previous requirement around type of action was dropped, making it easier to reuse SCO methods across programmes.2
An ex ante assessment process supports managing authorities in setting up SCOs before a programme begins.2 This upfront work is what makes the predefined rates defensible during later audits.
What to Watch Next
The push to expand SCO use reflects a broader drive to reduce administrative costs across Cohesion Policy programmes.8