How to avoid Common Pitfalls in Innovate UK Grant Audits

How to avoid common pitfalls in Innovate UK Grant Audits

UK Research and Innovation have a number of funding pots to which applicants can apply for funding towards a wide range of projects. Once an applicant has been granted funding, they have to ensure a number of Grant conditions are met; one of which includes obtaining an Independent Accountant’s Report, or IAR as it is more commonly referred to. 

At Plus Accounting, we prepare IAR’s for a number of applicants and regularly discuss areas of improvements to their record-keeping, a common area being improvements to preparing their labour cost information. 

Below is a brief guide to help support your claims for labour costs and some helpful tips on how to avoid common pitfalls. 

The Innovate UK website also provides further details, which you can access here.

What information must be kept?

• Timesheets or similar record to show the time spent by each employee involved in the project. 
• The above records should show they have been authorised by the Project Manager. 
• Payroll records to support salaries used in calculating the daily labour rate and document how the employee salaries are being declared to HMRC. 
• Records to confirm costs incurred and paid such as bank statements. 
• Labour day rate calculation. 

How can I avoid common mistakes? 

• Ensure each employee listed on your application is on your PAYE scheme.  Subcontractors must be shown separately. 
• The Project Manager needs to review timesheets/project records regularly to ensure changes are updated, for example, if an employee spends more or less time on the project. 
• Ensure you calculate the labour day rate in line with Innovate UK guidance (link above). 

We often come across the following errors: 

× Use of starting gross salary rather than current gross salary. 

× Employers’ National Insurance excluded. 

× Employers’ Pension excluded. 

× Day rate applied to incorrect amount of time spent on project. 

A monitoring officer from Innovate UK is allocated to applicants and should be able to help you compile the information needed to support your application.  Preparing the application thoroughly and in line with their requirements will help make it easier to meet the ongoing conditions of the grant. 

If you would like to discuss your Independent Accountant’s Report, please get in touch with our Audit & Assurance team.

Date published: 5 September 2024

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Want to learn more?

Get in touch with our in house expert Helen Griffiths to see how we can help.