# Official Journal C 409/9 De

| | ISSN 1977-091X |
| --- | --- |
| Official Journal
  of the European Union | C 409 |
| | |
| English edition | Information and Notices | Volume 589 December 2015 |

ISSN 1977-091X

Official Journal

of the European Union

C 409

English edition

Information and Notices

Volume 589 December 2015

---

| Notice No | Contents | page |
| --- | --- | --- |
| | IV   Notices |
| | NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES |
| | Court of Auditors |
| 2015/C 409/01 | Summary of results from the Court’s 2014 annual audits of the European Agencies and other bodies | 1 |
| 2015/C 409/02 | Report on the annual accounts of the Agency for the Cooperation of Energy Regulators for the financial year 2014 together with the Agency’s reply | 18 |
| 2015/C 409/03 | Report on the annual accounts of the Office of the Body of European Regulators for Electronic Communications for the financial year 2014 together with the Office’s reply | 27 |
| 2015/C 409/04 | Report on the annual accounts of the Translation Centre for the Bodies of the European Union for the financial year 2014, together with the Centre’s reply | 33 |
| 2015/C 409/05 | Report on the annual accounts of the European Centre for the Development of Vocational Training for the financial year 2014, together with the Centre’s reply | 39 |
| 2015/C 409/06 | Report on the annual accounts of the European Police College for the financial year 2014, together with the College’s reply | 46 |
| 2015/C 409/07 | Report on the annual accounts of the Consumers, Health and Food Executive Agency for the financial year 2014 together with the Agency’s reply | 56 |
| 2015/C 409/08 | Report on the annual accounts of the Community Plant Variety Office for the financial year 2014, together with the Office’s reply | 67 |
| 2015/C 409/09 | Report on the annual accounts of the Education, Audiovisual and Culture Executive Agency for the financial year 2014, together with the Agency’s reply | 73 |
| 2015/C 409/10 | Report on the annual accounts of the European Aviation Safety Agency for the financial year 2014, together with the Agency’s reply | 81 |
| 2015/C 409/11 | Report on the annual accounts of the Executive Agency for Small and Medium-sized Enterprises for the financial year 2014, together with the Agency’s reply | 90 |
| 2015/C 409/12 | Report on the annual accounts of the European Asylum Support Office for the financial year 2014, together with the Office’s reply | 102 |
| 2015/C 409/13 | Report on the annual accounts of the European Banking Authority for the financial year 2014 together with Authority’s reply | 111 |
| 2015/C 409/14 | Report on the annual accounts of the European Centre for Disease Prevention and Control for the financial year 2014, together with the Centre’s reply | 122 |
| 2015/C 409/15 | Report on the annual accounts of the European Chemicals Agency for the financial year 2014, together with the Agency’s reply | 131 |
| 2015/C 409/16 | Report on the annual accounts of the European Environment Agency for the financial year 2014, together with the Agency’s reply | 143 |
| 2015/C 409/17 | Report on the annual accounts of the European Fisheries Control Agency for the financial year 2014, together with the Agency’s reply | 151 |
| 2015/C 409/18 | Report on the annual accounts of the European Food Safety Authority for the financial year 2014, together with the Authority’s reply | 160 |
| 2015/C 409/19 | Report on the annual accounts of the European Institute for Gender Equality for the financial year 2014, together with the Institute’s reply | 168 |
| 2015/C 409/20 | Report on the annual accounts of the European Insurance and Occupational Pensions Authority for the financial year 2014 together with the Authority’s reply | 175 |
| 2015/C 409/21 | Report on the annual accounts of the European Institute of Innovation and Technology for the financial year 2014, together with the Institute’s reply | 187 |
| 2015/C 409/22 | Report on the annual accounts of the European Medicines Agency for the financial year 2014 together with the Agency’s reply | 197 |
| 2015/C 409/23 | Report on the annual accounts of the European Monitoring Centre for Drugs and Drug Addiction for the financial year 2014 together with the Centre’s reply | 206 |
| 2015/C 409/24 | Report on the annual accounts of the European Maritime Safety Agency for the financial year 2014, together with the Agency’s reply | 216 |
| 2015/C 409/25 | Report on the annual accounts of the European Union Agency for Network and Information Security for the financial year 2014, together with the Agency’s reply | 223 |
| 2015/C 409/26 | Report on the annual accounts of the Europol Pension Fund for the financial year 2014, together with the Fund’s reply | 234 |
| 2015/C 409/27 | Report on the annual accounts of the European Railway Agency for the financial year 2014, together with the Agency’s reply | 238 |
| 2015/C 409/28 | Report on the annual accounts of the European Research Council Executive Agency for the financial year 2014 together with the Agency’s reply | 247 |
| 2015/C 409/29 | Report on the annual accounts of the European Securities and Markets Authority for the financial year 2014 together with the Authority’s reply | 255 |
| 2015/C 409/30 | Report on the annual accounts of the European Training Foundation for the financial year 2014, together with the Foundation’s reply | 266 |
| 2015/C 409/31 | Report on the annual accounts of the European Agency for the operational management of large-scale IT systems in the area of freedom, security and justice (eu-LISA) for the financial year 2014, together with the Agency’s reply | 275 |
| 2015/C 409/32 | Report on the annual accounts of the European Agency for Safety and Health at Work for the financial year 2014 together with the Agency’s reply | 284 |
| 2015/C 409/33 | Report on the annual accounts of the Euratom Supply Agency for the financial year 2014 together with the Agency’s reply | 299 |
| 2015/C 409/34 | Report on the annual accounts of the European Foundation for the Improvement of Living and Working Conditions for the financial year 2014, together with the Foundation’s reply | 307 |
| 2015/C 409/35 | Report on the annual accounts of the European Union's Judicial Cooperation Unit for the financial year 2014, together with Eurojust’s reply | 315 |
| 2015/C 409/36 | Report on the annual accounts of the European Police Office for the financial year 2014 together with the Office’s reply | 324 |
| 2015/C 409/37 | Report on the annual accounts of the European Union Agency for Fundamental Rights for the financial year 2014, together with the Agency’s reply | 334 |
| 2015/C 409/38 | Report on the annual accounts of the European Agency for the Management of Operational Cooperation at the External Borders of the Member States for the financial year 2014 together with the Agency’s reply | 342 |
| 2015/C 409/39 | Report on the annual accounts of the European GNSS Agency for the financial year 2014, together with the Agency’s reply | 353 |
| 2015/C 409/40 | Report on the annual accounts of the Innovation and Networks Executive Agency for the financial year 2014 together with the Agency’s reply | 362 |
| 2015/C 409/41 | Report on the annual accounts of the Office for Harmonization in the Internal Market for the financial year 2014, together with the Office’s reply | 371 |
| 2015/C 409/42 | Report on the annual accounts of the Research Executive Agency for the financial year 2014 together with the Agency’s reply | 379 |

Notice No

Contents

page

IV   Notices

NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES

Court of Auditors

2015/C 409/01

Summary of results from the Court’s 2014 annual audits of the European Agencies and other bodies

1

2015/C 409/02

Report on the annual accounts of the Agency for the Cooperation of Energy Regulators for the financial year 2014 together with the Agency’s reply

18

2015/C 409/03

Report on the annual accounts of the Office of the Body of European Regulators for Electronic Communications for the financial year 2014 together with the Office’s reply

27

2015/C 409/04

Report on the annual accounts of the Translation Centre for the Bodies of the European Union for the financial year 2014, together with the Centre’s reply

33

2015/C 409/05

Report on the annual accounts of the European Centre for the Development of Vocational Training for the financial year 2014, together with the Centre’s reply

39

2015/C 409/06

Report on the annual accounts of the European Police College for the financial year 2014, together with the College’s reply

46

2015/C 409/07

Report on the annual accounts of the Consumers, Health and Food Executive Agency for the financial year 2014 together with the Agency’s reply

56

2015/C 409/08

Report on the annual accounts of the Community Plant Variety Office for the financial year 2014, together with the Office’s reply

67

2015/C 409/09

Report on the annual accounts of the Education, Audiovisual and Culture Executive Agency for the financial year 2014, together with the Agency’s reply

73

2015/C 409/10

Report on the annual accounts of the European Aviation Safety Agency for the financial year 2014, together with the Agency’s reply

81

2015/C 409/11

Report on the annual accounts of the Executive Agency for Small and Medium-sized Enterprises for the financial year 2014, together with the Agency’s reply

90

2015/C 409/12

Report on the annual accounts of the European Asylum Support Office for the financial year 2014, together with the Office’s reply

102

2015/C 409/13

Report on the annual accounts of the European Banking Authority for the financial year 2014 together with Authority’s reply

111

2015/C 409/14

Report on the annual accounts of the European Centre for Disease Prevention and Control for the financial year 2014, together with the Centre’s reply

122

2015/C 409/15

Report on the annual accounts of the European Chemicals Agency for the financial year 2014, together with the Agency’s reply

131

2015/C 409/16

Report on the annual accounts of the European Environment Agency for the financial year 2014, together with the Agency’s reply

143

2015/C 409/17

Report on the annual accounts of the European Fisheries Control Agency for the financial year 2014, together with the Agency’s reply

151

2015/C 409/18

Report on the annual accounts of the European Food Safety Authority for the financial year 2014, together with the Authority’s reply

160

2015/C 409/19

Report on the annual accounts of the European Institute for Gender Equality for the financial year 2014, together with the Institute’s reply

168

2015/C 409/20

Report on the annual accounts of the European Insurance and Occupational Pensions Authority for the financial year 2014 together with the Authority’s reply

175

2015/C 409/21

Report on the annual accounts of the European Institute of Innovation and Technology for the financial year 2014, together with the Institute’s reply

187

2015/C 409/22

Report on the annual accounts of the European Medicines Agency for the financial year 2014 together with the Agency’s reply

197

2015/C 409/23

Report on the annual accounts of the European Monitoring Centre for Drugs and Drug Addiction for the financial year 2014 together with the Centre’s reply

206

2015/C 409/24

Report on the annual accounts of the European Maritime Safety Agency for the financial year 2014, together with the Agency’s reply

216

2015/C 409/25

Report on the annual accounts of the European Union Agency for Network and Information Security for the financial year 2014, together with the Agency’s reply

223

2015/C 409/26

Report on the annual accounts of the Europol Pension Fund for the financial year 2014, together with the Fund’s reply

234

2015/C 409/27

Report on the annual accounts of the European Railway Agency for the financial year 2014, together with the Agency’s reply

238

2015/C 409/28

Report on the annual accounts of the European Research Council Executive Agency for the financial year 2014 together with the Agency’s reply

247

2015/C 409/29

Report on the annual accounts of the European Securities and Markets Authority for the financial year 2014 together with the Authority’s reply

255

2015/C 409/30

Report on the annual accounts of the European Training Foundation for the financial year 2014, together with the Foundation’s reply

266

2015/C 409/31

Report on the annual accounts of the European Agency for the operational management of large-scale IT systems in the area of freedom, security and justice (eu-LISA) for the financial year 2014, together with the Agency’s reply

275

2015/C 409/32

Report on the annual accounts of the European Agency for Safety and Health at Work for the financial year 2014 together with the Agency’s reply

284

2015/C 409/33

Report on the annual accounts of the Euratom Supply Agency for the financial year 2014 together with the Agency’s reply

299

2015/C 409/34

Report on the annual accounts of the European Foundation for the Improvement of Living and Working Conditions for the financial year 2014, together with the Foundation’s reply

307

2015/C 409/35

Report on the annual accounts of the European Union's Judicial Cooperation Unit for the financial year 2014, together with Eurojust’s reply

315

2015/C 409/36

Report on the annual accounts of the European Police Office for the financial year 2014 together with the Office’s reply

324

2015/C 409/37

Report on the annual accounts of the European Union Agency for Fundamental Rights for the financial year 2014, together with the Agency’s reply

334

2015/C 409/38

Report on the annual accounts of the European Agency for the Management of Operational Cooperation at the External Borders of the Member States for the financial year 2014 together with the Agency’s reply

342

2015/C 409/39

Report on the annual accounts of the European GNSS Agency for the financial year 2014, together with the Agency’s reply

353

2015/C 409/40

Report on the annual accounts of the Innovation and Networks Executive Agency for the financial year 2014 together with the Agency’s reply

362

2015/C 409/41

Report on the annual accounts of the Office for Harmonization in the Internal Market for the financial year 2014, together with the Office’s reply

371

2015/C 409/42

Report on the annual accounts of the Research Executive Agency for the financial year 2014 together with the Agency’s reply

379

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| EN | |
| --- | --- |

EN

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IV Notices

NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES

Court of Auditors

| 9.12.2015 | EN | Official Journal of the European Union | C 409/1 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/1

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Summary of results from the Court’s 2014 annual audits of the European Agencies and other bodies

(2015/C 409/01)

CONTENTS

| | Paragraph | Page |
| --- | --- | --- |
| INTRODUCTION | 1 | 2 |
| INFORMATION IN SUPPORT OF THE COURT’S OPINIONS | 13 | 3 |
| AUDIT RESULTS | | 3 |
| Opinions on the reliability of the accounts | 17 | 3 |
| Opinions on the legality and regularity of the transactions underlying the accounts | 19 | 4 |
| Comments not calling the Court’s opinions into question | 21 | 4 |
| Comments on the reliability of accounts | 23 | 4 |
| Comments on the legality and regularity of transactions | 24 | 5 |
| Comments on internal controls | 25 | 5 |
| Comments on budget implementation | 26 | 5 |
| Other comments | 29 | 5 |
| Follow-up of previous years’ comments | 32 | 5 |
| CONCLUSIONS | 33 | 6 |
| ANNEX I — | Agencies’ Income (Budget forecasts, entitlements established and amounts received) and Staff establishments plans |

Paragraph

Page

INTRODUCTION

1

2

INFORMATION IN SUPPORT OF THE COURT’S OPINIONS

13

3

AUDIT RESULTS

3

Opinions on the reliability of the accounts

17

3

Opinions on the legality and regularity of the transactions underlying the accounts

19

4

Comments not calling the Court’s opinions into question

21

4

Comments on the reliability of accounts

23

4

Comments on the legality and regularity of transactions

24

5

Comments on internal controls

25

5

Comments on budget implementation

26

5

Other comments

29

5

Follow-up of previous years’ comments

32

5

CONCLUSIONS

33

6

ANNEX I —

Agencies’ Income (Budget forecasts, entitlements established and amounts received) and Staff establishments plans

7

| ANNEX II — | Comments made by the Court in 2014, not calling its opinion into question |
| --- | --- |

ANNEX II —

Comments made by the Court in 2014, not calling its opinion into question

12

| ANNEX III — | Follow-up of open 2012 and 2013 comments not calling the Court’s opinions into question |
| --- | --- |

ANNEX III —

Follow-up of open 2012 and 2013 comments not calling the Court’s opinions into question

15

INTRODUCTION

| 1. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union, the Court has issued an opinion on the reliability of the accounts and on the legality and regularity of the underlying transactions, for the financial year ended 31 December 2014, for each of the 32 regulatory agencies, six executive agencies, the Euratom Supply Agency (Euratom), the European Institute of Innovation and Technology (EIT) and the Europol Pension Fund (see Table). |
| --- | --- |

1.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union, the Court has issued an opinion on the reliability of the accounts and on the legality and regularity of the underlying transactions, for the financial year ended 31 December 2014, for each of the 32 regulatory agencies, six executive agencies, the Euratom Supply Agency (Euratom), the European Institute of Innovation and Technology (EIT) and the Europol Pension Fund (see Table).

| 2. | As in prior years the Court has audited the legality and regularity of the transactions. However, 2014 is the first year whereby the annual accounts of the 30 Union-subsidised regulatory agencies and EIT were verified by an independent external auditor (audit firm) according to Article 208(4) (1) of the new EU Financial Regulation and Article 107(1) (2) of the new framework financial Regulation for agencies. The Court’s opinion on these accounts considered the audit work performed by the independent external auditor and the action taken in response to the auditor’s findings. |
| --- | --- |

2.

As in prior years the Court has audited the legality and regularity of the transactions. However, 2014 is the first year whereby the annual accounts of the 30 Union-subsidised regulatory agencies and EIT were verified by an independent external auditor (audit firm) according to Article 208(4) (1) of the new EU Financial Regulation and Article 107(1) (2) of the new framework financial Regulation for agencies. The Court’s opinion on these accounts considered the audit work performed by the independent external auditor and the action taken in response to the auditor’s findings.

| 3. | For the Euratom Supply Agency, two fully self-financed agencies (OHIM and CPVO), the six executive agencies and the Europol Pension Fund (EPF), the Court carried out its own audit work on the annual accounts.

  Table


  Audit arrangements by cluster | Agencies audited by the Court | Audited by ECA only | Audited by ECA + external auditor | Total |
| --- | --- | --- | --- | --- | --- |
| Regulatory Agencies | Union-subsidised agencies | — | 30 | 32 |
| Self-financed agencies — OHIM and CPVO | 2 | — |
| Executive agencies | EACEA, REA, ERCEA, EASME, INEA and CHAFEA | 6 | — | 6 |
| Other bodies | Euratom and EPF | 2 | — | 3 |
| EIT | — | 1 |
| Total | | 10 | 31 | 41 |

3.

For the Euratom Supply Agency, two fully self-financed agencies (OHIM and CPVO), the six executive agencies and the Europol Pension Fund (EPF), the Court carried out its own audit work on the annual accounts.

Table

Audit arrangements by cluster

Agencies audited by the Court

Audited by ECA only

Audited by ECA + external auditor

Total

Regulatory Agencies

Union-subsidised agencies

—

30

32

Self-financed agencies — OHIM and CPVO

2

—

Executive agencies

EACEA, REA, ERCEA, EASME, INEA and CHAFEA

6

—

6

Other bodies

Euratom and EPF

2

—

3

EIT

—

1

Total

10

31

41

| 4. | Details on the audited agencies, their budgets and staff are provided in Annex I. |
| --- | --- |

4.

Details on the audited agencies, their budgets and staff are provided in Annex I.

| 5. | This summary provides an overview of the results of the Court’s annual audits of the agencies for the financial year 2014. It aims to facilitate the analysis and comparison of the Court’s specific reports. The Court’s opinions and comments as well as the agencies’ replies can be found in the Specific Annual Reports (SAR). This summary is not an audit report or opinion. |
| --- | --- |

5.

| 6. | Decentralised agencies play an important role in implementing EU policies, especially tasks of a technical, scientific, operational and/or regulatory nature. Their aim is to allow the Commission to concentrate on policy-making and to reinforce cooperation between the EU and national governments by pooling technical and specialist expertise from both sides. They are located throughout the EU. |
| --- | --- |

6.

Decentralised agencies play an important role in implementing EU policies, especially tasks of a technical, scientific, operational and/or regulatory nature. Their aim is to allow the Commission to concentrate on policy-making and to reinforce cooperation between the EU and national governments by pooling technical and specialist expertise from both sides. They are located throughout the EU.

| 7. | The six executive agencies are entrusted with tasks relating to the management of one or more Union programmes and are set up for fixed periods of times. They are located in Brussels (five) or Luxembourg (one). |
| --- | --- |

7.

The six executive agencies are entrusted with tasks relating to the management of one or more Union programmes and are set up for fixed periods of times. They are located in Brussels (five) or Luxembourg (one).

| 8. | EIT in Budapest is an independent, decentralised EU body which pools scientific, business and education resources to boost the Union’s innovation capacity. |
| --- | --- |

8.

EIT in Budapest is an independent, decentralised EU body which pools scientific, business and education resources to boost the Union’s innovation capacity.

| 9. | Euratom in Luxembourg was created to support the aims of the European Atomic Energy Community Treaty. |
| --- | --- |

9.

Euratom in Luxembourg was created to support the aims of the European Atomic Energy Community Treaty.

| 10. | The Europol Pension Fund, which is located in The Hague, was established to finance and pay pensions for staff employed by Europol before it became a European Agency on 1 January 2010. |
| --- | --- |

10.

The Europol Pension Fund, which is located in The Hague, was established to finance and pay pensions for staff employed by Europol before it became a European Agency on 1 January 2010.

| 11. | The agencies’ total 2014 budget amounted to some 1,9 billion euro (2013: 2 billion euro) or about 1,4 % of the 2014 EU general budget (2013: 1,4 %). Approximately 1,2 billion euro comes from the European Commission’s subsidies and the rest is income from fees and other sources. The agencies employ 6  578 (2013: 6  536) permanent and temporary officials or 14 % (2013: 14 %) of total EU officials authorised under the EU general budget (staff establishment plan). In addition, some 3  200 (2013: 2  900) other staff are working for the agencies (contractual or seconded staff). The increase in staff is primarily concentrated in those agencies assigned additional tasks, those with supervisory responsibility for the financial industry, and the executive agencies with additional responsibilities under Horizon 2020 and other programmes. |
| --- | --- |

11.

The agencies’ total 2014 budget amounted to some 1,9 billion euro (2013: 2 billion euro) or about 1,4 % of the 2014 EU general budget (2013: 1,4 %). Approximately 1,2 billion euro comes from the European Commission’s subsidies and the rest is income from fees and other sources. The agencies employ 6  578 (2013: 6  536) permanent and temporary officials or 14 % (2013: 14 %) of total EU officials authorised under the EU general budget (staff establishment plan). In addition, some 3  200 (2013: 2  900) other staff are working for the agencies (contractual or seconded staff). The increase in staff is primarily concentrated in those agencies assigned additional tasks, those with supervisory responsibility for the financial industry, and the executive agencies with additional responsibilities under Horizon 2020 and other programmes.

| 12. | Whereas financial risk related to the agencies is relatively low compared to the total EU budget, the reputational risk for the Union is high. Nevertheless, the agencies are highly visible in the Member States and they have significant influence on policy and decision making and programme implementation in areas of vital importance to European citizens, i.e. health, safety, security, freedom and justice. |
| --- | --- |

12.

Whereas financial risk related to the agencies is relatively low compared to the total EU budget, the reputational risk for the Union is high. Nevertheless, the agencies are highly visible in the Member States and they have significant influence on policy and decision making and programme implementation in areas of vital importance to European citizens, i.e. health, safety, security, freedom and justice.

INFORMATION IN SUPPORT OF THE COURT’S OPINIONS

INFORMATION IN SUPPORT OF THE COURT’S OPINIONS

| 13. | Regarding the 31 agencies audited by an independent external auditor, the Court has reviewed the work of the audit firms in accordance with international audit standards. In forming its opinion on the reliability of the accounts expressed in the SARs, the Court took into account the audit firms’ work. |
| --- | --- |

13.

Regarding the 31 agencies audited by an independent external auditor, the Court has reviewed the work of the audit firms in accordance with international audit standards. In forming its opinion on the reliability of the accounts expressed in the SARs, the Court took into account the audit firms’ work.

| 14. | There is adequate assurance for the Court to base its own audit opinions on the reliability of the accounts using the private audit firms’ work. |
| --- | --- |

14.

There is adequate assurance for the Court to base its own audit opinions on the reliability of the accounts using the private audit firms’ work.

| 15. | Regarding the legality and regularity of transactions, for which the Court remains exclusively responsible, the audit approach comprises analytical audit procedures, direct testing of transactions and an assessment of the agencies’ internal controls. |
| --- | --- |

15.

Regarding the legality and regularity of transactions, for which the Court remains exclusively responsible, the audit approach comprises analytical audit procedures, direct testing of transactions and an assessment of the agencies’ internal controls.

| 16. | For the remaining 10 agencies, the Court continued to perform the audit of both the legality and regularity of the underlying transactions and the reliability of the accounts. |
| --- | --- |

16.

For the remaining 10 agencies, the Court continued to perform the audit of both the legality and regularity of the underlying transactions and the reliability of the accounts.

AUDIT RESULTS

AUDIT RESULTS

Opinions on the reliability of the accounts

Opinions on the reliability of the accounts

| 17. | The final accounts of the 41 agencies present fairly, in all material respects, their financial position as at 31 December 2014 and the results of their operations and their cash flows for the year then ended, in accordance with the provisions of the applicable Financial Regulations and the accounting rules adopted by the Commission’s Accounting Officer. |
| --- | --- |

17.

The final accounts of the 41 agencies present fairly, in all material respects, their financial position as at 31 December 2014 and the results of their operations and their cash flows for the year then ended, in accordance with the provisions of the applicable Financial Regulations and the accounting rules adopted by the Commission’s Accounting Officer.

| 18. | The Court included emphasis of matter (3) paragraphs in relation to the reliability of the accounts of European Agency for the operational management of large-scale IT systems in the area of freedom, security and justice (eu-LISA) and the EPF. In the case of eu-LISA, the situation to which the Court drew attention in its 2013 SAR continues, namely the need for reliable and complete data for the valuation of the agency’s core information systems, including the costs of hardware, off-the-shelf software and software development. These assets are being depreciated and while still material for 2014, the amount involved is decreasing each year. In the case of the EPF, the Court drew attention to the fact that the EPF’s 2014 accounts were prepared on a going concern basis whereas it is expected that by the end of 2015 there will be no active participants and the liquidation of the Fund is currently being assessed. |
| --- | --- |

18.

The Court included emphasis of matter (3) paragraphs in relation to the reliability of the accounts of European Agency for the operational management of large-scale IT systems in the area of freedom, security and justice (eu-LISA) and the EPF. In the case of eu-LISA, the situation to which the Court drew attention in its 2013 SAR continues, namely the need for reliable and complete data for the valuation of the agency’s core information systems, including the costs of hardware, off-the-shelf software and software development. These assets are being depreciated and while still material for 2014, the amount involved is decreasing each year. In the case of the EPF, the Court drew attention to the fact that the EPF’s 2014 accounts were prepared on a going concern basis whereas it is expected that by the end of 2015 there will be no active participants and the liquidation of the Fund is currently being assessed.

3

Opinions on the legality and regularity of the transactions underlying the accounts

Opinions on the legality and regularity of the transactions underlying the accounts

| 19. | The Court concluded that for the 41 agencies, the transactions underlying the annual accounts for the year ended 31 December 2014 were legal and regular in all material respects. |
| --- | --- |

19.

The Court concluded that for the 41 agencies, the transactions underlying the annual accounts for the year ended 31 December 2014 were legal and regular in all material respects.

| 20. | The Court included an emphasis of matter paragraph in relation to the legality and regularity of the transactions underlying the accounts of EIT. The grant agreements signed under the Framework Partnership Agreements (FPA) with the three first ‘Knowledge and Innovation Communities’ (KICs) stipulate that the EIT financial contribution may not exceed 25 % of the KIC’s global expenditure over the first five years, from 1 January 2010 to 31 December 2014. |
| --- | --- |

20.

The Court included an emphasis of matter paragraph in relation to the legality and regularity of the transactions underlying the accounts of EIT. The grant agreements signed under the Framework Partnership Agreements (FPA) with the three first ‘Knowledge and Innovation Communities’ (KICs) stipulate that the EIT financial contribution may not exceed 25 % of the KIC’s global expenditure over the first five years, from 1 January 2010 to 31 December 2014.

Comments not calling the Court’s opinions into question

Comments not calling the Court’s opinions into question

| 21. | Without calling its opinions into question, the Court made a total of 79 comments (2013: 97) affecting 35 agencies (2013: 35) to highlight matters of importance and to indicate room for improvement. Comments were made regarding the reliability of accounts, the legality and regularity of transactions, internal controls, budget implementation and other matters such as sound financial management.

  Chart


  Number of comments by heading





  Source: Specific reports on the agencies 2014 annual accounts. |
| --- | --- |

21.

Without calling its opinions into question, the Court made a total of 79 comments (2013: 97) affecting 35 agencies (2013: 35) to highlight matters of importance and to indicate room for improvement. Comments were made regarding the reliability of accounts, the legality and regularity of transactions, internal controls, budget implementation and other matters such as sound financial management.

Chart

Chart

Number of comments by heading

Number of comments by heading

Image

Source: Specific reports on the agencies 2014 annual accounts.

Source

| 22. | An overview of the comments made for each of the agencies is provided in Annex II. A summary of the most frequent comments and/or those comments of particular relevance is provided below. |
| --- | --- |

22.

An overview of the comments made for each of the agencies is provided in Annex II. A summary of the most frequent comments and/or those comments of particular relevance is provided below.

Annex II

Comment on the reliability of accounts

Comment on the reliability of accounts

| 23. | In addition to the two emphasis of matter paragraphs previously noted, there was one comment on the reliability of the accounts affecting European Securities and Markets Authority (ESMA) that addresses the disclosure of revenue based on estimated amounts rather than actual amounts. |
| --- | --- |

23.

In addition to the two emphasis of matter paragraphs previously noted, there was one comment on the reliability of the accounts affecting European Securities and Markets Authority (ESMA) that addresses the disclosure of revenue based on estimated amounts rather than actual amounts.

Comments on the legality and regularity of transactions

Comments on the legality and regularity of transactions

| 24. | The five comments (2013: seven) in this category affect five agencies (2013: seven) and relate to weaknesses in procurement procedures regarding the clarity of the tender technical specifications and the timeliness of the calls for tender; weaknesses in grant controls and compliance with regulatory dates for the collection of fees. |
| --- | --- |

24.

The five comments (2013: seven) in this category affect five agencies (2013: seven) and relate to weaknesses in procurement procedures regarding the clarity of the tender technical specifications and the timeliness of the calls for tender; weaknesses in grant controls and compliance with regulatory dates for the collection of fees.

Comments on internal controls

Comments on internal controls

| 25. | The seven comments (2013: 17) affect seven agencies (2013: 10). In two cases they relate to weaknesses in grant controls (2013: two) and in another case to weaknesses in controls over assets (2013: two); the other comments refer to different internal control shortcomings. Overall, there has been a significant improvement in internal control. Comments decreased by more than 50 % and there are no comments related to non-implementation of internal control standards (ICS). |
| --- | --- |

25.

The seven comments (2013: 17) affect seven agencies (2013: 10). In two cases they relate to weaknesses in grant controls (2013: two) and in another case to weaknesses in controls over assets (2013: two); the other comments refer to different internal control shortcomings. Overall, there has been a significant improvement in internal control. Comments decreased by more than 50 % and there are no comments related to non-implementation of internal control standards (ICS).

Comments on budget implementation

Comments on budget implementation

| 26. | A high level of carry-overs of committed appropriations remains the most frequent comment in this area and affected 28 agencies (2013: 24). Although it is usually considered to be at odds with the budgetary principle of annuality and can indicate weaknesses in budget planning and implementation, it often resulted from events (partly) beyond the agencies’ control (e.g. invoices or cost declarations that had not been received by the year end) or were justified by the multiannual nature of operations, procurement procedures or projects. |
| --- | --- |

26.

A high level of carry-overs of committed appropriations remains the most frequent comment in this area and affected 28 agencies (2013: 24). Although it is usually considered to be at odds with the budgetary principle of annuality and can indicate weaknesses in budget planning and implementation, it often resulted from events (partly) beyond the agencies’ control (e.g. invoices or cost declarations that had not been received by the year end) or were justified by the multiannual nature of operations, procurement procedures or projects.

| 27. | High rates of cancellation of carry-overs from previous years were noted in eight cases (2013: seven). Such cancellations indicate that the appropriations carried over were made on the basis of over-estimated needs or were otherwise not justified. |
| --- | --- |

27.

High rates of cancellation of carry-overs from previous years were noted in eight cases (2013: seven). Such cancellations indicate that the appropriations carried over were made on the basis of over-estimated needs or were otherwise not justified.

| 28. | There are three comments on insufficient commitments (2013: six) and one comment on high budget transfers (2013: three). |
| --- | --- |

28.

There are three comments on insufficient commitments (2013: six) and one comment on high budget transfers (2013: three).

Other comments

Other comments

| 29. | There was a total of 22 other comments (2013: 22) made in respect of 17 agencies (2013: 15), of which seven relate to matters of sound financial management. Four of the seven observations related to weaknesses in procurement and contract management: the accumulation of significant overheads and profits; insufficient competition on price due to excessive concentration on quality; planned objective and activities not sufficiently specific to justify the procurement decision; and poor planning to replace an existing contract which affected fair competition. |
| --- | --- |

29.

There was a total of 22 other comments (2013: 22) made in respect of 17 agencies (2013: 15), of which seven relate to matters of sound financial management. Four of the seven observations related to weaknesses in procurement and contract management: the accumulation of significant overheads and profits; insufficient competition on price due to excessive concentration on quality; planned objective and activities not sufficiently specific to justify the procurement decision; and poor planning to replace an existing contract which affected fair competition.

| 30. | During the audit of one agency, a miscalculation in salaries, resulting in the underpayment of some EU staff recruited before the application of the 2004 Staff Regulations was detected by the Court. Following further checks requested by the Court the same problem was found in 18 other agencies (total underpayments some 3 78  670 euro). However the sums involved were only significant for six agencies and thus specifically mentioned in the relevant SAR. A difference of opinion exists between the agencies and the PMO as to where responsibility for the error lies. |
| --- | --- |

30.

During the audit of one agency, a miscalculation in salaries, resulting in the underpayment of some EU staff recruited before the application of the 2004 Staff Regulations was detected by the Court. Following further checks requested by the Court the same problem was found in 18 other agencies (total underpayments some 3 78  670 euro). However the sums involved were only significant for six agencies and thus specifically mentioned in the relevant SAR. A difference of opinion exists between the agencies and the PMO as to where responsibility for the error lies.

| 31. | The European Environment Agency (EEA) contracted backup services with a cloud services provider using an interinstitutional contract procured by DIGIT. The conditions of the contract did not ensure that the privileges and immunities of the European Communities, which are applicable to the Agency, were guaranteed, nor that the privacy guarantees granted by Article 7 of the Charter of Fundamental Rights to citizens of the European Union are respected. It is likely that other agencies will use such services in future. It is important that they ensure that such services provide full protection of the privileges and immunities necessary for the performance of the Agency and privacy of EU citizens. |
| --- | --- |

31.

The European Environment Agency (EEA) contracted backup services with a cloud services provider using an interinstitutional contract procured by DIGIT. The conditions of the contract did not ensure that the privileges and immunities of the European Communities, which are applicable to the Agency, were guaranteed, nor that the privacy guarantees granted by Article 7 of the Charter of Fundamental Rights to citizens of the European Union are respected. It is likely that other agencies will use such services in future. It is important that they ensure that such services provide full protection of the privileges and immunities necessary for the performance of the Agency and privacy of EU citizens.

Follow-up of previous years’ comments

Follow-up of previous years’ comments

| 32. | The 2014 specific annual reports provide an overview of follow-up actions taken by the agencies in response to open comments from previous years. Annex III shows that for the 153 comments open at the end of 2013, corrective action was completed during 2014 in 51 cases; remained ongoing in 41 cases; and six comments remained outstanding. No corrective action was required for 55 comments, mainly in relation to justified budget carry-overs. |
| --- | --- |

32.

The 2014 specific annual reports provide an overview of follow-up actions taken by the agencies in response to open comments from previous years. Annex III shows that for the 153 comments open at the end of 2013, corrective action was completed during 2014 in 51 cases; remained ongoing in 41 cases; and six comments remained outstanding. No corrective action was required for 55 comments, mainly in relation to justified budget carry-overs.

Annex III

CONCLUSIONS

CONCLUSIONS

| 33. | All agencies have produced reliable accounts. The Court expressed two emphases of matter for eu-LISA and EPF. |
| --- | --- |

33.

All agencies have produced reliable accounts. The Court expressed two emphases of matter for eu-LISA and EPF.

| 34. | The Court concluded that transactions underlying the accounts were legal and regular for all agencies and expressed one emphasis of matter for EIT. |
| --- | --- |

34.

The Court concluded that transactions underlying the accounts were legal and regular for all agencies and expressed one emphasis of matter for EIT.

| 35. | There was one comment in respect of the EEA’s use of cloud services. |
| --- | --- |

35.

There was one comment in respect of the EEA’s use of cloud services.

| 36. | There were six observations related to underpayments of EU staff recruited before the application of the 2004 Staff Regulations. |
| --- | --- |

36.

There were six observations related to underpayments of EU staff recruited before the application of the 2004 Staff Regulations.

| 37. | Agencies further improved their procedures by taking corrective action in response to the Court’s comments from previous years. Nevertheless, there is still room for improvement, as indicated by the number of comments made in 2014. |
| --- | --- |

37.

Agencies further improved their procedures by taking corrective action in response to the Court’s comments from previous years. Nevertheless, there is still room for improvement, as indicated by the number of comments made in 2014.

---

(1)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

1

(2)  Article 107 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

2

(3)  An Emphasis of Matter paragraph is used to draw readers’ attention to a matter which is not materially misstated in the accounts, but is of such importance that it is fundamental to users’ understanding of the accounts.

3

---

ANNEX I

Agencies' Income (Budget forecasts, entitlements established and amounts received) and Staff establishments plans

| | 2014 | 2013 |
| --- | --- | --- |
| Agency | Parent DG | Policy Area | Forecasted Income budget (1) | Entitlements established (1) | Amounts received (1) | Staff establishment plan (2) | Forecasted Income budget (1) | Entitlements established (1) | Amounts received (1) | Staff establishment plan (2) |
| (million euro) | (million euro) | (million euro) | (million euro) | (million euro) | (million euro) |
| Regulatory Agencies |
| European Medicines Agency — EMA | SANCO | Health and Consumer Protection | 282 | 311 | 272 | 599 | 252 | 269 | 240 | 611 |
| Office for Harmonisation in the Internal Market — OHIM | MARKT | Internal Market | 194 | 196 | 196 | 844 | 418 | 189 | 189 | 861 |
| European Aviation Safety Agency — EASA | MOVE | Mobility and Transport | 162 | 145 | 137 | 685 | 151 | 125 | 125 | 692 |
| European Agency for the Management of Operational Cooperation at the External Borders — FRONTEX | HOME | Home Affairs | 98 | 87 | 87 | 152 | 94 | 92 | 92 | 153 |
| European Police Office — EUROPOL | HOME | Home Affairs | 84 | 85 | 85 | 450 | 83 | 83 | 83 | 457 |
| European Food Safety Authority — EFSA | SANCO | Health and Consumer Protection | 80 | 80 | 80 | 344 | 76 | 76 | 76 | 351 |
| European Maritime Safety Agency — EMSA | MOVE | Mobility and Transport | 58 | 58 | 58 | 210 | 57 | 58 | 56 | 213 |
| European Centre for Disease Prevention and Control — ECDC | SANCO | Health and Consumer Protection | 60 | 59 | 59 | 194 | 58 | 59 | 59 | 198 |
| Translations Centre for the Bodies of the EU — CDT | LANGUAGE | Language Services | 56 | 48 | 47 | 203 | 52 | 54 | 50 | 206 |
| European Environment Agency — EEA | ENV-CLIM | Environment | 43 | 53 | 52 | 135 | 49 | 63 | 63 | 138 |
| European Body for the Enhancement of Judicial Cooperation — EUROJUST | HOME | Justice | 34 | 34 | 34 | 209 | 32 | 32 | 32 | 213 |
| European Chemicals Agency — ECHA | ENTERPRISE AND INDUSTRY | Enterprise | 33 | 37 | 37 | 495 | 99 | 98 | 98 | 503 |
| European Railway Agency — ERA | MOVE | Mobility and Transport | 26 | 26 | 26 | 140 | 26 | 26 | 26 | 143 |
| European Union Agency for Fundamental Rights — FRA | JUSTICE | Justice | 21 | 21 | 21 | 75 | 22 | 22 | 22 | 78 |
| European Banking Authority — EBA | MARKT | Internal Market | 34 | 34 | 34 | 111 | 26 | 26 | 26 | 93 |
| European foundation for improvement of living & working conditions — EUROFOUND | EMPL | Employment and Social Affairs | 21 | 21 | 21 | 99 | 21 | 21 | 21 | 101 |
| European Training Foundation — ETF | EAC | Education and Culture | 20 | 21 | 21 | 94 | 20 | 22 | 22 | 96 |
| European Securities and Markets Authority — ESMA | MARKT | Internal Market | 33 | 32 | 32 | 133 | 28 | 30 | 30 | 121 |
| European Centre for the Development of Vocational Training — CEDEFOP | EAC | Education and Culture | 18 | 17 | 17 | 98 | 19 | 18 | 18 | 100 |
| European Insurance and Occupational Pensions Authority — EIOPA | MARKT | Internal Market | 22 | 22 | 22 | 87 | 19 | 18 | 18 | 80 |
| European Monitoring Centre for Drugs and Drug Addiction — EMCDDA | HOME | Home Affairs | 15 | 16 | 16 | 82 | 16 | 16 | 16 | 84 |
| European Agency for Safety and Health at Work — EU-OSHA | EMPL | Employment and Social Affairs | 15 | 15 | 15 | 43 | 15 | 16 | 16 | 44 |
| Community Plant Variety Office — CPVO | SANCO | Agriculture and Rural Development | 15 | 13 | 13 | 47 | 14 | 13 | 13 | 48 |
| European GNSS Agency — GSA | ENTERPRISE AND INDUSTRY | Enterprise | 25 | 358 | 358 | 96 | 14 | 54 | 54 | 77 |
| European Fisheries Control Agency — EFCA | MARE | Maritime Affairs & Fisheries | 9 | 9 | 9 | 53 | 9 | 9 | 9 | 54 |
| European Institute for Gender equality — EIGE | JUSTICE | Justice | 7 | 7 | 7 | 29 | 7 | 8 | 8 | 30 |
| European Police College — CEPOL | HOME | Home Affairs | 9 | 9 | 9 | 27 | 8 | 9 | 9 | 28 |
| European Network and Information Security Agency — ENISA | INFSO | Information Society and Media | 10 | 10 | 10 | 48 | 10 | 10 | 9 | 47 |
| European Agency for the Cooperation of Energy Regulators — ACER | ENER | Energy | 11 | 11 | 11 | 54 | 12 | 12 | 12 | 49 |
| European Asylum Support Office — EASO | HOME | Home Affairs | 16 | 13 | 13 | 51 | 11 | 10 | 10 | 45 |
| Office of the body of European Regulators for Electronic Communications — BEREC | INFSO | Information Society and Media | 4 | 4 | 4 | 16 | 4 | 4 | 4 | 16 |
| European Agency for the Operational Management of Large-Scale IT Systems in the Area of Freedom, Security and Justice — eu-LISA | HOME | Home Affairs | 65 | 57 | 57 | 120 | 34 | 19 | 19 | 120 |
| Executive Agencies |
| Education, Audiovisual and Culture Executive Agency — EACEA | EAC | Education and Culture | 47 | 47 | 47 | 108 | 51 | 52 | 52 | 105 |
| Research Executive Agency — REA | RTD | Research and Innovation | 52 | 52 | 52 | 145 | 47 | 47 | 47 | 140 |
| European Research Council Executive Agency — ERCEA | RTD | Research and Innovation | 36 | 36 | 36 | 100 | 40 | 40 | 40 | 100 |
| Executive Agency for Small and Medium-sized Enterprises — EASME (previously EACI) | ENER | Energy, Entrepreneurship and Innovation | 24 | 25 | 25 | 77 | 16 | 16 | 16 | 37 |
| Innovation and Networks Executive Agency — INEA (previously TEN-TEA) | MOVE | Mobility and Transport | 13 | 14 | 14 | 49 | 10 | 10 | 10 | 33 |
| Consumers, Health, Agriculture and Food Executive Agency — CHAFEA (previously EAHC) | SANCO | Consumer Protection | 7 | 7 | 7 | 12 | 7 | 7 | 7 | 12 |
| Other Bodies |
| European Institute of Innovation and Technology — EIT | EAC | Innovation and Technology | 175 | 167 | 167 | 39 | 99 | 97 | 97 | 34 |
| Euratom Supply Agency (3) — EURATOM | ENER & RTD | Energy and Innovation | 0,1 | 0,1 | 0,1 | 25 | 0,1 | 0,1 | 0,1 | 25 |
| Europol Pension Fund — EPF | HOME | Administrative Expenditure of Europol | n/a | n/a | n/a | n/a | n/a | n/a | n/a | n/a |
| Total | 1  934 | 2  257 | 2  208 | 6  578 | 2  026 | 1  830 | 1  794 | 6  536 |
| | | | | | | 2014 | 2013 | | | |
| | Commission subsidy part in agencies’ income: | 60,5 % | 51,9 % | | | |
| | Agencies’ forecasted income budget in comparison with EU general budget: | 1,4 % | 1,4 % | | | |
| | Agencies’ staff establishment plan in comparison with total under the EU general budget: | 14,1 % | 14,0 % | | | |

2014

2013

Agency

Parent DG

Policy Area

Forecasted Income budget (1)

Entitlements established (1)

Amounts received (1)

Staff establishment plan (2)

Forecasted Income budget (1)

Entitlements established (1)

Amounts received (1)

Staff establishment plan (2)

(million euro)

(million euro)

(million euro)

(million euro)

(million euro)

(million euro)

Regulatory Agencies

European Medicines Agency — EMA

SANCO

Health and Consumer Protection

282

311

272

599

252

269

240

611

Office for Harmonisation in the Internal Market — OHIM

MARKT

Internal Market

194

196

196

844

418

189

189

861

European Aviation Safety Agency — EASA

MOVE

Mobility and Transport

162

145

137

685

151

125

125

692

European Agency for the Management of Operational Cooperation at the External Borders — FRONTEX

HOME

Home Affairs

98

87

87

152

94

92

92

153

European Police Office — EUROPOL

HOME

Home Affairs

84

85

85

450

83

83

83

457

European Food Safety Authority — EFSA

SANCO

Health and Consumer Protection

80

80

80

344

76

76

76

351

European Maritime Safety Agency — EMSA

MOVE

Mobility and Transport

58

58

58

210

57

58

56

213

European Centre for Disease Prevention and Control — ECDC

SANCO

Health and Consumer Protection

60

59

59

194

58

59

59

198

Translations Centre for the Bodies of the EU — CDT

LANGUAGE

Language Services

56

48

47

203

52

54

50

206

European Environment Agency — EEA

ENV-CLIM

Environment

43

53

52

135

49

63

63

138

European Body for the Enhancement of Judicial Cooperation — EUROJUST

HOME

Justice

34

34

34

209

32

32

32

213

European Chemicals Agency — ECHA

ENTERPRISE AND INDUSTRY

Enterprise

33

37

37

495

99

98

98

503

European Railway Agency — ERA

MOVE

Mobility and Transport

26

26

26

140

26

26

26

143

European Union Agency for Fundamental Rights — FRA

JUSTICE

Justice

21

21

21

75

22

22

22

78

European Banking Authority — EBA

MARKT

Internal Market

34

34

34

111

26

26

26

93

European foundation for improvement of living & working conditions — EUROFOUND

EMPL

Employment and Social Affairs

21

21

21

99

21

21

21

101

European Training Foundation — ETF

EAC

Education and Culture

20

21

21

94

20

22

22

96

European Securities and Markets Authority — ESMA

MARKT

Internal Market

33

32

32

133

28

30

30

121

European Centre for the Development of Vocational Training — CEDEFOP

EAC

Education and Culture

18

17

17

98

19

18

18

100

European Insurance and Occupational Pensions Authority — EIOPA

MARKT

Internal Market

22

22

22

87

19

18

18

80

European Monitoring Centre for Drugs and Drug Addiction — EMCDDA

HOME

Home Affairs

15

16

16

82

16

16

16

84

European Agency for Safety and Health at Work — EU-OSHA

EMPL

Employment and Social Affairs

15

15

15

43

15

16

16

44

Community Plant Variety Office — CPVO

SANCO

Agriculture and Rural Development

15

13

13

47

14

13

13

48

European GNSS Agency — GSA

ENTERPRISE AND INDUSTRY

Enterprise

25

358

358

96

14

54

54

77

European Fisheries Control Agency — EFCA

MARE

Maritime Affairs & Fisheries

9

9

9

53

9

9

9

54

European Institute for Gender equality — EIGE

JUSTICE

Justice

7

7

7

29

7

8

8

30

European Police College — CEPOL

HOME

Home Affairs

9

9

9

27

8

9

9

28

European Network and Information Security Agency — ENISA

INFSO

Information Society and Media

10

10

10

48

10

10

9

47

European Agency for the Cooperation of Energy Regulators — ACER

ENER

Energy

11

11

11

54

12

12

12

49

European Asylum Support Office — EASO

HOME

Home Affairs

16

13

13

51

11

10

10

45

Office of the body of European Regulators for Electronic Communications — BEREC

INFSO

Information Society and Media

4

4

4

16

4

4

4

16

European Agency for the Operational Management of Large-Scale IT Systems in the Area of Freedom, Security and Justice — eu-LISA

HOME

Home Affairs

65

57

57

120

34

19

19

120

Executive Agencies

Education, Audiovisual and Culture Executive Agency — EACEA

EAC

Education and Culture

47

47

47

108

51

52

52

105

Research Executive Agency — REA

RTD

Research and Innovation

52

52

52

145

47

47

47

140

European Research Council Executive Agency — ERCEA

RTD

Research and Innovation

36

36

36

100

40

40

40

100

Executive Agency for Small and Medium-sized Enterprises — EASME (previously EACI)

ENER

Energy, Entrepreneurship and Innovation

24

25

25

77

16

16

16

37

Innovation and Networks Executive Agency — INEA (previously TEN-TEA)

MOVE

Mobility and Transport

13

14

14

49

10

10

10

33

Consumers, Health, Agriculture and Food Executive Agency — CHAFEA (previously EAHC)

SANCO

Consumer Protection

7

7

7

12

7

7

7

12

Other Bodies

European Institute of Innovation and Technology — EIT

EAC

Innovation and Technology

175

167

167

39

99

97

97

34

Euratom Supply Agency (3) — EURATOM

ENER & RTD

Energy and Innovation

0,1

0,1

0,1

25

0,1

0,1

0,1

25

Europol Pension Fund — EPF

HOME

Administrative Expenditure of Europol

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

Total

1  934

2  257

2  208

6  578

2  026

1  830

1  794

6  536

2014

2013

Commission subsidy part in agencies’ income:

60,5 %

51,9 %

Agencies’ forecasted income budget in comparison with EU general budget:

1,4 %

1,4 %

Agencies’ staff establishment plan in comparison with total under the EU general budget:

14,1 %

14,0 %

---

(1)  According to 2014/2013 consolidated EU annual accounts.

(2)  Permanent and temporary EU officials (AD, AST and AST/SC) only, according to staff establishment plan.

(3)  Euratom Supply Agency is not consolidated in the EU annual accounts;

---

ANNEX II

Comments made by the Court in 2014, not calling its opinion into question

| | Total No of comments | Reliability of accounts | Legality/Regularity of Transactions | Internal controls | Budget Implementation | Other comments |
| --- | --- | --- | --- | --- | --- | --- |
| Weaknesses in procurement procedures | Weaknesses in grant controls | Carry overs without legal commitment | Delays in collecting fees | Weak controls over fixed assets/stock taking | Weak grant controls | Other | High carry-overs | High budget transfers | High cancellations of 2013 carry-overs | Insufficient commitments | Other | SFM | Miscalculation in staff salaries | High turnover of staff | Other |
| 1 | ACER — Ljubljana | 3 | | | | | | | | | X | | | | X | | | | X |
| 2 | BEREC — Riga | 3 | | | | | | | | | X | X | | | X | | | | |
| 3 | CdT — Luxembourg | 1 | | | | | | | | | | | | | | X | | | |
| 4 | CEDEFOP — Thessaloniki | 0 | | | | | | | | | | | | | | | | | |
| 5 | CEPOL — Budapest | 2 | | | | | | | | | X | | X | | | | | | |
| 6 | CHAFEA — Luxembourg | 1 | | | | | | | | | X | | | | | | | | |
| 7 | CPVO — Angers | 2 | | | | | | | | X | | | | | | | | | X |
| 8 | EACEA — Brussels | 1 | | | | | | | | | X | | | | | | | | |
| 9 | EASA — Koln | 2 | | | | | | | | | X | | | | | X | | | |
| 10 | EASME — Brussels | 3 | | | | | | | | | X | | X | X | | | | | |
| 11 | EASO — Valletta | 7 | | | | X | | | | X | X | | X | X | | X | | X | |
| 12 | EBA — London | 1 | | | | | | | | | X | | | | | | | | |
| 13 | ECDC — Stockholm | 1 | | | | | | | | | X | | | | | | | | |
| 14 | ECHA — Helsinki | 2 | | | | | | | | | X | | | | X | | | | |
| 15 | EEA — Kobenhavn | 3 | | X | | | | | X | | | | | | | | | | X |
| 16 | EFCA — Vigo | 0 | | | | | | | | | | | | | | | | | |
| 17 | EFSA — Parma | 1 | | | | | | | | | | | | | | | X | | |
| 18 | EIGE — Vilnius | 1 | | | | | | | | | X | | | | | | | | |
| 19 | EIOPA — Frankfurt | 1 | | | | | | | | | X | | | | | | | | |
| 20 | EIT — Budapest | 4 | | | | | | | X | | | | | X | | | | X | X |
| 21 | EMA — London | 4 | | | | | X | X | | | | | | | | X | | | X |
| 22 | EMCDDA — Lisboa | 1 | | | | | | | | | X | | | | | | | | |
| 23 | EMSA — Lisboa | 0 | | | | | | | | | | | | | | | | | |
| 24 | ENISA — Heraklion | 1 | | | | | | | | | X | | | | | | | | |
| 25 | EPF — The Hague | 0 | | | | | | | | | | | | | | | | | |
| 26 | ERA — Valenciennes | 2 | | | | | | | | | X | | | | | X | | | |
| 27 | ERCEA — Brussels | 1 | | | | | | X | | | | | | | | | | | |
| 28 | ESMA — Paris | 4 | X | X | | | | | | | X | | X | | | | | | |
| 29 | ETF — Torino | 3 | | | | | | | | | X | | X | | | | X | | |
| 30 | eu-LISA — Tallinn | 2 | | | | | | | | | X | | X | | | | | | |
| 31 | EU-OSHA — Bilbao | 2 | | | | | | | | | X | | | | | | X | | |
| 32 | EURATOM — Luxembourg | 0 | | | | | | | | | | | | | | | | | |
| 33 | EUROFOUND — Dublin | 2 | | | | | | | | | X | | | | | | X | | |
| 34 | EUROJUST — The Hague | 2 | | | | | | | | | X | | | | X | | | | |
| 35 | EUROPOL — The Hague | 2 | | | | | | | | | X | | X | | | | | | |
| 36 | FRA — Wien | 2 | | | | | | | | | X | | | | | | X | | |
| 37 | FRONTEX — Warsaw | 4 | | | X | | | | | | X | | | | | | | | XX |
| 38 | GSA — Prague | 3 | | | | | | | | | X | | | | | XX | | | |
| 39 | INEA — Brussels | 1 | | | | | | | | | X | | | | | | | | |
| 40 | OHIM — Alicante | 4 | | | | | | | | X | X | | X | | | | X | | |
| 41 | REA — Brussels | 0 | | | | | | | | | | | | | | | | | |
| Subtotals: | 79 | 1 | 2 | 1 | 1 | 1 | 2 | 2 | 3 | 28 | 1 | 8 | 3 | 4 | 7 | 6 | 2 | 7 |
| Totals: | 1 | 5 | 7 | 44 | 22 |
| | 1 % | 6 % | 9 % | 56 % | 28 % |

Total No of comments

Reliability of accounts

Legality/Regularity of Transactions

Internal controls

Budget Implementation

Other comments

Weaknesses in procurement procedures

Weaknesses in grant controls

Carry overs without legal commitment

Delays in collecting fees

Weak controls over fixed assets/stock taking

Weak grant controls

Other

High carry-overs

High budget transfers

High cancellations of 2013 carry-overs

Insufficient commitments

Other

SFM

Miscalculation in staff salaries

High turnover of staff

Other

1

ACER — Ljubljana

3

X

X

X

2

BEREC — Riga

3

X

X

X

3

CdT — Luxembourg

1

X

4

CEDEFOP — Thessaloniki

0

5

CEPOL — Budapest

2

X

X

6

CHAFEA — Luxembourg

1

X

7

CPVO — Angers

2

X

X

8

EACEA — Brussels

1

X

9

EASA — Koln

2

X

X

10

EASME — Brussels

3

X

X

X

11

EASO — Valletta

7

X

X

X

X

X

X

X

12

EBA — London

1

X

13

ECDC — Stockholm

1

X

14

ECHA — Helsinki

2

X

X

15

EEA — Kobenhavn

3

X

X

X

16

EFCA — Vigo

0

17

EFSA — Parma

1

X

18

EIGE — Vilnius

1

X

19

EIOPA — Frankfurt

1

X

20

EIT — Budapest

4

X

X

X

X

21

EMA — London

4

X

X

X

X

22

EMCDDA — Lisboa

1

X

23

EMSA — Lisboa

0

24

ENISA — Heraklion

1

X

25

EPF — The Hague

0

26

ERA — Valenciennes

2

X

X

27

ERCEA — Brussels

1

X

28

ESMA — Paris

4

X

X

X

X

29

ETF — Torino

3

X

X

X

30

eu-LISA — Tallinn

2

X

X

31

EU-OSHA — Bilbao

2

X

X

32

EURATOM — Luxembourg

0

33

EUROFOUND — Dublin

2

X

X

34

EUROJUST — The Hague

2

X

X

35

EUROPOL — The Hague

2

X

X

36

FRA — Wien

2

X

X

37

FRONTEX — Warsaw

4

X

X

XX

38

GSA — Prague

3

X

XX

39

INEA — Brussels

1

X

40

OHIM — Alicante

4

X

X

X

X

41

REA — Brussels

0

Subtotals:

79

1

2

1

1

1

2

2

3

28

1

8

3

4

7

6

2

7

Totals:

1

5

7

44

22

1 %

6 %

9 %

56 %

28 %

---

ANNEX III

Follow-up of open 2012 and 2013 comments not calling the Court’s opinions into question

| | Total | Completed | Ongoing | Outstanding | N/A |
| --- | --- | --- | --- | --- | --- |
| Regulatory Agencies |
| 1 | European Medicines Agency — EMA | 1 | 1 | | | |
| 2 | Office for Harmonisation in the Internal Market — OHIM | 4 | 1 | 1 | 1 | 1 |
| 3 | European Aviation Safety Agency — EASA | 3 | | 2 | | 1 |
| 4 | European Agency for the Management of Operational Cooperation at the External Borders — FRONTEX | 11 | 3 | 4 | | 4 |
| 5 | European Police Office — EUROPOL | 3 | | 2 | | 1 |
| 6 | European Food Safety Authority — EFSA | 3 | 2 | 1 | | |
| 7 | European Maritime Safety Agency — EMSA | 3 | 1 | 2 | | |
| 8 | European Centre for Disease Prevention and Control — ECDC | 6 | 1 | 1 | | 4 |
| 9 | Translations Centre for the Bodies of the EU — CDT | 5 | 3 | 1 | 1 | |
| 10 | European Environment Agency — EEA | 2 | | 2 | | |
| 11 | European Body for the Enhancement of Judicial Cooperation — EUROJUST | 3 | 1 | 1 | | 1 |
| 12 | European Chemicals Agency — ECHA | 2 | | | | 2 |
| 13 | European Railway Agency — ERA | 6 | 2 | 4 | | |
| 14 | European Union Agency for Fundamental Rights — FRA | 2 | | | | 2 |
| 15 | European Banking Authority — EBA | 3 | | 1 | | 2 |
| 16 | European foundation for improvement of living & working conditions — EUROFOUND | 5 | 2 | 1 | | 2 |
| 17 | European Training Foundation — ETF | 1 | | 1 | | |
| 18 | European Securities and Markets Authority — ESMA | 10 | 4 | 5 | | 1 |
| 19 | European Centre for the Development of Vocational Training — CEDEFOP | 0 | | | | |
| 20 | European Insurance and Occupational Pensions Authority — EIOPA | 4 | 2 | | | 2 |
| 21 | European Monitoring Centre for Drugs and Drug Addiction — EMCDDA | 4 | 3 | | | 1 |
| 22 | European Agency for Safety and Health at Work — EU-OSHA | 2 | | | | 2 |
| 23 | Community Plant Variety Office – CPVO | 3 | 2 | | | 1 |
| 24 | European GNSS Agency — GSA | 2 | | | | 2 |
| 25 | European Fisheries Control Agency — EFCA | 2 | | | | 2 |
| 26 | European Institute for Gender equality — EIGE | 3 | 2 | | | 1 |
| 27 | European Police College — CEPOL | 8 | 4 | 3 | | 1 |
| 28 | European Network and Information Security Agency — ENISA | 5 | 1 | 1 | | 3 |
| 29 | European Agency for the Cooperation of Energy Regulators — ACER | 5 | 4 | | | 1 |
| 30 | European Asylum Support Office — EASO | 8 | | 3 | 2 | 3 |
| 31 | Office for the body of European Regulators for Electronic Communications — BEREC | 6 | 2 | 2 | | 2 |
| 32 | European Agency for the Operational Management of Large-Scale IT Systems in the Area of Freedom, Security and Justice — eu-LISA | 8 | 2 | 1 | 1 | 4 |
| Executive Agencies |
| 33 | Education, Audiovisual and Culture Executive Agency — EACEA | 1 | | | | 1 |
| 34 | Research Executive Agency — REA | 0 | | | | |
| 35 | European Research Council Executive Agency — ERCEA | 0 | | | | |
| 36 | Executive Agency for Small and Medium-sized Enterprises — EASME (previously EACI) | 1 | | | 1 | |
| 37 | Innovation and Networks Executive Agency — INEA (previously TEN-TEA) | 3 | 2 | | | 1 |
| 38 | Consumers, Health, Agriculture and Food Executive Agency — CHAFEA (previously EAHC) | 2 | | | | 2 |
| Other Bodies |
| 39 | European Institute of Innovation and Technology — EIT | 9 | 4 | 2 | | 3 |
| 40 | Euratom Supply Agency — EURATOM | 3 | 2 | | | 1 |
| 41 | Europol Pension Fund — EPF | 1 | | | | 1 |
| Totals | 153 | 51 | 41 | 6 | 55 |

Total

Completed

Ongoing

Outstanding

N/A

Regulatory Agencies

1

European Medicines Agency — EMA

1

1

2

Office for Harmonisation in the Internal Market — OHIM

4

1

1

1

1

3

European Aviation Safety Agency — EASA

3

2

1

4

European Agency for the Management of Operational Cooperation at the External Borders — FRONTEX

11

3

4

4

5

European Police Office — EUROPOL

3

2

1

6

European Food Safety Authority — EFSA

3

2

1

7

European Maritime Safety Agency — EMSA

3

1

2

8

European Centre for Disease Prevention and Control — ECDC

6

1

1

4

9

Translations Centre for the Bodies of the EU — CDT

5

3

1

1

10

European Environment Agency — EEA

2

2

11

European Body for the Enhancement of Judicial Cooperation — EUROJUST

3

1

1

1

12

European Chemicals Agency — ECHA

2

2

13

European Railway Agency — ERA

6

2

4

14

European Union Agency for Fundamental Rights — FRA

2

2

15

European Banking Authority — EBA

3

1

2

16

European foundation for improvement of living & working conditions — EUROFOUND

5

2

1

2

17

European Training Foundation — ETF

1

1

18

European Securities and Markets Authority — ESMA

10

4

5

1

19

European Centre for the Development of Vocational Training — CEDEFOP

0

20

European Insurance and Occupational Pensions Authority — EIOPA

4

2

2

21

European Monitoring Centre for Drugs and Drug Addiction — EMCDDA

4

3

1

22

European Agency for Safety and Health at Work — EU-OSHA

2

2

23

Community Plant Variety Office – CPVO

3

2

1

24

European GNSS Agency — GSA

2

2

25

European Fisheries Control Agency — EFCA

2

2

26

European Institute for Gender equality — EIGE

3

2

1

27

European Police College — CEPOL

8

4

3

1

28

European Network and Information Security Agency — ENISA

5

1

1

3

29

European Agency for the Cooperation of Energy Regulators — ACER

5

4

1

30

European Asylum Support Office — EASO

8

3

2

3

31

Office for the body of European Regulators for Electronic Communications — BEREC

6

2

2

2

32

European Agency for the Operational Management of Large-Scale IT Systems in the Area of Freedom, Security and Justice — eu-LISA

8

2

1

1

4

Executive Agencies

33

Education, Audiovisual and Culture Executive Agency — EACEA

1

1

34

Research Executive Agency — REA

0

35

European Research Council Executive Agency — ERCEA

0

36

Executive Agency for Small and Medium-sized Enterprises — EASME (previously EACI)

1

1

37

Innovation and Networks Executive Agency — INEA (previously TEN-TEA)

3

2

1

38

Consumers, Health, Agriculture and Food Executive Agency — CHAFEA (previously EAHC)

2

2

Other Bodies

39

European Institute of Innovation and Technology — EIT

9

4

2

3

40

Euratom Supply Agency — EURATOM

3

2

1

41

Europol Pension Fund — EPF

1

1

Totals

153

51

41

6

55

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/18 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/18

---

REPORT

on the annual accounts of the Agency for the Cooperation of Energy Regulators for the financial year 2014 together with the Agency’s reply

(2015/C 409/02)

INTRODUCTION

| 1. | The Agency for the Cooperation of Energy Regulators (hereinafter ‘the Agency’, aka ‘ACER’), which is located in Ljubljana, was created by Regulation (EC) No 713/2009 of the European Parliament and of the Council (1). The Agency’s main task is to assist National Regulatory Authorities in exercising, at Union level, the regulatory tasks that they perform in the Member States and, where necessary, to coordinate their action. Under the REMIT regulation (2), the Agency was given new additional responsibilities, together with national regulatory authorities, regarding the monitoring of the European wholesale energy market (3). |
| --- | --- |

1.

The Agency for the Cooperation of Energy Regulators (hereinafter ‘the Agency’, aka ‘ACER’), which is located in Ljubljana, was created by Regulation (EC) No 713/2009 of the European Parliament and of the Council (1). The Agency’s main task is to assist National Regulatory Authorities in exercising, at Union level, the regulatory tasks that they perform in the Member States and, where necessary, to coordinate their action. Under the REMIT regulation (2), the Agency was given new additional responsibilities, together with national regulatory authorities, regarding the monitoring of the European wholesale energy market (3).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Agency, which comprise the financial statements (4) and the reports on the implementation of the budget (5) for the financial year ended 31 December 2014, and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Agency, which comprise the financial statements (4) and the reports on the implementation of the budget (5) for the financial year ended 31 December 2014, and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (6):






  (a) | The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (7); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (6):

(a)

The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (7); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (8) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (8) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (9). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (9).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | The Agency carried over 1,57 million euro, i.e. 62 %, of committed appropriations for title III operational expenditure (2013: 3,1 million euro, i.e. 91 %). These carry-overs were mainly related to the implementation of REMIT, a complex multi-annual operational activity for which the Implementing Regulation was only adopted on 17 December 2014 (10). The Agency also carried over 0,98 million euro, i.e. 41 % (2013: 1,9 million euro, i.e. 56 %), of committed appropriations for title II administrative expenditure, mainly related to studies for the implementation of REMIT and annual contracts renewed towards the year end. |
| --- | --- |

11.

The Agency carried over 1,57 million euro, i.e. 62 %, of committed appropriations for title III operational expenditure (2013: 3,1 million euro, i.e. 91 %). These carry-overs were mainly related to the implementation of REMIT, a complex multi-annual operational activity for which the Implementing Regulation was only adopted on 17 December 2014 (10). The Agency also carried over 0,98 million euro, i.e. 41 % (2013: 1,9 million euro, i.e. 56 %), of committed appropriations for title II administrative expenditure, mainly related to studies for the implementation of REMIT and annual contracts renewed towards the year end.

| 12. | In October 2013, through a budget amendment, the Agency received an additional 3 million euro in appropriations to implement REMIT, which it carried over to 2014. However, according to the Implementing Regulation the REMIT framework will only become operational in October 2015. Part of the funds was spent in 2014 on preparation for the implementation of REMIT. At the end of 2014, the Agency made two pre-financing payments amounting to 1,56 million euro for contracts on REMIT-related services to be provided in the period 2015 to 2017, thereby avoiding an automatic return to the Commission of the unused funds (11). Although this will allow the Agency to finance its future REMIT-related activities, this is in contradiction with the budgetary principle of annuality. |
| --- | --- |

12.

In October 2013, through a budget amendment, the Agency received an additional 3 million euro in appropriations to implement REMIT, which it carried over to 2014. However, according to the Implementing Regulation the REMIT framework will only become operational in October 2015. Part of the funds was spent in 2014 on preparation for the implementation of REMIT. At the end of 2014, the Agency made two pre-financing payments amounting to 1,56 million euro for contracts on REMIT-related services to be provided in the period 2015 to 2017, thereby avoiding an automatic return to the Commission of the unused funds (11). Although this will allow the Agency to finance its future REMIT-related activities, this is in contradiction with the budgetary principle of annuality.

OTHER COMMENTS

| 13. | According to the Seat Agreement between the Agency and the Slovenian government a European School will be established in Slovenia. However, more than four years after the agreement no European School has been set up. |
| --- | --- |

13.

According to the Seat Agreement between the Agency and the Slovenian government a European School will be established in Slovenia. However, more than four years after the agreement no European School has been set up.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 14. | An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I. |
| --- | --- |

14.

An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 211, 14.8.2009, p. 1.

1

(2)  Regulation No 1227/2011 of the European Parliament and of the Council (OJ L 326, 8.12.2011, p. 1), which assigns an important role to the Agency in supervising trading in wholesale energy markets across Europe.

2

(3)  Annex II summarises the Agency’s competences and activities. It is presented for information purposes.

3

Annex II

(4)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

4

(5)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

5

(6)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

6

(7)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

7

(8)  Article 107 of Regulation (EU) No 1271/2013.

8

(9)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

9

(10)  Commission Implementing Regulation (EU) No 1348/2014 (OJ L 363, 18.12.2014, p. 121).

10

(11)  Article 13 of the EU Financial Regulation stipulates that amounts can be carried over for one financial year only.

11

---

ANNEX I

Follow-up of previous years’ comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2012 | The Agency held 4,2 million euro in cash at the year end, including the 2011 budget surplus of 1,6 million euro which resulted from an excessive call for funds in 2011 and was recovered by the Commission in January 2013. This is not consistent with a rigorous treasury management. | Completed |
| 2012 | The audited recruitment procedures revealed shortcomings affecting transparency and an equal treatment of candidates: questions for interviews and tests were not set before the examination of the applications. The conditions for admission to written tests and interviews and for being included in the list of suitable candidates were not specified in sufficient detail and the measures taken to ensure the anonymity of candidates sitting written tests were inadequate. | Completed |
| 2013 | The Agency carried over 1,9 million euro or 56 % of total committed title II appropriations (Agency’s building and associated costs), mainly related to the implementation of the REMIT regulation. This is an operational, multiannual activity and should have been budgeted under title III, a shortcoming which was rectified in subsequent commitment appropriations. | Completed |
| 2013 | In addition, the Agency carried over 3,1 million euro or 91 % of total committed title III appropriations, also related to the implementation of the REMIT regulation. The exceptionally high rate of carry-over for title III is mainly due to some 3 million euro in additional funding received through an amended budget approved on 31 October 2013. | N/A |
| 2013 | The Agency held 5,5 million euro in cash at year-end, which included some 3 million euro relating to the late budget amendment. Nevertheless, average cash balances during the year were significantly higher than justified by operational requirements. | Completed |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2012

The Agency held 4,2 million euro in cash at the year end, including the 2011 budget surplus of 1,6 million euro which resulted from an excessive call for funds in 2011 and was recovered by the Commission in January 2013. This is not consistent with a rigorous treasury management.

Completed

2012

The audited recruitment procedures revealed shortcomings affecting transparency and an equal treatment of candidates: questions for interviews and tests were not set before the examination of the applications. The conditions for admission to written tests and interviews and for being included in the list of suitable candidates were not specified in sufficient detail and the measures taken to ensure the anonymity of candidates sitting written tests were inadequate.

Completed

2013

The Agency carried over 1,9 million euro or 56 % of total committed title II appropriations (Agency’s building and associated costs), mainly related to the implementation of the REMIT regulation. This is an operational, multiannual activity and should have been budgeted under title III, a shortcoming which was rectified in subsequent commitment appropriations.

Completed

2013

In addition, the Agency carried over 3,1 million euro or 91 % of total committed title III appropriations, also related to the implementation of the REMIT regulation. The exceptionally high rate of carry-over for title III is mainly due to some 3 million euro in additional funding received through an amended budget approved on 31 October 2013.

N/A

2013

The Agency held 5,5 million euro in cash at year-end, which included some 3 million euro relating to the late budget amendment. Nevertheless, average cash balances during the year were significantly higher than justified by operational requirements.

Completed

---

ANNEX II

Agency for the Cooperation of Energy Regulators (Ljubljana)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Article 114 (ex Article 95 TEC) and Article 194 of the Treaty on the Functioning of the European Union) | The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.
  In the context of the establishment and functioning of the internal market and with regard for the need to preserve and improve the environment, Union policy on energy shall aim, in a spirit of solidarity between Member States to:






  (a) | ensure the functioning of the energy market; |
| --- | --- | --- |

Areas of Union competence deriving from the Treaty

(Article 114 (ex Article 95 TEC) and Article 194 of the Treaty on the Functioning of the European Union)

The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.

In the context of the establishment and functioning of the internal market and with regard for the need to preserve and improve the environment, Union policy on energy shall aim, in a spirit of solidarity between Member States to:

(a)

ensure the functioning of the energy market;

| (b) | ensure security of energy supply in the Union; |
| --- | --- |

(b)

ensure security of energy supply in the Union;

| (c) | promote energy efficiency and energy saving and the development of new and renewable forms of energy; and |
| --- | --- |

(c)

promote energy efficiency and energy saving and the development of new and renewable forms of energy; and

| (d) | promote the interconnection of energy networks. |
| --- | --- |

(d)

promote the interconnection of energy networks.

The European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall establish the measures necessary to achieve these objectives. Such measures shall be adopted after consultation of the Economic and Social Committee and the Committee of the Regions.

Competences of the Agency

(As specified in Regulation (EC) No 713/2009 of the European Parliament and of the Council; Commission Regulation (EU) No 838/2010; Regulation (EU) No 1227/2011 of the European Parliament and of the Council)

Regulation (EU) No 347/2013 of the European Parliament and the Council of 17 April 2013 on guidelines for trans-European energy infrastructure and repealing Decision No 1364/2006/EC and amending Regulations (EC) No 713/2009, (EC) No 714/2009 and (EC) No 715/2009

Objectives

The purpose of the Agency is to assist National Regulatory Authorities in exercising, at Union level, the regulatory tasks that they perform in the Member States and, where necessary, to coordinate their action.

Tasks

| — | Complement and coordinate the work of National Regulatory Authorities, |
| --- | --- |

—

Complement and coordinate the work of National Regulatory Authorities,

| — | participate in the creation of European network rules, |
| --- | --- |

—

participate in the creation of European network rules,

| — | take, under certain conditions, binding individual decisions on terms and conditions for access and operational security for cross border infrastructure, |
| --- | --- |

—

take, under certain conditions, binding individual decisions on terms and conditions for access and operational security for cross border infrastructure,

| — | give advice on various energy-related issues to the European institutions, |
| --- | --- |

—

give advice on various energy-related issues to the European institutions,

| — | monitor and report on developments in the energy markets, |
| --- | --- |

—

monitor and report on developments in the energy markets,

| — | formulate a proposal to the EU Commission on the annual cross-border infrastructure compensation sum for the ITC mechanism, |
| --- | --- |

—

formulate a proposal to the EU Commission on the annual cross-border infrastructure compensation sum for the ITC mechanism,

| — | participate in the process for the selection of Projects of Common Interest (PCIs), including by issuing opinions on the consistent application of the selection criteria and of the cost-benefit analysis across regions, and monitor the implementation of PCIs, |
| --- | --- |

—

participate in the process for the selection of Projects of Common Interest (PCIs), including by issuing opinions on the consistent application of the selection criteria and of the cost-benefit analysis across regions, and monitor the implementation of PCIs,

| — | take decisions on investment requests for PCIs, including on cross-border cost allocation, if the relevant national regulatory authorities for energy fail to reach an agreement, |
| --- | --- |

—

take decisions on investment requests for PCIs, including on cross-border cost allocation, if the relevant national regulatory authorities for energy fail to reach an agreement,

| — | monitor trading on EU wholesale energy markets to detect and prevent market abuse, in cooperation with national regulatory authorities for energy, ESMA, the competent financial authorities of the Member States and, where appropriate, national competition authorities, |
| --- | --- |

—

monitor trading on EU wholesale energy markets to detect and prevent market abuse, in cooperation with national regulatory authorities for energy, ESMA, the competent financial authorities of the Member States and, where appropriate, national competition authorities,

| — | assess the operation and transparency of different categories of market places and ways of trading, |
| --- | --- |

—

assess the operation and transparency of different categories of market places and ways of trading,

| — | make recommendations to the Commission as regards market rules, records of transactions, orders to trade, standards and procedures which could improve market integrity and the functioning of the internal market. |
| --- | --- |

—

make recommendations to the Commission as regards market rules, records of transactions, orders to trade, standards and procedures which could improve market integrity and the functioning of the internal market.

Governance

Administrative Board

Composition:

Two members appointed by the European Parliament, two members appointed by the Commission and five members appointed by the Council. Each member has an alternate.

Tasks:

The Administrative Board adopts the Agency’s annual programme and budget and monitors their implementation.

Director

Appointed by the Administrative Board after a favourable opinion from the Board of Regulators and on the basis of a list of candidates proposed by the Commission.

Board of Regulators

Composition:

A senior representative of the regulatory authorities from each Member State and one non-voting representative of the Commission. Each member has an alternate nominated by the national regulatory authority of each Member State.

Tasks:

The Board

| — | provides opinions to the Director on many of the opinions, recommendations and decisions that are considered for adoption, |
| --- | --- |

—

provides opinions to the Director on many of the opinions, recommendations and decisions that are considered for adoption,

| — | provides guidance to the Director in the execution of its tasks, |
| --- | --- |

—

provides guidance to the Director in the execution of its tasks,

| — | delivers an opinion to the Administrative Board on the candidate to be appointed as director, |
| --- | --- |

—

delivers an opinion to the Administrative Board on the candidate to be appointed as director,

| — | approves the work programme of the Agency. |
| --- | --- |

—

approves the work programme of the Agency.

External audit

Court of Auditors.

Discharge Authority

European Parliament acting on a recommendation from the Council.

Resources made available to the Agency in 2014 (2013)

Final Budget 2014

10,88(11,9) million euro

Staff as at 31 December 2014

Posts listed in the establishment plan: 54 (49)

Posts occupied on 31 December: 52 (49)

Other staff: 18 (20)

Total staff: 72 (69), of which assigned to:

| — | operational tasks: 48 (41) |
| --- | --- |

—

operational tasks: 48 (41)

| — | administrative tasks: 24 (28) |
| --- | --- |

—

administrative tasks: 24 (28)

Products and services 2014

| (a) | Network codes: Two Opinions on Network Codes (Electricity: Network Code on High Voltage Direct Current Connections and DC-connected power park modules and Network Code on Electricity Balancing). Three Recommendations on Network Codes (Electricity: Network Code on Forward Capacity Allocation and Network Code on HVDC and DC-connected power park modules; and Gas: Network Code on Interoperability and Data Exchange Rules). |
| --- | --- |

(a)

Network codes: Two Opinions on Network Codes (Electricity: Network Code on High Voltage Direct Current Connections and DC-connected power park modules and Network Code on Electricity Balancing). Three Recommendations on Network Codes (Electricity: Network Code on Forward Capacity Allocation and Network Code on HVDC and DC-connected power park modules; and Gas: Network Code on Interoperability and Data Exchange Rules).

| (b) | Nineteen Opinions related to ENTSOs: ENTSO-E Guideline for Cost Benefit Analysis of Grid Development Projects (CBA); Opinion on ENTSOG’s Winter Supply Outlook 2013/14; Opinion on the Proposal for Operation of the ENTSO-E Central Information Transparency Platform; Opinion on the ENTSOG Cost-Benefit Analysis Methodology (CBA); Opinion on the ENTSO-E Winter Outlook Report 2013/14 and Summer Review 2013; Opinion on the Statutes and Rules of Procedure on the basis of the proposed amendments to the Articles of Association of ENTSOG; Opinion on the National Ten-Year Electricity Network Development Plans pursuant to Article 8(11) of Regulation (EC) No 714/2009 — (TYNDP); Opinion on the Appropriate Range of Transmission Charges paid by Electricity Producers; Opinion on the Annual Report 2013 of ENTSOG; Opinion on the ENTSO-E Implementation Plan 2015-17 of the R&D Roadmap 2013-22; Opinion on the ENTSO-E Annual Report 2013; Opinion on ENTSOG’s Summer Supply Outlook 2014; Opinion on the ENTSO-E Summer Outlook Report 2014 and Winter Review 2013/14; Opinion on the Implementation of Investments in Electricity Transmission Networks; Opinion on the ENTSO-E Incidents Classification Scale — Methodology 2014; Opinion on the ENTSOG’s 2015 Annual Work Programme; Opinion on ENTSOG’s Winter Supply Outlook 2014/15; Opinion on the draft ENTSO-E Work Programme 2014 through December 2015; Opinion on the draft ENTSO-E SOAF (Scenario Outlook and Adequacy Forecast) 2014-30. |
| --- | --- |

(b)

Nineteen Opinions related to ENTSOs: ENTSO-E Guideline for Cost Benefit Analysis of Grid Development Projects (CBA); Opinion on ENTSOG’s Winter Supply Outlook 2013/14; Opinion on the Proposal for Operation of the ENTSO-E Central Information Transparency Platform; Opinion on the ENTSOG Cost-Benefit Analysis Methodology (CBA); Opinion on the ENTSO-E Winter Outlook Report 2013/14 and Summer Review 2013; Opinion on the Statutes and Rules of Procedure on the basis of the proposed amendments to the Articles of Association of ENTSOG; Opinion on the National Ten-Year Electricity Network Development Plans pursuant to Article 8(11) of Regulation (EC) No 714/2009 — (TYNDP); Opinion on the Appropriate Range of Transmission Charges paid by Electricity Producers; Opinion on the Annual Report 2013 of ENTSOG; Opinion on the ENTSO-E Implementation Plan 2015-17 of the R&D Roadmap 2013-22; Opinion on the ENTSO-E Annual Report 2013; Opinion on ENTSOG’s Summer Supply Outlook 2014; Opinion on the ENTSO-E Summer Outlook Report 2014 and Winter Review 2013/14; Opinion on the Implementation of Investments in Electricity Transmission Networks; Opinion on the ENTSO-E Incidents Classification Scale — Methodology 2014; Opinion on the ENTSOG’s 2015 Annual Work Programme; Opinion on ENTSOG’s Winter Supply Outlook 2014/15; Opinion on the draft ENTSO-E Work Programme 2014 through December 2015; Opinion on the draft ENTSO-E SOAF (Scenario Outlook and Adequacy Forecast) 2014-30.

| (c) | One decision on the investment request including cross-border cost allocation for the Gas Interconnection Poland-Lithuania Project of Common Interest No 8.5 (GIPL). |
| --- | --- |

(c)

One decision on the investment request including cross-border cost allocation for the Gas Interconnection Poland-Lithuania Project of Common Interest No 8.5 (GIPL).

| (d) | REMIT-related documents: Mechanisms for sharing information; Market Monitoring Handbook; Requirements for the registration of Registered Reporting Mechanisms (RRMs); Transaction Reporting User Manual; Manual of procedures, standards and electronic formats for the reporting of data; List of Organised Market Places. |
| --- | --- |

(d)

REMIT-related documents: Mechanisms for sharing information; Market Monitoring Handbook; Requirements for the registration of Registered Reporting Mechanisms (RRMs); Transaction Reporting User Manual; Manual of procedures, standards and electronic formats for the reporting of data; List of Organised Market Places.

| (e) | A Joint ACER-CEER Market Monitoring Report (Article 11 of Regulation (EC) No 713/2009) released on 22 October, public presentation in Brussels. |
| --- | --- |

(e)

A Joint ACER-CEER Market Monitoring Report (Article 11 of Regulation (EC) No 713/2009) released on 22 October, public presentation in Brussels.

| (f) | The (Annual) Regional Initiative Status Review for 2013 published in January. Two on-line Gas Regional initiative (GRI) and two on-line Electricity Regional Initiative (ERI) progress reports also published. |
| --- | --- |

(f)

The (Annual) Regional Initiative Status Review for 2013 published in January. Two on-line Gas Regional initiative (GRI) and two on-line Electricity Regional Initiative (ERI) progress reports also published.

| (g) | Agency’s 3rd Annual Conference ‘REMITage: The age of REMIT?’ in Ljubljana on 10 June 2014, with around 200 participants, and concurrent publication of the Agency’s 2nd annual REMIT Report. |
| --- | --- |

(g)

Agency’s 3rd Annual Conference ‘REMITage: The age of REMIT?’ in Ljubljana on 10 June 2014, with around 200 participants, and concurrent publication of the Agency’s 2nd annual REMIT Report.

Source: Annex provided by the Agency.

---

THE AGENCY’S REPLY

| 11. | The Agency had requested the necessary funds to implement REMIT in its draft budget for 2013, adopted by its Administrative Board in March 2012. However, these funds were initially not assigned to the Agency in the 2013 EU budget and only made available through a transfer of 2,989 million euro from DG ENER in October 2013, resulting in an amendment of the Agency’s budget on 31 October 2013. Despite this late amendment, the Agency successfully managed to commit it against the awarded, REMIT-related contracts. The adoption of the Commission Implementing Regulation for REMIT was expected for January but delayed until December 2014 and the Agency had to put on hold the part of the project that could only progress once the Implementing Regulation entered into force. |
| --- | --- |

11.

The Agency had requested the necessary funds to implement REMIT in its draft budget for 2013, adopted by its Administrative Board in March 2012. However, these funds were initially not assigned to the Agency in the 2013 EU budget and only made available through a transfer of 2,989 million euro from DG ENER in October 2013, resulting in an amendment of the Agency’s budget on 31 October 2013. Despite this late amendment, the Agency successfully managed to commit it against the awarded, REMIT-related contracts. The adoption of the Commission Implementing Regulation for REMIT was expected for January but delayed until December 2014 and the Agency had to put on hold the part of the project that could only progress once the Implementing Regulation entered into force.

| 12. | The Agency notes that the multi-annual nature of the REMIT project might be incompatible with the principle of budget annuality, especially given the delays in making funds available and in the adoption of the REMIT Implementing Acts (see above).
  Under these circumstances, the Agency did its best to ensure the proper and effective implementation of REMIT, by committing the received amended budget before the end of the year 2013 towards the required investment in infrastructure to host the Agency’s REMIT Information System (ARIS) and the fees for the operating licences, thus preparing for launching the operations once the Implementing Acts entered into force (expected beginning of 2014). The Agency is using non-differentiated appropriations for its commitments and payments, therefore the 2013 committed appropriations could either be used before the end of 2014 or cancelled.
  The mentioned delays required the Agency to amend some contracts in order to postpone the delivery of the contracted services and not to cancel the funds received via the 2013 budget amendment. The use of pre-financing payments backed-up by bank guarantees was found to be the best solution to ensure the future implementation of REMIT.
  The Agency is currently analysing the possibility of using differentiated appropriation in the future in order to minimise the level of carry-overs. |
| --- | --- |

12.

The Agency notes that the multi-annual nature of the REMIT project might be incompatible with the principle of budget annuality, especially given the delays in making funds available and in the adoption of the REMIT Implementing Acts (see above).

Under these circumstances, the Agency did its best to ensure the proper and effective implementation of REMIT, by committing the received amended budget before the end of the year 2013 towards the required investment in infrastructure to host the Agency’s REMIT Information System (ARIS) and the fees for the operating licences, thus preparing for launching the operations once the Implementing Acts entered into force (expected beginning of 2014). The Agency is using non-differentiated appropriations for its commitments and payments, therefore the 2013 committed appropriations could either be used before the end of 2014 or cancelled.

The mentioned delays required the Agency to amend some contracts in order to postpone the delivery of the contracted services and not to cancel the funds received via the 2013 budget amendment. The use of pre-financing payments backed-up by bank guarantees was found to be the best solution to ensure the future implementation of REMIT.

The Agency is currently analysing the possibility of using differentiated appropriation in the future in order to minimise the level of carry-overs.

| 13. | The establishment of a European School in Ljubljana has been discussed several times with the Ministry of Foreign Affairs and the Ministry of Education. The Agency has been recently informed that the Slovenian Government is assessing the necessary legal amendments and arrangements in order to find the optimal solution. Until now, adequate schooling has been provided to the children of Agency’s staff through the public and private educational establishments. |
| --- | --- |

13.

The establishment of a European School in Ljubljana has been discussed several times with the Ministry of Foreign Affairs and the Ministry of Education. The Agency has been recently informed that the Slovenian Government is assessing the necessary legal amendments and arrangements in order to find the optimal solution. Until now, adequate schooling has been provided to the children of Agency’s staff through the public and private educational establishments.

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| 9.12.2015 | EN | Official Journal of the European Union | C 409/27 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/27

---

REPORT

on the annual accounts of the Office of the Body of European Regulators for Electronic Communications for the financial year 2014 together with the Office’s reply

(2015/C 409/03)

INTRODUCTION

| 1. | The Office of the Body of European Regulators for Electronic Communications (hereinafter ‘the Office’), which is located in Riga, was established by Regulation (EC) No 1211/2009 of the European Parliament and of the Council (1). The Office’s main task is to provide professional and administrative support services to the Body of European Regulators for Electronic Communications (BEREC) and, under the guidance of the Board of Regulators, to collect and analyse information on electronic communications and to disseminate among National Regulatory Authorities regulatory best practices such as common approaches, methodologies or guidelines on the implementation of the EU regulatory framework (2). |
| --- | --- |

1.

The Office of the Body of European Regulators for Electronic Communications (hereinafter ‘the Office’), which is located in Riga, was established by Regulation (EC) No 1211/2009 of the European Parliament and of the Council (1). The Office’s main task is to provide professional and administrative support services to the Body of European Regulators for Electronic Communications (BEREC) and, under the guidance of the Board of Regulators, to collect and analyse information on electronic communications and to disseminate among National Regulatory Authorities regulatory best practices such as common approaches, methodologies or guidelines on the implementation of the EU regulatory framework (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Office’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Office’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Office, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Office, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Office and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Office’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Administrative Manager approves the annual accounts of the Office after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Office in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Office and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Office’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Administrative Manager approves the annual accounts of the Office after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Office in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Office are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Office are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Office’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Office’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Office’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Office’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | The overall level of committed appropriations improved to 98 % (2013: 87 %). However, the level of committed appropriations carried over increased to 0,9 million euro, i.e. 23 % (2013: 0,5 million euro, 13 %), particularly in relation to operational activities (Title III) such as ongoing studies on electronic communications. |
| --- | --- |

11.

The overall level of committed appropriations improved to 98 % (2013: 87 %). However, the level of committed appropriations carried over increased to 0,9 million euro, i.e. 23 % (2013: 0,5 million euro, 13 %), particularly in relation to operational activities (Title III) such as ongoing studies on electronic communications.

| 12. | The large number of budget transfers changed the structure of the initial budget considerably: Title I (staff costs) was reduced by 17 %, Title II (administrative expenditure) was reduced by 44 % and Title III (operational expenditure) was increased by 60 %, mainly in order to finance ongoing studies (paragraph 11). |
| --- | --- |

12.

The large number of budget transfers changed the structure of the initial budget considerably: Title I (staff costs) was reduced by 17 %, Title II (administrative expenditure) was reduced by 44 % and Title III (operational expenditure) was increased by 60 %, mainly in order to finance ongoing studies (paragraph 11).

| 13. | The 2014 budget provision for contributions from EFTA’s (9) national regulatory authorities having observer status at BEREC did not materialise in the absence of agreements with EFTA countries. |
| --- | --- |

13.

The 2014 budget provision for contributions from EFTA’s (9) national regulatory authorities having observer status at BEREC did not materialise in the absence of agreements with EFTA countries.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 14. | An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I. |
| --- | --- |

14.

An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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(1)  OJ L 337, 18.12.2009, p. 1.

1

(2)  Annex II summarises the Office’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

(9)  European Free Trade Association

9

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ANNEX I

Follow-up of previous years’ comments

| Year | Court’s comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2011 | The Office had not yet adopted and implemented all the internal control standards. | Completed (adoption)
  Ongoing (implementation) |
| 2012 | The Office had not yet implemented the Internal Control Standards on ‘Objectives and performance indicators’ (ICS 5), ‘Process and procedures’ (ICS 8), ‘Document management’ (ICS 11) and ‘Information and Communication’ (ICS 12). | Completed |
| 2012 | Some 1 01  000 euro, 45 % of the committed appropriations carried over from 2011, were cancelled. Appropriations for 2012 of 5 45  000 euro, 17 % of total 2012 appropriations, were not used and also had to be cancelled. The level of carry-overs of committed appropriations to 2013 was high at 6 11  000 euro or 19 % of the total. This indicates difficulties in the planning and/or implementation of the Office’s activities. The carry-overs for 2012 were mostly related to delayed recruitments and the absence of an effective policy to ensure the timely presentation and reimbursement of mission costs claimed by experts. | N/A |
| 2013 | Budget implementation rates improved considerably, which indicates better planning and more timely implementation of activities. Although the level of cancelled carry-overs from 2012 is still relatively high at 28 % (2012: 45 %), carry-overs of committed appropriations decreased to 4 61  983 euro or 13 % (2012: 6 11  223 euro or 19 %). Carry-overs were mostly related to contracts signed in the second half of 2013 for planned activities in 2013 and 2014. | N/A |
| 2013 | Of the 1  183 reimbursements for experts made in 2013, 1  078 were late. Where payments were late, they were overdue by an average delay of 78 days in the first half of 2013 as compared with 33 days in the second half of 2013. | Ongoing |

Year

Court’s comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2011

The Office had not yet adopted and implemented all the internal control standards.

Completed (adoption)

Ongoing (implementation)

2012

The Office had not yet implemented the Internal Control Standards on ‘Objectives and performance indicators’ (ICS 5), ‘Process and procedures’ (ICS 8), ‘Document management’ (ICS 11) and ‘Information and Communication’ (ICS 12).

Completed

2012

Some 1 01  000 euro, 45 % of the committed appropriations carried over from 2011, were cancelled. Appropriations for 2012 of 5 45  000 euro, 17 % of total 2012 appropriations, were not used and also had to be cancelled. The level of carry-overs of committed appropriations to 2013 was high at 6 11  000 euro or 19 % of the total. This indicates difficulties in the planning and/or implementation of the Office’s activities. The carry-overs for 2012 were mostly related to delayed recruitments and the absence of an effective policy to ensure the timely presentation and reimbursement of mission costs claimed by experts.

N/A

2013

Budget implementation rates improved considerably, which indicates better planning and more timely implementation of activities. Although the level of cancelled carry-overs from 2012 is still relatively high at 28 % (2012: 45 %), carry-overs of committed appropriations decreased to 4 61  983 euro or 13 % (2012: 6 11  223 euro or 19 %). Carry-overs were mostly related to contracts signed in the second half of 2013 for planned activities in 2013 and 2014.

N/A

2013

Of the 1  183 reimbursements for experts made in 2013, 1  078 were late. Where payments were late, they were overdue by an average delay of 78 days in the first half of 2013 as compared with 33 days in the second half of 2013.

Ongoing

---

ANNEX II

Office of the Body of European Regulators for Electronic Communications (Riga)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Article 114 of the Treaty on the Functioning of the European Union) | Approximation of laws in the field of electronic communications. |
| --- | --- |
| Competences of the Office


  (Regulation (EC) No 1211/2009 of the European Parliament and of the Council) | The Office’s powers as defined in Regulation (EC) No 1211/2009 of the European Parliament and of the Council.
  The Office referred to in Article 6 shall provide administrative and professional support services to BEREC.
  It shall perform its functions under the guidance of the Board of Regulators. |
| Governance | The Office has a Management Committee and an Administrative Manager. They share all administrative and financial responsibilities, including the management of staff.
  However, the Management Committee has sole responsibility for the appointment of staff (Article 7(4)).
  The Board of Regulators provides guidance on the services and products specified below in the section ‘Products and services in 2014’. |
| Resources made available to the Office in 2014 (2013) | Final Budget:4 1 62  874,00 euro (3 5 57  218,93 euro) (amended budget and including internal assigned revenue)

  Staff as at 31 December: 24 (25) |
| Products and services in 2014 | Under the guidance of the Board of Regulators, the Office provided the following services:






  — | professional and administrative support services to BEREC, |

Areas of Union competence deriving from the Treaty

(Article 114 of the Treaty on the Functioning of the European Union)

Approximation of laws in the field of electronic communications.

Competences of the Office

(Regulation (EC) No 1211/2009 of the European Parliament and of the Council)

The Office’s powers as defined in Regulation (EC) No 1211/2009 of the European Parliament and of the Council.

The Office referred to in Article 6 shall provide administrative and professional support services to BEREC.

It shall perform its functions under the guidance of the Board of Regulators.

Governance

The Office has a Management Committee and an Administrative Manager. They share all administrative and financial responsibilities, including the management of staff.

However, the Management Committee has sole responsibility for the appointment of staff (Article 7(4)).

The Board of Regulators provides guidance on the services and products specified below in the section ‘Products and services in 2014’.

Resources made available to the Office in 2014 (2013)

Final Budget:4 1 62  874,00 euro (3 5 57  218,93 euro) (amended budget and including internal assigned revenue)

Staff as at 31 December: 24 (25)

Products and services in 2014

Under the guidance of the Board of Regulators, the Office provided the following services:

—

professional and administrative support services to BEREC,

| — | collection of information from NRAs and exchange and transmission of information, |
| --- | --- |

—

collection of information from NRAs and exchange and transmission of information,

| — | dissemination of regulatory best practices among NRAs within the EU and to third parties, |
| --- | --- |

—

dissemination of regulatory best practices among NRAs within the EU and to third parties,

| — | assistance to the Chair in the preparation of the work of the Board of Regulators and the Management Committee of the Office, |
| --- | --- |

—

assistance to the Chair in the preparation of the work of the Board of Regulators and the Management Committee of the Office,

| — | support to the Expert Working Groups set up by the Board of Regulators. |
| --- | --- |

—

support to the Expert Working Groups set up by the Board of Regulators.

Source: Annex supplied by the Office.

---

THE OFFICE’S REPLY

| 11. | The BEREC Office takes note of the budgetary management comment on committed appropriations improvement to 98 % compared to 2013: 87 %. The 2014 budget was drafted in 2012 where the BEREC Office was in its early phase of the budget management. Since then, tools are being used to improve the regular monitoring that has led to a better planning.
  The BEREC Office acknowledges the high relevance of the matter brought forward by the Court’s observation regarding the level of committed appropriations carried over increased to 0,9 million euro, i.e. 23 % (2013: 0,5 million euro, 13 %), particularly in relation to operational activities (Title III) such as ongoing studies on electronic communications. This was due to significant requests by the Management Committee to launch operational projects (Net Neutrality study, approximately 3 90  000 euro, BEREC-Net of 1 05  000 euro, sectoral studies of approximately more than 2 60  000 euro). Also, the significant management changes delayed an early implementation of the abovementioned projects, as a new Administrative Manager was appointed in April 2014, and a new Head of the Programme Management Unit appointed in August 2014.
  The BEREC Office has set as target to reduce the level of committed appropriations carried over in 2015. |
| --- | --- |

11.

The BEREC Office takes note of the budgetary management comment on committed appropriations improvement to 98 % compared to 2013: 87 %. The 2014 budget was drafted in 2012 where the BEREC Office was in its early phase of the budget management. Since then, tools are being used to improve the regular monitoring that has led to a better planning.

The BEREC Office acknowledges the high relevance of the matter brought forward by the Court’s observation regarding the level of committed appropriations carried over increased to 0,9 million euro, i.e. 23 % (2013: 0,5 million euro, 13 %), particularly in relation to operational activities (Title III) such as ongoing studies on electronic communications. This was due to significant requests by the Management Committee to launch operational projects (Net Neutrality study, approximately 3 90  000 euro, BEREC-Net of 1 05  000 euro, sectoral studies of approximately more than 2 60  000 euro). Also, the significant management changes delayed an early implementation of the abovementioned projects, as a new Administrative Manager was appointed in April 2014, and a new Head of the Programme Management Unit appointed in August 2014.

The BEREC Office has set as target to reduce the level of committed appropriations carried over in 2015.

| 12. | The BEREC Office understands the high importance of the matter brought forward by the Court’s observation regarding the large number of budget transfers changed the structure of the initial budget considerably: Title I (staff costs) was reduced by 17 %, Title II (administrative expenditure) was reduced by 44 % and Title III (operational expenditure) was increased by 60 %, mainly in order to finance ongoing studies. The Office is working continuously to improve an activity-based planning system that could lead to further reduction of budget transfers. |
| --- | --- |

12.

The BEREC Office understands the high importance of the matter brought forward by the Court’s observation regarding the large number of budget transfers changed the structure of the initial budget considerably: Title I (staff costs) was reduced by 17 %, Title II (administrative expenditure) was reduced by 44 % and Title III (operational expenditure) was increased by 60 %, mainly in order to finance ongoing studies. The Office is working continuously to improve an activity-based planning system that could lead to further reduction of budget transfers.

| 13. | The BEREC Office takes note of the comment, that the 2014 budget provision for contributions from EFTA’s (1) national regulatory authorities having observer status at BEREC, did not materialise in the absence of agreements with EFTA countries. Consequently, the 2015 budget has been corrected accordingly. However, the EFTA agreement is negotiated between the Commission and countries concerned and the BEREC Office does not have power to influence the negotiations and agreement signing process. |
| --- | --- |

13.

The BEREC Office takes note of the comment, that the 2014 budget provision for contributions from EFTA’s (1) national regulatory authorities having observer status at BEREC, did not materialise in the absence of agreements with EFTA countries. Consequently, the 2015 budget has been corrected accordingly. However, the EFTA agreement is negotiated between the Commission and countries concerned and the BEREC Office does not have power to influence the negotiations and agreement signing process.

---

(1)  European Free Trade Association

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/33 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/33

---

REPORT

on the annual accounts of the Translation Centre for the Bodies of the European Union for the financial year 2014, together with the Centre’s reply

(2015/C 409/04)

INTRODUCTION

| 1. | The Translation Centre for the Bodies of the European Union (hereinafter ‘the Centre’, aka ‘CDT’), which is located in Luxembourg, was created by Council Regulation (EC) No 2965/94 (1). The Centre’s task is to provide any European Union institutions and bodies which call upon its services with the translation services necessary for their activities (2). |
| --- | --- |

1.

The Translation Centre for the Bodies of the European Union (hereinafter ‘the Centre’, aka ‘CDT’), which is located in Luxembourg, was created by Council Regulation (EC) No 2965/94 (1). The Centre’s task is to provide any European Union institutions and bodies which call upon its services with the translation services necessary for their activities (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Centre’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Centre’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Centre, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Centre, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Centre and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Centre’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Centre after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Centre in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Centre and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Centre’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Centre after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Centre in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the Intosai International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Centre are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the Intosai International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Centre are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and statement of assurance, the Court considered the audit work of the independent external auditor performed on the Centre’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and statement of assurance, the Court considered the audit work of the independent external auditor performed on the Centre’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Centre’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Centre’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

OTHER COMMENTS

| 11. | Cash and short-term deposits held by the Centre further increased from 40 million euro at the end of 2013 to 44 million euro at the end of 2014 (budgetary surplus and reserves increased from 37,5 million euro to 40,4 million euro). This indicates scope to reduce prices, as was the case in previous years. |
| --- | --- |

11.

Cash and short-term deposits held by the Centre further increased from 40 million euro at the end of 2013 to 44 million euro at the end of 2014 (budgetary surplus and reserves increased from 37,5 million euro to 40,4 million euro). This indicates scope to reduce prices, as was the case in previous years.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 12. | An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I. |
| --- | --- |

12.

An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 314, 7.12.1994, p. 1.

1

(2)  Annex II summarises the Centre’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

---

ANNEX I

Follow-up of previous years’ comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| Since 2012 (merged) | Since 2012, the Centre’s cash and short-term deposits and its budgetary surplus and reserves have been excessive. This indicates scope to reduce prices. | Outstanding |
| 2012 | The Founding Regulation of 20 regulatory agencies audited by the Court in 2012 requires them to use the Centre for all their translation needs (the Centre’s Founding Regulation stipulates the same for four other agencies). Other agencies are not obliged to use the Centre. For non-technical documents agencies could reduce their costs by using local services. In the Court’s opinion the legislator should consider allowing all agencies to do so. | Ongoing |
| 2013 | In 2008 the Centre concluded 472 framework contracts with translation services providers for a maximum period of 4 years. In order to obtain better conditions for the new framework contracts to be signed in 2012, the Centre wanted to participate in the Commission’s ongoing procurement procedure for translation services. However, no agreement on the contract terms could be reached with the Commission. Instead, the Centre extended its existing framework contracts for 1 more year. Although based on a derogation duly approved by the Centre’s Director, such an extension is not in compliance with the implementing rules for the Centre’s Financial Regulation, which provide for a maximum period of 4 years for framework contracts. | Completed |
| 2013 | Formal delegations (sub-delegations) from authorising officers (authorising officers by delegation) are not always consistent with the authorisation rights for transactions in the ABAC accounting system. | Completed |
| 2013 | The Centre became operational in 1994 and has, to date, worked on the basis of correspondence and exchanges with the host Member State. However, there is no comprehensive headquarters agreement between the Centre and the Member State. Such an agreement would further promote transparency in respect of the conditions under which the Centre and its staff operate. | Completed |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

Since 2012 (merged)

Since 2012, the Centre’s cash and short-term deposits and its budgetary surplus and reserves have been excessive. This indicates scope to reduce prices.

Outstanding

2012

The Founding Regulation of 20 regulatory agencies audited by the Court in 2012 requires them to use the Centre for all their translation needs (the Centre’s Founding Regulation stipulates the same for four other agencies). Other agencies are not obliged to use the Centre. For non-technical documents agencies could reduce their costs by using local services. In the Court’s opinion the legislator should consider allowing all agencies to do so.

Ongoing

2013

In 2008 the Centre concluded 472 framework contracts with translation services providers for a maximum period of 4 years. In order to obtain better conditions for the new framework contracts to be signed in 2012, the Centre wanted to participate in the Commission’s ongoing procurement procedure for translation services. However, no agreement on the contract terms could be reached with the Commission. Instead, the Centre extended its existing framework contracts for 1 more year. Although based on a derogation duly approved by the Centre’s Director, such an extension is not in compliance with the implementing rules for the Centre’s Financial Regulation, which provide for a maximum period of 4 years for framework contracts.

Completed

2013

Formal delegations (sub-delegations) from authorising officers (authorising officers by delegation) are not always consistent with the authorisation rights for transactions in the ABAC accounting system.

Completed

2013

The Centre became operational in 1994 and has, to date, worked on the basis of correspondence and exchanges with the host Member State. However, there is no comprehensive headquarters agreement between the Centre and the Member State. Such an agreement would further promote transparency in respect of the conditions under which the Centre and its staff operate.

Completed

---

ANNEX II

Translation Centre for the Bodies of the European Union (Luxembourg)

Competences and activities

| Areas of Union competence deriving from the Treaty | The representatives of the Member States’ governments adopted by mutual agreement a declaration concerning the creation, under the aegis of the Commission’s translation departments in Luxembourg, of a Translation Centre for the bodies of the Union, which would provide the necessary translation services for the operation of the bodies and services whose seats were established by the Decision of 29 October 1993. |
| --- | --- |
| Competences of the Centre


  (Council Regulation (EC) No 2965/94, as last amended by Regulation (EC) No 1645/2003 | Objectives

  To provide the necessary translation services for the operation of the following bodies:






  — | European Environment Agency, |

Areas of Union competence deriving from the Treaty

The representatives of the Member States’ governments adopted by mutual agreement a declaration concerning the creation, under the aegis of the Commission’s translation departments in Luxembourg, of a Translation Centre for the bodies of the Union, which would provide the necessary translation services for the operation of the bodies and services whose seats were established by the Decision of 29 October 1993.

Competences of the Centre

(Council Regulation (EC) No 2965/94, as last amended by Regulation (EC) No 1645/2003

Objectives

To provide the necessary translation services for the operation of the following bodies:

—

European Environment Agency,

| — | European Training Foundation, |
| --- | --- |

—

European Training Foundation,

| — | European Monitoring Centre for Drugs and Drug Addiction, |
| --- | --- |

—

European Monitoring Centre for Drugs and Drug Addiction,

| — | European Medicines Agency, |
| --- | --- |

—

European Medicines Agency,

| — | European Agency for Safety and Health at Work, |
| --- | --- |

—

European Agency for Safety and Health at Work,

| — | Office for Harmonisation in the Internal Market (Trademarks and Designs), |
| --- | --- |

—

Office for Harmonisation in the Internal Market (Trademarks and Designs),

| — | European Police Office (Europol) and Europol Drugs Unit. |
| --- | --- |

—

European Police Office (Europol) and Europol Drugs Unit.

Bodies set up by the Council other than the above may use the Centre’s services. The institutions and bodies of the European Union which already have their own translation services may, if need be, call upon the Centre’s services on a voluntary basis.

The Centre plays a full part in the work of the Interinstitutional Translation Committee.

Tasks

| — | To make arrangements for cooperation with the bodies and institutions, |
| --- | --- |

—

To make arrangements for cooperation with the bodies and institutions,

| — | to participate in the work of the Interinstitutional Translation Committee. |
| --- | --- |

—

to participate in the work of the Interinstitutional Translation Committee.

Governance

Management Board

Composition

| — | One representative per Member State, |
| --- | --- |

—

One representative per Member State,

| — | two representatives from the Commission, |
| --- | --- |

—

two representatives from the Commission,

| — | one representative from each body or institution calling upon the Centre’s services. |
| --- | --- |

—

one representative from each body or institution calling upon the Centre’s services.

Tasks

To adopt the Centre’s annual budget and work programme, establishment plan and annual reports.

Director

Appointed by the Management Board on a proposal from the Commission.

External audit

European Court of Auditors.

Internal audit

European Commission’s Internal Audit Service (IAS).

Discharge authority

European Parliament, acting on a recommendation from the Council.

Resources made available to the Centre in 2014 (2013)

Final Budget:

56,268(52,194) million euro

Staff:

203 (206) posts provided for in the establishment plan, of which 191 (193) were occupied.

+28 (23) contract staff

Total staff: 219 (216), undertaking the following tasks:

operational: 120 (118)

administrative: 99 (98)

Products and services 2014 (2013)

Number of pages translated:

7 58  061(8 04  986)

Number of pages by languages:

| — | official languages: 7 51  064(8 00  221) |
| --- | --- |

—

official languages: 7 51  064(8 00  221)

| — | other languages: 6  997(4  765) |
| --- | --- |

—

other languages: 6  997(4  765)

Number of pages per client:

| — | bodies: 7 47  951(7 80  310) |
| --- | --- |

—

bodies: 7 47  951(7 80  310)

| — | institutions: 10  110(24  676) |
| --- | --- |

—

institutions: 10  110(24  676)

Number of pages translated by freelances:

5 03  153(5 12  524)

Source: Annex supplied by the Centre.

---

THE CENTRE’S REPLY

| 11. | The Centre is aware of the high level of cash and recurrent budgetary surpluses and has taken various steps to reverse this trend. The Centre decreased the 2014 prices and a further decrease in prices was introduced in the 2015 budget. In 2015 the Centre also reimbursed to clients part of the reserve for stability pricing, amounting to 2,3 million euro.
  To avoid any further increase in the surplus, the Centre has introduced an automatic reimbursement of the budget surplus to clients. Based on this new mechanism the budget result of 2014, amounting to 2,6 million euro, will be paid back to clients after approval of the second amending budget for 2015. |
| --- | --- |

11.

The Centre is aware of the high level of cash and recurrent budgetary surpluses and has taken various steps to reverse this trend. The Centre decreased the 2014 prices and a further decrease in prices was introduced in the 2015 budget. In 2015 the Centre also reimbursed to clients part of the reserve for stability pricing, amounting to 2,3 million euro.

To avoid any further increase in the surplus, the Centre has introduced an automatic reimbursement of the budget surplus to clients. Based on this new mechanism the budget result of 2014, amounting to 2,6 million euro, will be paid back to clients after approval of the second amending budget for 2015.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/39 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/39

---

REPORT

on the annual accounts of the European Centre for the Development of Vocational Training for the financial year 2014, together with the Centre’s reply

(2015/C 409/05)

INTRODUCTION

| 1. | The European Centre for the Development of Vocational Training (hereinafter ‘the Centre’, aka ‘Cedefop’), which is located in Thessaloniki, was established by Council Regulation (EEC) No 337/75 (1). Its core mandate is to serve the development of vocational training at Union level. In order to achieve this objective, it has the task of compiling and disseminating documentation on vocational training systems (2). |
| --- | --- |

1.

The European Centre for the Development of Vocational Training (hereinafter ‘the Centre’, aka ‘Cedefop’), which is located in Thessaloniki, was established by Council Regulation (EEC) No 337/75 (1). Its core mandate is to serve the development of vocational training at Union level. In order to achieve this objective, it has the task of compiling and disseminating documentation on vocational training systems (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Centre’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Centre’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Centre, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Centre, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Centre and the legality and regularity of the underlying transactions (5).






  (a) | The management’s responsibilities in respect of the Centre’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); and making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Centre after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Centre in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Centre and the legality and regularity of the underlying transactions (5).

(a)

The management’s responsibilities in respect of the Centre’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); and making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Centre after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Centre in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Centre are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Centre are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Centre’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Centre’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Centre’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Centre’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 39, 13.2.1975, p. 1.

1

(2)  The Annex summarises the Centre’s competences and activities. It is presented for information purposes.

2

Annex

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the Annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

---

ANNEX

European Centre for the Development of Vocational Training (Thessaloniki)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Article 166(1) of the Treaty on the Functioning of the European Union) | Collection of information

  The Union shall implement a vocational training policy which shall support and supplement the action of the Member States, while fully respecting the responsibility of the Member States for the content and organisation of vocational training. |
| --- | --- |
| Competences of Cedefop


  (Articles 2 and 3 of Council Regulation (EEC) No 337/75) | Objectives

  In its capacity as the European Union reference centre for vocational education and training, Cedefop provides policy-makers, researchers and professionals with evidence on current trends to enable them to reach soundly based decisions. Cedefop assists the European Commission in promoting and developing vocational education and training (VET) at Union level.

  Tasks







  — | To compile selected documentation and produce data analysis; |

Areas of Union competence deriving from the Treaty

(Article 166(1) of the Treaty on the Functioning of the European Union)

Collection of information

The Union shall implement a vocational training policy which shall support and supplement the action of the Member States, while fully respecting the responsibility of the Member States for the content and organisation of vocational training.

Competences of Cedefop

(Articles 2 and 3 of Council Regulation (EEC) No 337/75)

Objectives

In its capacity as the European Union reference centre for vocational education and training, Cedefop provides policy-makers, researchers and professionals with evidence on current trends to enable them to reach soundly based decisions. Cedefop assists the European Commission in promoting and developing vocational education and training (VET) at Union level.

Tasks

—

To compile selected documentation and produce data analysis;

| — | to contribute to research development and coordination; |
| --- | --- |

—

to contribute to research development and coordination;

| — | to utilise and disseminate relevant information; |
| --- | --- |

—

to utilise and disseminate relevant information;

| — | to encourage and support a concerted approach to matters relating to the development of vocational training; |
| --- | --- |

—

to encourage and support a concerted approach to matters relating to the development of vocational training;

| — | to provide a forum for a broad and diverse public. |
| --- | --- |

—

to provide a forum for a broad and diverse public.

Governance

Governing Board

Composition

For each Member State:

| (a) | one member representing the Government; |
| --- | --- |

(a)

one member representing the Government;

| (b) | one member representing employer organisations; |
| --- | --- |

(b)

one member representing employer organisations;

| (c) | one member representing employee organisations. |
| --- | --- |

(c)

one member representing employee organisations.

For the European Commission: three members.

The members referred to in (a), (b) and (c) are appointed by the Council. The Commission appoints the members who are to represent it. Coordinators from employer and employee organisations at European level and observers from the EEA countries also attend Governing Board and Bureau meetings.

Duties

To adopt the budget, medium-term priorities (Cedefop’s multiannual planning) and work programme and assess and analyse the annual activity report and the annual accounts. To adopt the final budget and the establishment plan.

Bureau

Composition

The chair and the three vice-chairs of the Governing Board, one coordinator per group and one additional representative of the Commission.

Director

Appointed by the Commission from a list of candidates submitted by the Governing Board; responsible for the management of Cedefop; implements the decisions of the Governing Board and the Bureau.

Internal audit

European Commission’s Internal Audit Service (IAS).

External audit

European Court of Auditors.

Discharge authority

European Parliament, acting on a recommendation from the Council.

Resources made available to the Centre in 2014 (2013)

Final budget

17,28 (1)
  (18,53)
   (1) million euro

Union contribution: 96,9 % (97,4 %)

Staff as at 31 December 2014

Number of posts in establishment plan: 98 (100)

Posts occupied: 95 (98)

Other staff

| — | contract staff: 23 (23) |
| --- | --- |

—

contract staff: 23 (23)

| — | seconded national experts: 2 (4) |
| --- | --- |

—

seconded national experts: 2 (4)

Total staff: 120 (125)

| — | operational staff: 87 (91) |
| --- | --- |

—

operational staff: 87 (91)

| — | administrative staff: 33 (34) |
| --- | --- |

—

administrative staff: 33 (34)

Products and services in 2014 (2013)

Policy analysis and reporting

The findings of Cedefop’s 2010-2014 review of progress towards the goals set for VET informed policy discussions among Directors-General for Vocational Training (DGVTs) under the Greek and Italian Presidencies and at the meetings of the Advisory Committee for Vocational Training (ACVT). They were also presented at the Cedefop/DGEAC conference held on 29—30 September 2014. Cedefop also contributed to defining new VET priorities. The Centre published brief overviews of national VET systems (Spotlights on VET) and prepared detailed country information on VET policies for all Member States, Norway and Iceland. This information informed the 2014 country-specific recommendations of the European Semester. Cedefop used its extensive information on VET policies to showcase national efforts to strengthen VET graduate employability in the context of the Joint Assessment Framework on progress in education and training policy (published in the 2014 Education and Training Monitor). A selection of policy-relevant statistical indicators on VET was published. These facilitate reviewing the situation in each Member State. Cedefop contributed indicators based on PIAAC data to the OECD flagship publication Education at a Glance.

Common European tools, qualifications and learning outcomes

Cedefop coordinated the EQF (European Qualifications Framework) Advisory Group jointly with the European Commission and analysed NQF developments in 36 countries. Outcomes were published in the briefing note Qualifications frameworks: expanding influence, persisting obstacles. Support for EQAVET and ECVET continued. The 2014 update of the European Inventory on validation of non-formal and informal learning (33 countries) was published online. Cedefop also published the briefing note The validation challenge: how close is Europe to recognising all learning? Visits to the Europass website — managed by Cedefop and available in 27 languages — have reached 102 million since its launch (2014: 21,7 million; 2013: 20,1 million). Users have generated 47 million CVs online (2014: 13,1 million; 2013: 9,8 million). Cedefop carried out targeted research on strengthening the synergy among European tools and debated the findings at a high-level conference (Thessaloniki, 28 and 29 November). In the 2013/14 academic year, Cedefop coordinated the last 245 study visits by 2  709 education and vocational training specialists from 34 countries (the programme came to an end in September 2014).

Adult learning, transitions and apprenticeships

To support the European Alliance for Apprenticeships, Cedefop fostered cooperation at European level and among Member States on the development of apprenticeship-type work-based learning and reviewed the conditions for developing and expanding apprenticeship in different countries. Cedefop and the European Commission organised the European conference on ‘Steering Partnerships for Growth’ (Thessaloniki, 7-8 May) to help countries find potential partners willing to cooperate in developing apprenticeship schemes. For this conference, Cedefop published the briefing note Developing apprenticeships. To help young people and workers to manage labour market transitions and achieve positive labour market outcomes, Cedefop published the study Navigating difficult waters: learning for career and labour market transitions.

Skills analysis

In 2014 Cedefop took over responsibility for the EU Skills Panorama. Cedefop published online its latest skills supply and demand forecasts (for 2013-2025) and contributed to the report by the World Economic Forum’s Global Agenda Council on Employment (of which Cedefop was a member in the period 2012-2014) on Matching skills and labour market needs in the world economy — Building Social Partnerships for Better Skills and Better Jobs, which was presented in Davos-Klosters. The briefing note Skills mismatch: more than meets the eye was published. The second Cedefop/OECD ‘Green skills’ forum was organised in Paris in February. With the ETF and ILO, Cedefop produced guides on approaches to anticipating skill needs. It also joined the International Training Centre of the ILO (ITC-ILO) in organising a training course on ‘skills needs anticipation and matching’. Cedefop contributed to the OECD and European Union publication Matching economic migration with labour market needs.

Organisational impact

Key performance indicators show a high organisational impact: Cedefop’s work is widely cited in 97 EU policy documents. Cedefop provided advice and expertise to Presidency events and EU-level senior stakeholder meetings in support of policy implementation (164 contributions). Cedefop organised 69 conferences, workshops and meetings with high-level representatives of EU and national institutions. 92 % of participants considered these events very good or good. Some 6 00  000 Cedefop publications were downloaded, including 71  000 briefing notes targeting policy makers and published in eight languages. This shows a high level of interest in the knowledge and insights the Centre generates. 745 articles on Cedefop’s work appeared in leading European media, including Die Welt, the Times Educational Supplement and El País. Cedefop publications and studies were cited in academic/scientific journals (413 citations in 2013-2014).

For more information see www.cedefop.europa.eu (Annual Report and Annual Activity Report 2014).

---

(1)  Includes the two negative supplementary amending budgets amounting to a total of - 0,7 million euro in 2014.

(2)  Includes the assigned revenue from DG EMPL Delegation Agreements amounting to 0,6 million euro in 2013 for the action in 2014.

Source: Annex supplied by the Centre.

---

THE CENTRE’S REPLY

Cedefop has taken note of the Court’s report.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/46 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/46

---

REPORT

on the annual accounts of the European Police College for the financial year 2014, together with the College’s reply

(2015/C 409/06)

INTRODUCTION

| 1. | The European Police College (hereinafter ‘the College’, aka ‘CEPOL’), which is located in Budapest, was established by Council Decision 2000/820/JHA, repealed and replaced in 2005 by Council Decision 2005/681/JHA (1). The College’s task is to function as a network and bring together the national police training institutes in the Member States to provide training sessions, based on common standards, for senior police officers (2). The Commission’s accounting officer has been appointed as accounting officer of CEPOL as of 1 April 2014. |
| --- | --- |

1.

The European Police College (hereinafter ‘the College’, aka ‘CEPOL’), which is located in Budapest, was established by Council Decision 2000/820/JHA, repealed and replaced in 2005 by Council Decision 2005/681/JHA (1). The College’s task is to function as a network and bring together the national police training institutes in the Member States to provide training sessions, based on common standards, for senior police officers (2). The Commission’s accounting officer has been appointed as accounting officer of CEPOL as of 1 April 2014.

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the College’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the College’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the College, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the College, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the College and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the College’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The College has delegated these responsibilities to the Commission’s accounting officer by means of a service level agreement. The Director approves the annual accounts of the College after the Commission’s accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the College in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the College and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the College’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The College has delegated these responsibilities to the Commission’s accounting officer by means of a service level agreement. The Director approves the annual accounts of the College after the Commission’s accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the College in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the College are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the College are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the College’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the College’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the College’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the College’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | The cancellation rate for committed appropriations carried over from 2013 was high at 1 29  828 euro (15 %), mainly because of the cancellation of the Matrix project (15  090 euro) and the lower than estimated costs to be reimbursed under the 2013 grant agreements (57  285 euro). The Matrix project was cancelled during its initial phase because it did not meet operational needs. This could have been avoided if there had been a proper user analysis by the College. The over-estimation of grant costs indicates the need to obtain more accurate information from the College’s beneficiaries. |
| --- | --- |

11.

The cancellation rate for committed appropriations carried over from 2013 was high at 1 29  828 euro (15 %), mainly because of the cancellation of the Matrix project (15  090 euro) and the lower than estimated costs to be reimbursed under the 2013 grant agreements (57  285 euro). The Matrix project was cancelled during its initial phase because it did not meet operational needs. This could have been avoided if there had been a proper user analysis by the College. The over-estimation of grant costs indicates the need to obtain more accurate information from the College’s beneficiaries.

| 12. | The level of committed appropriations carried over was high for Title II (administrative expenditure) at 3 83  940 euro, i.e. 59 % (2013: 1 45  414 euro, i.e. 30 %). This was driven in large part by the high volume of furniture and IT equipment, and the maintenance required, for the College’s new premises, ordered but not yet delivered and/or paid for in the last quarter of 2014 (the college completed its move to Budapest in October 2014). |
| --- | --- |

12.

The level of committed appropriations carried over was high for Title II (administrative expenditure) at 3 83  940 euro, i.e. 59 % (2013: 1 45  414 euro, i.e. 30 %). This was driven in large part by the high volume of furniture and IT equipment, and the maintenance required, for the College’s new premises, ordered but not yet delivered and/or paid for in the last quarter of 2014 (the college completed its move to Budapest in October 2014).

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 13. | An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I. |
| --- | --- |

13.

An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 256, 1.10.2005, p. 63.

1

(2)  Annex II summarises the College’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

---

ANNEX I

Follow-up of previous years’ comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2011 | The high level of budget transfers indicates weaknesses in budget planning and is at odds with the principle of specification. | Completed |
| 2011 | The College is located in Bramshill, using premises of the UK National Policing Improvement Agency (NPIA). NPIA is due to close at the end of 2012 and it is not clear until when the College can continue using its current premises. | Completed |
| 2012 | Out of the committed appropriations carried over from 2011 amounting to 1,7 million euro, 0,7 million euro (41,2 %) were cancelled in 2012. This was mainly due to lower than estimated costs to be reimbursed under 2011 grant agreements (0,44 million euro or 62 % of cancelled carry-overs). | Ongoing |
| 2012 | In 2012, the College made 37 budgetary transfers amounting to 1 million euro, out of which 36 within their respective titles. | Completed |
| 2012 | Discussions about the College’s future that have been ongoing for several years have created a situation of uncertainty which continues to hamper business planning and implementation. | Completed |
| 2013 | Out of the committed appropriations carried over from 2012 amounting to 1,7 million euro, 0,3 million euro (17,6 %) were cancelled in 2013. This was mainly due to lower than estimated costs to be reimbursed under 2012 grant agreements (0,21 million euro or 70 % of cancelled carry-overs), which indicates the need to obtain more accurate information from beneficiaries at year-end on the actual cost incurred. | Ongoing |
| 2013 | The level of committed 2013 appropriations for the different titles varied between 92 % and 95 %, indicating that legal commitments were made in a timely manner. The level of committed appropriations carried over to 2014 was high for Title II (administrative expenditure) at 1 45  410 euro (30,5 %), but this mainly arose from events beyond the College’s control, such as payments due in 2014 for services and goods ordered and received as planned in 2013. | N/A |
| 2013 | The College’s recruitment procedures are still not fully transparent. Guidance to members of the selection boards on the consistent assessment of selection criteria was not sufficiently clear; requirements set in respect of professional experience were not always compliant with the Implementing Rules to the College’s Staff Regulations and recruitment documentation was incomplete. | Ongoing (guidelines in place but not sufficiently detailed) |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2011

The high level of budget transfers indicates weaknesses in budget planning and is at odds with the principle of specification.

Completed

2011

The College is located in Bramshill, using premises of the UK National Policing Improvement Agency (NPIA). NPIA is due to close at the end of 2012 and it is not clear until when the College can continue using its current premises.

Completed

2012

Out of the committed appropriations carried over from 2011 amounting to 1,7 million euro, 0,7 million euro (41,2 %) were cancelled in 2012. This was mainly due to lower than estimated costs to be reimbursed under 2011 grant agreements (0,44 million euro or 62 % of cancelled carry-overs).

Ongoing

2012

In 2012, the College made 37 budgetary transfers amounting to 1 million euro, out of which 36 within their respective titles.

Completed

2012

Discussions about the College’s future that have been ongoing for several years have created a situation of uncertainty which continues to hamper business planning and implementation.

Completed

2013

Out of the committed appropriations carried over from 2012 amounting to 1,7 million euro, 0,3 million euro (17,6 %) were cancelled in 2013. This was mainly due to lower than estimated costs to be reimbursed under 2012 grant agreements (0,21 million euro or 70 % of cancelled carry-overs), which indicates the need to obtain more accurate information from beneficiaries at year-end on the actual cost incurred.

Ongoing

2013

The level of committed 2013 appropriations for the different titles varied between 92 % and 95 %, indicating that legal commitments were made in a timely manner. The level of committed appropriations carried over to 2014 was high for Title II (administrative expenditure) at 1 45  410 euro (30,5 %), but this mainly arose from events beyond the College’s control, such as payments due in 2014 for services and goods ordered and received as planned in 2013.

N/A

2013

The College’s recruitment procedures are still not fully transparent. Guidance to members of the selection boards on the consistent assessment of selection criteria was not sufficiently clear; requirements set in respect of professional experience were not always compliant with the Implementing Rules to the College’s Staff Regulations and recruitment documentation was incomplete.

Ongoing (guidelines in place but not sufficiently detailed)

---

ANNEX II

European Police College (Budapest)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Article 87 TFEU) | Approximation of laws








  ‘1. | The Union shall establish police cooperation involving all the Member States’ competent authorities, including police, customs and other specialised law enforcement services in relation to the prevention, detection and investigation of criminal offences. |
| --- | --- | --- |

Areas of Union competence deriving from the Treaty

(Article 87 TFEU)

Approximation of laws

‘1.

The Union shall establish police cooperation involving all the Member States’ competent authorities, including police, customs and other specialised law enforcement services in relation to the prevention, detection and investigation of criminal offences.

| 2. | For the purposes of paragraph 1, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, may establish measures concerning:






  [...] | |
| --- | --- | --- |

2.

For the purposes of paragraph 1, the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, may establish measures concerning:

[...]

| (b) | support for the training of staff, and cooperation on the exchange of staff, on equipment and on research into crime-detection;’ |
| --- | --- |

(b)

support for the training of staff, and cooperation on the exchange of staff, on equipment and on research into crime-detection;’

[...]

Competences of the College

Competences of the College

(Council Decision 2005/681/JHA)

Council Decision 2005/681/JHA)

Objectives

Objectives

The aim of CEPOL shall be to help train senior police officers in the Member States by optimising cooperation between CEPOL’s various components. It shall support and develop a European approach to the main problems facing Member States in the fight against crime, crime prevention and the maintenance of law and order and public security, in particular the cross-border dimensions of those problems.

Tasks

Tasks

| — | To increase knowledge of the national police systems and structures of other Member States and of cross-border police cooperation within the European Union. |
| --- | --- |

—

To increase knowledge of the national police systems and structures of other Member States and of cross-border police cooperation within the European Union.

| — | To improve knowledge of international and European Union instruments, particularly in the following sectors:






  (a) | the institutions of the European Union, their functioning and role, as well as the decision-making mechanisms and legal instruments of the European Union, in particular as regards their implications for law-enforcement cooperation; |
| --- | --- | --- |

—

To improve knowledge of international and European Union instruments, particularly in the following sectors:

(a)

the institutions of the European Union, their functioning and role, as well as the decision-making mechanisms and legal instruments of the European Union, in particular as regards their implications for law-enforcement cooperation;

| (b) | Europol’s objectives, structure and functioning, as well as ways to maximise cooperation between Europol and relevant law-enforcement services in the Member States in the fight against organised crime; |
| --- | --- |

(b)

Europol’s objectives, structure and functioning, as well as ways to maximise cooperation between Europol and relevant law-enforcement services in the Member States in the fight against organised crime;

| (c) | Eurojust’s objectives, structure and functioning. |
| --- | --- |

(c)

Eurojust’s objectives, structure and functioning.

| — | To provide appropriate training with regard to respect for democratic safeguards, with particular reference to the rights of defence. |
| --- | --- |

—

To provide appropriate training with regard to respect for democratic safeguards, with particular reference to the rights of defence.

Governance

Governance

Governing Board

Governing Board

Composition

Composition

One delegation from each Member State.

Each delegation shall have one vote. Representatives of the European Commission and of the General Secretariat of the Council of the European Union and Europol shall be invited to attend meetings as non-voting observers.

Director

Director

Manages the College, is appointed and may be removed by the Governing Board.

External audit

External audit

European Court of Auditors.

Internal audit

Internal audit

European Commission’s Internal Audit Service (IAS).

Discharge authority

Discharge authority

European Parliament, acting on a recommendation from the Council.

Resources made available to the College in 2014 (2013)

Resources made available to the College in 2014 (2013)

Budget

Budget

8,8(8,4) million euro

(8,4)

Staff

Staff

The Establishment Plan for 2014 provided for 27 (28) temporary staff.

(28)

In addition: 10 (10) contract staff posts were budgeted for.

10)

Member States also seconded a total of: 5,5(5) national experts during the course of the year.

(5)

Products and services in 2014 (2013)

Products and services in 2014 (2013)

Courses, Seminars and Conferences

Courses, Seminars and Conferences

The College implemented a total of 71 (72) residential activities (courses, seminars and conferences). The assessment of the evaluation of the activities shows that general satisfaction with the College activities and its learning outcomes remained outstanding at 94 % (94 %).

(72)

(94 %)

CEPOL has brought together 2  098 (2  251) law enforcement participants, exceeding the planned targets, and 710 (707) trainers from 34 (42) countries (EU Member States and third countries) and 24 (21) EU and international bodies.

(707)

(42)

(21)

Attendance rate (attendance v seats available) has remained high: 108 % (116 %) demonstrating exceptional demand for CEPOL training. The College itself organised 11 (19) activities in support of the network and initiated a Grant Agreement application process for 2014. Six additional courses were added to the list of activities by the Governing Board in November. These courses will be implemented by mid-February 2015 and will be counted and reported in the 2015 statistics.

(116 %)

(19)

External Relations

External Relations

In 2014 CEPOL continued its fruitful cooperation with candidate, potential candidate and ENP/EaP countries as well as strategic partners, JHA agencies and EU institutions, including the European External Action Service.

In 2014, CEPOL concluded the negotiations for two working arrangements, one with the former Yugoslav Republic of Macedonia and one with Bosnia and Herzegovina. The latter was signed in December 2014, while the former is awaiting the exchange of letters.

CEPOL developed a training matrix which provides the state of play for training activities delivered by the JHA agencies network. This was done with a view to improving coordination and possible synergies, in line with the Law Enforcement Training Scheme (LETS).

In 2014, CEPOL supported seven capacity-building projects implemented by EU Member States or by international organisations; those ranged from e-learning methodologies through training against child sexual exploitation to civilian crisis management and other important policing topics.

Development of training manuals and (Common) Curricula

Development of training manuals and (Common) Curricula

In 2014 two Common Curricula (CC) were updated, one of which (Money Laundering) was adopted in August 2014 together with three that had been updated in 2013 (Counter-Terrorism, Drug Trafficking and Eurojust). The other one, Trafficking in Human Beings (THB), was finalised at the end of October and was submitted to the Governing Board for a written procedure to be adopted in January 2015. By the end of 2014 there were nine adopted CEPOL CCs in total.

A new section was opened in the Learning Management System (LMS) for the Common Curricula under Educators Support. This is meant to become a source for training input and material on the CC topics. The following six Common Curricula have been uploaded so far: CC05A Counter-Terrorism, CC05D Police Ethics and Integrity, CC06A Domestic Violence, CC06B Money Laundering, CC07A Civilian Crisis Management, CC07B Drug Trafficking.

CC05C on Europol and CC06C on THB will be uploaded as soon as they have been finalised and adopted; CC13A on Eurojust is to be uploaded in January.

The Sirene Trainers Manual has been updated and will be re-distributed after printing by the Publication Office at the beginning of 2015.

Research and Science

Research and Science

Two new issues of the ‘European Science and Research Bulletin’ were developed and published on the website and in print (issues Nos 10 and 11).

The number of registered experts in the CEPOL Lecturer, Trainer and Researcher database rose to 293 by the end of the year 2014.

The National Research and Science Correspondents completed their submission of National Implementation Plans.

CEPOL provided access to users of the CEPOL e-Net to the content of nine peer-reviewed professional and academic police science journals.

European Police Exchange Programme

European Police Exchange Programme

CEPOL European Police Exchange Programme 2014 (EPEP) featured six segments:

| — | general segment for police officers, |
| --- | --- |

—

general segment for police officers,

| — | commander segment, |
| --- | --- |

—

commander segment,

| — | trainers segment, |
| --- | --- |

—

trainers segment,

| — | researchers segment, |
| --- | --- |

—

researchers segment,

| — | inter-agency segment, |
| --- | --- |

—

inter-agency segment,

| — | ENP-WB segment. |
| --- | --- |

—

ENP-WB segment.

The programme included topics derived from the Stockholm programme priorities, the EU Policy Cycle as well as requests from the Member States. The exchange visits were done on bilateral basis, with a duration of 6 days/5 nights.

Altogether 312 (444) participants from all EU Member States, candidate countries, ENP East and WB countries took part, exceeding the annual target. The programme had a budget of just over 3 55  000 euro (6 00  000 euro) financed by CEPOL and with a utilisation rate of 85 % (95 %).

(444)

(6 00  000 euro)

(95 %)

Feedback is still being collected but at the moment indicates a general satisfaction rate of around 91 % (98 %).

(98 %)

Electronic Network (e-Net)

Electronic Network (e-Net)

Following the issues in 2013, there was little or no disruption to service in 2014. In 2014 the project ‘Review and update of e-Net user Management’ was launched, aimed at identifying unused and disabled e-Net accounts for deletion, improving the e-Net registration workflow and updating the user management tools for e-Net Managers in Member States and partner organisations and within the College.

During 2014 the version of the Learning Management System on e-Net was updated to Moodle 2.7 in which security improvements are addressed. This version of the LMS includes long-term support, until May 2017, from Moodle HQ.

E-Learning

E-Learning

In 2014 navigation to online modules on the Learning Management System was improved with a new graphical user interface, making it easier for e-Net users to find the modules they wish to use.

CEPOL supported the Erasmus project ‘E-Campus Policing Europe’ aimed at the development and delivery of learning assignments on cross-border police cooperation matters. The outcome of the project is a module consisting of learning assignments with a bespoke user interface and online support as a course on the CEPOL LMS, targeting police and law enforcement educators. This module became available for all registered e-Net users in September.

CEPOL supported the development of three online modules within the framework of the ISEC project ‘Developing e-Learning Modules on Cross-Border Police Cooperation Tools for Police Education’. The modules were designed on the topics of Hot Pursuit, Mixed Patrols and Data & Information Exchange. To date 23 (19) online modules are available.

(19)

Updates to three CEPOL online modules were carried out in 2014: EU Policy Cycle for Serious and Organised Crime, Webinars for Educators and LMS support to the 2014 CEPOL residential activities.

In 2014 a total of 2  513(1  994) unique users visited the online learning modules, 54 (31) webinars were implemented and attended by 5  399(3  562) participants. The Webinar Resources platform became the one attracting the most users in 2014.

(1  994)

(31)

(3  562)

In 2014, 14 platforms for communities of practice saw 2  588 (2  063) like-minded professionals in different domains of policing and police education share and build on each other’s knowledge and expertise.

2  063

Source: Annex supplied by the College.

Source:

---

THE COLLEGE’S REPLY

| 11. | The College has taken note of the Court’s comments. The measures introduced by CEPOL in the recent years have led to a significantly reduced amount of carried forward and cancelled funds. We are committed to further increase and maintain compliance with the budgetary principle of annuality provided in the Financial Regulation. |
| --- | --- |

11.

The College has taken note of the Court’s comments. The measures introduced by CEPOL in the recent years have led to a significantly reduced amount of carried forward and cancelled funds. We are committed to further increase and maintain compliance with the budgetary principle of annuality provided in the Financial Regulation.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/56 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/56

---

REPORT

on the annual accounts of the Consumers, Health and Food Executive Agency for the financial year 2014 together with the Agency’s reply

(2015/C 409/07)

INTRODUCTION

| 1. | The Consumers, Health and Food Executive Agency (hereinafter ‘the Agency’) was set up on 1 January 2005 (Public Health Executive Agency — PHEA — from 2005 to 2008, Executive Agency for Health and Consumers — EAHC — from 2008 to 2013 and Consumers, Health and Food Executive Agency — Chafea — as from 1 January 2014 (1)). The Agency, which is located in Luxembourg, was established for a period ending 31 December 2024. It implements the EU Health programme, the Consumer programme and the Better Training for Safer Food initiative (BTSF) (2). |
| --- | --- |

1.

The Consumers, Health and Food Executive Agency (hereinafter ‘the Agency’) was set up on 1 January 2005 (Public Health Executive Agency — PHEA — from 2005 to 2008, Executive Agency for Health and Consumers — EAHC — from 2008 to 2013 and Consumers, Health and Food Executive Agency — Chafea — as from 1 January 2014 (1)). The Agency, which is located in Luxembourg, was established for a period ending 31 December 2024. It implements the EU Health programme, the Consumer programme and the Better Training for Safer Food initiative (BTSF) (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts.

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | Carry-overs for Title III (Expenditure linked to the Agency’s operations) are high at 0,9 million euro (2013: 1,0 million euro), i.e. 50 % (2013: 43 %) of committed appropriations. Although such a high level of carry-over is at odds with the budgetary principle of annuality, it is related to services received in 2014 (0,6 million euro) and annual contracts covering part of 2015 (0,3 million euro). |
| --- | --- |

11.

Carry-overs for Title III (Expenditure linked to the Agency’s operations) are high at 0,9 million euro (2013: 1,0 million euro), i.e. 50 % (2013: 43 %) of committed appropriations. Although such a high level of carry-over is at odds with the budgetary principle of annuality, it is related to services received in 2014 (0,6 million euro) and annual contracts covering part of 2015 (0,3 million euro).

FOLLOW-UP OF PREVIOUS YEAR’S COMMENTS

| 12. | An overview of the corrective actions taken in response to the Court’s comments from the previous year is provided in Annex I. |
| --- | --- |

12.

An overview of the corrective actions taken in response to the Court’s comments from the previous year is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  Commission Decision 2013/770/EU (OJ L 341, 18.12.2013, p. 69).

1

(2)  Annex II summarises the Agency’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes

3

(4)  These comprise the budgetary outturn account, the budget implementation reports and notes on budget implementation.

4

(5)  Articles 38 to 42 of the Financial Regulation of the Agency.

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Articles 87 to 92 of the Financial Regulation of the Agency.

7

---

ANNEX I

Follow-up of previous year’s comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2013 | Of the 1,1 million euro carried over from 2012, 0,23 million euro, or 21 %, was cancelled in 2013. Such a high level of cancellations indicates weaknesses in budget planning, particularly in forecasting costs for meetings with external participants. | N/A |
| 2013 | The overall level of committed appropriations was relatively low at 94 %. The 2013 payment rates against committed appropriations were satisfactory for Titles I and II at 97 % and 87 % respectively. Although carry-overs for Title III are high at 1,0 million euro, or 43 % of committed Title III appropriations, they reflect the multiannual nature of the Agency’s activities and payments were planned and made according to operational needs. | N/A |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2013

Of the 1,1 million euro carried over from 2012, 0,23 million euro, or 21 %, was cancelled in 2013. Such a high level of cancellations indicates weaknesses in budget planning, particularly in forecasting costs for meetings with external participants.

N/A

2013

The overall level of committed appropriations was relatively low at 94 %. The 2013 payment rates against committed appropriations were satisfactory for Titles I and II at 97 % and 87 % respectively. Although carry-overs for Title III are high at 1,0 million euro, or 43 % of committed Title III appropriations, they reflect the multiannual nature of the Agency’s activities and payments were planned and made according to operational needs.

N/A

---

ANNEX II

Consumers, Health and Food Executive Agency (Luxembourg)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Article 168 and 169 of the Treaty on the Functioning of the European Union) | A high level of human health protection shall be ensured in the definition and implementation of all Union policies and activities. Union action, which shall complement national policies, shall be directed towards improving public health, preventing human illness and diseases, and obviating sources of danger to human health. Such action shall cover the fight against the major health scourges, by promoting research into their causes, their transmission and their prevention, as well as health information and education and monitoring, early warning of and combating serious cross border threats to health. The Union shall complement the Member States’ action in reducing drugs-related health damage, including information and prevention.
  In order to promote the interests of consumers and to ensure a high level of consumer protection, the Union shall contribute to protecting the health, safety and economic interests of consumers, as well as to promoting their right to information, education and to organise themselves in order to safeguard their interests. |
| --- | --- |
| Competences of the Agency | Objectives







  — | By Commission Implementing Decision 2013/770/EU, as amended by Commission Implementing Decision 2014/927/EU, the Agency became responsible for carrying out the implementation tasks related to the management of certain EU programmes — namely the Consumer programme 2014-2020, the Public Health programme 2014-2020, the food safety training measures covered by Directive 2000/29/EC and Regulation (EC) No 882/2004 and the information provision and promotion measures concerning agricultural products implemented in the internal market and in third countries. |

Areas of Union competence deriving from the Treaty

(Article 168 and 169 of the Treaty on the Functioning of the European Union)

A high level of human health protection shall be ensured in the definition and implementation of all Union policies and activities. Union action, which shall complement national policies, shall be directed towards improving public health, preventing human illness and diseases, and obviating sources of danger to human health. Such action shall cover the fight against the major health scourges, by promoting research into their causes, their transmission and their prevention, as well as health information and education and monitoring, early warning of and combating serious cross border threats to health. The Union shall complement the Member States’ action in reducing drugs-related health damage, including information and prevention.

In order to promote the interests of consumers and to ensure a high level of consumer protection, the Union shall contribute to protecting the health, safety and economic interests of consumers, as well as to promoting their right to information, education and to organise themselves in order to safeguard their interests.

Competences of the Agency

Objectives

—

By Commission Implementing Decision 2013/770/EU, as amended by Commission Implementing Decision 2014/927/EU, the Agency became responsible for carrying out the implementation tasks related to the management of certain EU programmes — namely the Consumer programme 2014-2020, the Public Health programme 2014-2020, the food safety training measures covered by Directive 2000/29/EC and Regulation (EC) No 882/2004 and the information provision and promotion measures concerning agricultural products implemented in the internal market and in third countries.

| — | The Agency also manages the legacy of the following programmes and actions: the Public Health programme 2008-2013, the Consumer programme 2007-2013, the food safety training measures covered by Regulation (EC) No 882/2004, Directive 2000/29/EC, Decision C(2012) 1548 and Regulation (EC) No 1905/2006, and the last operating grant agreement that was signed between the Agency and ANEC, the European consumer voice in standardisation, which is governed by Regulation (EU) No 1025/2012. |
| --- | --- |

—

The Agency also manages the legacy of the following programmes and actions: the Public Health programme 2008-2013, the Consumer programme 2007-2013, the food safety training measures covered by Regulation (EC) No 882/2004, Directive 2000/29/EC, Decision C(2012) 1548 and Regulation (EC) No 1905/2006, and the last operating grant agreement that was signed between the Agency and ANEC, the European consumer voice in standardisation, which is governed by Regulation (EU) No 1025/2012.

| — | By its Implementing Decision of 17 December 2013 (2013/770/EU) the European Commission established the Consumers, Health and Food Executive Agency (Chafea), which replaced and succeeded the Executive Agency for Health and Consumers from 1 January 2014 to 31 December 2024. Commission Implementing Decision 2013/770/EU (amended) of 17 December 2014 then renamed Chafea the Consumers, Health, Agriculture and Food Executive Agency. |
| --- | --- |

—

By its Implementing Decision of 17 December 2013 (2013/770/EU) the European Commission established the Consumers, Health and Food Executive Agency (Chafea), which replaced and succeeded the Executive Agency for Health and Consumers from 1 January 2014 to 31 December 2024. Commission Implementing Decision 2013/770/EU (amended) of 17 December 2014 then renamed Chafea the Consumers, Health, Agriculture and Food Executive Agency.

| — | As a consequence, all references in this annex to the Consumers, Health and Food Executive Agency (Chafea) shall also be deemed to mean, as of 1 January 2015, the newly established Consumers, Health, Agriculture and Food Executive Agency (Chafea), which is the legal successor to the EAHC. |
| --- | --- |

—

As a consequence, all references in this annex to the Consumers, Health and Food Executive Agency (Chafea) shall also be deemed to mean, as of 1 January 2015, the newly established Consumers, Health, Agriculture and Food Executive Agency (Chafea), which is the legal successor to the EAHC.

Tasks

The Agency is responsible for the following programme-related tasks, as defined both in its act of establishment and in the delegation act last amended on 17 and 19 December 2014.

| (a) | Programme implementation tasks:






  (i) | manage some or all of the phases of programme implementation and stages in the lifetime of projects in the framework of the Consumer programme 2014-2020, the Public Health programme 2014-2020, the food safety training measures covered by Directive 2000/29/EC, Regulation (EC) No 882/2004 and Decision C(2014) 1269, the information provision and promotion measures concerning agricultural products implemented in the internal market and in third countries covered by Regulation (EU) No 1144/2014, as well as of the Public Health programme 2008-2013, the Consumer programme 2007-2013, the food safety training measures covered by Directive 2000/29/EC, Regulation (EC) No 882/2004, Regulation (EC) No 1905/2006 and Decision C(2012) 1548, and the management of the agreement with ANEC governed by Regulation (EU) No 1025/2012. In this connection, the Agency is responsible for monitoring projects, making the necessary checks and recovery procedures, and performing budget implementation tasks covering revenue and expenditure within the meaning of Regulation (EU, Euratom) No 966/2012, and in particular:






  — | awarding grants and managing the ensuing agreement or decision, including the operations required to launch and conclude grant award procedures, |
| --- | --- | --- | --- |

(a)

Programme implementation tasks:

(i)

manage some or all of the phases of programme implementation and stages in the lifetime of projects in the framework of the Consumer programme 2014-2020, the Public Health programme 2014-2020, the food safety training measures covered by Directive 2000/29/EC, Regulation (EC) No 882/2004 and Decision C(2014) 1269, the information provision and promotion measures concerning agricultural products implemented in the internal market and in third countries covered by Regulation (EU) No 1144/2014, as well as of the Public Health programme 2008-2013, the Consumer programme 2007-2013, the food safety training measures covered by Directive 2000/29/EC, Regulation (EC) No 882/2004, Regulation (EC) No 1905/2006 and Decision C(2012) 1548, and the management of the agreement with ANEC governed by Regulation (EU) No 1025/2012. In this connection, the Agency is responsible for monitoring projects, making the necessary checks and recovery procedures, and performing budget implementation tasks covering revenue and expenditure within the meaning of Regulation (EU, Euratom) No 966/2012, and in particular:

—

awarding grants and managing the ensuing agreement or decision, including the operations required to launch and conclude grant award procedures,

| — | concluding public procurement procedures and managing the ensuing contracts, including the operations required to launch and conclude public procurement procedures, |
| --- | --- |

—

concluding public procurement procedures and managing the ensuing contracts, including the operations required to launch and conclude public procurement procedures,

| — | performing all the operations required to launch contests and award prizes in accordance with Regulation (EU, Euratom) No 966/2012; |
| --- | --- |

—

performing all the operations required to launch contests and award prizes in accordance with Regulation (EU, Euratom) No 966/2012;

| (ii) | in the framework of the information provision and promotion measures concerning agricultural products implemented in the internal market and in third countries covered by Regulation (EU) No 1144/2014, regarding simple programmes, perform the following implementation tasks:






  — | preparation and publication of the calls for proposals defined in the work programmes, |
| --- | --- | --- |

(ii)

in the framework of the information provision and promotion measures concerning agricultural products implemented in the internal market and in third countries covered by Regulation (EU) No 1144/2014, regarding simple programmes, perform the following implementation tasks:

—

preparation and publication of the calls for proposals defined in the work programmes,

| — | preparation of information documents for potential beneficiaries, |
| --- | --- |

—

preparation of information documents for potential beneficiaries,

| — | preparation of the evaluation of proposals, including the selection of expert evaluators, |
| --- | --- |

—

preparation of the evaluation of proposals, including the selection of expert evaluators,

| — | reception and eligibility checking of proposals, |
| --- | --- |

—

reception and eligibility checking of proposals,

| — | verification on the basis of the exclusion criteria and evaluation of proposals, |
| --- | --- |

—

verification on the basis of the exclusion criteria and evaluation of proposals,

| — | provision of information to rejected and successful applicants. |
| --- | --- |

—

provision of information to rejected and successful applicants.

| (b) | Support in programme implementation, in particular:






  — | collecting, processing and distributing data, and in particular compiling, analysing and transmitting to the Commission all information required to guide implementation of the programme and promote coordination with other Union programmes, the Member States or international organisations, |
| --- | --- | --- |

(b)

Support in programme implementation, in particular:

—

collecting, processing and distributing data, and in particular compiling, analysing and transmitting to the Commission all information required to guide implementation of the programme and promote coordination with other Union programmes, the Member States or international organisations,

| — | contributing to evaluation of the impact of the programme and to monitoring the actual effect of the measures on the market, |
| --- | --- |

—

contributing to evaluation of the impact of the programme and to monitoring the actual effect of the measures on the market,

| — | managing and directing a network, in particular concerning the target public (beneficiaries, recipients, projects, actors), |
| --- | --- |

—

managing and directing a network, in particular concerning the target public (beneficiaries, recipients, projects, actors),

| — | organising meetings, seminars or talks; organising training; organising the Commission’s own information and promotion campaigns for agricultural products, |
| --- | --- |

—

organising meetings, seminars or talks; organising training; organising the Commission’s own information and promotion campaigns for agricultural products,

| — | contributing to studies and evaluations, in particular the annual and/or mid-term evaluation of implementation of the programme, |
| --- | --- |

—

contributing to studies and evaluations, in particular the annual and/or mid-term evaluation of implementation of the programme,

| — | preparing recommendations for the Commission on implementation of the programme and its future development, |
| --- | --- |

—

preparing recommendations for the Commission on implementation of the programme and its future development,

| — | planning and implementing information operations, |
| --- | --- |

—

planning and implementing information operations,

| — | producing overall control and supervision data, |
| --- | --- |

—

producing overall control and supervision data,

| — | participating in preparatory work on work programmes and financing decisions. |
| --- | --- |

—

participating in preparatory work on work programmes and financing decisions.

Governance

Steering Committee

Comprises five members appointed by the European Commission. The members of the Steering Committee are appointed for two years.

It adopts the Agency’s annual work programme after approval by the European Commission. In addition, it adopts the administrative budget of the Agency and its annual activity report.

Director

Appointed by the European Commission for four years.

External audit

European Court of Auditors.

Discharge authority

European Parliament, following a recommendation from the Council.

Resources made available to the Agency in 2014 (2013)

Final budget

The Agency’s administrative budget for 2014 amounted to 7,25(7,23) million euro.

Staff at 31 December 2014

On 31 December 2014, the Agency employed 48 (50) statutory staff members, including 12 (11) temporary staff and 38 (38) contract staff.

Products and services 2014

| 1. | Closed the few remaining 2005-2007 grants provided under the 2003-2008 Public Health programme; monitoring, including concluding the balance payment for several of the 2008-2012 grants provided under the second Health programme (HP 2008-2013); finalised negotiations for the proposals included in the reserve list of the 2013 calls; managed the implementation of the new IT tools for the 2014 calls and launched a significant number of service contracts under the 2014 work plan; managed the 2013 calls and the grants and contracts awarded under the 2008 calls for proposals and tenders under the 2007-2013 Consumer programme (CP); awarded projects under the 2007, 2008 and 2009 calls for tenders under Food Safety Training Measures. |
| --- | --- |

1.

Closed the few remaining 2005-2007 grants provided under the 2003-2008 Public Health programme; monitoring, including concluding the balance payment for several of the 2008-2012 grants provided under the second Health programme (HP 2008-2013); finalised negotiations for the proposals included in the reserve list of the 2013 calls; managed the implementation of the new IT tools for the 2014 calls and launched a significant number of service contracts under the 2014 work plan; managed the 2013 calls and the grants and contracts awarded under the 2008 calls for proposals and tenders under the 2007-2013 Consumer programme (CP); awarded projects under the 2007, 2008 and 2009 calls for tenders under Food Safety Training Measures.

| 2. | HP work programme






  — | The 2014 calls for proposals were launched on 6 June 2014 and closed on 25 September 2014. They were published in the EU Official Journal (1) and on the Chafea website (2) and Europa website (3). |
| --- | --- | --- |

2.

HP work programme

—

The 2014 calls for proposals were launched on 6 June 2014 and closed on 25 September 2014. They were published in the EU Official Journal (1) and on the Chafea website (2) and Europa website (3).

| — | Project proposals: 12 of the 50 technically evaluated project proposals (27,2 %) were recommended for funding (excluding reserve list), for a total of 1 1 5 67  617 euro in proposed EU co-funding. However, the corresponding grants will not be signed until the first quarter of 2015 due to the late publication of the calls. |
| --- | --- |

—

Project proposals: 12 of the 50 technically evaluated project proposals (27,2 %) were recommended for funding (excluding reserve list), for a total of 1 1 5 67  617 euro in proposed EU co-funding. However, the corresponding grants will not be signed until the first quarter of 2015 due to the late publication of the calls.

| — | Operating grant proposals: 14 of the 40 technically evaluated operating grant proposals, including both the framework partnership agreements and the corresponding specific grant agreements (28,6 %), were recommended for funding. However, the corresponding grants will not be signed until the first quarter of 2015 due to the late publication of the calls. The total amount in proposed EU co-funding is 4 7 17  062 euro. |
| --- | --- |

—

Operating grant proposals: 14 of the 40 technically evaluated operating grant proposals, including both the framework partnership agreements and the corresponding specific grant agreements (28,6 %), were recommended for funding. However, the corresponding grants will not be signed until the first quarter of 2015 due to the late publication of the calls. The total amount in proposed EU co-funding is 4 7 17  062 euro.

| — | Joint actions: the negotiation procedure for joint actions was launched on 7 November 2014, with a submission deadline of 29 January 2015. All eight joint actions are expected to be co-funded, but the corresponding grants will not be signed until the first quarter of 2015 due to the late publication of the 2014 work plan. The expected amount in EU co-funding, according to the work plan, is 1 8 5 93  000 euro. |
| --- | --- |

—

Joint actions: the negotiation procedure for joint actions was launched on 7 November 2014, with a submission deadline of 29 January 2015. All eight joint actions are expected to be co-funded, but the corresponding grants will not be signed until the first quarter of 2015 due to the late publication of the 2014 work plan. The expected amount in EU co-funding, according to the work plan, is 1 8 5 93  000 euro.

| — | A single project reserve list was established, consisting of four proposals worth a total of 3 9 34  352 euro in proposed EU co-funding. |
| --- | --- |

—

A single project reserve list was established, consisting of four proposals worth a total of 3 9 34  352 euro in proposed EU co-funding.

| — | 31 procurement procedures were launched, of which 6 were open calls for tenders and the remainder requests for services. |
| --- | --- |

—

31 procurement procedures were launched, of which 6 were open calls for tenders and the remainder requests for services.

| 3. | CP work programme






  — | In 2014, the Agency, being entrusted with the implementation of parts of the (annual) consumer work programme, launched two calls for proposals, two invitations to submit proposals and 13 public procurement procedures (covering an open call for tenders, a low-value contract and a specific request for services/orders). |
| --- | --- | --- |

3.

CP work programme

—

In 2014, the Agency, being entrusted with the implementation of parts of the (annual) consumer work programme, launched two calls for proposals, two invitations to submit proposals and 13 public procurement procedures (covering an open call for tenders, a low-value contract and a specific request for services/orders).

| — | 60 grants were awarded for exchanges of officials between competent authorities of Member States, giving enforcement officials the opportunity to share experiences and knowledge about the implementation of Directive 2001/95/EC on general product safety and Regulation (EC) No 2006/2004 on consumer protection cooperation. |
| --- | --- |

—

60 grants were awarded for exchanges of officials between competent authorities of Member States, giving enforcement officials the opportunity to share experiences and knowledge about the implementation of Directive 2001/95/EC on general product safety and Regulation (EC) No 2006/2004 on consumer protection cooperation.

| — | A grant was awarded for the implementation of joint actions pertaining to the General Product Safety Directive and aimed at exchanging and implementing best practices among the competent authorities of the participating Member States and improving cross-border cooperation. |
| --- | --- |

—

A grant was awarded for the implementation of joint actions pertaining to the General Product Safety Directive and aimed at exchanging and implementing best practices among the competent authorities of the participating Member States and improving cross-border cooperation.

| — | Following the accession of Croatia to the EU, two contracts were signed for the organisation of an information campaign on consumer rights in Croatia, with the aim of informing Croatian citizens about their new consumers’ rights as EU citizens. |
| --- | --- |

—

Following the accession of Croatia to the EU, two contracts were signed for the organisation of an information campaign on consumer rights in Croatia, with the aim of informing Croatian citizens about their new consumers’ rights as EU citizens.

| — | The Agency launched procedures for the conclusion of a three-year framework partnership agreement (2015-2017) and specific grant agreement for 2015 with the European Consumer Centres Network. The new procedure is designed to ensure greater stability, strategic planning and efficiency in ECC-Net grant management. The Agency also managed the first phase of a contract aimed at creating a support mechanism for the ECC-Network in order to improve its visibility and the impact of collective ECC work. The development of quality standards is part of the service and will assist ECCs to measure their performance against predefined indicators. |
| --- | --- |

—

The Agency launched procedures for the conclusion of a three-year framework partnership agreement (2015-2017) and specific grant agreement for 2015 with the European Consumer Centres Network. The new procedure is designed to ensure greater stability, strategic planning and efficiency in ECC-Net grant management. The Agency also managed the first phase of a contract aimed at creating a support mechanism for the ECC-Network in order to improve its visibility and the impact of collective ECC work. The development of quality standards is part of the service and will assist ECCs to measure their performance against predefined indicators.

| — | To continue its analysis of the problems faced by consumers when buying products or services, the Agency launched several surveys on consumer issues and market studies that will answer to a range of concerns regarding market functioning from a consumer perspective in various domains such as insurance, food choices and eating habits, guarantees and cross-border obstacles to the Digital Single Market. A large market-monitoring study was launched covering 42 different markets. |
| --- | --- |

—

To continue its analysis of the problems faced by consumers when buying products or services, the Agency launched several surveys on consumer issues and market studies that will answer to a range of concerns regarding market functioning from a consumer perspective in various domains such as insurance, food choices and eating habits, guarantees and cross-border obstacles to the Digital Single Market. A large market-monitoring study was launched covering 42 different markets.

| — | A procurement procedure was completed in the area of product safety to investigate the safety aspects of ladders. |
| --- | --- |

—

A procurement procedure was completed in the area of product safety to investigate the safety aspects of ladders.

| — | In the field of consumer protection cooperation, the Agency launched a procurement procedure for a market study aimed at collecting data and providing analysis on misleading ‘free’ trials and submission traps for consumers in the EU. |
| --- | --- |

—

In the field of consumer protection cooperation, the Agency launched a procurement procedure for a market study aimed at collecting data and providing analysis on misleading ‘free’ trials and submission traps for consumers in the EU.

| — | In 2014 the Agency launched procedures for the conclusion of a four-year framework partnership agreement (2015-2018) and a specific grant agreement with BEUC, the European Consumer Organisation. The co-financing of BEUC will contribute to further promoting the interests of European consumers in the EU policy process as purchasers or users of goods and services. |
| --- | --- |

—

In 2014 the Agency launched procedures for the conclusion of a four-year framework partnership agreement (2015-2018) and a specific grant agreement with BEUC, the European Consumer Organisation. The co-financing of BEUC will contribute to further promoting the interests of European consumers in the EU policy process as purchasers or users of goods and services.

| — | Several procurement procedures were launched to implement Consumer Champion, a new capacity-building initiative for consumer professionals, and Consumer Classroom, an online interactive platform on consumer education for secondary school teachers. |
| --- | --- |

—

Several procurement procedures were launched to implement Consumer Champion, a new capacity-building initiative for consumer professionals, and Consumer Classroom, an online interactive platform on consumer education for secondary school teachers.

| 4. | BTSF work programme






  — | The Agency launched five procurement procedures in the form of open calls for tenders aimed at organising training activities for staff of EU Member States, candidate countries, European Neighbourhood Policy countries and EFTA national authorities who are involved in official control activities. |
| --- | --- | --- |

4.

BTSF work programme

—

The Agency launched five procurement procedures in the form of open calls for tenders aimed at organising training activities for staff of EU Member States, candidate countries, European Neighbourhood Policy countries and EFTA national authorities who are involved in official control activities.

| — | The purpose of the training is to keep the officials up-to-date with all aspects of EU food law and ensure that controls are carried out in a more uniform, objective and satisfactory manner in all Member States. A broad range of legislation is covered, from animal health and welfare to plant health and food hygiene and control. |
| --- | --- |

—

The purpose of the training is to keep the officials up-to-date with all aspects of EU food law and ensure that controls are carried out in a more uniform, objective and satisfactory manner in all Member States. A broad range of legislation is covered, from animal health and welfare to plant health and food hygiene and control.

| — | The Agency made the transfer from the first to the second phase of five contracts running since 2012 to provide training on 11 different subjects, and published two specific requests for services for the organisation of the 2nd Food Crime Conference and participation by the BTSF in activities around the 2015 Milan Expo. |
| --- | --- |

—

The Agency made the transfer from the first to the second phase of five contracts running since 2012 to provide training on 11 different subjects, and published two specific requests for services for the organisation of the 2nd Food Crime Conference and participation by the BTSF in activities around the 2015 Milan Expo.

| — | Specific training activities for third countries, especially developing countries, were continued under the BTSF programme, which is financed from the DG DEVCO and DG TRADE budgets. The purpose of these activities is to familiarise third-country officials involved in food controls with the applicable EU standards and import requirements. |
| --- | --- |

—

Specific training activities for third countries, especially developing countries, were continued under the BTSF programme, which is financed from the DG DEVCO and DG TRADE budgets. The purpose of these activities is to familiarise third-country officials involved in food controls with the applicable EU standards and import requirements.

| — | In 2014 the BTSF initiative achieved the target rate set at launch of around 6  000 participants per year from Member States. Overall satisfaction is close to the targeted 85 %, and more than 90 % of participants evaluate the knowledge gained as useful. |
| --- | --- |

—

In 2014 the BTSF initiative achieved the target rate set at launch of around 6  000 participants per year from Member States. Overall satisfaction is close to the targeted 85 %, and more than 90 % of participants evaluate the knowledge gained as useful.

---

(1)  OJ C 171, 6.6.2014, p. 10.

(2)  http://ec.europa.eu/chafea/health/projects.html and http://ec.europa.eu/chafea/health/grants.html

(3)  http://ec.europa.eu/health/programme/how_does_it_work/call_for_proposals/index_en.htm

Source: Annex supplied by the Agency.

---

THE AGENCY’S REPLY

| 11: | The Agency accepts the Court’s comments. The Agency shall continue its efforts to further reduce the carry-overs for Title III (Expenditure linked to the Agency’s operations) through early planning and close monitoring of contracts. |
| --- | --- |

11:

The Agency accepts the Court’s comments. The Agency shall continue its efforts to further reduce the carry-overs for Title III (Expenditure linked to the Agency’s operations) through early planning and close monitoring of contracts.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/67 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/67

---

REPORT

on the annual accounts of the Community Plant Variety Office for the financial year 2014, together with the Office’s reply

(2015/C 409/08)

INTRODUCTION

| 1. | The Community Plant Variety Office (hereinafter ‘the Office’, aka ‘CPVO’), which is located in Angers, was created by Council Regulation (EC) No 2100/94 (1). Its main task is to register and examine applications for the grant of Union industrial property rights for plant varieties and to ensure that the necessary technical examinations are carried out by the competent offices in the Member States (2). |
| --- | --- |

1.

The Community Plant Variety Office (hereinafter ‘the Office’, aka ‘CPVO’), which is located in Angers, was created by Council Regulation (EC) No 2100/94 (1). Its main task is to register and examine applications for the grant of Union industrial property rights for plant varieties and to ensure that the necessary technical examinations are carried out by the competent offices in the Member States (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Office’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Office’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Office, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Office, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Office and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Office’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The President approves the annual accounts of the Office after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Office in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Office and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Office’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The President approves the annual accounts of the Office after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Office in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Office are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Office are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts.

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Office’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Office’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON INTERNAL CONTROLS

| 11. | The Office uses electronic banking for most of its payments. The Accounting Officer or her two deputies can sign the payments electronically. No signature of a second person is required, which represents a financial risk for the Office. |
| --- | --- |

11.

The Office uses electronic banking for most of its payments. The Accounting Officer or her two deputies can sign the payments electronically. No signature of a second person is required, which represents a financial risk for the Office.

OTHER COMMENT

| 12. | Although the Office became operational in 1995, there is still no seat agreement signed with its host Member State that would clarify the conditions under which the Office can operate and that it can offer to its staff. |
| --- | --- |

12.

Although the Office became operational in 1995, there is still no seat agreement signed with its host Member State that would clarify the conditions under which the Office can operate and that it can offer to its staff.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 13. | An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I. |
| --- | --- |

13.

An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 227, 1.9.1994, p. 1.

1

(2)  Annex II summarises the Office’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 38 to 42 of the Financial Regulation of the Office.

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Articles 87 to 92 of the Financial Regulation of the Office.

7

---

ANNEX I

Follow-up of previous years’ comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2011 | The Office did not adopt the Implementing Rules of the Staff Regulations as regards the engagement and use of contract staff and the temporary occupation of management posts. | Completed |
| 2012 | Recruitment procedures showed significant shortcomings affecting transparency and equal treatment of candidates: the weightings and thresholds set were not always applied, no consistent evaluation method was used throughout the various recruitment procedures and the possibility of appeal was not mentioned in the vacancy notice. | Completed |
| 2013 | The budget execution rate for 2013 is low at 86 % (1 2 7 55  144 euro) with a corresponding high rate of cancellations. This is partly explained by the fact that revenue and related operational expenditure (Title III) is highly dependent on the number of applications to register plant variety rights, which is difficult to forecast accurately. However, there is scope to further improve budget planning and monitoring, particularly with regard to administrative expenditure (Title II). | N/A |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2011

The Office did not adopt the Implementing Rules of the Staff Regulations as regards the engagement and use of contract staff and the temporary occupation of management posts.

Completed

2012

Recruitment procedures showed significant shortcomings affecting transparency and equal treatment of candidates: the weightings and thresholds set were not always applied, no consistent evaluation method was used throughout the various recruitment procedures and the possibility of appeal was not mentioned in the vacancy notice.

Completed

2013

The budget execution rate for 2013 is low at 86 % (1 2 7 55  144 euro) with a corresponding high rate of cancellations. This is partly explained by the fact that revenue and related operational expenditure (Title III) is highly dependent on the number of applications to register plant variety rights, which is difficult to forecast accurately. However, there is scope to further improve budget planning and monitoring, particularly with regard to administrative expenditure (Title II).

N/A

---

ANNEX II

Community Plant Variety Office (Angers)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Extract of Article 36 of the Treaty on the Functioning of the European Union) | Free movements of goods

  Such prohibitions or restrictions [the protection of industrial and commercial property] shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States. |
| --- | --- |
| Competences of the Office


  (Council Regulation (EC) No 2100/94 and Strategic Plan 2010-2015) | Objectives

  To apply the system of European Union plant variety rights as the sole and exclusive form of European Union industrial property rights for plant varieties.
  To foster innovation in plant varieties by high quality processing of applications for Community plant variety rights at affordable costs while providing policy guidance and assistance in the exercise of these rights for the benefit of stakeholders.

  Tasks







  — | To decide whether to refuse or grant applications for Union plant variety rights; |

Areas of Union competence deriving from the Treaty

(Extract of Article 36 of the Treaty on the Functioning of the European Union)

Free movements of goods

Such prohibitions or restrictions [the protection of industrial and commercial property] shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.

Competences of the Office

(Council Regulation (EC) No 2100/94 and Strategic Plan 2010-2015)

Objectives

To apply the system of European Union plant variety rights as the sole and exclusive form of European Union industrial property rights for plant varieties.

To foster innovation in plant varieties by high quality processing of applications for Community plant variety rights at affordable costs while providing policy guidance and assistance in the exercise of these rights for the benefit of stakeholders.

Tasks

—

To decide whether to refuse or grant applications for Union plant variety rights;

| — | to decide on objections; |
| --- | --- |

—

to decide on objections;

| — | to decide on appeals; |
| --- | --- |

—

to decide on appeals;

| — | to decide on the revocation or cancellation of a European Union plant variety right. |
| --- | --- |

—

to decide on the revocation or cancellation of a European Union plant variety right.

Governance

The President

Directs the Office. He is appointed by the Council from a list of candidates proposed by the Commission after obtaining the opinion of the Administrative Council.

The Administrative Council

Oversees the Office’s work programme and draws up rules governing the Office’s working methods. It is composed of one representative of each Member State and one representative of the Commission, plus their alternates.

Decisions regarding the grant of Community plant variety rights are adopted by Committees composed of three members of staff of the Office and by the Board of Appeal in appeal proceedings.

Control of the legality of the Office’s acts

Review by the Commission of the legality of the acts of the Office’s President in respect of which European Union law does not provide for any control on legality by another body and of the acts of the Administrative Council relating to the Office’s budget.

External audit

European Court of Auditors.

Discharge authority

Administrative Council.

Resources made available to the Office in 2014 (2013)

Final Budget

14,7(14,8) million euro

Staff as at 31 December 2014

Number of posts in the establishment plan: 47 (48)

Posts occupied: 45 (45)

Total staff: 45 (45), undertaking the following tasks:

| — | operational: 28,5(28,5) |
| --- | --- |

—

operational: 28,5(28,5)

| — | administrative: 16,5(16,5) |
| --- | --- |

—

administrative: 16,5(16,5)

Products and services 2014 (2013)

Applications received: 3  626(3  297)

Rights granted: 2  684(2  706)

European Union rights in force at 31 December 2014: 22  554(21  576)

International Cooperation on Plant Variety Protection

| — | Contribution to enforcement of plant variety rights |
| --- | --- |

—

Contribution to enforcement of plant variety rights

| — | Contacts and cooperation with the following organisations: European Commission (DG SANTE, Standing Committees), UPOV (1), CIOPORA (2), ESA (3), OAPI (4), OECD (5), MAFF (6) |
| --- | --- |

—

Contacts and cooperation with the following organisations: European Commission (DG SANTE, Standing Committees), UPOV (1), CIOPORA (2), ESA (3), OAPI (4), OECD (5), MAFF (6)

---

(1)  Union pour la Protection des Obtentions végétales.

(2)  International Community of Breeders of Asexually Reproduced Ornamental and Fruit Plants.

(3)  European Seed Association.

(4)  Organisation africaine de la Propriété intellectuelle.

(5)  Organisation for Economic Co-operation and Development.

(6)  Ministry of Agriculture, Forestry & Fisheries of Japan.

Source: Annex supplied by the Office.

---

THE OFFICE’S REPLY

| 11. | The Office takes note of the Courts findings. All payments made by the Office are done on the basis of approved electronic workflows. The regulations do not require such a second signature to send electronic payment files and significant mitigating controls are in place ex-post for all banking movements. Furthermore, each individual sending files for electronic payment signs with a personal certificate. |
| --- | --- |

11.

The Office takes note of the Courts findings. All payments made by the Office are done on the basis of approved electronic workflows. The regulations do not require such a second signature to send electronic payment files and significant mitigating controls are in place ex-post for all banking movements. Furthermore, each individual sending files for electronic payment signs with a personal certificate.

| 12. | The CPVO takes note of the comments of the Court and confirms that all necessary actions have been undertaken in order to have the seat agreement signed by the host Member State. |
| --- | --- |

12.

The CPVO takes note of the comments of the Court and confirms that all necessary actions have been undertaken in order to have the seat agreement signed by the host Member State.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/73 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/73

---

REPORT

on the annual accounts of the Education, Audiovisual and Culture Executive Agency for the financial year 2014, together with the Agency’s reply

(2015/C 409/09)

INTRODUCTION

| 1. | The Education, Audiovisual and Culture Executive Agency (hereinafter ‘the Agency’, aka ‘EACEA’), which is located in Brussels, was established by Commission Decision No 2009/336/EC (1). The Agency’s task is to manage programmes decided by the Commission in the educational, audiovisual and cultural fields, including undertaking the detailed implementation of technical projects (2). |
| --- | --- |

1.

The Education, Audiovisual and Culture Executive Agency (hereinafter ‘the Agency’, aka ‘EACEA’), which is located in Brussels, was established by Commission Decision No 2009/336/EC (1). The Agency’s task is to manage programmes decided by the Commission in the educational, audiovisual and cultural fields, including undertaking the detailed implementation of technical projects (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts.

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | The overall level of committed appropriations was high at 98 % (97 % in 2013). Carry-overs of committed appropriations were also high for Title III (support to agency operations) at 56 %, i.e. 3,2 million euro (8). They mainly relate to IT services ordered in 2014 but not yet invoiced at year-end (1,2 million euro), ongoing project audits (1 million euro) and to communication, publication and translation services (0,9 million euro) related to new programmes managed by the Agency. |
| --- | --- |

11.

The overall level of committed appropriations was high at 98 % (97 % in 2013). Carry-overs of committed appropriations were also high for Title III (support to agency operations) at 56 %, i.e. 3,2 million euro (8). They mainly relate to IT services ordered in 2014 but not yet invoiced at year-end (1,2 million euro), ongoing project audits (1 million euro) and to communication, publication and translation services (0,9 million euro) related to new programmes managed by the Agency.

FOLLOW-UP OF PREVIOUS YEAR’S COMMENTS

| 12. | An overview of the corrective actions taken in response to the Court’s comments from the previous year is provided in Annex I. |
| --- | --- |

12.

An overview of the corrective actions taken in response to the Court’s comments from the previous year is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 101, 21.4.2009, p. 26.

1

(2)  Annex II summarises the Agency’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 62 and 68 in conjunction with Articles 53 and 58 of Regulation (EU, Euratom) No 966/2012 (OJ L 298, 26.10.2012, p. 1).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 162 of Regulation (EU, Euratom) No 966/2012.

7

(8)  Following a restructuring of the Agency’s budget, Title III ‘support to the agency operations’ was introduced in 2014.

8

---

ANNEX I

Follow-up of previous year’s comments

| Year | Court’s comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2013 | The level of committed appropriations was high at 97 % for both title I (staff expenditure) and title II (administrative expenditure). Although carry-overs of committed appropriations were relatively high for title II at 25 %, they mainly relate to IT services and equipment ordered and partly received in 2013 for which invoices had not been issued at year-end, and also to the multiannual nature of the Agency’s activities (experts’ project reviews and project audits). | N/A |

Year

Court’s comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2013

The level of committed appropriations was high at 97 % for both title I (staff expenditure) and title II (administrative expenditure). Although carry-overs of committed appropriations were relatively high for title II at 25 %, they mainly relate to IT services and equipment ordered and partly received in 2013 for which invoices had not been issued at year-end, and also to the multiannual nature of the Agency’s activities (experts’ project reviews and project audits).

N/A

---

ANNEX II

Education, Audiovisual and Culture Executive Agency (Brussels)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Articles 165(1), 166(1), 167(1) and 173(1) TFEU) | Collection of information

  The European Union shall contribute to the development of quality education.
  The European Union shall implement a vocational training policy.
  The European Union shall contribute to the flowering of the cultures of the Member States.
  The European Union and the Member States shall ensure that the conditions necessary for the competitiveness of the Union’s industry exist. |
| --- | --- |
| Competences of the Agency

  (Council Regulation (EC) No 58/2003; Commission Implementing Decision (2013/776/EU) repealing Decision 2009/336/EC; Commission Decision C(2013) 9189 as amended by Decision C(2014) 4048) | Objectives

  In the framework of the education, culture and industry policies, numerous measures have been taken to promote education, vocational training, audiovisual, culture, youth, humanitarian aid and active citizenship in the European Union. The main objectives of these measures are to reinforce social cohesion and to contribute to competitiveness, to economic growth and to an ever closer union amongst the people of Europe.
  These measures include a variety of programmes.
  The Agency is responsible for managing certain strands of these programmes, e.g. Erasmus+, Creative Europe, Europe for Citizens and the EU Aid Volunteers initiative. In this respect, it implements the aid of the Union, except for tasks which require discretionary powers in translating political choices.

  Tasks







  — | To manage, throughout their duration, the projects implementing the Union programmes entrusted to it and to perform the necessary checks to that end, by adopting the relevant decisions where the Commission has empowered it to do so; |

Areas of Union competence deriving from the Treaty

(Articles 165(1), 166(1), 167(1) and 173(1) TFEU)

Collection of information

The European Union shall contribute to the development of quality education.

The European Union shall implement a vocational training policy.

The European Union shall contribute to the flowering of the cultures of the Member States.

The European Union and the Member States shall ensure that the conditions necessary for the competitiveness of the Union’s industry exist.

Competences of the Agency

(Council Regulation (EC) No 58/2003; Commission Implementing Decision (2013/776/EU) repealing Decision 2009/336/EC; Commission Decision C(2013) 9189 as amended by Decision C(2014) 4048)

Objectives

In the framework of the education, culture and industry policies, numerous measures have been taken to promote education, vocational training, audiovisual, culture, youth, humanitarian aid and active citizenship in the European Union. The main objectives of these measures are to reinforce social cohesion and to contribute to competitiveness, to economic growth and to an ever closer union amongst the people of Europe.

These measures include a variety of programmes.

The Agency is responsible for managing certain strands of these programmes, e.g. Erasmus+, Creative Europe, Europe for Citizens and the EU Aid Volunteers initiative. In this respect, it implements the aid of the Union, except for tasks which require discretionary powers in translating political choices.

Tasks

—

To manage, throughout their duration, the projects implementing the Union programmes entrusted to it and to perform the necessary checks to that end, by adopting the relevant decisions where the Commission has empowered it to do so;

| — | to adopt the instruments of budget implementation for revenue and expenditure and to carry out, where the Commission has empowered it to do so, the operations necessary for the management of the Union programmes and, in particular, those linked to the award of grants and contracts; |
| --- | --- |

—

to adopt the instruments of budget implementation for revenue and expenditure and to carry out, where the Commission has empowered it to do so, the operations necessary for the management of the Union programmes and, in particular, those linked to the award of grants and contracts;

| — | to gather, analyse and pass on to the Commission all the information needed to guide the implementation of the Union programmes; |
| --- | --- |

—

to gather, analyse and pass on to the Commission all the information needed to guide the implementation of the Union programmes;

| — | to implement, at EU level, the network of information on education in Europe (Eurydice) and activities intended to improve understanding and knowledge of the field of youth through the collection, analysis and dissemination of information and production of studies and publications. |
| --- | --- |

—

to implement, at EU level, the network of information on education in Europe (Eurydice) and activities intended to improve understanding and knowledge of the field of youth through the collection, analysis and dissemination of information and production of studies and publications.

Governance

Steering Committee

Composition

Comprises five members appointed by the European Commission.

Duties

It adopts the Agency’s annual work programme after approval by the European Commission. In addition, it adopts the administrative budget of the Agency and its annual activity report.

Director

Appointed by the European Commission.

External audit

European Court of Auditors.

Internal audit

Internal Audit Capability.

European Commission’s Internal Audit Service (IAS).

Discharge authority

European Parliament acting on a recommendation from the Council.

Resources made available to the Agency in 2014 (2013)

Budget

The 2014 administrative budget of the Agency was 47 (51) million euro (100 % financed by the general budget of the European Union).

The Agency has managed 693 million euro, which includes 90 million euro contracted on C8 (automatic carry-forward of committed appropriations) credits (850
   (1)) related to the programmes and projects delegated by the Commission to the Executive Agency.

Staff as at 31 December 2014

Temporary staff: 108 (105) posts for temporary staff in the establishment plan

Post occupied: 101 (99)

Contract staff: 350 (348) contract staff posts

Posts occupied: 336 (336)

Total staff: 437 (435) posts occupied by staff undertaking the following tasks:

| — | Operational: 358 |
| --- | --- |

—

Operational: 358

| — | Administrative: 79 |
| --- | --- |

—

Administrative: 79

Products and services in 2014 (2013)

Communication

| — | Around 120 Agency staff participated in Info days organised by National Agencies/Structures and several other information sessions in Brussels, update of VALOR (2) database with project results, organisation of events in cooperation with parent Directorates-General (DGs). |
| --- | --- |

—

Around 120 Agency staff participated in Info days organised by National Agencies/Structures and several other information sessions in Brussels, update of VALOR (2) database with project results, organisation of events in cooperation with parent Directorates-General (DGs).

| — | 12 Kick-off meetings were organised in Brussels for new project coordinators and partners. |
| --- | --- |

—

12 Kick-off meetings were organised in Brussels for new project coordinators and partners.

| — | Thematic cluster meetings and meetings with project coordinators were held in different locations. |
| --- | --- |

—

Thematic cluster meetings and meetings with project coordinators were held in different locations.

Selections

| — | 13 calls for proposals were published as well as 4 calls for tenders. |
| --- | --- |

—

13 calls for proposals were published as well as 4 calls for tenders.

| — | Management of the approximately 10  000 proposals received. |
| --- | --- |

—

Management of the approximately 10  000 proposals received.

| — | Selection of approximately 4  000 projects and 550 Erasmus Charters for Higher Education. |
| --- | --- |

—

Selection of approximately 4  000 projects and 550 Erasmus Charters for Higher Education.

Monitoring visits

| — | More than 386 monitoring missions (on site or in Brussels) with project participants were organised to monitor 440 projects. |
| --- | --- |

—

More than 386 monitoring missions (on site or in Brussels) with project participants were organised to monitor 440 projects.

Simplification measures

| — | The use of e-forms was extended to cover more actions, i.e. 86 % of all applications. |
| --- | --- |

—

The use of e-forms was extended to cover more actions, i.e. 86 % of all applications.

| — | Simplified contracting was expanded (decisions instead of grant agreements) for some actions. |
| --- | --- |

—

Simplified contracting was expanded (decisions instead of grant agreements) for some actions.

| — | The lump sum calculation method was refined and applied to more actions. |
| --- | --- |

—

The lump sum calculation method was refined and applied to more actions.

| — | Greater use was made of remote expert briefings and remote project evaluation to evaluate actions. |
| --- | --- |

—

Greater use was made of remote expert briefings and remote project evaluation to evaluate actions.

| — | Audit certificates were drawn up to simplify financial reporting and will be gradually deployed. |
| --- | --- |

—

Audit certificates were drawn up to simplify financial reporting and will be gradually deployed.

| — | A financial information kit to enhance guidance for beneficiaries was finalised and made available. |
| --- | --- |

—

A financial information kit to enhance guidance for beneficiaries was finalised and made available.

Cooperation with parent DGs

| — | Organisation of three Steering Committee meetings and four written procedures to adopt further decisions. |
| --- | --- |

—

Organisation of three Steering Committee meetings and four written procedures to adopt further decisions.

| — | Periodic coordination meetings on the delegated programmes with the parent DGs Operational Directors (three/four meetings per year). |
| --- | --- |

—

Periodic coordination meetings on the delegated programmes with the parent DGs Operational Directors (three/four meetings per year).

| — | Assistance to the parent DGs in the launch of the next generation of programmes. |
| --- | --- |

—

Assistance to the parent DGs in the launch of the next generation of programmes.

| — | Providing information on programme implementation to the Commission on request. |
| --- | --- |

—

Providing information on programme implementation to the Commission on request.

| — | Close collaboration with parent DGs in the launch of the new programmes for 2014-20. |
| --- | --- |

—

Close collaboration with parent DGs in the launch of the new programmes for 2014-20.

Policy support

| — | Continuous management of the Eurydice network for policy support in the field of education; it has been also extended to the field of youth. |
| --- | --- |

—

Continuous management of the Eurydice network for policy support in the field of education; it has been also extended to the field of youth.

| — | Several reports produced by the Eurydice unit. |
| --- | --- |

—

Several reports produced by the Eurydice unit.

Audits

During the year 2014 the results of 115 audits were implemented.

Contracts and projects:

6  664 contracts were signed, 4  972 projects were closed.

Mandate

| — | The mandate of the Agency was extended in 2014 to enable it to manage new programmes. A new extension was adopted by the Commission to enable the Agency to manage Heading 4 funds. |
| --- | --- |

—

The mandate of the Agency was extended in 2014 to enable it to manage new programmes. A new extension was adopted by the Commission to enable the Agency to manage Heading 4 funds.

---

(1)  To which should be added 11 million euro covering commitments made on C4 (carried over internal assigned revenue) and P0/R0 (carried over other external assigned revenue) credits.

(2)  Electronic platform for the dissemination and exploitation of results of projects supported by programmes managed by the European Commission in the fields of education, training, culture, youth and citizenship.

Source: Annex supplied by the Agency.

---

THE AGENCY’S REPLY

| 11. | The Agency takes note of the Court’s comments. The Agency will continue the efforts put in place to control and further reduce the rate of carry-over. |
| --- | --- |

11.

The Agency takes note of the Court’s comments. The Agency will continue the efforts put in place to control and further reduce the rate of carry-over.

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| 9.12.2015 | EN | Official Journal of the European Union | C 409/81 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/81

---

REPORT

on the annual accounts of the European Aviation Safety Agency for the financial year 2014, together with the Agency’s reply

(2015/C 409/10)

INTRODUCTION

| 1. | The European Aviation Safety Agency (hereinafter ‘the Agency’, aka ‘EASA’), which is located in Cologne, was established by Regulation (EC) No 1592/2002 of the European Parliament and of the Council (1) as last amended by Regulation (EC) No 1108/2009. The Agency has been given specific regulatory and executive tasks in the field of aviation safety (2). |
| --- | --- |

1.

The European Aviation Safety Agency (hereinafter ‘the Agency’, aka ‘EASA’), which is located in Cologne, was established by Regulation (EC) No 1592/2002 of the European Parliament and of the Council (1) as last amended by Regulation (EC) No 1108/2009. The Agency has been given specific regulatory and executive tasks in the field of aviation safety (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | The overall level of appropriations committed was high at 97,1 %. Although the Agency reduced further the overall level of carry-overs of committed appropriations from 7,2 million euro (7,7 %) in 2013 to 5,9 million euro (6,2 %) in 2014, carry-overs of committed appropriations were high at 3,6 million euro (22,0 %) for title II (administrative expenditure) and at 2,0 million euro (38,1 %) for title III (operational expenditure). Although this is partly justified by the multiannual nature of the Agency’s operations and the carry-overs included in the Court’s sample were duly justified, such a high level is at odds with the budgetary principle of annuality. |
| --- | --- |

11.

The overall level of appropriations committed was high at 97,1 %. Although the Agency reduced further the overall level of carry-overs of committed appropriations from 7,2 million euro (7,7 %) in 2013 to 5,9 million euro (6,2 %) in 2014, carry-overs of committed appropriations were high at 3,6 million euro (22,0 %) for title II (administrative expenditure) and at 2,0 million euro (38,1 %) for title III (operational expenditure). Although this is partly justified by the multiannual nature of the Agency’s operations and the carry-overs included in the Court’s sample were duly justified, such a high level is at odds with the budgetary principle of annuality.

OTHER COMMENTS

| 12. | There is room to improve the Agency’s procurement planning, particularly in respect of framework contracts. In 2014, three procedures were launched too late to replace existing framework contracts by the time they expired. To ensure business continuity, two existing framework contracts were extended until the new ones were in place and in another case a negotiated procurement procedure was launched to bridge the gap. The change of the initial contract duration affects fair competition and the use of a negotiated procedure was not in compliance with the Financial Regulation. |
| --- | --- |

12.

There is room to improve the Agency’s procurement planning, particularly in respect of framework contracts. In 2014, three procedures were launched too late to replace existing framework contracts by the time they expired. To ensure business continuity, two existing framework contracts were extended until the new ones were in place and in another case a negotiated procurement procedure was launched to bridge the gap. The change of the initial contract duration affects fair competition and the use of a negotiated procedure was not in compliance with the Financial Regulation.

FOLLOW-UP OF PREVIOUS YEAR’S COMMENTS

| 13. | An overview of the corrective actions taken in response to the Court's comments from the previous year is provided in Annex I. |
| --- | --- |

13.

An overview of the corrective actions taken in response to the Court's comments from the previous year is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 15 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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(1)  OJ L 240, 7.9.2002, p. 1.

1

(2)  Annex II summarises the Agency’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

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ANNEX I

Follow-up of previous year’s comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2013 | In 2012 EASA selected 14 National Aviation Authorities (NAAs) and 10 ‘Qualified Entities’ (QEs) through procurement procedures to outsource part of its certification activities (1). Expenditure for such outsourced certification activities amounted to some 22 million euro in 2013. The process of allocating specific certification tasks to NAAs and QEs and the criteria to be used are described in specific guidelines established by the Agency (2). However, the transparency of outsourcing could be improved through better documentation of the allocation processes, including the assessments made on the basis of the criteria set in the guidelines. This is also the case for the allocation of the many other low-value contracts to bidders. | Ongoing |
| 2013 | The overall level of appropriations committed was high at 98 %. Although the Agency reduced further the overall level of carry-overs of committed appropriations from 10,1 million euro (11 %) in 2012 to 7,2 million euro (8 %) in 2013, carry-overs of committed appropriations for title III were high at 3,4 million euro (42 %). Although this is partly justified by the multiannual nature of the Agency’s operations and the carry-overs included in the Court’s sample were duly justified, such a high level is at odds with the budgetary principle of annuality. | N/A |
| 2013 | The Agency became operational in 2004 and has, to date, worked on the basis of correspondence and exchanges with the host Member State. However, a comprehensive headquarters agreement between the Agency and the Member State has not been signed. Such an agreement would promote transparency in respect of the conditions under which the Agency and its staff operate. | Ongoing |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2013

In 2012 EASA selected 14 National Aviation Authorities (NAAs) and 10 ‘Qualified Entities’ (QEs) through procurement procedures to outsource part of its certification activities (1). Expenditure for such outsourced certification activities amounted to some 22 million euro in 2013. The process of allocating specific certification tasks to NAAs and QEs and the criteria to be used are described in specific guidelines established by the Agency (2). However, the transparency of outsourcing could be improved through better documentation of the allocation processes, including the assessments made on the basis of the criteria set in the guidelines. This is also the case for the allocation of the many other low-value contracts to bidders.

Ongoing

2013

The overall level of appropriations committed was high at 98 %. Although the Agency reduced further the overall level of carry-overs of committed appropriations from 10,1 million euro (11 %) in 2012 to 7,2 million euro (8 %) in 2013, carry-overs of committed appropriations for title III were high at 3,4 million euro (42 %). Although this is partly justified by the multiannual nature of the Agency’s operations and the carry-overs included in the Court’s sample were duly justified, such a high level is at odds with the budgetary principle of annuality.

N/A

2013

The Agency became operational in 2004 and has, to date, worked on the basis of correspondence and exchanges with the host Member State. However, a comprehensive headquarters agreement between the Agency and the Member State has not been signed. Such an agreement would promote transparency in respect of the conditions under which the Agency and its staff operate.

Ongoing

---

(1)  At the end of May 2014, 3 contracts with QEs had been terminated and consequently there were 14 active contracts with NAAs and 7 with QEs.

(2)  ‘Guidelines for the allocation of certification tasks to National Aviation Authorities and Qualified Entities’, EASA Management Board Decision 01-2011.

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ANNEX II

European Aviation Safety Agency (Cologne)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Article 100 of the Treaty on the Functioning of the European Union) | The European Parliament and the Council may, acting in accordance with the ordinary legislative procedure, may lay down appropriate provisions for sea and air transport. They shall act after consulting the Economic and Social Committee and the Committee of the Regions. |
| --- | --- |
| Competences of the Agency


  (The Agency's powers as defined in Regulation (EC) No 216/2008 of the European Parliament and of the Council (the ‘Basic Regulation’)) | Main Objective







  — | To maintain a high uniform level of civil aviation safety in Europe and to ensure the proper functioning and development of civil aviation safety. |

Areas of Union competence deriving from the Treaty

(Article 100 of the Treaty on the Functioning of the European Union)

The European Parliament and the Council may, acting in accordance with the ordinary legislative procedure, may lay down appropriate provisions for sea and air transport. They shall act after consulting the Economic and Social Committee and the Committee of the Regions.

Competences of the Agency

(The Agency's powers as defined in Regulation (EC) No 216/2008 of the European Parliament and of the Council (the ‘Basic Regulation’))

Main Objective

—

To maintain a high uniform level of civil aviation safety in Europe and to ensure the proper functioning and development of civil aviation safety.

Functions and tasks

In accordance with Articles 17 and 18 of the Basic Regulation, the Agency has been established, among other things:

| — | to issue opinions and recommendations to the European Commission, |
| --- | --- |

—

to issue opinions and recommendations to the European Commission,

| — | to issue certification specifications, including airworthiness codes and acceptable means of compliance, and any guidance material for the application of the Basic Regulation and its implementing rules, |
| --- | --- |

—

to issue certification specifications, including airworthiness codes and acceptable means of compliance, and any guidance material for the application of the Basic Regulation and its implementing rules,

| — | to take the appropriate decisions regarding airworthiness and environmental certification, pilot certification, air operation certification, third country operators, inspections of Member States and investigation of undertakings for the application of the Basic Regulation and its implementing rules, |
| --- | --- |

—

to take the appropriate decisions regarding airworthiness and environmental certification, pilot certification, air operation certification, third country operators, inspections of Member States and investigation of undertakings for the application of the Basic Regulation and its implementing rules,

| — | to conduct standardisation inspections of the competent authorities of the EU Member States, associated States (Swiss, Norway, Iceland, Liechtenstein) and other States which have working arrangements with EASA. |
| --- | --- |

—

to conduct standardisation inspections of the competent authorities of the EU Member States, associated States (Swiss, Norway, Iceland, Liechtenstein) and other States which have working arrangements with EASA.

Governance

Management Board

According to Article 34(1) of the Basic Regulation, the management Board is composed of one representative of each Member State and one representative of the Commission.

Tasks

The powers and tasks of the Management Board are described in Article 33(2) of the Basic Regulation and are, among others:

| — | appointment of the Executive Director and the Directors on a proposal from the Executive Director, |
| --- | --- |

—

appointment of the Executive Director and the Directors on a proposal from the Executive Director,

| — | adoption of the annual general report on the Agency's activities, |
| --- | --- |

—

adoption of the annual general report on the Agency's activities,

| — | adoption of the Agency's work programme for the coming year, |
| --- | --- |

—

adoption of the Agency's work programme for the coming year,

| — | appointment of the members of the Board of Appeal pursuant to Article 41 of the Basic Regulation, |
| --- | --- |

—

appointment of the members of the Board of Appeal pursuant to Article 41 of the Basic Regulation,

| — | establishment of its Rules of Procedure, |
| --- | --- |

—

establishment of its Rules of Procedure,

| — | establishment, if it so wishes, of working bodies to assist in carrying out its functions, including the preparation of its decisions and monitoring the implementation thereof. |
| --- | --- |

—

establishment, if it so wishes, of working bodies to assist in carrying out its functions, including the preparation of its decisions and monitoring the implementation thereof.

Executive Director

Manages the Agency and is appointed by the Management Board on a proposal from the European Commission.

The Executive Director is completely independent in the performance of his/her duties.

Functions and powers of the Executive Director are described in Article 38 of the Basic Regulation.

The Board of Appeal

Decides on appeals against the Agency's decisions in accordance with Article 44 of the Basic Regulation in certain respects such as certification, fees & charges and investigation of undertakings.

External audit

European Court of Auditors.

Discharge authority

European Parliament, acting on a recommendation by the Council.

Resources made available to the Agency in 2014 (2013)

Final Budget

Total budget: 162,3(151,2) million euro, including:

| — | own revenue: 88,3(83,8) million euro (54,4 %) |
| --- | --- |

—

own revenue: 88,3(83,8) million euro (54,4 %)

| — | union subsidy: 34,2(34,9) million euro (21,1 %) |
| --- | --- |

—

union subsidy: 34,2(34,9) million euro (21,1 %)

| — | contribution from non-EU countries: 2,0(1,7) million euro (1,2 %) |
| --- | --- |

—

contribution from non-EU countries: 2,0(1,7) million euro (1,2 %)

| — | assigned revenue from fees and charges: 27,8(24,2) million euro (17,1 %) |
| --- | --- |

—

assigned revenue from fees and charges: 27,8(24,2) million euro (17,1 %)

| — | other revenue: 1,0(0,9) million euro (0,6 %) |
| --- | --- |

—

other revenue: 1,0(0,9) million euro (0,6 %)

| — | other subsidies: 9,0(5,7) million euro (5,6 %) |
| --- | --- |

—

other subsidies: 9,0(5,7) million euro (5,6 %)

Staff as at 31 December 2014

685 (692) temporary staff in the establishment plan

Posts occupied: 650 (647)

Posts occupied by other staff: 96 (100) in total, of which contract staff: 81 (85); seconded national experts: 15 (15); special advisors: 0 (0).

Total temporary staff: 651 (1)
  (648)

Temporary staff subsidy-financed: 213 (2)
  (219)

Temporary staff fee-financed: 438 (2)
  (429)

Products and services in 2014 (2013)

Opinions

5 Opinions.

Rulemaking Decisions

30 Decisions related to: Certification specifications (9); Acceptable Means of Compliance and Guidance Material (21).

Additional deliverables in 2014 (which will lead to Rules in the forthcoming years)

24 Terms of Reference (ToRs), 29 Notices of Proposed Amendment (NPAs), 18 Comment Response Document (CRDs).

International Cooperation

10 Working Arrangements.

2 modifications of Appendices to a Working Arrangement.

21 recommendations provided on International Civil Aviation Organization (ICAO) State Letters.

BASA (Bilateral Aviation Safety Agreement)

Support for the development of the relevant instruments required for the practical implementation of the BASA between the EU and Brazil.

Support for the implementation of the EU-US Bilateral Aviation Safety Agreement (BASA), including for the preparation of the board meetings, support for the preparation of sub-committee meetings, and the annual Flight Standards meeting with the Federal Aviation Administration (FAA).

Support for the implementation of the EU-Canada Bilateral Aviation Safety Agreement (BASA), including for the preparation of the board meetings and support for the preparation of sub-committee meetings.

Support for the European Commission for the development of new Annexes to the EU-US BASA (Flight Crew Licensing, Flight Simulation Training Devices, Pilot Training Organisations).

Support for the development of the relevant instruments required for the practical implementation of the BASA between the EU and USA.

Certification decisions at 31 December 2014

Type Certificates/Restricted Type Certificates (TCs/RTCs): 12 (3)

Supplemental Type Certificates (STCs): 515

Airworthiness Directives (ADs): 368

Alternative Method of Compliance (AMOC): 60

European Technical Standard Order Authorisation (ETSOA): 227

Major changes/Major repairs/TC New Derivatives: 1  184

Minor changes/Minor repairs: 665

Aircraft Flight Manual (AFM): 219

Approval of flight conditions (PTF): 399

Flight Simulation Training Devices (FSTD): 394

Design Organisation Approval (DOA): 311

Alternative Procedures to DOA (AP-DOA): 274

Approval of Maintenance organisations (bilateral) (4): 1  609

Approval of Maintenance organisations (foreign) (4): 339

Approval of Maintenance training organisations (4): 55

Approval of Manufacturing (4): 29

Approval of Flight Crew Licencing Organisations (5): 12

Approval of ATM/ANS Organisations (4): 4

Standardisation inspections (number of inspections by type) at 31 December 2014

In the field of Airworthiness (AIR): 22

In the field of Operations (OPS): 18

In the field of flight crew licensing (FCL): 13

In the field of medical flight crew licensing (MED): 12

In the field of flight simulation training devices (FSTD): 10

In the field of Air Traffic Management/Air Navigation Services (ANS): 18

In the field of Safety Assessment of Foreign Aircraft (SAFA): 14

---

(1)  Two structural part-time pilots occupy one post.

(2)  The split between fee-financed and subsidy-financed posts has changed due to revision of the cost-accounting allocation keys in 2014.

(3)  Only those TCs/RTCs are counted which were issued for a new type design. TCs issued as a result of grandfathering, transfer or administrative re-issuance are excluded.

(4)  The organisation approval activity is subdivided into a main surveillance activity of already approved organisations (with a renewal every 2/3 years) and an activity linked to new approvals. The data supplied concern the total number of approvals on 31 December 2014.

(5)  The organisation approval activity is subdivided into a main surveillance activity of already approved organisations (with a renewal every years) and an activity linked to new approvals. The data supplied concern the total number of approvals on 31 December 2014

Source: Annex supplied by the Agency.

---

THE AGENCY’S REPLY

| 11. | As mentioned by the Court, the Agency has continued to reduce the overall level of carry-overs. The 2014 exercise has been affected by exceptional events linked to the Agency’s move to a new headquarter building (MOVE project). The Agency remains committed to reducing the level of carry-overs still further. |
| --- | --- |

11.

As mentioned by the Court, the Agency has continued to reduce the overall level of carry-overs. The 2014 exercise has been affected by exceptional events linked to the Agency’s move to a new headquarter building (MOVE project). The Agency remains committed to reducing the level of carry-overs still further.

| 12. | The Agency would like to thank the Court for the detailed review and acknowledges that enhancement in EASA’s procurement planning can be achieved. The organisational evolutions adopted in 2014 aim, among others, to deliver a better organisational oversight on procurement. |
| --- | --- |

12.

The Agency would like to thank the Court for the detailed review and acknowledges that enhancement in EASA’s procurement planning can be achieved. The organisational evolutions adopted in 2014 aim, among others, to deliver a better organisational oversight on procurement.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/90 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/90

---

REPORT

on the annual accounts of the Executive Agency for Small and Medium-sized Enterprises for the financial year 2014, together with the Agency’s reply

(2015/C 409/11)

INTRODUCTION

| 1. | The Executive Agency for Small and Medium-sized Enterprises (hereinafter ‘the Agency’, aka ‘EASME’), which is located in Brussels, replaced and succeeded the Executive Agency for Competitiveness and Innovation (EACI) and was established for the period 1 January 2014 to 31 December 2024 by Commission Implementing Decision 2013/771/EU (1), repealing Commission Decision 2007/372/EC (2). Its considerably extended mandate is to manage, in close cooperation with seven Directorates-General of the Commission, EU actions in the fields of research and innovation, competitiveness of SMEs, environment and climate action, maritime and fisheries, and also, as in the past, parts of the competitiveness and innovation programme 2007-2013. |
| --- | --- |

1.

The Executive Agency for Small and Medium-sized Enterprises (hereinafter ‘the Agency’, aka ‘EASME’), which is located in Brussels, replaced and succeeded the Executive Agency for Competitiveness and Innovation (EACI) and was established for the period 1 January 2014 to 31 December 2024 by Commission Implementing Decision 2013/771/EU (1), repealing Commission Decision 2007/372/EC (2). Its considerably extended mandate is to manage, in close cooperation with seven Directorates-General of the Commission, EU actions in the fields of research and innovation, competitiveness of SMEs, environment and climate action, maritime and fisheries, and also, as in the past, parts of the competitiveness and innovation programme 2007-2013.

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Agency's annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Agency's annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts.

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | The extent to which budget appropriations carried over from 2013 were cancelled in 2014 (2 60  209 euro, i.e. 20 % of carry-overs (19 % in 2013)) demonstrates an overestimation of budgetary needs at the end of 2013, as was the case in the previous year. |
| --- | --- |

11.

The extent to which budget appropriations carried over from 2013 were cancelled in 2014 (2 60  209 euro, i.e. 20 % of carry-overs (19 % in 2013)) demonstrates an overestimation of budgetary needs at the end of 2013, as was the case in the previous year.

| 12. | Although the Agency’s initial budget was amended and reduced in September 2014 by 3 million euro, only 91 % of the reduced budget appropriations were committed by the Agency. This low implementation rate is mainly explained by organisational and operational challenges linked to the extended mandate of the Agency for the implementation of additional programmes and tasks in close cooperation with the Commission. Nonetheless, the significant under-consumption of the budget shows the need to improve the Agency’s budget planning. |
| --- | --- |

12.

Although the Agency’s initial budget was amended and reduced in September 2014 by 3 million euro, only 91 % of the reduced budget appropriations were committed by the Agency. This low implementation rate is mainly explained by organisational and operational challenges linked to the extended mandate of the Agency for the implementation of additional programmes and tasks in close cooperation with the Commission. Nonetheless, the significant under-consumption of the budget shows the need to improve the Agency’s budget planning.

| 13. | This is also reflected in the high and increased level of committed appropriations carried over to 2015, amounting to 3,8 million euro, i.e. 17 % (2013: 1,3 million euro, i.e. 8 %), mainly related to Title III (programme support expenditure) with 2,6 million euro, i.e. 72 % (2013: 0,6 million euro, i.e. 35 %) which is at odds with the budgetary principle of annuality. |
| --- | --- |

13.

This is also reflected in the high and increased level of committed appropriations carried over to 2015, amounting to 3,8 million euro, i.e. 17 % (2013: 1,3 million euro, i.e. 8 %), mainly related to Title III (programme support expenditure) with 2,6 million euro, i.e. 72 % (2013: 0,6 million euro, i.e. 35 %) which is at odds with the budgetary principle of annuality.

FOLLOW-UP OF PREVIOUS YEAR’S COMMENTS

| 14. | An overview of the corrective actions taken in response to the Court's comments from the previous year is provided in Annex I. |
| --- | --- |

14.

An overview of the corrective actions taken in response to the Court's comments from the previous year is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 341, 18.12.2013, p. 73.

1

(2)  OJ L 140, 1.6.2007, p. 52.

2

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 62 and 68 in conjunction with Articles 53 and 58 of Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 162 of Regulation (EU, Euratom) No 966/2012.

7

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ANNEX I

Follow-up of previous year’s comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2013 | Although budget implementation rates for 2013 were satisfactory, the extent to which appropriations carried over from 2012 were cancelled in 2013 (2 15  000 euro, or 19 % of carry-overs) indicates weaknesses in the Agency’s budget planning and is at odds with the budgetary principle of annuality. These cancellations are mainly related to provisional commitments made for routine administrative expenditure. | Outstanding |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2013

Although budget implementation rates for 2013 were satisfactory, the extent to which appropriations carried over from 2012 were cancelled in 2013 (2 15  000 euro, or 19 % of carry-overs) indicates weaknesses in the Agency’s budget planning and is at odds with the budgetary principle of annuality. These cancellations are mainly related to provisional commitments made for routine administrative expenditure.

Outstanding

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ANNEX II

Executive Agency for Small and Medium-sized Enterprises (Brussels)

Competences and activities

| Areas of Union competence deriving from the Treaty on the Functioning of the European Union (TFEU) | 1. | The Union policy on the environment shall contribute to preserving, protecting and improving the quality of the environment; protecting human health; prudent and rational utilisation of natural resources; promoting measures at international level to deal with regional or worldwide environmental problems, and in particular combating climate change.

  (Article 191 TFEU) |
| --- | --- | --- |

Areas of Union competence deriving from the Treaty on the Functioning of the European Union (TFEU)

1.

The Union policy on the environment shall contribute to preserving, protecting and improving the quality of the environment; protecting human health; prudent and rational utilisation of natural resources; promoting measures at international level to deal with regional or worldwide environmental problems, and in particular combating climate change.

(Article 191 TFEU)

| 2. | The Union policy on industry shall ensure that the conditions necessary for the competitiveness of the Union’s industry exist by speeding up the adjustment of industry to structural changes, encouraging an environment favourable to initiative and to the development of and cooperation between undertakings, fostering better exploitation of the industrial potential of policies of innovation, research and technological development. The Member States shall consult each other in liaison with the Commission and, where necessary, shall coordinate their action. The Commission may take any useful initiative to promote such coordination, in particular initiatives aiming at the establishment of guidelines and indicators, the organisation of exchange of best practice, and the preparation of the necessary elements for periodic monitoring and evaluation. The European Parliament shall be kept fully informed.

  (Article 173 TFEU) |
| --- | --- |

2.

The Union policy on industry shall ensure that the conditions necessary for the competitiveness of the Union’s industry exist by speeding up the adjustment of industry to structural changes, encouraging an environment favourable to initiative and to the development of and cooperation between undertakings, fostering better exploitation of the industrial potential of policies of innovation, research and technological development. The Member States shall consult each other in liaison with the Commission and, where necessary, shall coordinate their action. The Commission may take any useful initiative to promote such coordination, in particular initiatives aiming at the establishment of guidelines and indicators, the organisation of exchange of best practice, and the preparation of the necessary elements for periodic monitoring and evaluation. The European Parliament shall be kept fully informed.

(Article 173 TFEU)

| 3. | Union policy on energy shall aim to ensure the functioning of the energy market; ensure security of energy supply in the Union; promote energy efficiency and energy saving and the development of new and renewable forms of energy; promote the interconnection of energy networks.

  (Article 194(1) TFEU) |
| --- | --- |

3.

Union policy on energy shall aim to ensure the functioning of the energy market; ensure security of energy supply in the Union; promote energy efficiency and energy saving and the development of new and renewable forms of energy; promote the interconnection of energy networks.

(Article 194(1) TFEU)

| 4. | The Union shall have the objective of strengthening its scientific and technological bases by achieving a European research area in which researchers, scientific knowledge and technology circulate freely, and encouraging it to become more competitive, including in its industry. [...] For this purpose the Union shall [...] encourage undertakings, including small and medium-sized undertakings, research centres and universities in their research and technological development activities of high quality; it shall support their efforts to cooperate with one another, aiming, notably, at permitting researchers to cooperate freely across borders and at enabling undertakings to exploit the internal market potential to the full, in particular through [...] the definition of common standards and the removal of legal and fiscal obstacles to that cooperation. [...]
  In pursuing these objectives, the Union shall carry out the following activities, complementing the activities carried out in the Member States: (a) implementation of research, technological development and demonstration programmes, by promoting cooperation with and between undertakings, research centres and universities; (b) promotion of cooperation in the field of Union research, technological development and demonstration with third countries and international organisations; (c) dissemination and optimisation of the results of activities in Union research, technological development and demonstration; (d) stimulation of the training and mobility of researchers in the Union.

  (Article 179 and 180 TFEU) |
| --- | --- |

4.

The Union shall have the objective of strengthening its scientific and technological bases by achieving a European research area in which researchers, scientific knowledge and technology circulate freely, and encouraging it to become more competitive, including in its industry. [...] For this purpose the Union shall [...] encourage undertakings, including small and medium-sized undertakings, research centres and universities in their research and technological development activities of high quality; it shall support their efforts to cooperate with one another, aiming, notably, at permitting researchers to cooperate freely across borders and at enabling undertakings to exploit the internal market potential to the full, in particular through [...] the definition of common standards and the removal of legal and fiscal obstacles to that cooperation. [...]

In pursuing these objectives, the Union shall carry out the following activities, complementing the activities carried out in the Member States: (a) implementation of research, technological development and demonstration programmes, by promoting cooperation with and between undertakings, research centres and universities; (b) promotion of cooperation in the field of Union research, technological development and demonstration with third countries and international organisations; (c) dissemination and optimisation of the results of activities in Union research, technological development and demonstration; (d) stimulation of the training and mobility of researchers in the Union.

(Article 179 and 180 TFEU)

| 5. | The European Parliament and the Council, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, shall establish [...] the other provisions necessary for the pursuit of the objectives of the [...] the common fisheries policy.

  (Article 43(2) TFEU). |
| --- | --- |

5.

The European Parliament and the Council, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, shall establish [...] the other provisions necessary for the pursuit of the objectives of the [...] the common fisheries policy.

(Article 43(2) TFEU).

Competences of the Agency

(as defined in Commission Implementing Decision (2013/771/EU)

Objectives

The Agency is responsible for the management of Union actions in the fields of SME support, energy, environment, maritime and fisheries, entrepreneurship and innovation (including eco-innovation). It is entrusted with the implementation of parts of the following Union programmes:

| (a) | programme for the competitiveness of enterprises and small and medium-sized enterprises (COSME) 2014-2020; |
| --- | --- |

(a)

programme for the competitiveness of enterprises and small and medium-sized enterprises (COSME) 2014-2020;

| (b) | programme for the environment and climate action (LIFE) 2014-2020; |
| --- | --- |

(b)

programme for the environment and climate action (LIFE) 2014-2020;

| (c) | European Maritime and Fisheries Fund (EMFF) including the integrated maritime policy (IMP), control and scientific advice and knowledge; |
| --- | --- |

(c)

European Maritime and Fisheries Fund (EMFF) including the integrated maritime policy (IMP), control and scientific advice and knowledge;

| (d) | The framework programme for research and innovation 2014-2020 (Horizon 2020) — parts of ‘Part II — Industrial Leadership’ and ‘Part III Societal challenges’. |
| --- | --- |

(d)

The framework programme for research and innovation 2014-2020 (Horizon 2020) — parts of ‘Part II — Industrial Leadership’ and ‘Part III Societal challenges’.

In addition, the Agency is entrusted with the implementation of the legacy of the following actions under the CIP: (a) the ‘Intelligent energy Europe’ (IEE II); (b) the ‘Eco-innovation initiative’; (c) the ‘Enterprise Europe network’; (d) the ‘Your Europe business portal’; (e) the ‘European IPR helpdesk’; (f) the ‘IPorta project’.

The Agency strives to provide ‘high-quality support to our beneficiaries, turning EU policy into action. As an executive agency of the European Commission, we manage significant parts of COSME, LIFE, Horizon 2020 and EMFF. We ensure that actions funded by these programmes deliver results and provide the Commission with valuable input for its policy tasks’.

Tasks

The Agency shall be responsible for the following tasks related to the implementation of the parts of the Union programmes referred to above:

| (a) | managing some or all stages of programme implementation and some or all phases in the lifetime of specific projects on the basis of the relevant work programmes adopted by the Commission, where the Commission has empowered it to do so in the instrument of delegation; |
| --- | --- |

(a)

managing some or all stages of programme implementation and some or all phases in the lifetime of specific projects on the basis of the relevant work programmes adopted by the Commission, where the Commission has empowered it to do so in the instrument of delegation;

| (b) | adopting the instruments of budget execution for revenue and expenditure and carrying out all the operations necessary for the management of the programme, where the Commission has empowered it to do so in the instrument of delegation; |
| --- | --- |

(b)

adopting the instruments of budget execution for revenue and expenditure and carrying out all the operations necessary for the management of the programme, where the Commission has empowered it to do so in the instrument of delegation;

| (c) | providing support in programme implementation where the Commission has empowered it to do so in the instrument of delegation. |
| --- | --- |

(c)

providing support in programme implementation where the Commission has empowered it to do so in the instrument of delegation.

Governance

Steering Committee

Comprises five members and three observers appointed by the European Commission. It adopts the Agency’s annual work programme after approval by the European Commission. In addition, it adopts the administrative budget of the Agency and its annual activity report.

Director

Appointed by the European Commission.

External audit

European Court of Auditors.

Discharge authority

European Parliament, acting on a recommendation by the Council.

Resources made available to the Agency in 2014 (2013)

Budget

Operational budget

The 1  056,5 (1)
  (242,9) million euro planned (of which 100 % came from the general budget of the EU) were committed and 123,11 (2) (213,9) million euro was paid of the appropriations (98,98 %) voted by the Budget Authority. The EASME implements the operational budget under the responsibility of the Commission:

| — | for COSME 95,0 million euro, |
| --- | --- |

—

for COSME 95,0 million euro,

| — | for H2020 695,7 million euro, |
| --- | --- |

—

for H2020 695,7 million euro,

| — | for EMFF 34,6 million euro, |
| --- | --- |

—

for EMFF 34,6 million euro,

| — | for LIFE 229,9 million euro, |
| --- | --- |

—

for LIFE 229,9 million euro,

| — | for IEE 1,3(91,9) million euro, |
| --- | --- |

—

for IEE 1,3(91,9) million euro,

| — | for EIP-Eco-innovation 0 (33,1) million euro, |
| --- | --- |

—

for EIP-Eco-innovation 0 (33,1) million euro,

| — | for EIP-Networks 0 (51,2) million euro, |
| --- | --- |

—

for EIP-Networks 0 (51,2) million euro,

| — | for MP 0 (66,8) million euro. |
| --- | --- |

—

for MP 0 (66,8) million euro.

Administrative budget

24,5(16,4) million euro (100 % EU subsidy) for the administrative budget, for which the EASME is independently responsible.

Staff at 31 December 2014

| — | Total staff: 308 posts planned, of which 283 occupied (163 posts planned, 161 occupied), |
| --- | --- |

—

Total staff: 308 posts planned, of which 283 occupied (163 posts planned, 161 occupied),

| — | TA posts: 77 planned, of which 61 occupied (37 planned, 35 occupied), |
| --- | --- |

—

TA posts: 77 planned, of which 61 occupied (37 planned, 35 occupied),

| — | contract staff: 231 posts planned, of which 222 occupied (126 planned, 126 occupied). |
| --- | --- |

—

contract staff: 231 posts planned, of which 222 occupied (126 planned, 126 occupied).

Products and services 2014

The year 2014 was the first year of the new mandate for the Agency which differs considerable from the previous mandates. The new portfolio includes the legacy programmes EIP and IEE and also the new programmes H2020, COSME, LIFE and EMFF. EASME is responsible for the management of Union actions in the fields of SME support, energy, environment, maritime and fisheries, entrepreneurship and innovation (including eco-innovation), under the following Union programmes.

New programmes

| — | competitiveness of enterprises and small and medium-sized enterprises (COSME) |
| --- | --- |

—

competitiveness of enterprises and small and medium-sized enterprises (COSME)

| — | programme for research and innovation (Horizon 2020) in the following fields: energy, environment and resources |
| --- | --- |

—

programme for research and innovation (Horizon 2020) in the following fields: energy, environment and resources

| — | programme for the environment and climate action (LIFE) |
| --- | --- |

—

programme for the environment and climate action (LIFE)

| — | European Maritime and Fisheries Fund (EMFF) |
| --- | --- |

—

European Maritime and Fisheries Fund (EMFF)

Legacy programmes

| — | The following parts of the competitiveness and innovation framework programme: ‘Intelligent energy Europe’ (IEE) and eco-innovation programmes. |
| --- | --- |

—

The following parts of the competitiveness and innovation framework programme: ‘Intelligent energy Europe’ (IEE) and eco-innovation programmes.

COSME — the programme for the competitiveness of enterprises and small and medium-sized enterprises (SMEs) is associated with strengthening the competitiveness and sustainability of the Union’s enterprises and targeted towards encouraging an entrepreneurial culture to promote the creation and growth of SMEs.

Key activities

| — | COSME was one of the new programmes delegated to the EASME in 2014. |
| --- | --- |

—

COSME was one of the new programmes delegated to the EASME in 2014.

| — | Communication and dissemination activities are at the core of the COSME activities. As an example, EASME organised in collaboration with the Turin Chamber of Commerce (partner of the network) an annual conference which attracted more than 700 participants and, as a result of the 2  000 informal and formal business meetings, 192 potential business opportunities were identified. |
| --- | --- |

—

Communication and dissemination activities are at the core of the COSME activities. As an example, EASME organised in collaboration with the Turin Chamber of Commerce (partner of the network) an annual conference which attracted more than 700 participants and, as a result of the 2  000 informal and formal business meetings, 192 potential business opportunities were identified.

Horizon 2020 — the EU’s funding programme for research and innovation aims to stimulate the economy and secure the science and technology base and industrial competitiveness for the future, contributing towards a smarter, more sustainable and more inclusive society. It promises more breakthroughs, discoveries and world-firsts by taking great ideas from the lab to the market.

Innovation in SMEs

Key activities

| — | In 2014 EASME published four calls for proposals under H2020 Innovation ‘Innovation in SMEs’ and two other calls ‘Capitalising the full potential of online collaboration’ and ‘Cluster-facilitated projects for new industrial chains’ with deadlines in March and April in 2015. |
| --- | --- |

—

In 2014 EASME published four calls for proposals under H2020 Innovation ‘Innovation in SMEs’ and two other calls ‘Capitalising the full potential of online collaboration’ and ‘Cluster-facilitated projects for new industrial chains’ with deadlines in March and April in 2015.

SME instrument

Key activities

| — | Launch of the new SME instrument, which is a continuously open call, was a great success as the Agency received more than 8  000 applications for four cut-off dates. The selected business ideas aim to introduce new products, processes and services. |
| --- | --- |

—

Launch of the new SME instrument, which is a continuously open call, was a great success as the Agency received more than 8  000 applications for four cut-off dates. The selected business ideas aim to introduce new products, processes and services.

| — | The programme provides for coaching for the beneficiaries. The coaching mission was defined and the methodology starter kits were produced. The Key Account Managers help SME instrument beneficiaries to define their coaching priorities and propose one or more coaches for them. By the end of the year, 39 SMEs had defined their needs and chosen their coaches and the Agency had contracted 21 coaches. |
| --- | --- |

—

The programme provides for coaching for the beneficiaries. The coaching mission was defined and the methodology starter kits were produced. The Key Account Managers help SME instrument beneficiaries to define their coaching priorities and propose one or more coaches for them. By the end of the year, 39 SMEs had defined their needs and chosen their coaches and the Agency had contracted 21 coaches.

The Agency contributes to the specific objective of ‘Making the transition to a reliable, affordable, publicly accepted, sustainable and competitive energy system, aiming at reducing fossil fuel dependency in the face of increasingly scarce resources, increasing energy needs and climate change’ in Societal Challenge 3 ‘Secure, clean and efficient energy’.

Key activities

| — | Two out of three topics related to the contractual public private partnership (PPP) on energy efficient buildings. The third related to PPP on process industry (SPIRE). The Agency received 63 proposals, of which 19 were recommended for funding. |
| --- | --- |

—

Two out of three topics related to the contractual public private partnership (PPP) on energy efficient buildings. The third related to PPP on process industry (SPIRE). The Agency received 63 proposals, of which 19 were recommended for funding.

| — | 15 topics were opened in the area of research and innovation actions as well as in coordination and support actions. The Agency received 393 proposals, of which 45 were selected. |
| --- | --- |

—

15 topics were opened in the area of research and innovation actions as well as in coordination and support actions. The Agency received 393 proposals, of which 45 were selected.

| — | The results of the first energy efficiency call showed that the support for innovation, from research to retail, in the energy efficiency area is promising. |
| --- | --- |

—

The results of the first energy efficiency call showed that the support for innovation, from research to retail, in the energy efficiency area is promising.

| — | In October, the Agency presented its public private partnership funding topics at an Information Day on PPPs organised by DG RTD. |
| --- | --- |

—

In October, the Agency presented its public private partnership funding topics at an Information Day on PPPs organised by DG RTD.

| — | In December, EASME organised a large Info Day in Brussels to present the 2015 H2020 energy efficiency call, which was attended by more than 550 participants. |
| --- | --- |

—

In December, EASME organised a large Info Day in Brussels to present the 2015 H2020 energy efficiency call, which was attended by more than 550 participants.

| — | The Agency staff also participated in the meetings between the European Commission and the industrial stakeholders regarding the future priorities of the energy efficiency building and SPIRE contractual PPPs. |
| --- | --- |

—

The Agency staff also participated in the meetings between the European Commission and the industrial stakeholders regarding the future priorities of the energy efficiency building and SPIRE contractual PPPs.

The Agency contributes to DG RTD’s and DG GROW’s common specific objectives: to achieve a resource- and water-efficient and climate-change-resilient economy and society, the protection and sustainable management of natural resources and ecosystems, and a sustainable supply and use of raw materials, in order to meet the needs of a growing global population within the sustainable limits of the planet’s natural resources and eco-systems in Societal Challenge 5 ‘Climate action, environment and resource efficiency and raw materials’.

Key activities

| — | In 2014 the Agency was responsible for the implementation of the H2020 calls under Societal Challenge 5 except those that have high policy relevance or which are implemented by other bodies. |
| --- | --- |

—

In 2014 the Agency was responsible for the implementation of the H2020 calls under Societal Challenge 5 except those that have high policy relevance or which are implemented by other bodies.

| — | The Agency managed and participated in several calls, such as the call on energy efficiency, disaster resilience and blue growth. |
| --- | --- |

—

The Agency managed and participated in several calls, such as the call on energy efficiency, disaster resilience and blue growth.

| — | In November the Agency organised an Information Day on 2015 calls for Horizon 2020 climate action, environment, resource efficiency and raw materials. The purpose of this event was to present the 2015 calls to potential applicants and to provide guidance on the preparation and submission of proposals. |
| --- | --- |

—

In November the Agency organised an Information Day on 2015 calls for Horizon 2020 climate action, environment, resource efficiency and raw materials. The purpose of this event was to present the 2015 calls to potential applicants and to provide guidance on the preparation and submission of proposals.

The Agency manages the programme for the Environment and Climate Action (LIFE) which provides support for reaching specific objectives related to environment policy and climate action at Union and international level.

Key activities

| — | The Agency managed the following calls for proposals launched by DG ENV/CLIMA: the call for LIFE NGO operating grants, with a total budget of 9 million euro, for which the Agency received 66 proposals. |
| --- | --- |

—

The Agency managed the following calls for proposals launched by DG ENV/CLIMA: the call for LIFE NGO operating grants, with a total budget of 9 million euro, for which the Agency received 66 proposals.

| — | The call for capacity building projects is an open call that will close in September 2015, for which 15 Member States are eligible. |
| --- | --- |

—

The call for capacity building projects is an open call that will close in September 2015, for which 15 Member States are eligible.

| — | The Agency evaluated more than 250 proposals under different strands, such as climate action (190 applications) and NGO operating grant (66 proposals) |
| --- | --- |

—

The Agency evaluated more than 250 proposals under different strands, such as climate action (190 applications) and NGO operating grant (66 proposals)

| — | The Agency participated actively in the LIFE Info Day for national contact points and organised two Info Days for NGO operating grants. |
| --- | --- |

—

The Agency participated actively in the LIFE Info Day for national contact points and organised two Info Days for NGO operating grants.

The Agency implemented parts of the European Maritime and Fisheries Fund (EMFF), which aimed to contribute to promoting competitive, environmentally sustainable, economically viable and socially responsible fisheries and aquaculture and to enhancing the development and implementation of the EU integrated maritime policy (IMP).

Key activities

| — | The implementation of parts of the European Maritime and Fisheries Fund (EMFF) was delegated to the Agency in October 2014. DG MARE decided to delegate 19 EMFF actions. |
| --- | --- |

—

The implementation of parts of the European Maritime and Fisheries Fund (EMFF) was delegated to the Agency in October 2014. DG MARE decided to delegate 19 EMFF actions.

| — | The first EMFF action was effectively transferred to the Agency in December. In cooperation with DG MARE, the Agency prepared the evaluation of four calls for tender and one call for proposals. |
| --- | --- |

—

The first EMFF action was effectively transferred to the Agency in December. In cooperation with DG MARE, the Agency prepared the evaluation of four calls for tender and one call for proposals.

Intelligent energy Europe (IEE)

Key activities

The ‘Intelligent energy Europe’ programme (IEE) supports the European Union’s energy policy and its ambitious ‘20-20-20’ commitment, i.e. reducing greenhouse gas emissions by 20 %, increasing the share of renewables in energy consumption to 20 %, and reducing energy use by 20 %, all by 2020.

| — | In 2014 the IEE budget implemented by the Agency was fully executed (67 million euro). In addition, the average time required to assess IEE project reports and to pay beneficiaries was less than the contractual obligations. |
| --- | --- |

—

In 2014 the IEE budget implemented by the Agency was fully executed (67 million euro). In addition, the average time required to assess IEE project reports and to pay beneficiaries was less than the contractual obligations.

| — | The ‘Intelligent energy Europe’ programme delivered tangible benefits for the EU’s energy policy. The analysis of the IEE programme’s impact showed that since 2007 the IEE projects had reached out through the media to more than 40 million people across the EU, had delivered an amount of renewable energy which was equivalent to more than the annual electricity consumption of 7 million citizens, had saved an amount of primary energy which was equivalent to the annual electricity use of more than 2 million households, and were expected to trigger more than 3 billion euro of sustainable energy investments. |
| --- | --- |

—

The ‘Intelligent energy Europe’ programme delivered tangible benefits for the EU’s energy policy. The analysis of the IEE programme’s impact showed that since 2007 the IEE projects had reached out through the media to more than 40 million people across the EU, had delivered an amount of renewable energy which was equivalent to more than the annual electricity consumption of 7 million citizens, had saved an amount of primary energy which was equivalent to the annual electricity use of more than 2 million households, and were expected to trigger more than 3 billion euro of sustainable energy investments.

| — | The Agency communicated the programme results at various events. For example in June 2014, the Agency, in collaboration with DG ENER, organised another edition of EUSEW, the EU’s premier event for public authorities, energy agencies, private companies, NGOs and industry associations engaged in helping to meet the EU’s energy and climate goals. The week included an award ceremony, a high-level political conference and 600 events with around 1 00  000 participants across the EU and in many countries worldwide. |
| --- | --- |

—

The Agency communicated the programme results at various events. For example in June 2014, the Agency, in collaboration with DG ENER, organised another edition of EUSEW, the EU’s premier event for public authorities, energy agencies, private companies, NGOs and industry associations engaged in helping to meet the EU’s energy and climate goals. The week included an award ceremony, a high-level political conference and 600 events with around 1 00  000 participants across the EU and in many countries worldwide.

| — | Several events organised under the ManagEnergy initiative took place, in particular during the Open Days. In addition, Agency staff attended more than 100 project meetings. |
| --- | --- |

—

Several events organised under the ManagEnergy initiative took place, in particular during the Open Days. In addition, Agency staff attended more than 100 project meetings.

Eco-innovation

Key activities

One of the key objectives of the entrepreneurship and innovation programme (EIP) is to support eco-innovation. Eco-innovation projects focus on cleaner production, environmental management and new products and services to make sustainable development become a business reality.

In 2014 efforts were concentrated on:

| — | completion of the eco-innovation call of 2013 which resulted in 461 submitted proposals. Following the evaluations, 59 proposals were selected for funding. Based on the available budget, 42 grant agreements were signed, |
| --- | --- |

—

completion of the eco-innovation call of 2013 which resulted in 461 submitted proposals. Following the evaluations, 59 proposals were selected for funding. Based on the available budget, 42 grant agreements were signed,

| — | communication with the parent DGs and other stakeholders was ongoing throughout the year. In addition, some meetings took place where the Agency was actively participating in the presentation of the results of the programme. There was a financial meeting in the United Kingdom with Eco-Innovation partners and the NCP, the FICOB and EcoProFabrics projects were presented during the Green Week, and ‘Eco-innovation in EU funds’ was presented in Spain, |
| --- | --- |

—

communication with the parent DGs and other stakeholders was ongoing throughout the year. In addition, some meetings took place where the Agency was actively participating in the presentation of the results of the programme. There was a financial meeting in the United Kingdom with Eco-Innovation partners and the NCP, the FICOB and EcoProFabrics projects were presented during the Green Week, and ‘Eco-innovation in EU funds’ was presented in Spain,

| — | projects co-financed by the Agency won international recognition and awards. The coordinator of the Phobior project won the Energy Globe Award, the Lasermark and EcoBionet projects were selected as the ‘Best European Environmental project of 2013’ by the Generalitat of Valencia, while the GEnIuS project coordinator (SME ‘Directa Plus’) was selected to be listed in the ‘Italy Cleantech 10’ among the top 10 Italian clean technology SMEs, |
| --- | --- |

—

projects co-financed by the Agency won international recognition and awards. The coordinator of the Phobior project won the Energy Globe Award, the Lasermark and EcoBionet projects were selected as the ‘Best European Environmental project of 2013’ by the Generalitat of Valencia, while the GEnIuS project coordinator (SME ‘Directa Plus’) was selected to be listed in the ‘Italy Cleantech 10’ among the top 10 Italian clean technology SMEs,

| — | all things considered, the legacy of the CIP eco-innovation programme is still running full-speed with great success. Projects from the 2013 call have all been contracted and most of them have started. Assessment of ongoing projects has been performed according to the objectives set and 2014 closed with 100 % budget consumption. |
| --- | --- |

—

all things considered, the legacy of the CIP eco-innovation programme is still running full-speed with great success. Projects from the 2013 call have all been contracted and most of them have started. Assessment of ongoing projects has been performed according to the objectives set and 2014 closed with 100 % budget consumption.

---

(1)  Figure includes all credit lines.

(2)  Idem.

Source: Annex supplied by the Agency.

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THE AGENCY’S REPLY

| 11. | The Agency reviews all the commitments at the end of each year. The year 2014 was an exceptional one as it was the first year of EASME’s new mandate. This transitional year included many changes such as a new operational structure, many organisational changes, new programmes and a significant increase in the number of staff employed by the Agency. A variety of new tasks were delegated to the Agency and this increase in tasks reflected also on the budget. A part of these budget appropriations was cancelled because the payments due were lower than expected. The main reasons were: variable costs in rent and maintenance of the building (due to the increase of office needs to accommodate the newly recruited staff), and unknown cost of additional services provided by OIB and DG HR.
  To rectify the situation, EASME is putting in place more precise budget planning and monitoring. |
| --- | --- |

11.

The Agency reviews all the commitments at the end of each year. The year 2014 was an exceptional one as it was the first year of EASME’s new mandate. This transitional year included many changes such as a new operational structure, many organisational changes, new programmes and a significant increase in the number of staff employed by the Agency. A variety of new tasks were delegated to the Agency and this increase in tasks reflected also on the budget. A part of these budget appropriations was cancelled because the payments due were lower than expected. The main reasons were: variable costs in rent and maintenance of the building (due to the increase of office needs to accommodate the newly recruited staff), and unknown cost of additional services provided by OIB and DG HR.

To rectify the situation, EASME is putting in place more precise budget planning and monitoring.

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| 9.12.2015 | EN | Official Journal of the European Union | C 409/102 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/102

---

REPORT

on the annual accounts of the European Asylum Support Office for the financial year 2014, together with the Office’s reply

(2015/C 409/12)

INTRODUCTION

| 1. | The European Asylum Support Office (hereinafter ‘the Office’, aka ‘EASO’), which is located in Valletta, was established by Regulation (EU) No 439/2010 of the European Parliament and of the Council (1). The Office’s task is to support the development of the Common European Asylum System. It was established with the aim of enhancing practical cooperation on asylum matters and helping Member States fulfil their European and international obligations to give protection to people in need. EASO acts as a centre of expertise on asylum. It also provides support to Member States whose asylum and reception systems are under particular pressure. |
| --- | --- |

1.

The European Asylum Support Office (hereinafter ‘the Office’, aka ‘EASO’), which is located in Valletta, was established by Regulation (EU) No 439/2010 of the European Parliament and of the Council (1). The Office’s task is to support the development of the Common European Asylum System. It was established with the aim of enhancing practical cooperation on asylum matters and helping Member States fulfil their European and international obligations to give protection to people in need. EASO acts as a centre of expertise on asylum. It also provides support to Member States whose asylum and reception systems are under particular pressure.

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Office’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Office’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Office, which comprise the financial statements (2) and the reports on the implementation of the budget (3) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Office, which comprise the financial statements (2) and the reports on the implementation of the budget (3) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Office and the legality and regularity of the underlying transactions (4):






  (a) | The management’s responsibilities in respect of the Office’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (5); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Office after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Office in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Office and the legality and regularity of the underlying transactions (4):

(a)

The management’s responsibilities in respect of the Office’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (5); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Office after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Office in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (6) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Office are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (6) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Office are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court is supposed to consider the audit work of the independent external auditor performed on the Office’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (7). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court is supposed to consider the audit work of the independent external auditor performed on the Office’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (7).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the annual accounts of the Office present fairly, in all material respects, the financial position of the Office as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the annual accounts of the Office present fairly, in all material respects, the financial position of the Office as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts of the Office for the period from 1 January to 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts of the Office for the period from 1 January to 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON THE LEGALITY AND REGULARITY OF TRANSACTIONS

| 11. | The Office, in its budget management system (ABAC) for the year 2014, carried over budgetary commitments amounting to some 1,3 million euro which were not covered by legal commitments. This is in contradiction to the Financial Regulation. Following the Court’s audit, the Office decided to correct the irregular carry-overs and this is reflected in its final accounts for the year 2014. However, since the 2014 financial period was already closed, correction in the system was no longer possible and needs to be done in the 2015 financial period. |
| --- | --- |

11.

The Office, in its budget management system (ABAC) for the year 2014, carried over budgetary commitments amounting to some 1,3 million euro which were not covered by legal commitments. This is in contradiction to the Financial Regulation. Following the Court’s audit, the Office decided to correct the irregular carry-overs and this is reflected in its final accounts for the year 2014. However, since the 2014 financial period was already closed, correction in the system was no longer possible and needs to be done in the 2015 financial period.

COMMENTS ON INTERNAL CONTROLS

| 12. | The Office made 1  062 (28,6 %) payments after the time limits set in the Financial Regulation. The average delay for late payments was 24 days. |
| --- | --- |

12.

The Office made 1  062 (28,6 %) payments after the time limits set in the Financial Regulation. The average delay for late payments was 24 days.

COMMENTS ON BUDGETARY MANAGEMENT

| 13. | Of the 6 89  875 euro of non-differentiated committed appropriations carried over from 2013, 1 46  417 euro (21,2 %) were cancelled in 2014 (2013: 16,5 %). This indicates weaknesses in the Agency’s budget planning and is at odds with the budgetary principle of annuality. Cancellations are mainly related to interim services and staff training courses as well as to administrative support services and translation costs. |
| --- | --- |

13.

Of the 6 89  875 euro of non-differentiated committed appropriations carried over from 2013, 1 46  417 euro (21,2 %) were cancelled in 2014 (2013: 16,5 %). This indicates weaknesses in the Agency’s budget planning and is at odds with the budgetary principle of annuality. Cancellations are mainly related to interim services and staff training courses as well as to administrative support services and translation costs.

| 14. | The Office implemented commitment appropriations of only 12,4 million euro, i.e. 84,7 % of the approved budget (2013: 10,5 million euro, i.e. 87,3 %). The level of committed appropriations for Title II (administrative expenditure) carried over to 2015 was high at some 6 08  848 euro, i.e. 27,9 % (2013: 5 40  269 euro, i.e. 30,7 %) and mainly related to advisory and IT consultancy services delivered in 2014 but not yet invoiced or still to be delivered in 2015. |
| --- | --- |

14.

The Office implemented commitment appropriations of only 12,4 million euro, i.e. 84,7 % of the approved budget (2013: 10,5 million euro, i.e. 87,3 %). The level of committed appropriations for Title II (administrative expenditure) carried over to 2015 was high at some 6 08  848 euro, i.e. 27,9 % (2013: 5 40  269 euro, i.e. 30,7 %) and mainly related to advisory and IT consultancy services delivered in 2014 but not yet invoiced or still to be delivered in 2015.

OTHER COMMENTS

| 15. | The Office has a high staff turnover: 14 staff left the Office in 2014, including four in key positions. This high turnover of staff causes a considerable risk to the achievement of the objectives set in the annual and multiannual work programmes. |
| --- | --- |

15.

The Office has a high staff turnover: 14 staff left the Office in 2014, including four in key positions. This high turnover of staff causes a considerable risk to the achievement of the objectives set in the annual and multiannual work programmes.

| 16. | According to a decision by the Executive Director, participants in meetings organised by EASO are classified in one of the three categories (A, B or C) for cost reimbursements. Total 2014 reimbursements to meeting participants amounted to 9 97  506 euro. Category ‘A’ participants, who are supposed to assume a specific duty in the meetings, receive a flat rate reimbursement for travel and daily subsistence costs, whereas Category ‘B’ participants receive a flat rate reimbursement for travel costs only. Category ‘C’ participants are not eligible for any reimbursement. The number of participants classified as recipients of category ‘A’ reimbursements increased from 61 % in 2013 to 69 % in 2014. There is no documentation justifying the classification of participants in the three categories. |
| --- | --- |

16.

According to a decision by the Executive Director, participants in meetings organised by EASO are classified in one of the three categories (A, B or C) for cost reimbursements. Total 2014 reimbursements to meeting participants amounted to 9 97  506 euro. Category ‘A’ participants, who are supposed to assume a specific duty in the meetings, receive a flat rate reimbursement for travel and daily subsistence costs, whereas Category ‘B’ participants receive a flat rate reimbursement for travel costs only. Category ‘C’ participants are not eligible for any reimbursement. The number of participants classified as recipients of category ‘A’ reimbursements increased from 61 % in 2013 to 69 % in 2014. There is no documentation justifying the classification of participants in the three categories.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 17. | An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I. |
| --- | --- |

17.

An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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(1)  OJ L 132, 29.5.2010, p. 11.

1

(2)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

2

(3)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

3

(4)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

4

(5)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

5

(6)  Article 107 of Regulation (EU) No 1271/2013.

6

(7)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

7

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ANNEX I

Follow-up of previous year’s comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2012 | 10 of the 16 internal control standards have not yet been fully implemented. | Ongoing |
| 2012 | There is room to improve the transparency of recruitment procedures: there was no evidence that weightings and threshold scores to be invited for interviews and for being put on the reserve list were set before examination of the applications, or that questions for interviews and written tests were set before the examination of applications. | Outstanding |
| 2013 | The basis for an accrual amounting to 40  000 euro relating to expenses and allowances for staff who entered into service in 2013 was not made available in the course of the audit. | N/A |
| 2013 | Of the total number of payments, 446 (18 %) were made after the time limits set in the Financial Regulation. The average delay for late payments was 21 days. | Outstanding |
| 2013 | Six of the 16 internal control standards have not been fully implemented. | Ongoing |
| 2013 | The Agency had overestimated its budgetary needs for 2013 by 13 % (2012: 32 %) and only 10,4 million of the 12 million euro budget were committed. Appropriations carried over amounted to 2,5 million euro or 24 % (2012: 65 %) of total committed appropriations, of which 3 37  031 euro were not covered by a legal commitment. While there is scope for improved budgetary planning, both the overestimation of budgetary needs and the carry-overs of committed appropriations were significantly lower than the previous year. | N/A |
| 2013 | Carry-overs of committed appropriations mainly concern Title II (other administrative expenditure) at 5 40  269 euro, i.e. 31 % of committed appropriations, and Title III (operational activities) at 1 8 41  798 euro (45 % of committed appropriations). They are mostly related to invoices not yet received and/or paid at year-end or where the services in question had not been delivered. | N/A |
| 2013 | There is room to improve the transparency of recruitment procedures: questions for interviews and written tests were drafted after examination of the applications, which increases the risk of questions being influenced by individual applications; the selection committees did not always award scores to all selection criteria included in the vacancy notices; the declaration of conflict of interest signed by selection committee members only considers a personal relationship to constitute a potential conflict of interest and explicitly excludes professional relationships; in the case of one specific recruitment procedure a discrepancy was noted between one eligibility criterion indicated in the vacancy notice and the corresponding selection criterion concerning the number of years of proven professional experience. | Ongoing |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2012

10 of the 16 internal control standards have not yet been fully implemented.

Ongoing

2012

There is room to improve the transparency of recruitment procedures: there was no evidence that weightings and threshold scores to be invited for interviews and for being put on the reserve list were set before examination of the applications, or that questions for interviews and written tests were set before the examination of applications.

Outstanding

2013

The basis for an accrual amounting to 40  000 euro relating to expenses and allowances for staff who entered into service in 2013 was not made available in the course of the audit.

N/A

2013

Of the total number of payments, 446 (18 %) were made after the time limits set in the Financial Regulation. The average delay for late payments was 21 days.

Outstanding

2013

Six of the 16 internal control standards have not been fully implemented.

Ongoing

2013

The Agency had overestimated its budgetary needs for 2013 by 13 % (2012: 32 %) and only 10,4 million of the 12 million euro budget were committed. Appropriations carried over amounted to 2,5 million euro or 24 % (2012: 65 %) of total committed appropriations, of which 3 37  031 euro were not covered by a legal commitment. While there is scope for improved budgetary planning, both the overestimation of budgetary needs and the carry-overs of committed appropriations were significantly lower than the previous year.

N/A

2013

Carry-overs of committed appropriations mainly concern Title II (other administrative expenditure) at 5 40  269 euro, i.e. 31 % of committed appropriations, and Title III (operational activities) at 1 8 41  798 euro (45 % of committed appropriations). They are mostly related to invoices not yet received and/or paid at year-end or where the services in question had not been delivered.

N/A

2013

There is room to improve the transparency of recruitment procedures: questions for interviews and written tests were drafted after examination of the applications, which increases the risk of questions being influenced by individual applications; the selection committees did not always award scores to all selection criteria included in the vacancy notices; the declaration of conflict of interest signed by selection committee members only considers a personal relationship to constitute a potential conflict of interest and explicitly excludes professional relationships; in the case of one specific recruitment procedure a discrepancy was noted between one eligibility criterion indicated in the vacancy notice and the corresponding selection criterion concerning the number of years of proven professional experience.

Ongoing

---

ANNEX II

European Asylum Support Office, EASO (Valletta Harbour, Malta)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Article 3 of the Treaty on the European Union and Articles 67, 78 and 80 of the Treaty on the Functioning of the European Union) | The Union shall offer its citizens an area of freedom, security and justice without internal frontiers, in which the free movement of persons is ensured in conjunction with appropriate measures with respect to external border controls, asylum, immigration and the prevention and combating of crime.
  The Union shall develop a common policy on asylum, subsidiary protection and temporary protection with a view to offering appropriate status to any third-country national requiring international protection and ensuring compliance with the principle of non-refoulement. This policy must be in accordance with the Geneva Convention of 28 July 1951 and the Protocol of 31 January 1967 relating to the status of refugees, and other relevant treaties.
  For that purpose, measures should be adopted for a common European asylum system comprising: a uniform status of asylum for nationals of third countries, valid throughout the Union; a uniform status of subsidiary protection for nationals of third countries who, without obtaining European asylum, are in need of international protection; a common system of temporary protection for displaced persons in the event of a massive inflow; common procedures for the granting and withdrawing of uniform asylum or subsidiary protection status; criteria and mechanisms for determining which Member State is responsible for considering an application for asylum or subsidiary protection; standards concerning the conditions for the reception of applicants for asylum or subsidiary protection; partnership and cooperation with third countries for the purpose of managing inflows of people applying for asylum or subsidiary or temporary protection.
  In the event of one or more Member States being confronted by an emergency situation characterised by a sudden inflow of nationals of third countries, provisional measures may be adopted for the benefit of the Member State(s) concerned.
  The policy of the Union on asylum and its implementation shall be governed by the principle of solidarity and fair sharing of responsibility, including its financial implications, between the Member States. |
| --- | --- |
| Competences of the Office


  (Regulation (EU) No 439/2010 of the European Parliament and of the Council establishing a European Asylum Support Office) | Objectives

  EASO contributes to the implementation of a Common European Asylum System. EASO’s purpose is to facilitate, coordinate and strengthen practical cooperation among Member States on the many aspects of asylum, such as: providing practical and operational support to Member States; providing operational support to Member States with specific needs or Member States subject to particular pressure on their asylum systems; providing scientific and technical assistance for EU policymaking and legislation in all areas having a direct or indirect impact on asylum.

  Tasks







  — | Permanent support: supporting and stimulating the common quality of the asylum process through common training, a common asylum curriculum and common country of origin information. |

Areas of Union competence deriving from the Treaty

(Article 3 of the Treaty on the European Union and Articles 67, 78 and 80 of the Treaty on the Functioning of the European Union)

The Union shall offer its citizens an area of freedom, security and justice without internal frontiers, in which the free movement of persons is ensured in conjunction with appropriate measures with respect to external border controls, asylum, immigration and the prevention and combating of crime.

The Union shall develop a common policy on asylum, subsidiary protection and temporary protection with a view to offering appropriate status to any third-country national requiring international protection and ensuring compliance with the principle of non-refoulement. This policy must be in accordance with the Geneva Convention of 28 July 1951 and the Protocol of 31 January 1967 relating to the status of refugees, and other relevant treaties.

For that purpose, measures should be adopted for a common European asylum system comprising: a uniform status of asylum for nationals of third countries, valid throughout the Union; a uniform status of subsidiary protection for nationals of third countries who, without obtaining European asylum, are in need of international protection; a common system of temporary protection for displaced persons in the event of a massive inflow; common procedures for the granting and withdrawing of uniform asylum or subsidiary protection status; criteria and mechanisms for determining which Member State is responsible for considering an application for asylum or subsidiary protection; standards concerning the conditions for the reception of applicants for asylum or subsidiary protection; partnership and cooperation with third countries for the purpose of managing inflows of people applying for asylum or subsidiary or temporary protection.

In the event of one or more Member States being confronted by an emergency situation characterised by a sudden inflow of nationals of third countries, provisional measures may be adopted for the benefit of the Member State(s) concerned.

The policy of the Union on asylum and its implementation shall be governed by the principle of solidarity and fair sharing of responsibility, including its financial implications, between the Member States.

Competences of the Office

(Regulation (EU) No 439/2010 of the European Parliament and of the Council establishing a European Asylum Support Office)

Objectives

EASO contributes to the implementation of a Common European Asylum System. EASO’s purpose is to facilitate, coordinate and strengthen practical cooperation among Member States on the many aspects of asylum, such as: providing practical and operational support to Member States; providing operational support to Member States with specific needs or Member States subject to particular pressure on their asylum systems; providing scientific and technical assistance for EU policymaking and legislation in all areas having a direct or indirect impact on asylum.

Tasks

—

Permanent support: supporting and stimulating the common quality of the asylum process through common training, a common asylum curriculum and common country of origin information.

| — | Special support: tailor-made assistance, capacity building, relocation, specific support and special quality-control processes. |
| --- | --- |

—

Special support: tailor-made assistance, capacity building, relocation, specific support and special quality-control processes.

| — | Emergency support: organising solidarity for Member States confronted with particular pressures by providing temporary support and assistance to repair or to rebuild the asylum system. |
| --- | --- |

—

Emergency support: organising solidarity for Member States confronted with particular pressures by providing temporary support and assistance to repair or to rebuild the asylum system.

| — | Information and analysis support: sharing and merging information and data, analysis and assessment: not only comparing and sharing information, but also common trend analysis and common assessment. |
| --- | --- |

—

Information and analysis support: sharing and merging information and data, analysis and assessment: not only comparing and sharing information, but also common trend analysis and common assessment.

| — | Third-country support: supporting the external dimension, supporting partnerships with third countries to reach common solutions, for example by capacity building and regional protection programmes, and coordinating Member States’ actions on resettlement. |
| --- | --- |

—

Third-country support: supporting the external dimension, supporting partnerships with third countries to reach common solutions, for example by capacity building and regional protection programmes, and coordinating Member States’ actions on resettlement.

Governance

Management Board

Composition

The EASO Management Board is composed of one member from each Member State except Denmark, two members from the European Commission and one non-voting member from the UNHCR. All members are appointed on the basis of their experience, professional responsibility and high degree of expertise in the asylum field.

Denmark, Iceland, Liechtenstein, Norway and Switzerland are invited to attend all meetings of the Management Board and other relevant meetings as observers.

Tasks

The key functions of the Management Board, as the governing and planning body of EASO, are outlined in Article 29 of the EASO Regulation and include the appointment of the Executive Director and the adoption of EASO’s work programmes and annual reports, and of EASO’s general budget. It has overall responsibility for ensuring that EASO performs its duties effectively.

Executive Director

The Executive Director, who is independent in the performance of his tasks, is the legal representative of the Office and is responsible, inter alia, for the administrative management of EASO and for the implementation of the work programme and the decisions of the Management Board. The Executive Director of EASO, Dr Robert K. Visser, took up office on 1 February 2011. His term of office is five years, renewable once for a further three years.

Consultative Forum

EASO has set up a Consultative Forum in accordance with Article 51 of the EASO Regulation. The Consultative Forum enables EASO to ensure close dialogue with civil society organisations and relevant competent bodies. The Consultative Forum constitutes a mechanism for the exchange of information and pooling of knowledge between EASO, civil society organisations and relevant bodies operating in the asylum field. In accordance with the EASO Regulation, the Consultative Forum meets in plenary at least once a year. In addition, EASO has an annual consultation calendar to organise its various consultation methodologies and activities, i.e. expert meetings, workshops, seminars and online consultation.

Internal audit

European Commission’s Internal Audit Service (IAS).

External audit

European Court of Auditors.

Discharge authority

European Parliament acting on a recommendation from the Council.

Resources made available to the Office in 2014 (2013)

Final Budget

1 5 6 63  975 euro (12 million euro)

Staff as at 31 December 2014

Authorised posts (temporary staff): 51 (45). Posts occupied: 48 (44)

Other posts (contract staff and SNEs (1)): 33 (32). Posts occupied: 31 (27)

Total posts: 84 (77)

Posts occupied: 79 (2)
  (71), by staff assigned to the following duties:

| — | operational tasks: 45 (43), |
| --- | --- |

—

operational tasks: 45 (43),

| — | administrative and support tasks: 34 (28). |
| --- | --- |

—

administrative and support tasks: 34 (28).

Products and services in 2014

EASO’s activities can be divided into five focus areas: permanent support, special support, emergency support, information and analysis support and third country support.

Permanent support: With regards to training, EASO delivered 13 train-the-trainer sessions, organised three regional training events, developed one new training module and updated four already-existing modules, developed two training handbooks and one Annual Training Report based on the training cockpit, organised the Annual Didactic Seminar, one training event on national contact points meetings and initiated the process for the certification of the EASO training system.

EASO’s work on quality of asylum processes and decisions included a thematic mapping of access to procedure, identification of persons with special needs and special procedures, the development of a publication on quality tool on personal interview, the organisation of three thematic meetings, eight working group meetings and a meeting of the national contact points on quality. EASO furthermore strengthened its cooperation with the members of the Courts and Tribunals, organising an annual conference and three experts’ meetings and developing a practical tool on Article 15(c) of the Qualification Directive. In the area of trafficking in human beings, EASO coordinated, from October 2012 to October 2014, a report on ‘Joint Activities’ developed by the justice and home affairs agencies to address THB and organised one expert meeting.

An EASO practical cooperation conference on unaccompanied minors and four thematic meetings were organised; a publication on family tracing and the evaluation of the ‘EASO age-assessment practice in Europe’ publication were initiated.

With regards to country of origin information (COI), EASO further developed the COI portal which served 580 active users, created four new COI specific networks on Iran, Iraq, Russia and Afghanistan, organised two meetings and four training events for the National Common Portal Administrators, two meetings of the Strategic COI Network and 13 country-specific workshop and seminars. In addition, EASO produced two COI reports (on Somalia and on Chechnya) and a publication on ‘Tools and tips for online COI research’.

Special support: special support was provided to Italy, completing the implementation of the special support plan which started in 2013, and, as from June 2014, to Cyprus. EASO organised six pilot projects on joint processing of asylum applications and six practical cooperation meetings on tools to provide support, contingency planning, relocation and reception. EASO participated in the Annual Resettlement and Relocation Forum and a mapping of resettlement cycles in Member States was completed. Furthermore EASO, in collaboration with other stakeholders, implemented eight actions within the framework of the Task Force Mediterranean.

Emergency support: EASO provided emergency support to Greece and to Bulgaria completing the implementation of the respective operating plans. EASO organised two meetings of the Asylum Intervention Pool national contact points.

Information and analysis support: EASO published its Annual Report on the state of asylum in the EU in 2013 with inputs from approximately 40 stakeholders. In addition, EASO developed three quarterly asylum reports, 12 monthly asylum reports and seven ad hoc reports. Moreover, EASO organised two meetings with the Group of Provision of Statistics (GPS), fully implemented Stage II of its Early warning and Preparedness System and developed a proposal for its Stage III.

Third country support: EASO started the implementation of its EASO external dimension strategy, particularly through the implementation of a European Neighbourhood and Partnership Instrument (ENPI) project with Jordan, Tunisia and Morocco. EASO established an External Dimension Network and organised two practical cooperation meetings and translated into Arabic an EASO training module.

With regard to EASO’s organisation and cooperation with stakeholders, EASO organised three Management Board meetings, adopted three Management Board decisions, signed a working arrangement with eu-LISA, held its 4th Consultative Forum meeting and consulted civil society on various topics. In 2014 EASO chaired the network of the JHA Agencies, within which EASO organised three contact group meetings and the Heads of JHA Agencies meeting. Finally, EASO strengthened its internal and external communication: a communication strategy was adopted, press releases and newsletters were regularly issued and an EASO Info Day was organised in Member States and in the European Parliament.

In 2014 the external evaluation of EASO was launched.

---

(1)  As of 31.12.2014, the number of authorised SNE posts decreased from 14 to 12.

(2)  Including offer letters submitted as of 31.12.2014.

Source: Annex supplied by the Office.

---

THE OFFICE’S REPLY

| 11. | The Office made the necessary corrections in the 2015 final period in the budget management system, as addressed by the Court. |
| --- | --- |

11.

The Office made the necessary corrections in the 2015 final period in the budget management system, as addressed by the Court.

| 12. | EASO recognises that the percentage of late payments is too large and is addressing the root causes of this situation. In the second half of 2015, specific measures shall be put in place for substantially reducing the current rate of late payments by the closing of the financial year.
  13-14. EASO shall review at least twice a year its annual budget, starting in Q2 2015, in order to improve its budget planning and implementation process and reduce any disproportionate carry-overs at the end of the financial year. Additionally, EASO has introduced in June 2015 a new format for a monthly budget status report that provides focused analysis of factors affecting the implementation of the budget and suggests timely corrective action to the authorising officers. Lastly, internal workshops on the budget implementation and on financial management have been planned for Q3 and Q4 and will also address the budget implementation. Through the combination of these measures, EASO expects to achieve much improved results for its budget implementation in 2015. |
| --- | --- |

12.

EASO recognises that the percentage of late payments is too large and is addressing the root causes of this situation. In the second half of 2015, specific measures shall be put in place for substantially reducing the current rate of late payments by the closing of the financial year.

13-14. EASO shall review at least twice a year its annual budget, starting in Q2 2015, in order to improve its budget planning and implementation process and reduce any disproportionate carry-overs at the end of the financial year. Additionally, EASO has introduced in June 2015 a new format for a monthly budget status report that provides focused analysis of factors affecting the implementation of the budget and suggests timely corrective action to the authorising officers. Lastly, internal workshops on the budget implementation and on financial management have been planned for Q3 and Q4 and will also address the budget implementation. Through the combination of these measures, EASO expects to achieve much improved results for its budget implementation in 2015.

| 15. | EASO has recruited replacements for the staff that left last year and all posts are occupied or recruitment procedures are currently being done. Staff is recognised to be the most valued asset of the Office and human resources activities to support this approach shall be put in place. |
| --- | --- |

15.

EASO has recruited replacements for the staff that left last year and all posts are occupied or recruitment procedures are currently being done. Staff is recognised to be the most valued asset of the Office and human resources activities to support this approach shall be put in place.

| 16. | EASO takes note of these comments and will ensure that letters of invitation to be sent out will more clearly state the applicable reimbursement category.
  The level of participation and contribution expected by EASO in the organised activities is of a very high level of expertise, as detailed in the supporting documentation and the annual work programme. Therefore, the frequent use of category A participants is a logical consequence of such requirements. |
| --- | --- |

16.

EASO takes note of these comments and will ensure that letters of invitation to be sent out will more clearly state the applicable reimbursement category.

The level of participation and contribution expected by EASO in the organised activities is of a very high level of expertise, as detailed in the supporting documentation and the annual work programme. Therefore, the frequent use of category A participants is a logical consequence of such requirements.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/111 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/111

---

REPORT

on the annual accounts of the European Banking Authority for the financial year 2014 together with Authority’s reply

(2015/C 409/13)

INTRODUCTION

| 1. | The European Banking Authority (hereinafter ‘the Authority’, aka ‘EBA’), which is located in London, was established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council (1). The Authority’s task is to contribute to the establishment of high-quality common regulatory and supervisory standards and practices, to contribute to the consistent application of legally binding Union acts, to stimulate and facilitate the delegation of tasks and responsibilities among competent authorities, to monitor and assess market developments in the area of its competence and to foster depositor and investor protection (2). |
| --- | --- |

1.

The European Banking Authority (hereinafter ‘the Authority’, aka ‘EBA’), which is located in London, was established by Regulation (EU) No 1093/2010 of the European Parliament and of the Council (1). The Authority’s task is to contribute to the establishment of high-quality common regulatory and supervisory standards and practices, to contribute to the consistent application of legally binding Union acts, to stimulate and facilitate the delegation of tasks and responsibilities among competent authorities, to monitor and assess market developments in the area of its competence and to foster depositor and investor protection (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Authority’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Authority’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Authority, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Authority, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Authority and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Authority’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Authority after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Authority in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Authority and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Authority’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Authority after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Authority in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Authority are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Authority are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Authority’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Authority’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Authority’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Authority’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | Carry-overs of committed appropriations for title II (administrative expenditure) were high at 3 4 31  070 euro, i.e. 48 % (2013: 1 9 74  511 euro, i.e. 35 %) and mainly related to the Authority’s move to its new premises in mid-December 2014. |
| --- | --- |

11.

Carry-overs of committed appropriations for title II (administrative expenditure) were high at 3 4 31  070 euro, i.e. 48 % (2013: 1 9 74  511 euro, i.e. 35 %) and mainly related to the Authority’s move to its new premises in mid-December 2014.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 12. | An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I. |
| --- | --- |

12.

An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 331, 15.12.2010, p. 12.

1

(2)  Annex II summarises the Authority’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

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ANNEX I

Follow-up of previous year’s comments

| Year | Court’s comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2012 | In order to cover higher school fees, the Authority grants staff whose children attend primary or secondary school an education contribution in addition to the education allowances provided for in the Staff Regulations (1). Total 2012 education contributions amounted to some 76  000 euro. They are not covered by the Staff Regulations and therefore irregular. | Ongoing (2) |
| 2013 | In 2013, the overall level of committed appropriations was 90 % as compared to 89 % in 2012, varying between 87 % for title I (staff expenditure), 98 % for title II (administrative expenditure) and 92 % for title III (operational expenditure). The commitment rate for title I was negatively impacted by the Court of Justice’s decision against the indexation of staff salaries for the period 1 July 2011 to 30 June 2013 (1,8 million euro). | N/A |
| 2013 | Although the overall level of carry-overs decreased significantly to 3 8 76  564 euro (17 %) compared with 6 5 47  808 euro (36 %) for the previous year, carry-overs of committed appropriations remained relatively high for title II at 1 9 74  511 euro (35 %) and title III at 1 6 51  203 euro (36 %). These carry-overs mainly result from the planned procurement of IT infrastructure and IT services, for which the contracts were concluded as planned in December 2013 and the related services will be provided in 2014. | N/A |

Year

Court’s comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2012

In order to cover higher school fees, the Authority grants staff whose children attend primary or secondary school an education contribution in addition to the education allowances provided for in the Staff Regulations (1). Total 2012 education contributions amounted to some 76  000 euro. They are not covered by the Staff Regulations and therefore irregular.

Ongoing (2)

2013

In 2013, the overall level of committed appropriations was 90 % as compared to 89 % in 2012, varying between 87 % for title I (staff expenditure), 98 % for title II (administrative expenditure) and 92 % for title III (operational expenditure). The commitment rate for title I was negatively impacted by the Court of Justice’s decision against the indexation of staff salaries for the period 1 July 2011 to 30 June 2013 (1,8 million euro).

N/A

2013

Although the overall level of carry-overs decreased significantly to 3 8 76  564 euro (17 %) compared with 6 5 47  808 euro (36 %) for the previous year, carry-overs of committed appropriations remained relatively high for title II at 1 9 74  511 euro (35 %) and title III at 1 6 51  203 euro (36 %). These carry-overs mainly result from the planned procurement of IT infrastructure and IT services, for which the contracts were concluded as planned in December 2013 and the related services will be provided in 2014.

N/A

---

(1)  Article 3 of Annex VII provides for twice the basic allowance of 252,81 euro = 505,62 euro.

(2)  As at the end of 2014 the Authority had signed contracts with 15 of the 17 schools attended by children of staff members.

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ANNEX II

European Banking Authority (London)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Articles 26 and 114 of the Treaty on the Functioning of the European Union) | Article 26








  ‘1. | The Union shall adopt measures with the aim of establishing or ensuring the functioning of the internal market, in accordance with the relevant provisions of the Treaties. |
| --- | --- | --- |

Areas of Union competence deriving from the Treaty

(Articles 26 and 114 of the Treaty on the Functioning of the European Union)

Article 26

‘1.

The Union shall adopt measures with the aim of establishing or ensuring the functioning of the internal market, in accordance with the relevant provisions of the Treaties.

| 2. | The internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of the Treaties. |
| --- | --- |

2.

The internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of the Treaties.

| 3. | The Council, on a proposal from the Commission, shall determine the guidelines and conditions necessary to ensure balanced progress in all the sectors concerned.’ |
| --- | --- |

3.

The Council, on a proposal from the Commission, shall determine the guidelines and conditions necessary to ensure balanced progress in all the sectors concerned.’

Article 114

Article 114

| ‘1. | Save where otherwise provided in the Treaties, the following provisions shall apply for the achievement of the objectives set out in Article 26. The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.’ |
| --- | --- |

‘1.

Save where otherwise provided in the Treaties, the following provisions shall apply for the achievement of the objectives set out in Article 26. The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.’

Competences of the Authority

Competences of the Authority

(Regulation (EU) No 1093/2010 of the European Parliament and of the Council)

(Regulation (EU) No 1093/2010 of the European Parliament and of the Council)

(Regulation (EU) No 1022/2013 of the European Parliament and of the Council, amending Regulation (EU) No 1093/2010)

(Regulation (EU) No 1022/2013 of the European Parliament and of the Council, amending Regulation (EU) No 1093/2010)

Objectives

Objectives

| (a) | Improving the functioning of the internal market, including, in particular, a sound, effective and consistent level of regulation and supervision; |
| --- | --- |

(a)

Improving the functioning of the internal market, including, in particular, a sound, effective and consistent level of regulation and supervision;

| (b) | ensuring the integrity, transparency, efficiency and orderly functioning of financial markets; |
| --- | --- |

(b)

ensuring the integrity, transparency, efficiency and orderly functioning of financial markets;

| (c) | strengthening international supervisory coordination; |
| --- | --- |

(c)

strengthening international supervisory coordination;

| (d) | preventing regulatory arbitrage and promoting equal conditions of competition; |
| --- | --- |

(d)

preventing regulatory arbitrage and promoting equal conditions of competition;

| (e) | ensuring the taking of credit and other risks are appropriately regulated and supervised; |
| --- | --- |

(e)

ensuring the taking of credit and other risks are appropriately regulated and supervised;

| (f) | enhancing customer protection. |
| --- | --- |

(f)

enhancing customer protection.

Tasks

Tasks

| (a) | To contribute to the establishment of high-quality common regulatory and supervisory standards and practices; |
| --- | --- |

(a)

To contribute to the establishment of high-quality common regulatory and supervisory standards and practices;

| (b) | to develop and maintain up to date a European supervisory handbook on the supervision of financial institutions in the Union as a whole; |
| --- | --- |

(b)

to develop and maintain up to date a European supervisory handbook on the supervision of financial institutions in the Union as a whole;

| (c) | to contribute to the consistent application of legally binding Union acts; |
| --- | --- |

(c)

to contribute to the consistent application of legally binding Union acts;

| (d) | to facilitate the delegation of tasks and responsibilities among competent authorities; |
| --- | --- |

(d)

to facilitate the delegation of tasks and responsibilities among competent authorities;

| (e) | to cooperate closely with the ESRB (1); |
| --- | --- |

(e)

to cooperate closely with the ESRB (1);

1

| (f) | to organise and conduct peer review analyses of competent authorities; |
| --- | --- |

(f)

to organise and conduct peer review analyses of competent authorities;

| (g) | to monitor and assess market developments in the area of its competence; |
| --- | --- |

(g)

to monitor and assess market developments in the area of its competence;

| (h) | to undertake economic analyses of markets to inform the discharge of the Authority’s functions; |
| --- | --- |

(h)

to undertake economic analyses of markets to inform the discharge of the Authority’s functions;

| (i) | to foster depositor and investor protection; |
| --- | --- |

(i)

to foster depositor and investor protection;

| (j) | to promote the consistent and coherent functioning of colleges of supervisors, the monitoring, assessment and measurement of systemic risk, the development and coordination of recovery and resolution plans, providing a high level of protection to depositors and investors throughout the Union and developing methods for the resolution of failing financial institutions and an assessment of the need for appropriate financing instruments; |
| --- | --- |

(j)

to promote the consistent and coherent functioning of colleges of supervisors, the monitoring, assessment and measurement of systemic risk, the development and coordination of recovery and resolution plans, providing a high level of protection to depositors and investors throughout the Union and developing methods for the resolution of failing financial institutions and an assessment of the need for appropriate financing instruments;

| (k) | to fulfil any other specific tasks set out in this Regulation or in other legislative acts; |
| --- | --- |

(k)

to fulfil any other specific tasks set out in this Regulation or in other legislative acts;

| (l) | to publish on its website, and to update regularly, information relating to its field of activities; |
| --- | --- |

(l)

to publish on its website, and to update regularly, information relating to its field of activities;

Governance

Governance

Board of Supervisors

Board of Supervisors

Composed of the Chairperson, one representative per Member State (head of NSA (2)), Commission, ECB (3), ESRB, EIOPA (4) and ESMA (5).

2

3

4

5

Management Board

Management Board

Composed of the Chairperson and six other members of the Board of Supervisors.

Chairperson

Chairperson

Appointed by Board of Supervisors.

Executive Director

Executive Director

Appointed by Board of Supervisors.

Board of Appeal

Board of Appeal

Joint body of the three ESAs.

External audit

External audit

European Court of Auditors.

Discharge authority

Discharge authority

European Parliament.

Resources made available to the Authority in 2014 (2013)

Resources made available to the Authority in 2014 (2013)

2014 Budget

2014 Budget

33,6(26) million euro

(26)

Including:

European Union subsidy: 13,4(10,4) million euro

(10,4)

Contributions from Member States: 19,6(15,2) million euro

(15,2)

Contributions from observers: 0,6(0,4) million euro

(0,4)

Posts filled as of 31 December 2014

Posts filled as of 31 December 2014

111 temporary staff (93) — of which five offer letters sent to and accepted before 31 December 2014, with starting dates in the first months of 2015, however, due to notice periods

(93) —

22 contract staff (14)

(14)

22 Seconded National Experts (17)

(17)

Products and services in 2014

Products and services in 2014

| — | Conduct of 66 public consultations (on draft Regulatory and Implementing Technical Standards developed under the CRDIV/CRR, the Banking Recovery and Resolution Directive (BRRD), Markets in Financial Instruments Regulation (MiFiR), the European Markets Infrastructure Regulation (EMIR), Payments Account Directive (PAD), Mortgage Credit Directive (MCD) and Financial Conglomerates Directive (FICOD)), organisation of 32 public hearings (6). |
| --- | --- |

—

Conduct of 66 public consultations (on draft Regulatory and Implementing Technical Standards developed under the CRDIV/CRR, the Banking Recovery and Resolution Directive (BRRD), Markets in Financial Instruments Regulation (MiFiR), the European Markets Infrastructure Regulation (EMIR), Payments Account Directive (PAD), Mortgage Credit Directive (MCD) and Financial Conglomerates Directive (FICOD)), organisation of 32 public hearings (6).

6

| — | Submission of 22 draft Regulatory Technical Standards and 10 draft Implementing Technical Standards to the European Commission for final endorsement (including mandates on banks’ own funds, credit risk, market risk, liquidity and remuneration under the CRDIV/CRR legislative framework as well as several mandates under the BRRD). |
| --- | --- |

—

Submission of 22 draft Regulatory Technical Standards and 10 draft Implementing Technical Standards to the European Commission for final endorsement (including mandates on banks’ own funds, credit risk, market risk, liquidity and remuneration under the CRDIV/CRR legislative framework as well as several mandates under the BRRD).

| — | Issuance of 17 guidelines (on different topics such as recovery plan scenarios, high earners data collection or the security of internet payments) and one recommendation to national competent authorities (on the use of the Legal Entity Identifier). |
| --- | --- |

—

Issuance of 17 guidelines (on different topics such as recovery plan scenarios, high earners data collection or the security of internet payments) and one recommendation to national competent authorities (on the use of the Legal Entity Identifier).

| — | Coordination of the 2014 EU-wide stress test to assess the resilience of 123 EU banks to adverse economic developments, so as to understand remaining vulnerabilities, complete the repair of the EU banking sector and increase confidence. In addition, the EBA developed a common methodology and played an important role in ensuring comprehensive, consistent, and comparable disclosure of the results. |
| --- | --- |

—

Coordination of the 2014 EU-wide stress test to assess the resilience of 123 EU banks to adverse economic developments, so as to understand remaining vulnerabilities, complete the repair of the EU banking sector and increase confidence. In addition, the EBA developed a common methodology and played an important role in ensuring comprehensive, consistent, and comparable disclosure of the results.

| — | Provision of 13 opinions addressed to the Commission, European Parliament and Council, and one technical advice to the European Commission on the prudential filter for fair value gains and losses arising from the institution’s own credit risk related to derivative liabilities. |
| --- | --- |

—

Provision of 13 opinions addressed to the Commission, European Parliament and Council, and one technical advice to the European Commission on the prudential filter for fair value gains and losses arising from the institution’s own credit risk related to derivative liabilities.

| — | Adoption of a formal recommendation addressed to the Bulgarian National Bank (BNB) and the Bulgarian Deposit Insurance Fund (BDIF) notifying that they are breaching EU Law (Article 1(3)(i) and Article 10 of the Deposit Guarantee Schemes Directive — DGSD). |
| --- | --- |

—

Adoption of a formal recommendation addressed to the Bulgarian National Bank (BNB) and the Bulgarian Deposit Insurance Fund (BDIF) notifying that they are breaching EU Law (Article 1(3)(i) and Article 10 of the Deposit Guarantee Schemes Directive — DGSD).

| — | Provision of three comment letters addressed to IASB (on the conceptual framework for financial reporting, on disclosure and on accounting for dynamic risk management) and two comment letters on auditing addressed to the IAASB (on the proposed strategy for 2015-2019 and the proposed work program for 2015-2016). |
| --- | --- |

—

Provision of three comment letters addressed to IASB (on the conceptual framework for financial reporting, on disclosure and on accounting for dynamic risk management) and two comment letters on auditing addressed to the IAASB (on the proposed strategy for 2015-2019 and the proposed work program for 2015-2016).

| — | One peer review completed on the implementation of the EBA’s guidelines on credit concentration risk. |
| --- | --- |

—

One peer review completed on the implementation of the EBA’s guidelines on credit concentration risk.

| — | Application, maintenance and enhancement of the Single Rulebook Questions and Answers tool on the EBA’ website for institutions, supervisors and other stakeholders. |
| --- | --- |

—

Application, maintenance and enhancement of the Single Rulebook Questions and Answers tool on the EBA’ website for institutions, supervisors and other stakeholders.

| — | Issuance of 23 thematic reports in various areas of EBA expertise (including reports on the consistency of banks’ risk-weighted assets, consumer trends report, report on the results of the Basel monitoring exercise, reports on banks’ liquidity, report on bench-marking of recovery plans, report on reconciliation of statistical and supervisory reporting, report on own funds deduction of net pensions/assets). |
| --- | --- |

—

Issuance of 23 thematic reports in various areas of EBA expertise (including reports on the consistency of banks’ risk-weighted assets, consumer trends report, report on the results of the Basel monitoring exercise, reports on banks’ liquidity, report on bench-marking of recovery plans, report on reconciliation of statistical and supervisory reporting, report on own funds deduction of net pensions/assets).

| — | Development of semi-annual banking sector and cross-sectoral risk reports, quarterly risk dashboards, weekly reporting on liquidity and funding conditions of European banks and on banking market indicators, regular updates on risks and vulnerabilities provided to the EU institutions and bodies. |
| --- | --- |

—

Development of semi-annual banking sector and cross-sectoral risk reports, quarterly risk dashboards, weekly reporting on liquidity and funding conditions of European banks and on banking market indicators, regular updates on risks and vulnerabilities provided to the EU institutions and bodies.

| — | Extensive work in the regular thematic analysis of a number of areas including the finalisation of the work on consistency of outcomes in risk weighted assets (RWAs). |
| --- | --- |

—

Extensive work in the regular thematic analysis of a number of areas including the finalisation of the work on consistency of outcomes in risk weighted assets (RWAs).

| — | Active participation in meetings and activities of colleges of national supervisory authorities, including the promoting and monitoring of supervisory cooperation in colleges, assistance in the process of establishment of resolution colleges. |
| --- | --- |

—

Active participation in meetings and activities of colleges of national supervisory authorities, including the promoting and monitoring of supervisory cooperation in colleges, assistance in the process of establishment of resolution colleges.

| — | Work related to Euribor and benchmark-related issues, performed jointly with the ESMA, including monitoring the implementation of the recommendations to Euribor-EBF (published in February 2014) and the work on data collection and potential design of a transactions-based Euribor representing unsecured wholesale funding cost of EU banks. |
| --- | --- |

—

Work related to Euribor and benchmark-related issues, performed jointly with the ESMA, including monitoring the implementation of the recommendations to Euribor-EBF (published in February 2014) and the work on data collection and potential design of a transactions-based Euribor representing unsecured wholesale funding cost of EU banks.

| — | Annual assessment of banks’ implementation of Pillar 3 disclosure requirements. |
| --- | --- |

—

Annual assessment of banks’ implementation of Pillar 3 disclosure requirements.

| — | Contribution to the Basel Committee on Banking Supervision’s Regulatory Consistency Assessment Programme (RCAP). |
| --- | --- |

—

Contribution to the Basel Committee on Banking Supervision’s Regulatory Consistency Assessment Programme (RCAP).

| — | Chairmanship of the Joint Committee of the European Supervisory Authorities (ESAs), with a focus on cross-sectoral risks, including conduct of business risk, and on consumer protection. |
| --- | --- |

—

Chairmanship of the Joint Committee of the European Supervisory Authorities (ESAs), with a focus on cross-sectoral risks, including conduct of business risk, and on consumer protection.

| — | In the area of joint ESAs’ work on consumer protection, focus on the development of regulatory products as mandated in the Packaged Retail Investment and Insurance-based products legislation (PRIIPs), publication of a Discussion Paper on Key Information Documents (KIDs), finalisation of common guidelines on complaints handling, issuance of a reminder to financial institutions regarding self-placement, i.e. placements of their own instruments with their retail clients, issuance of common principles on product oversight and governance, and organisation of a second Joint Consumer Protection Day. |
| --- | --- |

—

In the area of joint ESAs’ work on consumer protection, focus on the development of regulatory products as mandated in the Packaged Retail Investment and Insurance-based products legislation (PRIIPs), publication of a Discussion Paper on Key Information Documents (KIDs), finalisation of common guidelines on complaints handling, issuance of a reminder to financial institutions regarding self-placement, i.e. placements of their own instruments with their retail clients, issuance of common principles on product oversight and governance, and organisation of a second Joint Consumer Protection Day.

| — | In the area of joint ESAs’ work on cross-sectoral risks, production of two joint reports on identification of key cross-sectoral risks and vulnerabilities in the EU financial system. |
| --- | --- |

—

In the area of joint ESAs’ work on cross-sectoral risks, production of two joint reports on identification of key cross-sectoral risks and vulnerabilities in the EU financial system.

| — | In the area of joint ESAs’ work on financial conglomerates, finalisation of guidelines on the consistency of supervisory practices for financial conglomerates, and publication of annual list of identified financial conglomerates. |
| --- | --- |

—

In the area of joint ESAs’ work on financial conglomerates, finalisation of guidelines on the consistency of supervisory practices for financial conglomerates, and publication of annual list of identified financial conglomerates.

| — | Leadership of the ESAs’ operational and secretarial support to the Board of Appeal of the ESAs. |
| --- | --- |

—

Leadership of the ESAs’ operational and secretarial support to the Board of Appeal of the ESAs.

| — | Providing input and contribution to the process of the European Commission’s audit of the European System of Financial Supervision, jointly with the other ESAs, and input to the audit by the European Court of Auditors of the EBA and its performance in setting up the new arrangements for regulation and supervision. |
| --- | --- |

—

Providing input and contribution to the process of the European Commission’s audit of the European System of Financial Supervision, jointly with the other ESAs, and input to the audit by the European Court of Auditors of the EBA and its performance in setting up the new arrangements for regulation and supervision.

| — | Provision and coordination of 19 seminars and training activities to staff of EU national supervisory authorities (out of which four provided jointly with the other ESAs); hosting a legal workshop for policymakers, supervisors, and legal academics, and the third policy research workshop for economists, supervisors and academics to discuss the measurement of the riskiness of banks in a consistent manner. |
| --- | --- |

—

Provision and coordination of 19 seminars and training activities to staff of EU national supervisory authorities (out of which four provided jointly with the other ESAs); hosting a legal workshop for policymakers, supervisors, and legal academics, and the third policy research workshop for economists, supervisors and academics to discuss the measurement of the riskiness of banks in a consistent manner.

| — | Fourteen meetings of the Board of Supervisors (eight physical meetings, six teleconferences), six meetings of the Management Board (all physical meetings), and seven meetings of the Banking Stakeholder Group (two of which were held jointly with the Board of Supervisors). |
| --- | --- |

—

Fourteen meetings of the Board of Supervisors (eight physical meetings, six teleconferences), six meetings of the Management Board (all physical meetings), and seven meetings of the Banking Stakeholder Group (two of which were held jointly with the Board of Supervisors).

| — | Fulfilment of the Establishment plan (the EBA published 69 vacancy notices (41 Temporary Agents, 9 Contract Agents and 19 Seconded National Experts) for which 1  850 candidates applied and 173 were interviewed in 2014; no appeals were lodged with the EBA’s Executive Director or Ombudsman). |
| --- | --- |

—

Fulfilment of the Establishment plan (the EBA published 69 vacancy notices (41 Temporary Agents, 9 Contract Agents and 19 Seconded National Experts) for which 1  850 candidates applied and 173 were interviewed in 2014; no appeals were lodged with the EBA’s Executive Director or Ombudsman).

| — | Further improvement of the administration and transparency of the recruitment process. |
| --- | --- |

—

Further improvement of the administration and transparency of the recruitment process.

| — | Introduction of a conflict of interest declaration procedure for new staff, prior to the start of their contract, from January 2014. |
| --- | --- |

—

Introduction of a conflict of interest declaration procedure for new staff, prior to the start of their contract, from January 2014.

| — | Further improvement of induction training for newly recruited staff. |
| --- | --- |

—

Further improvement of induction training for newly recruited staff.

| — | Definition and implementation of traineeship policy, recruitment of first trainees in December 2014 with starting dates in 2015. |
| --- | --- |

—

Definition and implementation of traineeship policy, recruitment of first trainees in December 2014 with starting dates in 2015.

| — | Revision of the language training policy for eligible staff with a focus on cost effectiveness and sound financial management. |
| --- | --- |

—

Revision of the language training policy for eligible staff with a focus on cost effectiveness and sound financial management.

| — | Introduction of flexi-time arrangements for the EBA’s staff, including the software and related procedures, effective since April 2014. |
| --- | --- |

—

Introduction of flexi-time arrangements for the EBA’s staff, including the software and related procedures, effective since April 2014.

| — | In relation to Allegro, further modifications and improvements (modifications reflecting the European Commission’s General Implementing Procedures on Staff Appraisal, simplification of the performance appraisal report, notification emails, amendments to missions at weekends, sick leave with and without certificate booking — taken away from the staff to be done by Human Resources only). |
| --- | --- |

—

In relation to Allegro, further modifications and improvements (modifications reflecting the European Commission’s General Implementing Procedures on Staff Appraisal, simplification of the performance appraisal report, notification emails, amendments to missions at weekends, sick leave with and without certificate booking — taken away from the staff to be done by Human Resources only).

| — | Achieved 99,8 % budget execution on 2014 budget. |
| --- | --- |

—

Achieved 99,8 % budget execution on 2014 budget.

| — | Processed 469 financial commitment transactions and 2  711 payment transactions. |
| --- | --- |

—

Processed 469 financial commitment transactions and 2  711 payment transactions.

| — | Improved payment time statistics and generated no late payment interest. |
| --- | --- |

—

Improved payment time statistics and generated no late payment interest.

| — | Implemented improved budget monitoring and reporting tools. |
| --- | --- |

—

Implemented improved budget monitoring and reporting tools.

| — | Held multiple training sessions on the financial circuit and procurement rules. |
| --- | --- |

—

Held multiple training sessions on the financial circuit and procurement rules.

| — | Successfully completed 12 procurement procedures, all in line with the EU procurement rules. |
| --- | --- |

—

Successfully completed 12 procurement procedures, all in line with the EU procurement rules.

| — | Renewed 29 contracts which initially had been signed in 2013 for a period of 12 months. |
| --- | --- |

—

Renewed 29 contracts which initially had been signed in 2013 for a period of 12 months.

---

(1)  European Systemic Risk Board

1

(2)  National Supervisory Authority

2

(3)  European Central Bank

3

(4)  European Insurance and Occupational Pensions Authority

4

(5)  European Securities and Markets Authority

5

(6)  Some public hearings covered more than one EBA regulatory proposal

6

Source: Annex supplied by the Authority.

Source

---

THE AUTHORITY’S REPLY

| 11. | The Authority has taken note of the Court’s report. |
| --- | --- |

11.

The Authority has taken note of the Court’s report.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/122 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/122

---

REPORT

on the annual accounts of the European Centre for Disease Prevention and Control for the financial year 2014, together with the Centre’s reply

(2015/C 409/14)

INTRODUCTION

| 1. | The European Centre for Disease Prevention and Control (ECDC — hereinafter ‘the Centre’), which is located in Stockholm, was established by Regulation (EC) No 851/2004 of the European Parliament and of the Council (1). The Centre’s main tasks are to collect and disseminate data on the prevention and control of human diseases and to provide scientific opinions on this subject. It is also required to coordinate the European network of bodies operating in this field (2). |
| --- | --- |

1.

The European Centre for Disease Prevention and Control (ECDC — hereinafter ‘the Centre’), which is located in Stockholm, was established by Regulation (EC) No 851/2004 of the European Parliament and of the Council (1). The Centre’s main tasks are to collect and disseminate data on the prevention and control of human diseases and to provide scientific opinions on this subject. It is also required to coordinate the European network of bodies operating in this field (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Centre’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Centre’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Centre, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Centre, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Centre and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Centre’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Centre after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Centre in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Centre and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Centre’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Centre after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Centre in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Centre are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Centre are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Centre’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Centre’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Centre’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Centre’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | The overall budget execution rate was high at 99 % (92 % in 2013). However, carry-overs of committed appropriations were also relatively high, at 1,6 million euro, i.e. 25 % for title II — administrative expenditure (2013: 1,7 million euro, i.e. 26 %) and 8,1 million euro, i.e. 49 % for title III — operational expenditure (2013: 7,9 million euro, i.e. 44 %). Carry-overs for title II mainly related to the planned procurement of IT hardware and software (1 million euro) in the second half of 2014, for which payment is not due until 2015. For title III, carry-overs concerned multiannual projects (4,7 million euro), ICT to support operational activities (1,6 million euro) for which activities were implemented and payments were made according to operational needs, and expert consultation (1,2 million euro) for the organisation of meetings held in 2014 and not yet invoiced at year-end and meetings taking place in the first quarter of 2015. |
| --- | --- |

11.

The overall budget execution rate was high at 99 % (92 % in 2013). However, carry-overs of committed appropriations were also relatively high, at 1,6 million euro, i.e. 25 % for title II — administrative expenditure (2013: 1,7 million euro, i.e. 26 %) and 8,1 million euro, i.e. 49 % for title III — operational expenditure (2013: 7,9 million euro, i.e. 44 %). Carry-overs for title II mainly related to the planned procurement of IT hardware and software (1 million euro) in the second half of 2014, for which payment is not due until 2015. For title III, carry-overs concerned multiannual projects (4,7 million euro), ICT to support operational activities (1,6 million euro) for which activities were implemented and payments were made according to operational needs, and expert consultation (1,2 million euro) for the organisation of meetings held in 2014 and not yet invoiced at year-end and meetings taking place in the first quarter of 2015.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 12. | An overview of the corrective actions taken in response to the Court’s comments from previous years is provided in Annex I. |
| --- | --- |

12.

An overview of the corrective actions taken in response to the Court’s comments from previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 142, 30.4.2004, p. 1.

1

(2)  Annex II summarises the Centre’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

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ANNEX I

Follow-up of previous years’ comments

| Year | Court’s comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2012 | In 2012, the Centre awarded grants to research institutions and individuals. Total grant expenditure amounted to 7 52  000 euro, representing 1,4 % of 2012 operating expenditure. The Centre’s ex ante verifications before reimbursement of costs claimed by beneficiaries consist of a desk analysis of cost claims and, partly, of audit certificates issued by independent audit firms contracted by the beneficiaries. The Centre does not usually obtain any documents from beneficiaries to substantiate the eligibility and accuracy of the costs claimed. In order to strengthen controls, the Centre has adopted an ex post verification strategy and planned for its implementation in 2012. However, it experienced a 10-month delay in gaining access to an interinstitutional audit contract and, at the time of the audit, no ex post verifications of 2012 grant expenditure had yet taken place. Supporting documentation obtained by the Centre on the Court’s behalf provided reasonable assurance as to the legality and regularity of the transactions audited by the Court. | Ongoing |
| 2013 | Although the Centre has improved its management of procurement procedures, for one procedure launched in 2013 there was conflicting information between the contract notice and the tender specifications which may have affected the competitive process and the outcome of the procedure. Payments made in 2013 under the framework contract and the two specific contracts concerned amounted to 1 08  000 euro. Following the Court’s audit, the Centre took immediate corrective action and the framework contract was cancelled. | Completed |
| 2013 | The overall budget execution rate was relatively low (92 %). Cancellations of 2013 appropriations appeared in all budget titles. | N/A |
| 2013 | Carry-overs of committed appropriations were relatively high, with 1 7 14  484 euro (26 %) for title II (administrative expenditure) and 7 9 07  139 euro (44 %) for title III (operational expenditure). | N/A |
| 2013 | For title II, this mainly related to procurement of IT hardware and software (1 0 86  203 euro) and the ongoing external evaluation of the Centre (2 10  000 euro). | N/A |
| 2013 | For title III, committed appropriations carried over mainly concerned multiannual projects (4 6 20  605 euro), and IT items to support operational activities (1 9 62  443 euro) for which activities were implemented and payments were made according to operational needs. However, weaknesses were noted in respect of budgetary planning and execution for operational meetings, mainly due to over-estimated attendance levels and hotel and flight costs. For the respective budget line, 29 % of 2013 appropriations (6 55  142 euro) and 59 % of carry-overs from 2012 (4 55  820 euro) were cancelled. In addition, 38 % of committed 2013 appropriations for operational meetings (amounting to 5 94  758 euro) were carried over to 2014. | N/A |

Year

Court’s comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2012

In 2012, the Centre awarded grants to research institutions and individuals. Total grant expenditure amounted to 7 52  000 euro, representing 1,4 % of 2012 operating expenditure. The Centre’s ex ante verifications before reimbursement of costs claimed by beneficiaries consist of a desk analysis of cost claims and, partly, of audit certificates issued by independent audit firms contracted by the beneficiaries. The Centre does not usually obtain any documents from beneficiaries to substantiate the eligibility and accuracy of the costs claimed. In order to strengthen controls, the Centre has adopted an ex post verification strategy and planned for its implementation in 2012. However, it experienced a 10-month delay in gaining access to an interinstitutional audit contract and, at the time of the audit, no ex post verifications of 2012 grant expenditure had yet taken place. Supporting documentation obtained by the Centre on the Court’s behalf provided reasonable assurance as to the legality and regularity of the transactions audited by the Court.

Ongoing

2013

Although the Centre has improved its management of procurement procedures, for one procedure launched in 2013 there was conflicting information between the contract notice and the tender specifications which may have affected the competitive process and the outcome of the procedure. Payments made in 2013 under the framework contract and the two specific contracts concerned amounted to 1 08  000 euro. Following the Court’s audit, the Centre took immediate corrective action and the framework contract was cancelled.

Completed

2013

The overall budget execution rate was relatively low (92 %). Cancellations of 2013 appropriations appeared in all budget titles.

N/A

2013

Carry-overs of committed appropriations were relatively high, with 1 7 14  484 euro (26 %) for title II (administrative expenditure) and 7 9 07  139 euro (44 %) for title III (operational expenditure).

N/A

2013

For title II, this mainly related to procurement of IT hardware and software (1 0 86  203 euro) and the ongoing external evaluation of the Centre (2 10  000 euro).

N/A

2013

For title III, committed appropriations carried over mainly concerned multiannual projects (4 6 20  605 euro), and IT items to support operational activities (1 9 62  443 euro) for which activities were implemented and payments were made according to operational needs. However, weaknesses were noted in respect of budgetary planning and execution for operational meetings, mainly due to over-estimated attendance levels and hotel and flight costs. For the respective budget line, 29 % of 2013 appropriations (6 55  142 euro) and 59 % of carry-overs from 2012 (4 55  820 euro) were cancelled. In addition, 38 % of committed 2013 appropriations for operational meetings (amounting to 5 94  758 euro) were carried over to 2014.

N/A

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ANNEX II

European Centre for Disease Prevention and Control (Stockholm)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Article 168 of the Treaty on the Functioning of the European Union) | — | A high level of human health protection shall be ensured in the definition and implementation of all Union policies and activities. |
| --- | --- | --- |

Areas of Union competence deriving from the Treaty

(Article 168 of the Treaty on the Functioning of the European Union)

—

A high level of human health protection shall be ensured in the definition and implementation of all Union policies and activities.

| — | Union action, which shall complement national policies, shall be directed towards improving public health, preventing physical and mental illness and diseases, and obviating sources of danger to physical and mental health. Such action shall cover the fight against the major health scourges, by promoting research into their causes, their transmission and their prevention, as well as health information and education, and monitoring, early warning of and combating serious cross-border threats to health. |
| --- | --- |

—

Union action, which shall complement national policies, shall be directed towards improving public health, preventing physical and mental illness and diseases, and obviating sources of danger to physical and mental health. Such action shall cover the fight against the major health scourges, by promoting research into their causes, their transmission and their prevention, as well as health information and education, and monitoring, early warning of and combating serious cross-border threats to health.

Competences of the Centre

(Regulation (EC) No 851/2004 of the European Parliament and of the Council)

Objectives

| — | To strengthen Europe’s defences against infectious diseases; specifically, to identify, assess and communicate current and emerging threats to human health from communicable diseases. |
| --- | --- |

—

To strengthen Europe’s defences against infectious diseases; specifically, to identify, assess and communicate current and emerging threats to human health from communicable diseases.

| — | To this end, the Centre operates dedicated surveillance networks, provides scientific opinions, operates the early warning and response system (EWRS) and provides scientific and technical assistance and training. |
| --- | --- |

—

To this end, the Centre operates dedicated surveillance networks, provides scientific opinions, operates the early warning and response system (EWRS) and provides scientific and technical assistance and training.

Tasks

| — | To operate dedicated disease surveillance networks and enhance networking activities. The Centre has a specific role in data collection, validation, analysis and dissemination. |
| --- | --- |

—

To operate dedicated disease surveillance networks and enhance networking activities. The Centre has a specific role in data collection, validation, analysis and dissemination.

| — | To provide authoritative expert advice and scientific opinions and studies on communicable diseases. |
| --- | --- |

—

To provide authoritative expert advice and scientific opinions and studies on communicable diseases.

| — | To operate the EWRS and develop procedures for identifying emerging health threats. |
| --- | --- |

—

To operate the EWRS and develop procedures for identifying emerging health threats.

| — | To strengthen Member States’ capacity in preparedness planning and in training. |
| --- | --- |

—

To strengthen Member States’ capacity in preparedness planning and in training.

| — | To inform the general public and interested parties about its work. |
| --- | --- |

—

To inform the general public and interested parties about its work.

Governance

Management Board

Composition

One member designated by each Member State, two members designated by the European Parliament and three representatives of the Commission.

Tasks

The Board adopts the Centre’s annual programme and budget and monitors their implementation.

Director

Appointed by the Management Board on the basis of a list of candidates proposed by the Commission.

Advisory Forum

Composition

A representative of each Member State and three non-voting representatives of the Commission.

Tasks

The Forum is to ensure the scientific excellence of the Centre’s work and the independence of its activities and opinions.

External audit

European Court of Auditors.

Internal audit

European Commission’s Internal Audit Service (IAS).

Discharge authority

European Parliament acting on a recommendation from the Council.

Resources made available to the Centre in 2014 (2013)

Final budget

60,4(58,3) million euro

Staff as at 31 December 2014

Authorised posts: 194 (198)

Posts occupied: 183 (190)

Other posts: 92 (95)

Total: 275 (285), assigned to the following duties:

| — | operational tasks: 213 (186) |
| --- | --- |

—

operational tasks: 213 (186)

| — | administrative and support tasks: 63 (99) |
| --- | --- |

—

administrative and support tasks: 63 (99)

Products and services in 2014 (2013)

44 (42) health threats identified and monitored using the Threat Tracking Tool (TTT). This figure refers to new threats in 2014, which are in addition to threats that are monitored on a bi-weekly, monthly and seasonal basis.

52 (52) weekly threat reports on communicable diseases sent to 614 (400) recipients. The reports are also made available on the ECDC website every week and logged more then 15  000 visits in 2014 (8  000 visits in 2013).

Provision of support to epidemic intelligence for 2 (2) large mass-gathering events.

Preparation of 3 (3) risk assessments, 26 (12) new rapid risk assessments and 13 (9) rapid risk assessment updates.

One (one) simulation exercise conducted for testing and improving preparedness and response to communicable diseases.

115 (117) fellows coached in the European Programme for Intervention Epidemiology Training (EPIET) and the European Programme for Public Health Microbiology Training (EUPHEM).

102 (112) public health experts from 26 EU-EEA countries, 3 EU enlargement countries (Albania, Bosnia & Herzegovina and the former Yugoslav Republic of Macedonia) and 7 third countries (Canada, Egypt, Jordan, Lebanon, Palestine, Switzerland and Ukraine) participated in the Centre’s short training modules.

1 2 00  000(9 45  000) visitors to the Centre’s web portal.

209 (216) scientific articles published. Five-year impact factor: 5,09(5,46).

Seventh European Antibiotic Awareness Day organised 18 November, with the participation of over 40 countries. The ECDC cooperated with its partners in other regions of the world, and campaigned during this week on prudent antibiotic use in the United States, Canada, Australia and New Zealand.

17,4(16,3) million unique records in the TESSy databases; 1  676(1  492) active users from 58 (57) countries.

Annual Epidemiological Report published. The ECDC launched the Surveillance Atlas of Infectious Diseases, a web-based tool that makes EU-level surveillance data available in an interactive format. By the end of 2014, the ECDC was publishing EU-level data, and some international data, for four diseases via the Atlas.

16 (18) surveillance reports published, including tuberculosis, HIV/AIDS and anti-microbioresistance annual reports.

41 (41) weekly influenza bulletins/weekly influenza surveillance overviews for 2014.

88 (89) scientific opinions produced, based on stakeholder requests.

Organisation of the eighth European Scientific Conference on Applied Infectious Disease Epidemiology (ESCAIDE) on 5—7 November 2014 in Stockholm, with 608 (550) participants.

Weekly publication of the Eurosurveillance scientific journal, which obtained an impact factor of 4,65(5,49) for 2014, allowing Eurosurveillance to remain among the top 10 journals in the infectious diseases category.

Final report of the second independent external evaluation of the ECDC.

The ECDC played an important role in supporting the EU and international response to Ebola, including deployment of ECDC staff to Guinea.

First annual stakeholder survey conducted.

Source: Annex supplied by the Centre.

---

THE CENTRE’S REPLY

| 11. | The Centre welcomes the Court of Auditor’s comment about the high budget execution rate (99 %) and that they also identified the fact that the high carry-overs are justified for operational needs. |
| --- | --- |

11.

The Centre welcomes the Court of Auditor’s comment about the high budget execution rate (99 %) and that they also identified the fact that the high carry-overs are justified for operational needs.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/131 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/131

---

REPORT

on the annual accounts of the European Chemicals Agency for the financial year 2014, together with the Agency’s reply

(2015/C 409/15)

INTRODUCTION

| 1. | The European Chemicals Agency (hereinafter ‘the Agency’, aka ‘ECHA’), which is located in Helsinki, was set up by Regulation (EC) No 1907/2006 of the European Parliament and of the Council (1). Its main tasks are to ensure a high level of protection of human health and the environment as well as the free movement of substances on the internal market while enhancing competitiveness and innovation. The Agency also promotes the development of alternative methods for the assessment of hazards relating to substances (2). |
| --- | --- |

1.

The European Chemicals Agency (hereinafter ‘the Agency’, aka ‘ECHA’), which is located in Helsinki, was set up by Regulation (EC) No 1907/2006 of the European Parliament and of the Council (1). Its main tasks are to ensure a high level of protection of human health and the environment as well as the free movement of substances on the internal market while enhancing competitiveness and innovation. The Agency also promotes the development of alternative methods for the assessment of hazards relating to substances (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | Budget implementation rates for the year 2014 improved in comparison with the previous year. The level of committed appropriations carried over to 2014 for titles III, IV, and V (operational expenses) was 8,5 million euro, i.e. 35 % (2013: 10,6 million euro, i.e. 46 %). These carry-overs mainly resulted from the multiannual nature of planned IT development projects (4,5 million euro), costs for translations ordered in 2014 but not received and paid by the end of the year (0,5 million euro) and substance evaluations with a regulatory deadline in 2015 (1,9 million euro). The expenditure for procedures associated with one new specific activity of the Agency, the implementation of the Regulation concerning biocidal products (9), was to be, in principle, covered by application fees for the registration of these products (10). However, fees collected in 2014 covered only 17 % of this expenditure and the remaining part was in fact financed by contributions to the Agency’s budget from the Union (6,3 million euro) and EFTA countries (0,2 million euro). |
| --- | --- |

11.

Budget implementation rates for the year 2014 improved in comparison with the previous year. The level of committed appropriations carried over to 2014 for titles III, IV, and V (operational expenses) was 8,5 million euro, i.e. 35 % (2013: 10,6 million euro, i.e. 46 %). These carry-overs mainly resulted from the multiannual nature of planned IT development projects (4,5 million euro), costs for translations ordered in 2014 but not received and paid by the end of the year (0,5 million euro) and substance evaluations with a regulatory deadline in 2015 (1,9 million euro). The expenditure for procedures associated with one new specific activity of the Agency, the implementation of the Regulation concerning biocidal products (9), was to be, in principle, covered by application fees for the registration of these products (10). However, fees collected in 2014 covered only 17 % of this expenditure and the remaining part was in fact financed by contributions to the Agency’s budget from the Union (6,3 million euro) and EFTA countries (0,2 million euro).

FOLLOW-UP OF PREVIOUS YEAR’S COMMENTS

| 12. | An overview of the corrective actions taken in response to the Court’s comments from the previous year is provided in Annex I. |
| --- | --- |

12.

An overview of the corrective actions taken in response to the Court’s comments from the previous year is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 396, 30.12.2006, p. 1.

1

(2)  Annex II summarises the Agency’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

(9)  Regulation (EU) No 528/2012 of the European Parliament and of the Council (OJ L 167, 27.6.2012, p. 1).

9

(10)  Article 80(3)(a) of Regulation (EU) No 528/2012.

10

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ANNEX I

Follow-up of previous year’s comments

| Year | Court’s comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2013 | As in the previous year, budget implementation rates for the year 2013 were satisfactory for titles I and II. Although the level of committed appropriations carried over to 2014 remained high for titles III, IV and V (operational expenses) at 10,6 million euro (46 %), this mainly resulted from the multiannual nature of planned IT development projects (6,3 million euro), cost for translations ordered in 2013 but not received by the year end (1,3 million euro) and substance evaluations for which the regulatory deadline was February 2014 (1,7 million euro). | N/A |
| 2013 | In his Declaration of assurance for the year 2013 ECHA’s Executive Director confirmed reasonable assurance that resources have been used for their intended purpose and in accordance with the principles of sound financial management, and that the control procedures in place give the necessary guarantees concerning the legality and regularity of the underlying transactions. However, a reservation to this assurance was made since the mandate of the Agency does not include controls or inspections at national level and therefore no confirmation could be given that only registered or authorised substances and products, for which a fee has been paid to the Agency, were circulating on the European Union market. | N/A |

Year

Court’s comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2013

As in the previous year, budget implementation rates for the year 2013 were satisfactory for titles I and II. Although the level of committed appropriations carried over to 2014 remained high for titles III, IV and V (operational expenses) at 10,6 million euro (46 %), this mainly resulted from the multiannual nature of planned IT development projects (6,3 million euro), cost for translations ordered in 2013 but not received by the year end (1,3 million euro) and substance evaluations for which the regulatory deadline was February 2014 (1,7 million euro).

N/A

2013

In his Declaration of assurance for the year 2013 ECHA’s Executive Director confirmed reasonable assurance that resources have been used for their intended purpose and in accordance with the principles of sound financial management, and that the control procedures in place give the necessary guarantees concerning the legality and regularity of the underlying transactions. However, a reservation to this assurance was made since the mandate of the Agency does not include controls or inspections at national level and therefore no confirmation could be given that only registered or authorised substances and products, for which a fee has been paid to the Agency, were circulating on the European Union market.

N/A

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ANNEX II

European Chemicals Agency (Helsinki)

Competences and activities

| Areas of Union competence deriving from the Treaty | Collection of information







  — | The legal base of ECHA’s founding regulation — the REACH Regulation (EC) No 1907/2006 — is Article 114 of the Treaty on the Functioning of the EU. |
| --- | --- | --- |

Areas of Union competence deriving from the Treaty

Collection of information

—

The legal base of ECHA’s founding regulation — the REACH Regulation (EC) No 1907/2006 — is Article 114 of the Treaty on the Functioning of the EU.

Competences of the Agency

(as defined in Regulation (EC) No 1907/2006 of the European Parliament and of the Council (the REACH Regulation), Regulation (EC) No 1272/2008 of the European Parliament and of the Council (Classification, labelling and packaging of substances and mixtures — CLP Regulation), Regulation (EU) No 528/2012 of the European Parliament and of the Council (Biocidal Products Regulation) and Regulation (EU) No 649/2012 of the European Parliament and of the Council (Prior informed consent))

Objectives

| — | The purpose of the REACH and CLP Regulations is to ensure a high level of protection of human health and the environment, including the promotion of alternative methods for the assessment of hazards of substances, as well as the free circulation of substances on the internal market while enhancing competitiveness and innovation (Article 1(1) of the REACH Regulation, Article 1 of CLP Regulation). |
| --- | --- |

—

The purpose of the REACH and CLP Regulations is to ensure a high level of protection of human health and the environment, including the promotion of alternative methods for the assessment of hazards of substances, as well as the free circulation of substances on the internal market while enhancing competitiveness and innovation (Article 1(1) of the REACH Regulation, Article 1 of CLP Regulation).

| — | ECHA is established for the purposes of managing and, in some cases, carrying out the technical, scientific and administrative aspects of the REACH Regulation and to ensure consistency at Union level in relation to these aspects (Article 75 of the REACH Regulation) and to manage tasks related to the classification and labelling of chemical substances deriving from the CLP Regulation. |
| --- | --- |

—

ECHA is established for the purposes of managing and, in some cases, carrying out the technical, scientific and administrative aspects of the REACH Regulation and to ensure consistency at Union level in relation to these aspects (Article 75 of the REACH Regulation) and to manage tasks related to the classification and labelling of chemical substances deriving from the CLP Regulation.

Tasks

| — | To receive registrations and other dossiers of chemical substances and undertake a completeness check thereof (Title II of the REACH Regulation). |
| --- | --- |

—

To receive registrations and other dossiers of chemical substances and undertake a completeness check thereof (Title II of the REACH Regulation).

| — | To process inquiries regarding the registrations and take decisions on data sharing disputes (Title III of the REACH Regulation). |
| --- | --- |

—

To process inquiries regarding the registrations and take decisions on data sharing disputes (Title III of the REACH Regulation).

| — | To examine registration dossiers for compliance with the REACH Regulation and the testing proposals therein, and coordinate the substance evaluation process (Title VI of the REACH Regulation). |
| --- | --- |

—

To examine registration dossiers for compliance with the REACH Regulation and the testing proposals therein, and coordinate the substance evaluation process (Title VI of the REACH Regulation).

| — | To process proposals of substances of very high concern for the Candidate List and make recommendations for some of these substances to be included in the Authorisation List and handle authorisation applications (Title VII of the REACH Regulation). |
| --- | --- |

—

To process proposals of substances of very high concern for the Candidate List and make recommendations for some of these substances to be included in the Authorisation List and handle authorisation applications (Title VII of the REACH Regulation).

| — | To process restriction dossiers (Title VIII of the REACH Regulation). |
| --- | --- |

—

To process restriction dossiers (Title VIII of the REACH Regulation).

| — | To establish and maintain public database(s) with information on all registered substances and make certain information publicly available over the Internet (Articles 77 and 119 of the REACH Regulation). |
| --- | --- |

—

To establish and maintain public database(s) with information on all registered substances and make certain information publicly available over the Internet (Articles 77 and 119 of the REACH Regulation).

| — | To provide technical and scientific guidance and tools where appropriate (Article 77 of the REACH Regulation, Article 50(2) of CLP Regulation) and under the Biocidal Product Regulation (EU) No 528/2012. |
| --- | --- |

—

To provide technical and scientific guidance and tools where appropriate (Article 77 of the REACH Regulation, Article 50(2) of CLP Regulation) and under the Biocidal Product Regulation (EU) No 528/2012.

| — | To provide the Member States and the EU institutions with the best possible scientific and technical advice on questions relating to chemicals which fall within its remit and which are referred to it in accordance with the provisions of the REACH and CLP Regulations (Article 77(1) of the REACH Regulation, Article 50(1) of CLP Regulation). |
| --- | --- |

—

To provide the Member States and the EU institutions with the best possible scientific and technical advice on questions relating to chemicals which fall within its remit and which are referred to it in accordance with the provisions of the REACH and CLP Regulations (Article 77(1) of the REACH Regulation, Article 50(1) of CLP Regulation).

| — | To receive C&L notifications, maintain a public C&L inventory, handle requests for alternative names and process proposals for the harmonised classification and labelling of substances (CLP). |
| --- | --- |

—

To receive C&L notifications, maintain a public C&L inventory, handle requests for alternative names and process proposals for the harmonised classification and labelling of substances (CLP).

| — | To implement technical and scientific tasks in accordance with the Biocidal Products Regulation (EU) No 528/2012, which came into force on 1 September 2013. |
| --- | --- |

—

To implement technical and scientific tasks in accordance with the Biocidal Products Regulation (EU) No 528/2012, which came into force on 1 September 2013.

| — | To implement tasks under the PIC (‘Prior Informed Consent’) Regulation (EU) No 649/2012, which came into force on 1 March 2014. |
| --- | --- |

—

To implement tasks under the PIC (‘Prior Informed Consent’) Regulation (EU) No 649/2012, which came into force on 1 March 2014.

Governance

Management Board

One representative of each Member State appointed by the Council and a maximum of six representatives appointed by the Commission, including three individuals from interested parties without voting rights and, in addition, two independent persons appointed by the European Parliament. (Article 79 of the REACH Regulation).

Tasks

Article 78 of the REACH Regulation and framework financial regulation for agencies, mainly adopting annual and multiannual work programmes, the final budget, a general report, internal rules of procedures and the appointment of and disciplinary authority over the Executive Director. In addition, the appointment of the Board of Appeal and Committee members.

Executive Director

Tasks

Article 83 of the REACH Regulation

REACH Committees

The Agency comprises three Scientific Committees (Risk Assessment, Member States and Socio-Economic Analysis)

Tasks

Article 77(3)(a-c) of the REACH Regulation

BPR Committee

The Agency has a Biocidal Products Committee

Tasks

Article 75(1) of the Biocidal Products Regulation

Forum for Exchange of Information on Enforcement

Tasks

Article 77(4)(a-h) of the REACH Regulation

Secretariat

Tasks

Article 77(2)(a-o) of the REACH Regulation

Board of Appeal

Tasks

Article 76(1)(h) of the REACH Regulation

External audit

European Court of Auditors

Internal audit

European Commission’s Internal Audit Service (IAS)

Discharge authority

European Parliament on a recommendation from the Council (Article 97(10) of the REACH Regulation)

Resources made available to the Agency in 2014 (2013)

Budget (including amending budgets)

| — | 113,2(107,7) million euro, including:






  — | Revenue from fees: 27,2(86,1) million euro; 25,9(85,8) million euro in respect of fees and charges under the REACH Regulation (EC) No 1907/2006 and 1,3(0,3) million euro in respect of fees and charges collected under the Biocidal Products Regulation (EU) No 528/2012. |
| --- | --- | --- |

—

113,2(107,7) million euro, including:

—

Revenue from fees: 27,2(86,1) million euro; 25,9(85,8) million euro in respect of fees and charges under the REACH Regulation (EC) No 1907/2006 and 1,3(0,3) million euro in respect of fees and charges collected under the Biocidal Products Regulation (EU) No 528/2012.

| — | Union contribution: 7,8(8,6) million euro, including support for the implementation of Regulation (EU) No 528/2012 concerning the making available on the market and use of biocidal products (5,1 million euro), the balancing contribution (1,2 million euro), an EFTA contribution (0,2 million euro) and a contribution under Regulation (EU) No 649/2012 of the European Parliament and of the Council of 4 July 2012 concerning the export and import of hazardous chemicals (1,3 million euro). |
| --- | --- |

—

Union contribution: 7,8(8,6) million euro, including support for the implementation of Regulation (EU) No 528/2012 concerning the making available on the market and use of biocidal products (5,1 million euro), the balancing contribution (1,2 million euro), an EFTA contribution (0,2 million euro) and a contribution under Regulation (EU) No 649/2012 of the European Parliament and of the Council of 4 July 2012 concerning the export and import of hazardous chemicals (1,3 million euro).

Staff at 31 December 2014

| — | Number of posts in the establishment plan: 495 (503) |
| --- | --- |

—

Number of posts in the establishment plan: 495 (503)

| — | Number of posts occupied: 479, of which 9 under recruitment (468) |
| --- | --- |

—

Number of posts occupied: 479, of which 9 under recruitment (468)

| — | Other staff: 118 (95) (106 contract staff, of which 1 under recruitment and 12 seconded national experts) |
| --- | --- |

—

Other staff: 118 (95) (106 contract staff, of which 1 under recruitment and 12 seconded national experts)

| — | Total staff: 587 (563) assigned to the following (1):






  — | Operational tasks: 78 %/458 (386); |
| --- | --- | --- |

—

Total staff: 587 (563) assigned to the following (1):

—

Operational tasks: 78 %/458 (386);

| — | Administrative and support tasks: 22 %/129 (177) |
| --- | --- |

—

Administrative and support tasks: 22 %/129 (177)

Activities and services provided in 2014 (2013)

ECHA’s Work Program was divided into the following 17 Activities:

Registration, Pre-registration and Data-sharing

| — | Number of registration dossiers processed: 9  001(14  839) |
| --- | --- |

—

Number of registration dossiers processed: 9  001(14  839)

| — | Number of confidentiality requests assessments completed: 636 (860) assessments (initial and final) of which 67 (198) negative decisions |
| --- | --- |

—

Number of confidentiality requests assessments completed: 636 (860) assessments (initial and final) of which 67 (198) negative decisions

| — | Number of new inquiries received: 1  000(1  903) |
| --- | --- |

—

Number of new inquiries received: 1  000(1  903)

| — | Number of decisions issued on data sharing disputes: 5 (11) |
| --- | --- |

—

Number of decisions issued on data sharing disputes: 5 (11)

| — | Number of substances on which info made public (excluding confidential info): 12  888(10  561) |
| --- | --- |

—

Number of substances on which info made public (excluding confidential info): 12  888(10  561)

Evaluation

| — | Number of compliance checks completed: 283 (637) |
| --- | --- |

—

Number of compliance checks completed: 283 (637)

| — | Number of final decisions on testing proposals: 204 (111) |
| --- | --- |

—

Number of final decisions on testing proposals: 204 (111)

Risk Management

| — | Number of substances identified for inclusion in the Candidate List: 10 (13) |
| --- | --- |

—

Number of substances identified for inclusion in the Candidate List: 10 (13)

| — | Number of recommendations of substances for inclusion in Authorisation List: 1 (1) |
| --- | --- |

—

Number of recommendations of substances for inclusion in Authorisation List: 1 (1)

| — | Number of restriction dossiers submitted for Commission decision: 4 (2) |
| --- | --- |

—

Number of restriction dossiers submitted for Commission decision: 4 (2)

| — | Number of authorisation applications received: 19 (8) |
| --- | --- |

—

Number of authorisation applications received: 19 (8)

| — | Number of notifications of Candidate List substances in articles: 14 (93) |
| --- | --- |

—

Number of notifications of Candidate List substances in articles: 14 (93)

Classification and Labelling (C&L)

| — | Number of C&L notifications received: 6,4 million for over 1 33  000 substances (of which over 1 18  000 are included in the publicly disseminated notifications) |
| --- | --- |

—

Number of C&L notifications received: 6,4 million for over 1 33  000 substances (of which over 1 18  000 are included in the publicly disseminated notifications)

| — | Number of proposals for harmonised classification and labelling received: 44 (29) |
| --- | --- |

—

Number of proposals for harmonised classification and labelling received: 44 (29)

| — | Number of requests for alternative names for substances in mixtures received: 28 (28) |
| --- | --- |

—

Number of requests for alternative names for substances in mixtures received: 28 (28)

Advice and assistance

| — | Number of questions answered by ECHA Helpdesk: 7  628(5  975) |
| --- | --- |

—

Number of questions answered by ECHA Helpdesk: 7  628(5  975)

| — | Number of new guidance documents issued: 10 (1) |
| --- | --- |

—

Number of new guidance documents issued: 10 (1)

| — | Number of guidance updates and corrigenda issued: 9 (3) updates and 8 (4) corrigenda |
| --- | --- |

—

Number of guidance updates and corrigenda issued: 9 (3) updates and 8 (4) corrigenda

Scientific IT Tools

| — | 2 new versions of R4BP were released in 2014 |
| --- | --- |

—

2 new versions of R4BP were released in 2014

| — | An SPC editor developed and released to support the authoring of structured SPC for Biocides |
| --- | --- |

—

An SPC editor developed and released to support the authoring of structured SPC for Biocides

| — | A new system supporting PIC Regulation, ePIC, released in time to manage notifications arriving for 2015 |
| --- | --- |

—

A new system supporting PIC Regulation, ePIC, released in time to manage notifications arriving for 2015

| — | The current dissemination system enhanced to cover Biocides and PIC data and to achieve operational efficiencies |
| --- | --- |

—

The current dissemination system enhanced to cover Biocides and PIC data and to achieve operational efficiencies

| — | An update to the Chesar 2 product (version 2.3) released |
| --- | --- |

—

An update to the Chesar 2 product (version 2.3) released

| — | The case management platform Dynamic Case was launched and already supporting 17 REACH&CLP processes by year-end |
| --- | --- |

—

The case management platform Dynamic Case was launched and already supporting 17 REACH&CLP processes by year-end

| — | Two new versions of Odyssey were released |
| --- | --- |

—

Two new versions of Odyssey were released

| — | Two maintenance versions of ECM-DEP released |
| --- | --- |

—

Two maintenance versions of ECM-DEP released

Scientific and Technical Advice to EU institutions and bodies

| — | A successful Topical Scientific Workshop on Regulatory Challenges in Risk Assessment of Nanomaterials was organised in October 2014 |
| --- | --- |

—

A successful Topical Scientific Workshop on Regulatory Challenges in Risk Assessment of Nanomaterials was organised in October 2014

| — | ECHA 2nd report under Article 117(3) of REACH on use of alternatives to animal testing was published |
| --- | --- |

—

ECHA 2nd report under Article 117(3) of REACH on use of alternatives to animal testing was published

| — | ECHA’s 2-year work plan on nanomaterials was updated |
| --- | --- |

—

ECHA’s 2-year work plan on nanomaterials was updated

| — | Two meetings of the nanomaterials working group were held |
| --- | --- |

—

Two meetings of the nanomaterials working group were held

| — | Contributions to the Commission’s work for the revision of REACH annexes regarding specific requirements for nanomaterials |
| --- | --- |

—

Contributions to the Commission’s work for the revision of REACH annexes regarding specific requirements for nanomaterials

| — | ECHA and JRC published a report on ‘Awareness of non-animal methods for the assessment of chemicals — View to promote non-animal testing and alternative methods’ |
| --- | --- |

—

ECHA and JRC published a report on ‘Awareness of non-animal methods for the assessment of chemicals — View to promote non-animal testing and alternative methods’

| — | Contribution to the development of OECD test guidelines and testing strategies (IATAs) especially in the areas of skin and eye irritation/corrosion, skin sensitisation, genotoxicity, endocrine disrupters, reproductive toxicity and aquatic and terrestrial ecotoxicity. |
| --- | --- |

—

Contribution to the development of OECD test guidelines and testing strategies (IATAs) especially in the areas of skin and eye irritation/corrosion, skin sensitisation, genotoxicity, endocrine disrupters, reproductive toxicity and aquatic and terrestrial ecotoxicity.

Committees and Forum

| — | Number of unanimous MSC agreements: 149 (155) |
| --- | --- |

—

Number of unanimous MSC agreements: 149 (155)

| — | Number of RAC opinions: 88 (41) |
| --- | --- |

—

Number of RAC opinions: 88 (41)

| — | Number of SEAC opinions: 34 (3) |
| --- | --- |

—

Number of SEAC opinions: 34 (3)

Board of Appeal

| — | Number of appeals lodged: 18 (22) |
| --- | --- |

—

Number of appeals lodged: 18 (22)

| — | Number of decisions on appeals: 16 (8) |
| --- | --- |

—

Number of decisions on appeals: 16 (8)

Communication

| — | 3 Stakeholder events organised:






  — | 2 Stakeholders’ Days |
| --- | --- | --- |

—

3 Stakeholder events organised:

—

2 Stakeholders’ Days

| — | Accredited Stakeholder Workshop |
| --- | --- |

—

Accredited Stakeholder Workshop

| — | 8 webinars organised with 2  060 participants |
| --- | --- |

—

8 webinars organised with 2  060 participants

| — | 264 (250) translations. |
| --- | --- |

—

264 (250) translations.

| — | 1 4 81  986 website visitors for a total of 4 4 30  136 visits. |
| --- | --- |

—

1 4 81  986 website visitors for a total of 4 4 30  136 visits.

| — | 61 (53) publications. |
| --- | --- |

—

61 (53) publications.

| — | 21 press releases produced, 49 interviews with media organised |
| --- | --- |

—

21 press releases produced, 49 interviews with media organised

| — | 57 news alerts, e-News bulletins, newsletters |
| --- | --- |

—

57 news alerts, e-News bulletins, newsletters

| — | 1  136 tweets, 51 Facebook posts and 38 LinkedIn posts published |
| --- | --- |

—

1  136 tweets, 51 Facebook posts and 38 LinkedIn posts published

Cooperation

| — | Scientific and technical co-operation with the OECD (e.g. IUCLID) and peer agencies (Australia, Canada, Japan and USA) and technical support to the Commission’s international work (e.g. UN GHS) |
| --- | --- |

—

Scientific and technical co-operation with the OECD (e.g. IUCLID) and peer agencies (Australia, Canada, Japan and USA) and technical support to the Commission’s international work (e.g. UN GHS)

Management

| — | Continued development and improvement of administrative and management systems |
| --- | --- |

—

Continued development and improvement of administrative and management systems

| — | ISO 9001 certification achieved |
| --- | --- |

—

ISO 9001 certification achieved

Finance, Procurement and Accounting

| — | Rigorous budget and cash reserve management |
| --- | --- |

—

Rigorous budget and cash reserve management

| — | In 2014 ECHA procured scientific, IT, communication and administrative services under its existing Framework Contracts (548 specific contract/orders) and through procurement procedures (188 contracts). In particular, the Agency successfully concluded open calls for tenders to establish new Framework Contracts for language training, for the certification of the ECHA IQMS against ISO 9001:2008 Standard, for current account banking services and launched a project to increase efficiency in its procurement and contract management and related financial processes. |
| --- | --- |

—

In 2014 ECHA procured scientific, IT, communication and administrative services under its existing Framework Contracts (548 specific contract/orders) and through procurement procedures (188 contracts). In particular, the Agency successfully concluded open calls for tenders to establish new Framework Contracts for language training, for the certification of the ECHA IQMS against ISO 9001:2008 Standard, for current account banking services and launched a project to increase efficiency in its procurement and contract management and related financial processes.

| — | Total number of companies verified regarding SME status: 271 (516) |
| --- | --- |

—

Total number of companies verified regarding SME status: 271 (516)

Human resources and corporate services

| — | 22 (27) selection procedures finalised; 62 (87) staff members recruited (TA and CA) |
| --- | --- |

—

22 (27) selection procedures finalised; 62 (87) staff members recruited (TA and CA)

Information and Communication Technology

| — | The first modules of the HRMS were launched |
| --- | --- |

—

The first modules of the HRMS were launched

| — | A totally restructured document management system is in use |
| --- | --- |

—

A totally restructured document management system is in use

Biocides

| — | 2  094 biocides applications (applications for new active substances, renewals or review, Union authorisations of products) were processed and transmitted to Member States |
| --- | --- |

—

2  094 biocides applications (applications for new active substances, renewals or review, Union authorisations of products) were processed and transmitted to Member States

| — | 4 data sharing disputes solved |
| --- | --- |

—

4 data sharing disputes solved

| — | Assessment of suppliers’ applications of active substances and maintenance of the list of approved suppliers: 1 decision |
| --- | --- |

—

Assessment of suppliers’ applications of active substances and maintenance of the list of approved suppliers: 1 decision

| — | Assessment of technical equivalence applications: 7 decisions |
| --- | --- |

—

Assessment of technical equivalence applications: 7 decisions

| — | Assessment of chemical similarity of active substances: 1 case |
| --- | --- |

—

Assessment of chemical similarity of active substances: 1 case

PIC

| — | 5  289 notifications were processed |
| --- | --- |

—

5  289 notifications were processed

---

(1)  Based on the benchmarking exercise.

Source: Annex supplied by the Agency.

---

THE AGENCY’S REPLY

| 11. | ECHA appreciates the conclusion of the European Court of Auditors and will continue to be attentive to avoid any non-justified carry-over operations.
  It is true that the fees triggered by the 2014 applications under the Biocidal Products Regulation (BPR) covered the Agency’s related cost only for a small part. The original Commission assumption, that the Agency would be largely self-financing, has proven to be incorrect, as the national and EU fees have a bias in favour of national applications and mutual recognitions rather than Union authorisations for Biocidal products.
  The Commission has, meanwhile, adapted its fee estimates downwards several times and now recognises the need for a continuing annual EU subsidy sufficient to cover most of ECHA’s non-fee related tasks. The Commission has also launched an independent study that should provide the necessary input to review the Fee Regulation, as foreseen by the BPR in 2015. |
| --- | --- |

11.

ECHA appreciates the conclusion of the European Court of Auditors and will continue to be attentive to avoid any non-justified carry-over operations.

It is true that the fees triggered by the 2014 applications under the Biocidal Products Regulation (BPR) covered the Agency’s related cost only for a small part. The original Commission assumption, that the Agency would be largely self-financing, has proven to be incorrect, as the national and EU fees have a bias in favour of national applications and mutual recognitions rather than Union authorisations for Biocidal products.

The Commission has, meanwhile, adapted its fee estimates downwards several times and now recognises the need for a continuing annual EU subsidy sufficient to cover most of ECHA’s non-fee related tasks. The Commission has also launched an independent study that should provide the necessary input to review the Fee Regulation, as foreseen by the BPR in 2015.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/143 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/143

---

REPORT

on the annual accounts of the European Environment Agency for the financial year 2014, together with the Agency’s reply

(2015/C 409/16)

INTRODUCTION

| 1. | The European Environment Agency (hereinafter ‘the Agency’, aka ‘EEA’), which is located in Copenhagen, was established by Council Regulation (EEC) No 1210/90 (1). It is responsible for setting up an observation network to provide the Commission, the Parliament, the Member States and, more generally, the public with reliable information on the state of the environment. This information should, in particular, enable the European Union and the Member States to take action to safeguard the environment and assess the effectiveness of such action (2). |
| --- | --- |

1.

The European Environment Agency (hereinafter ‘the Agency’, aka ‘EEA’), which is located in Copenhagen, was established by Council Regulation (EEC) No 1210/90 (1). It is responsible for setting up an observation network to provide the Commission, the Parliament, the Member States and, more generally, the public with reliable information on the state of the environment. This information should, in particular, enable the European Union and the Member States to take action to safeguard the environment and assess the effectiveness of such action (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency's supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency's supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Agency's annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Agency's annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON THE LEGALITY AND REGULARITY OF TRANSACTIONS

| 11. | In 2014 the Agency launched a call to procure services to provide IT and Geographic Information Systems (GIS) consultancy services for the implementation of Reference Data Access (RDA) component and for supporting EEA in other Copernicus related activities to the value of 1,7 million euro. An important aspect of the tender referred to as ‘known shortcomings’ was not defined anywhere in the technical specifications. Clearer tender specifications would have contributed to a more effective and competitive procurement procedure. |
| --- | --- |

11.

In 2014 the Agency launched a call to procure services to provide IT and Geographic Information Systems (GIS) consultancy services for the implementation of Reference Data Access (RDA) component and for supporting EEA in other Copernicus related activities to the value of 1,7 million euro. An important aspect of the tender referred to as ‘known shortcomings’ was not defined anywhere in the technical specifications. Clearer tender specifications would have contributed to a more effective and competitive procurement procedure.

COMMENTS ON INTERNAL CONTROLS

| 12. | Although the EEA has started to implement a new ex-ante and ex-post control policy for grants, the verification procedures have not yet been documented. However, guidelines have been issued to beneficiaries (European Topic Centres or ETC) on the preparation of cost statements. |
| --- | --- |

12.

Although the EEA has started to implement a new ex-ante and ex-post control policy for grants, the verification procedures have not yet been documented. However, guidelines have been issued to beneficiaries (European Topic Centres or ETC) on the preparation of cost statements.

| 13. | Weaknesses were nevertheless noted for the grant transactions audited. For one of the ETCs, the verifying officer had identified the inclusion of ineligible expenditure within the cost claim but the authorising officer approved the full amount claimed. In a second case, the full cost claim was paid even though most of the partners selected for ex ante verification had not provided the EEA with the requested documents. Furthermore, the internal auditor was involved in both ex ante and ex post verifications: these are incompatible tasks. It should be noted that the system of ex ante controls has been the subject of discussion between the Court and the Agency since 2012. |
| --- | --- |

13.

Weaknesses were nevertheless noted for the grant transactions audited. For one of the ETCs, the verifying officer had identified the inclusion of ineligible expenditure within the cost claim but the authorising officer approved the full amount claimed. In a second case, the full cost claim was paid even though most of the partners selected for ex ante verification had not provided the EEA with the requested documents. Furthermore, the internal auditor was involved in both ex ante and ex post verifications: these are incompatible tasks. It should be noted that the system of ex ante controls has been the subject of discussion between the Court and the Agency since 2012.

OTHER COMMENTS

| 14. | The Agency has contracted backup services, including email services, with a cloud services provider using an interinstitutional contract procured by DIGIT. The conditions of the contract do not adequately define the location of the Agency’s data. The contractor has reserved the right to transfer the Agency’s data outside the geographic area of the European Union without notice, e.g. to address latency issues, routing data may need to be copied to different data centres in different regions. Consequently the Agency has not ensured that the privileges and immunities of the European Communities, to which it is subject, are guaranteed and that the service provider fully respects the privacy guarantees granted by Article 7 of the EU Charter of Fundamental Rights. |
| --- | --- |

14.

The Agency has contracted backup services, including email services, with a cloud services provider using an interinstitutional contract procured by DIGIT. The conditions of the contract do not adequately define the location of the Agency’s data. The contractor has reserved the right to transfer the Agency’s data outside the geographic area of the European Union without notice, e.g. to address latency issues, routing data may need to be copied to different data centres in different regions. Consequently the Agency has not ensured that the privileges and immunities of the European Communities, to which it is subject, are guaranteed and that the service provider fully respects the privacy guarantees granted by Article 7 of the EU Charter of Fundamental Rights.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 15. | An overview of the corrective actions taken in response to the Court's comments from the previous years is provided in Annex I. |
| --- | --- |

15.

An overview of the corrective actions taken in response to the Court's comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 15 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 120, 11.5.1990, p. 1.

1

(2)  Annex II summarises the Agency's competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

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ANNEX I

Follow-up of previous years’ comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2012 | In 2012 the Agency awarded grants under three major grant programmes (1) to consortia consisting of environmental institutions and bodies in Europe, UN organisations and national environment organisations. Total grant expenditure in 2012 was 11,9 million euro, representing 27 % of the total operating expenditure. The Agency’s ex ante verifications before reimbursement of costs claimed by beneficiaries consist of a desk analysis of cost claims. It does not usually obtain from beneficiaries any document to substantiate the eligibility and accuracy of the staff costs claimed, which represent the main part of costs (2). Ex ante on-the-spot verifications of costs at beneficiary level are rare (3). | Ongoing |
| 2013 | In 2013 the Agency awarded grants under five grant programmes (4) to consortia consisting of environmental institutions and bodies in Europe, UN organisations and national environment organisations. Total grant expenditure in 2013 was 13,9 million euro, representing 31 % of total operating expenditure. The Agency’s ex ante verifications consist of a desk analysis of cost claims. Following the Court’s comment of last year, the EEA intensified its checks on the eligibility and accuracy of staff costs claimed under the grant programmes, as these represent the major part of costs. In particular, for a sample of beneficiaries, time sheets were obtained to check the salary costs claimed, but payslips have not been obtained. On-the-spot verifications of costs at beneficiary level are rare.
  Existing controls therefore provide only limited assurance on the eligibility and accuracy of the costs claimed by beneficiaries. For the transactions audited by the Court supporting documentation was obtained which provided reasonable assurance as to their legality and regularity. | Ongoing |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2012

In 2012 the Agency awarded grants under three major grant programmes (1) to consortia consisting of environmental institutions and bodies in Europe, UN organisations and national environment organisations. Total grant expenditure in 2012 was 11,9 million euro, representing 27 % of the total operating expenditure. The Agency’s ex ante verifications before reimbursement of costs claimed by beneficiaries consist of a desk analysis of cost claims. It does not usually obtain from beneficiaries any document to substantiate the eligibility and accuracy of the staff costs claimed, which represent the main part of costs (2). Ex ante on-the-spot verifications of costs at beneficiary level are rare (3).

Ongoing

2013

In 2013 the Agency awarded grants under five grant programmes (4) to consortia consisting of environmental institutions and bodies in Europe, UN organisations and national environment organisations. Total grant expenditure in 2013 was 13,9 million euro, representing 31 % of total operating expenditure. The Agency’s ex ante verifications consist of a desk analysis of cost claims. Following the Court’s comment of last year, the EEA intensified its checks on the eligibility and accuracy of staff costs claimed under the grant programmes, as these represent the major part of costs. In particular, for a sample of beneficiaries, time sheets were obtained to check the salary costs claimed, but payslips have not been obtained. On-the-spot verifications of costs at beneficiary level are rare.

Existing controls therefore provide only limited assurance on the eligibility and accuracy of the costs claimed by beneficiaries. For the transactions audited by the Court supporting documentation was obtained which provided reasonable assurance as to their legality and regularity.

Ongoing

---

(1)  European Topic Centers (ETC), European Neighbourhood Partnership Instrument (ENPI) and Global Monitoring for Environment and Security Initial Operations (GIO).

(2)  For other types of costs (i.e. sub-contracting, acquisition of equipment), supporting documents are requested and analysed.

(3)  In 2012 and in 2011 one ex ante verification was carried out to check one beneficiary’s control systems. In 2010 one ex ante verification had been carried out to check the eligibility of expenditure declared by one beneficiary.

(4)  European Topic Centres (ETCs), European Neighbourhood Partnership Instrument (ENPI) Global Monitoring for Environment and Security Initial Operations (GIO and GIO2), GMES in-situ coordination (GISC) and Instrument for Pre-Accession Assistance (IPA2).

---

ANNEX II

European Environment Agency (Copenhagen)

Competences and Activities

| Areas of Union competence deriving from the Treaty


  (Article 191 of the Treaty on the Functioning of the European Union) | Environment policy

  Union policy on the environment shall contribute to pursuit of [...] the objectives of preserving, protecting and improving the quality of the environment, protecting human health, prudent and rational utilisation of natural resources, promoting measures at international level to deal with regional or worldwide environmental problems, and in particular combating climate change.
  Union policy on the environment shall aim at a high level of protection taking into account the diversity of situations in the various regions of the Union. It shall be based on the precautionary principle and on the principles that preventive action should be taken, that environmental damage should as a priority be rectified at source and that the polluter should pay. [...] In preparing its policy [...], the Union shall take account of available scientific and technical data, environmental conditions in the various regions of the Union, the potential benefits and costs of action or lack of action, the economic and social development of the Union as a whole and the balanced development of its regions [...]. |
| --- | --- |
| Competences of the Agency


  (Council Regulation (EEC) No 1210/1990) | Objectives

  To set up a European environment information and observation network to provide the Union and the Member States with:






  1. | Objective, reliable and comparable information at European level enabling them to:






  (a) | take the requisite measures to protect the environment, |

Areas of Union competence deriving from the Treaty

(Article 191 of the Treaty on the Functioning of the European Union)

Environment policy

Union policy on the environment shall contribute to pursuit of [...] the objectives of preserving, protecting and improving the quality of the environment, protecting human health, prudent and rational utilisation of natural resources, promoting measures at international level to deal with regional or worldwide environmental problems, and in particular combating climate change.

Union policy on the environment shall aim at a high level of protection taking into account the diversity of situations in the various regions of the Union. It shall be based on the precautionary principle and on the principles that preventive action should be taken, that environmental damage should as a priority be rectified at source and that the polluter should pay. [...] In preparing its policy [...], the Union shall take account of available scientific and technical data, environmental conditions in the various regions of the Union, the potential benefits and costs of action or lack of action, the economic and social development of the Union as a whole and the balanced development of its regions [...].

Competences of the Agency

(Council Regulation (EEC) No 1210/1990)

Objectives

To set up a European environment information and observation network to provide the Union and the Member States with:

1.

Objective, reliable and comparable information at European level enabling them to:

(a)

take the requisite measures to protect the environment,

| (b) | assess the results of such measures, |
| --- | --- |

(b)

assess the results of such measures,

| (c) | ensure that the public is properly informed about the state of the environment. |
| --- | --- |

(c)

ensure that the public is properly informed about the state of the environment.

| 2. | The necessary technical and scientific support. |
| --- | --- |

2.

The necessary technical and scientific support.

Tasks

| — | to establish, in cooperation with the Member States, and coordinate the European Environment Information and Observation Network; |
| --- | --- |

—

to establish, in cooperation with the Member States, and coordinate the European Environment Information and Observation Network;

| — | to provide the Union and the Member States with the objective information necessary for framing and implementing sound and effective environmental policies; |
| --- | --- |

—

to provide the Union and the Member States with the objective information necessary for framing and implementing sound and effective environmental policies;

| — | to assist the monitoring of environmental measures through appropriate support for reporting requirements; |
| --- | --- |

—

to assist the monitoring of environmental measures through appropriate support for reporting requirements;

| — | to advise individual Member States on the development, establishment and expansion of their systems for the monitoring of environmental measures; |
| --- | --- |

—

to advise individual Member States on the development, establishment and expansion of their systems for the monitoring of environmental measures;

| — | to record, collate and assess data on the state of the environment, to report on the quality of and pressures on the environment within the territory of the Union, to provide uniform assessment criteria for environmental data to be applied in all Member States and to develop further and maintain a reference centre of information on the environment; |
| --- | --- |

—

to record, collate and assess data on the state of the environment, to report on the quality of and pressures on the environment within the territory of the Union, to provide uniform assessment criteria for environmental data to be applied in all Member States and to develop further and maintain a reference centre of information on the environment;

| — | to help ensure that environmental data at European level are comparable and, if necessary, to encourage by appropriate means improved harmonisation of methods of measurement; |
| --- | --- |

—

to help ensure that environmental data at European level are comparable and, if necessary, to encourage by appropriate means improved harmonisation of methods of measurement;

| — | to promote the incorporation of European environmental data into international environment monitoring programmes; |
| --- | --- |

—

to promote the incorporation of European environmental data into international environment monitoring programmes;

| — | to publish a report on the state of, trends in and prospects for the environment every five years, supplemented by indicator reports focussing upon specific issues; |
| --- | --- |

—

to publish a report on the state of, trends in and prospects for the environment every five years, supplemented by indicator reports focussing upon specific issues;

| — | to stimulate the development of environmental forecasting techniques, exchanges of information on technologies for preventing or reducing damage to the environment, methods of assessing the costs of damage to the environment and the costs of environmental preventive, protection and restoration policies; |
| --- | --- |

—

to stimulate the development of environmental forecasting techniques, exchanges of information on technologies for preventing or reducing damage to the environment, methods of assessing the costs of damage to the environment and the costs of environmental preventive, protection and restoration policies;

| — | to ensure the broad dissemination of reliable and comparable environmental information, in particular on the state of the environment, to the general public and, to this end, to promote use of new telematics technology for this purpose; |
| --- | --- |

—

to ensure the broad dissemination of reliable and comparable environmental information, in particular on the state of the environment, to the general public and, to this end, to promote use of new telematics technology for this purpose;

| — | to cooperate actively with other Union bodies and programmes and other international bodies and in areas of common interest with those institutions in countries which are not members of the Union, taking account of the need to avoid duplication of effort; |
| --- | --- |

—

to cooperate actively with other Union bodies and programmes and other international bodies and in areas of common interest with those institutions in countries which are not members of the Union, taking account of the need to avoid duplication of effort;

| — | to support the Commission in the process of exchange of information on the development of environmental assessment methodologies and best practice and in the diffusion of information on the results of relevant environmental research and in a form which can best assist policy development. |
| --- | --- |

—

to support the Commission in the process of exchange of information on the development of environmental assessment methodologies and best practice and in the diffusion of information on the results of relevant environmental research and in a form which can best assist policy development.

Governance

Management Board

Composition

One representative of each Member State, one of each EEA member country, two representatives of the Commission, and two scientists appointed by the European Parliament.

Tasks

To adopt the multiannual and annual work programmes and to ensure their implementation and to adopt the annual report on the Agency’s activities.

Executive Director

Appointed by the Management Board on a proposal from the Commission.

Scientific Committee

Consisting of qualified persons in the field of the environment, designated by the Management Board.

External audit

European Court of Auditors.

Discharge authority

European Parliament, acting on a recommendation from the Council.

Resources made available to the Agency in 2014 (2013)

Final Budget

52,6(41,7) million euro

Union subsidy: 80 % (100 %)

Staff as of 31 December 2014

Number of posts in the establishment plan: 135 (138)

Posts occupied: 130 (132) plus 74 (78) other posts (contract staff and seconded national experts)

Total staff numbers: 204 (210)

Establishment plan posts assigned to the following tasks:

| — | operational 97 (98) |
| --- | --- |

—

operational 97 (98)

| — | administrative 38 (40) |
| --- | --- |

—

administrative 38 (40)

Products and services in 2014 (2013)

| Articles | 14 (48) |
| --- | --- |
| Highlights | 46 (53) |
| Press releases | 7 (11) |
| Data sets | 54 (29) |
| Indicators | 34 (46) |
| Maps, graphs | 48 (217) |
| Brochures, flyers etc. | 1 (5) |
| Corporate docs | 2 (5) |
| Reports | 10 (13) |
| Technical reports | 17 (21) |
| EEA Signals | 1 (1) |
| SOER | 1 (0) |

Articles

14 (48)

Highlights

46 (53)

Press releases

7 (11)

Data sets

54 (29)

Indicators

34 (46)

Maps, graphs

48 (217)

Brochures, flyers etc.

1 (5)

Corporate docs

2 (5)

Reports

10 (13)

Technical reports

17 (21)

EEA Signals

1 (1)

SOER

1 (0)

Source: Annex supplied by the Agency.

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THE AGENCY’S REPLY

| 11. | According to EEA’s understanding the principle of transparency has been respected. The ‘known shortcomings’ were adequately described in section 6.3.2 of the tender specifications with use of words such as: improvement, correction, adjustment and ensuring consistency. The full tender specifications can be seen on the EEA’s website (http://www.eea.europa.eu/about-us/tenders/eea-mdi-14-005-it). |
| --- | --- |

11.

According to EEA’s understanding the principle of transparency has been respected. The ‘known shortcomings’ were adequately described in section 6.3.2 of the tender specifications with use of words such as: improvement, correction, adjustment and ensuring consistency. The full tender specifications can be seen on the EEA’s website (http://www.eea.europa.eu/about-us/tenders/eea-mdi-14-005-it).

| 12. | When implementing the new ex-ante and ex-post verification policy for grants as from May 2014, the EEA prioritized guidelines for beneficiaries on the preparation of cost statements. ‘EEA verification guidelines’ have been elaborated since and distributed to the resource officers performing the ex-ante verifications on grants and are applicable from the financial year 2016. |
| --- | --- |

12.

When implementing the new ex-ante and ex-post verification policy for grants as from May 2014, the EEA prioritized guidelines for beneficiaries on the preparation of cost statements. ‘EEA verification guidelines’ have been elaborated since and distributed to the resource officers performing the ex-ante verifications on grants and are applicable from the financial year 2016.

| 13. | Following the observation from the ECA, the EEA has initiated the recovery from the beneficiary concerned.
  The EEA will ensure a rigorous implementation of ICS No 18 to document any instances of overriding of controls or deviations from established policies and procedure that may occur in the future.
  Concerning the second part of this observation, the Agency did not deem it effective to pursue the requested documents given that strong evidence had been obtained from the same partners from past sampling. In addition, the Agency was in dialogue with the Court’s auditors at this time on formulating the most appropriate verification policy aimed at ensuring coverage and eligibility.
  EEA takes note of the third remark in this observation and will take it into consideration when revising the current ETC verification policy. A formal ex-post verification strategy will be developed ensuring compatibility with the tasks of EEA Internal Audit Capability. The internal auditor will carry out exclusively ex-post controls thus covering both on-the-spot verifications and effectiveness of the EEA ex-ante verification process. |
| --- | --- |

13.

Following the observation from the ECA, the EEA has initiated the recovery from the beneficiary concerned.

The EEA will ensure a rigorous implementation of ICS No 18 to document any instances of overriding of controls or deviations from established policies and procedure that may occur in the future.

Concerning the second part of this observation, the Agency did not deem it effective to pursue the requested documents given that strong evidence had been obtained from the same partners from past sampling. In addition, the Agency was in dialogue with the Court’s auditors at this time on formulating the most appropriate verification policy aimed at ensuring coverage and eligibility.

EEA takes note of the third remark in this observation and will take it into consideration when revising the current ETC verification policy. A formal ex-post verification strategy will be developed ensuring compatibility with the tasks of EEA Internal Audit Capability. The internal auditor will carry out exclusively ex-post controls thus covering both on-the-spot verifications and effectiveness of the EEA ex-ante verification process.

| 14. | Prior to the implementation of a cloud based e-mail service, the EEA carried out a test study and then a risk assessment of the changes entailed involving EEA IT and quality management experts as well as the data protection officer. Following this assessment process, further clarifications and guarantees were requested from the provider in order to ensure compliance with the European Regulation on the protection of personal data. In this respect the provider confirmed that:






  — | Data centers are guaranteed to be in Europe (Dublin as the primary site and Amsterdam as mirror and back up) and the communication between the EEA and the data centers is encrypted; |
| --- | --- | --- |

14.

Prior to the implementation of a cloud based e-mail service, the EEA carried out a test study and then a risk assessment of the changes entailed involving EEA IT and quality management experts as well as the data protection officer. Following this assessment process, further clarifications and guarantees were requested from the provider in order to ensure compliance with the European Regulation on the protection of personal data. In this respect the provider confirmed that:

—

Data centers are guaranteed to be in Europe (Dublin as the primary site and Amsterdam as mirror and back up) and the communication between the EEA and the data centers is encrypted;

| — | it adheres to the EU data protection Regulation and the EU Safe Harbour framework; |
| --- | --- |

—

it adheres to the EU data protection Regulation and the EU Safe Harbour framework;

| — | it will strive to redirect legal enquiries or promptly notify the EEA of any such enquiries, allowing the AIPN to take an informed decision on the required transfer of data, where possible; |
| --- | --- |

—

it will strive to redirect legal enquiries or promptly notify the EEA of any such enquiries, allowing the AIPN to take an informed decision on the required transfer of data, where possible;

| — | their cloud services are certified under the new ISO 27018/2014 certification and subject to regular audits; |
| --- | --- |

—

their cloud services are certified under the new ISO 27018/2014 certification and subject to regular audits;

| — | the security measures in place allow constant and immediate application of updates and greater possibilities to discover, track and resolve potential intrusion. |
| --- | --- |

—

the security measures in place allow constant and immediate application of updates and greater possibilities to discover, track and resolve potential intrusion.

Consequently, the EEA considers the residual risks identified as acceptable and adequately addressed by the agreed contractual clauses. The EEA will however undertake periodic reviews of the contract implementation with a view to re-assess the risks and adopt appropriate measures and remedial actions if deemed necessary.

Furthermore, the EEA considers that the immunities and privileges protecting its data are not affected by the use of cloud services.

As regards the respect of the right of privacy life and family life as provided for in the Charter of Fundamental Rights of the European Union, the EEA has since updated its policy for e-mail usage with the inclusion of a disclaimer towards staff members concerning the limited personal use of the e-mail system.

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| 9.12.2015 | EN | Official Journal of the European Union | C 409/151 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/151

---

REPORT

on the annual accounts of the European Fisheries Control Agency for the financial year 2014, together with the Agency’s reply

(2015/C 409/17)

INTRODUCTION

| 1. | The European Fisheries Control Agency (hereinafter ‘the Agency’, aka ‘EFCA’), which is located in Vigo, was established by Council Regulation (EC) No 768/2005 (1). The Agency’s main task is to organise the operational coordination of fisheries control and inspection activities by the Member States in order to ensure an effective and uniform application of the rules of the common fisheries policy (2). |
| --- | --- |

1.

The European Fisheries Control Agency (hereinafter ‘the Agency’, aka ‘EFCA’), which is located in Vigo, was established by Council Regulation (EC) No 768/2005 (1). The Agency’s main task is to organise the operational coordination of fisheries control and inspection activities by the Member States in order to ensure an effective and uniform application of the rules of the common fisheries policy (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

FOLLOW-UP OF PREVIOUS YEAR’S COMMENTS

| 10. | An overview of the corrective actions taken in response to the Court’s comments from the previous year is provided in Annex I. |
| --- | --- |

10.

An overview of the corrective actions taken in response to the Court’s comments from the previous year is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 128, 21.5.2005, p. 1.

1

(2)  Annex II summarises the Agency’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

---

ANNEX I

Follow-up of previous year’s comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2013 | In 2013 the overall level of committed appropriations was 99 %, indicating that commitments were made in a timely manner. The level of committed appropriations carried over to 2014 however was high at 4 98  592 euro (38 %) for Title II (administrative expenditure) and 7 34  301 euro (43 %) for Title III (operating expenditure). | N/A |
| 2013 | For Title III, an important reason for the high level of planned carry-overs was the considerable workload faced by the agency as a result of the large number of IT projects that were either launched or ongoing during 2013. | N/A |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2013

In 2013 the overall level of committed appropriations was 99 %, indicating that commitments were made in a timely manner. The level of committed appropriations carried over to 2014 however was high at 4 98  592 euro (38 %) for Title II (administrative expenditure) and 7 34  301 euro (43 %) for Title III (operating expenditure).

N/A

2013

For Title III, an important reason for the high level of planned carry-overs was the considerable workload faced by the agency as a result of the large number of IT projects that were either launched or ongoing during 2013.

N/A

---

ANNEX II

European Fisheries Control Agency (Vigo)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Article 43 TFEU) | The European Parliament and the Council, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, shall establish the common organisation of agricultural markets provided for in Article 40(1) and the other provisions necessary for the pursuit of the objectives of the common agricultural policy and of the common fisheries policy. |
| --- | --- |
| Competences of the Agency


  (Council Regulation (EC) No 768/2005, amended by Regulation (EC) No 1224/2009) | Objectives







  — | The Regulation establishes a European Fisheries Control Agency (EFCA), the objective of which is to organise operational coordination of fisheries control and inspection activities by the Member States and to assist them to cooperate so as to comply with the rules of the common fisheries policy in order to ensure its effective and uniform application. |

Areas of Union competence deriving from the Treaty

(Article 43 TFEU)

The European Parliament and the Council, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, shall establish the common organisation of agricultural markets provided for in Article 40(1) and the other provisions necessary for the pursuit of the objectives of the common agricultural policy and of the common fisheries policy.

Competences of the Agency

(Council Regulation (EC) No 768/2005, amended by Regulation (EC) No 1224/2009)

Objectives

—

The Regulation establishes a European Fisheries Control Agency (EFCA), the objective of which is to organise operational coordination of fisheries control and inspection activities by the Member States and to assist them to cooperate so as to comply with the rules of the common fisheries policy in order to ensure its effective and uniform application.

Tasks/Mission

| — | To coordinate control and inspection by Member States relating to the control and inspection obligations of the EU, |
| --- | --- |

—

To coordinate control and inspection by Member States relating to the control and inspection obligations of the EU,

| — | to coordinate the deployment of the national means of control and inspection pooled by the Member States concerned in accordance with this Regulation, |
| --- | --- |

—

to coordinate the deployment of the national means of control and inspection pooled by the Member States concerned in accordance with this Regulation,

| — | to assist Member States in reporting information on fishing activities and control and inspection activities to the Commission and third parties, |
| --- | --- |

—

to assist Member States in reporting information on fishing activities and control and inspection activities to the Commission and third parties,

| — | in the field of its competences, to assist Member States to fulfil their tasks and obligations under the rules of the Common Fisheries Policy, |
| --- | --- |

—

in the field of its competences, to assist Member States to fulfil their tasks and obligations under the rules of the Common Fisheries Policy,

| — | to assist Member States and the Commission in harmonising the application of the Common Fisheries Policy throughout the EU, |
| --- | --- |

—

to assist Member States and the Commission in harmonising the application of the Common Fisheries Policy throughout the EU,

| — | to contribute to the work of Member States and the Commission on research into and development of control and inspection techniques, |
| --- | --- |

—

to contribute to the work of Member States and the Commission on research into and development of control and inspection techniques,

| — | to contribute to the coordination of inspector training and the exchange of experience between Member States, |
| --- | --- |

—

to contribute to the coordination of inspector training and the exchange of experience between Member States,

| — | to coordinate the operations to combat illegal, unreported and unregulated fishing in conformity with EU rules, |
| --- | --- |

—

to coordinate the operations to combat illegal, unreported and unregulated fishing in conformity with EU rules,

| — | to assist in the uniform implementation of the control system of the common fisheries policy, including in particular:






  (i) | organisation of operational coordination of control activities by Member States for the implementation of specific control and inspection programmes, control programmes related to illegal, unreported and unregulated (IUU) fishing and international control and inspection programmes; |
| --- | --- | --- |

—

to assist in the uniform implementation of the control system of the common fisheries policy, including in particular:

(i)

organisation of operational coordination of control activities by Member States for the implementation of specific control and inspection programmes, control programmes related to illegal, unreported and unregulated (IUU) fishing and international control and inspection programmes;

| (ii) | inspections as necessary to fulfil the Agency’s tasks. |
| --- | --- |

(ii)

inspections as necessary to fulfil the Agency’s tasks.

Please note that, among other competences, after the amendment of the Agency’s establishing Regulation by Council Regulation (EC) No 1224/2009:

| 1. | operational coordination by the Agency shall cover control of all activities covered by the common fisheries policy; |
| --- | --- |

1.

operational coordination by the Agency shall cover control of all activities covered by the common fisheries policy;

| 2. | officials of the Agency may be assigned in international waters as Union inspectors; |
| --- | --- |

2.

officials of the Agency may be assigned in international waters as Union inspectors;

| 3. | the Agency may acquire, rent or charter the equipment that is necessary for the implementation of the joint deployment plans; |
| --- | --- |

3.

the Agency may acquire, rent or charter the equipment that is necessary for the implementation of the joint deployment plans;

| 4. | the Agency shall, where appropriate:






  (a) | issue manuals on harmonised standards of inspections; |
| --- | --- | --- |

4.

the Agency shall, where appropriate:

(a)

issue manuals on harmonised standards of inspections;

| (b) | develop guidance material reflecting the best practices in the field of control of the common fisheries policy, including on the training of control officials, and update this on a regular basis; |
| --- | --- |

(b)

develop guidance material reflecting the best practices in the field of control of the common fisheries policy, including on the training of control officials, and update this on a regular basis;

| (c) | provide the Commission with the necessary technical and administrative support to carry out its tasks; |
| --- | --- |

(c)

provide the Commission with the necessary technical and administrative support to carry out its tasks;

| 5. | the Agency shall facilitate cooperation between MS and between them and the Commission in the development of harmonised standards for control and best practices in the legal procedures field with the regard due to the different legal systems in the individual MS and in accordance with EU legislation and agreed international standards; |
| --- | --- |

5.

the Agency shall facilitate cooperation between MS and between them and the Commission in the development of harmonised standards for control and best practices in the legal procedures field with the regard due to the different legal systems in the individual MS and in accordance with EU legislation and agreed international standards;

| 6. | upon a notification by the Commission or of its own initiative the Agency shall set up an Emergency Unit, where a situation involving direct, indirect or potential serious risk to the common fisheries policy is identified, and the risk cannot be prevented, eliminated, or reduced by existing means or cannot adequately be managed; |
| --- | --- |

6.

upon a notification by the Commission or of its own initiative the Agency shall set up an Emergency Unit, where a situation involving direct, indirect or potential serious risk to the common fisheries policy is identified, and the risk cannot be prevented, eliminated, or reduced by existing means or cannot adequately be managed;

| 7. | the Agency shall contribute to the implementation of the EU integrated maritime policy, and in particular conclude administrative agreements with other bodies in matters covered by Council Regulation (EC) No 768/2005 after approval by the Administrative Board. |
| --- | --- |

7.

the Agency shall contribute to the implementation of the EU integrated maritime policy, and in particular conclude administrative agreements with other bodies in matters covered by Council Regulation (EC) No 768/2005 after approval by the Administrative Board.

(Regulation (EU) No 1380/2013 of the European Parliament and of the Council)

This regulation adopted the new common fisheries policy. As regards the Agency:

| — | the Union shall, including through the Agency, cooperate with third countries and international organisations dealing with fisheries, including regional fisheries management organisations, to strengthen compliance with measures, especially those to combat IUU fishing, in order to ensure that measures adopted by such international organisations are strictly adhered to, |
| --- | --- |

—

the Union shall, including through the Agency, cooperate with third countries and international organisations dealing with fisheries, including regional fisheries management organisations, to strengthen compliance with measures, especially those to combat IUU fishing, in order to ensure that measures adopted by such international organisations are strictly adhered to,

| — | control and enforcement of the CFP shall in particular be based on and shall include cooperation and coordination between Member States, the Commission and the Agency, |
| --- | --- |

—

control and enforcement of the CFP shall in particular be based on and shall include cooperation and coordination between Member States, the Commission and the Agency,

| — | the Agency may assist the expert group on compliance meetings as an observer. |
| --- | --- |

—

the Agency may assist the expert group on compliance meetings as an observer.

(Regulation (EC) 1386/2007 of the Council)

This Regulation empowers the Agency to coordinate the surveillance and inspection activities for the EU in the NAFO Regulatory Area and to draw up, in cooperation with the Member States, a plan for EU participation in the international inspection and surveillance scheme (Article 41).

(Commission Implementing Regulation (EU) 433/2012)

This Regulation, in line with the Regulation (EU) 1236/2010 of the European Parliament and the Council, and in relation with the fishing activities in the NEAFC Regulatory Area, designates the Agency to:

| — | coordinate the surveillance and inspection activities of the EU in the area, |
| --- | --- |

—

coordinate the surveillance and inspection activities of the EU in the area,

| — | prepare a plan in cooperation with Member States for EU participation in the international scheme, |
| --- | --- |

—

prepare a plan in cooperation with Member States for EU participation in the international scheme,

| — | receive and prepare reports on inspection and infringement in the NEAFC area. |
| --- | --- |

—

receive and prepare reports on inspection and infringement in the NEAFC area.

(Commission Decision 2009/988/EU)

By this Decision, the Commission designated the EFCA as the body to carry out certain tasks under the IUU Regulation. These tasks are as follows:

| — | transmit notifications, with copy to the Commission, on denials of landing or transhipment authorisations by third country vessels to flag state(s) and, if appropriate copies of these notifications, to Regional Fisheries Management Organisations in accordance with Article 11(3) of Regulation (EC) No 1005/2008, |
| --- | --- |

—

transmit notifications, with copy to the Commission, on denials of landing or transhipment authorisations by third country vessels to flag state(s) and, if appropriate copies of these notifications, to Regional Fisheries Management Organisations in accordance with Article 11(3) of Regulation (EC) No 1005/2008,

| — | upon request from the Commission, provide for the conduct of on-the-spot audits, alone or in cooperation with the Commission, to verify the effective implementation of agreed cooperation arrangements with third countries in accordance with Article 20(4), second subparagraph (c) of Regulation (EC) No 1005/2008, |
| --- | --- |

—

upon request from the Commission, provide for the conduct of on-the-spot audits, alone or in cooperation with the Commission, to verify the effective implementation of agreed cooperation arrangements with third countries in accordance with Article 20(4), second subparagraph (c) of Regulation (EC) No 1005/2008,

| — | communicate to Member States and flag States, with copy to the Commission, additional information submitted by the Member States to the Commission which is relevant for the establishment of the European Union IUU vessel list in accordance with Article 25(2) of Regulation (EC) No 1005/2008; |
| --- | --- |

—

communicate to Member States and flag States, with copy to the Commission, additional information submitted by the Member States to the Commission which is relevant for the establishment of the European Union IUU vessel list in accordance with Article 25(2) of Regulation (EC) No 1005/2008;

| — | transmit sightings reports to all Member States, with copy to the Commission, and, if appropriate, to the Executive Secretary of the relevant regional fisheries management organisation in accordance with Article 48(4) of Regulation (EC) No 1005/2008, |
| --- | --- |

—

transmit sightings reports to all Member States, with copy to the Commission, and, if appropriate, to the Executive Secretary of the relevant regional fisheries management organisation in accordance with Article 48(4) of Regulation (EC) No 1005/2008,

| — | transmit to the Executive Secretary of the relevant regional fisheries management organisation, with copy to the Commission, information from a Member State in response to a sighting report on one of its vessels from a contracting party to that regional fisheries management organisation in accordance with Article 48(5) of Regulation (EC) No 1005/2008. |
| --- | --- |

—

transmit to the Executive Secretary of the relevant regional fisheries management organisation, with copy to the Commission, information from a Member State in response to a sighting report on one of its vessels from a contracting party to that regional fisheries management organisation in accordance with Article 48(5) of Regulation (EC) No 1005/2008.

Governance

Administrative Board

Composition

Comprises one representative from each Member State and six representatives of the Commission.

Duties, inter alia

To adopt the budget and the establishment plan, multiannual and annual work programme, annual report and multiannual staff policy plan. To give an opinion on the final accounts.

Executive Director

Appointed by the Administrative Board from a list of at least two candidates proposed by the Commission.

External audit

European Court of Auditors.

Internal control

European Commission’s Internal Audit Service (IAS).

Discharge authority

European Parliament acting on a recommendation from the Council.

Resources made available to the Agency in 2014 (2013)

Final budget

Total budget 2014: 9,22(9,22) million euro

| — | Title I — 6,35(6,33) million euro |
| --- | --- |

—

Title I — 6,35(6,33) million euro

| — | Title II — 1,16(1,18) million euro |
| --- | --- |

—

Title II — 1,16(1,18) million euro

| — | Title III — 1,71(1,71) million euro |
| --- | --- |

—

Title III — 1,71(1,71) million euro

Staff as at 31 December 2014

53 (54) posts for temporary staff provided in the establishment plan, of which occupied: 52 (52)
   (1)

- 5 (5) posts for contract staff, of which occupied: 4 (5)

- 4 (4) posts for Seconded National Experts (SNEs), of which occupied: 2 (3)

Total staff posts, including SNEs: 62 (63), of which occupied 58 (60)
   (1)

Products and services 2014 (2013)

Operational Coordination

| — | Implementation of JDP (Joint Deployment Plan) for the following fisheries:






  — | Of cod, sole and plaice in the North Sea, Skagerrak, Kattegat and the Eastern Channel and Western Waters (West of Scotland and the Irish Sea). |
| --- | --- | --- |

—

Implementation of JDP (Joint Deployment Plan) for the following fisheries:

—

Of cod, sole and plaice in the North Sea, Skagerrak, Kattegat and the Eastern Channel and Western Waters (West of Scotland and the Irish Sea).

| — | Implementation of JDP (Joint Deployment Plan) for the fisheries of cod, salmon, herring and sprat in the Baltic Sea. |
| --- | --- |

—

Implementation of JDP (Joint Deployment Plan) for the fisheries of cod, salmon, herring and sprat in the Baltic Sea.

| — | Implementation of JDP (Joint Deployment Plan) for the fisheries of bluefin tuna in the Mediterranean Sea and Eastern Atlantic, swordfish in Mediterranean Sea and small pelagic in the Adriatic Sea. |
| --- | --- |

—

Implementation of JDP (Joint Deployment Plan) for the fisheries of bluefin tuna in the Mediterranean Sea and Eastern Atlantic, swordfish in Mediterranean Sea and small pelagic in the Adriatic Sea.

| — | Implementation of JDP (Joint Deployment Plan) for the fisheries of regulated species by the North-West Atlantic Fisheries Organisation (NAFO) area and North-East Atlantic Fisheries Commission (NEAFC) area. |
| --- | --- |

—

Implementation of JDP (Joint Deployment Plan) for the fisheries of regulated species by the North-West Atlantic Fisheries Organisation (NAFO) area and North-East Atlantic Fisheries Commission (NEAFC) area.

| — | Implementation of JDP (Joint Deployment Plan) for the fisheries of pelagic species in Western Waters of the European Union. |
| --- | --- |

—

Implementation of JDP (Joint Deployment Plan) for the fisheries of pelagic species in Western Waters of the European Union.

| — | Support to national control programmes in the Black Sea. |
| --- | --- |

—

Support to national control programmes in the Black Sea.

| — | Support to the preparation for the implementation of the landing obligation from January 2015 in the Baltic Sea, North Sea, Western Waters and Mediterranean Sea. |
| --- | --- |

—

Support to the preparation for the implementation of the landing obligation from January 2015 in the Baltic Sea, North Sea, Western Waters and Mediterranean Sea.

| — | Delivery of a methodology to evaluate compliance levels and costs of control operations. |
| --- | --- |

—

Delivery of a methodology to evaluate compliance levels and costs of control operations.

| — | Assistance to the Commission and the Member States in their relations with regional fisheries organisations such as NAFO, NEAFC, ICCAT and GFCM. |
| --- | --- |

—

Assistance to the Commission and the Member States in their relations with regional fisheries organisations such as NAFO, NEAFC, ICCAT and GFCM.

| — | Consolidation of the JDPs through promoting a regional approach. |
| --- | --- |

—

Consolidation of the JDPs through promoting a regional approach.

Capacity building

| — | Development and maintenance of the Core Curricula. |
| --- | --- |

—

Development and maintenance of the Core Curricula.

| — | Running and maintenance of the web-based collaboration platform for training. |
| --- | --- |

—

Running and maintenance of the web-based collaboration platform for training.

| — | Assistance to the Member States’ national training programmes. |
| --- | --- |

—

Assistance to the Member States’ national training programmes.

| — | Training of trainers and training of Union inspectors before their first deployment. |
| --- | --- |

—

Training of trainers and training of Union inspectors before their first deployment.

| — | Operation, maintenance, enhancement and development of ICT monitoring capabilities: Vessel Monitoring System (VMS), Electronic Reporting System (ERS) Electronic Inspection Report system (EIR), Core Curricula Development Platform (DCCDP), Fishnet collaboration platform and JADE (planning and statistics system). |
| --- | --- |

—

Operation, maintenance, enhancement and development of ICT monitoring capabilities: Vessel Monitoring System (VMS), Electronic Reporting System (ERS) Electronic Inspection Report system (EIR), Core Curricula Development Platform (DCCDP), Fishnet collaboration platform and JADE (planning and statistics system).

| — | In the framework of the EU's integrated maritime policy (IMP); providing an integrated maritime picture (EFCA Marsurv Service) in support of JDP coordination activities, support to various H2020 projects related to the assessment of new technologies for maritime surveillance, and participation in’s relevant EU projects within the framework of the Common Information Sharing Environment (CISE). |
| --- | --- |

—

In the framework of the EU's integrated maritime policy (IMP); providing an integrated maritime picture (EFCA Marsurv Service) in support of JDP coordination activities, support to various H2020 projects related to the assessment of new technologies for maritime surveillance, and participation in’s relevant EU projects within the framework of the Common Information Sharing Environment (CISE).

| — | Workshops and seminars to exchange best practices between Member States in order to combat imports originating from illegal, unreported and unregulated fisheries. |
| --- | --- |

—

Workshops and seminars to exchange best practices between Member States in order to combat imports originating from illegal, unreported and unregulated fisheries.

| — | Advanced training for Union inspectors (officials involved in fight against IUU) (exchange of best practice, refresher courses, etc.), and training for third countries' inspectors on European Commission request. |
| --- | --- |

—

Advanced training for Union inspectors (officials involved in fight against IUU) (exchange of best practice, refresher courses, etc.), and training for third countries' inspectors on European Commission request.

(See annual work programme 2014 of the Agency for details.)

---

(1)  Job offers made for staff recruitment (3 offers) are included in the figure in brackets regarding 2013 (status 31.1.2014).

Source: Annex supplied by the Agency.

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THE AGENCY’S REPLY

The Agency has taken note of the Court’s report.

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| 9.12.2015 | EN | Official Journal of the European Union | C 409/160 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/160

---

REPORT

on the annual accounts of the European Food Safety Authority for the financial year 2014, together with the Authority’s reply

(2015/C 409/18)

INTRODUCTION

| 1. | The European Food Safety Authority (hereinafter ‘the Authority’, aka ‘EFSA’), which is located in Parma, was established by Regulation (EC) No 178/2002 of the European Parliament and of the Council (1). The Authority’s main tasks are to supply the scientific information needed for Union legislation to be drawn up concerning food and food safety, to collect and analyse data that allow risks to be identified and monitored and to provide independent information on these risks (2). |
| --- | --- |

1.

The European Food Safety Authority (hereinafter ‘the Authority’, aka ‘EFSA’), which is located in Parma, was established by Regulation (EC) No 178/2002 of the European Parliament and of the Council (1). The Authority’s main tasks are to supply the scientific information needed for Union legislation to be drawn up concerning food and food safety, to collect and analyse data that allow risks to be identified and monitored and to provide independent information on these risks (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Authority’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Authority’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Authority, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Authority, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Authority and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Authority’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Authority after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Authority in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Authority and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Authority’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Authority after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Authority in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Authority are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Authority are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Authority’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Authority’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Authority’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Authority’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

OTHER COMMENTS

| 11. | In 2005 new EU Staff Regulations entered into force, including provisions that future remunerations of officials recruited before 1 May 2004 should not be less than under the previous EU Staff Regulations. The Court’s audit revealed that this was not complied with and, in the case of 8 of the 71 officials employed at that time, this led to a total underpayment of 87  000 euro for the period 2005 to 2014. The Authority will make the supplementary salary payments in due course. |
| --- | --- |

11.

In 2005 new EU Staff Regulations entered into force, including provisions that future remunerations of officials recruited before 1 May 2004 should not be less than under the previous EU Staff Regulations. The Court’s audit revealed that this was not complied with and, in the case of 8 of the 71 officials employed at that time, this led to a total underpayment of 87  000 euro for the period 2005 to 2014. The Authority will make the supplementary salary payments in due course.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 12. | An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I. |
| --- | --- |

12.

An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 31, 1.2.2002, p. 1.

1

(2)  Annex II summarises the Authority’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

---

ANNEX I

Follow-up of previous years’ comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2012 | Following high-level risk assessments carried out by an external consultation in 2012 and by the Commission’s Internal Audit Service in February 2013, a number of potential critical risks were identified in the operation of the Authority’s internal controls, particularly in the areas of data management, business continuity and IT security. The Authority started a comprehensive self-assessment of its internal control system in 2012. The process is ongoing and implementation of corrective actions is planned for 2013. | Ongoing |
| 2013 | According to the Authority’s self-assessment of its internal control system which was carried out in 2012 and 2013, the majority of internal control standards (ICS) are met. This is not yet the case for ICS 4 (Staff appraisal and development) and ICS 11 (Document management), for which corrective action was still ongoing at the time of the audit. | Completed |
| 2013 | The Authority’s annual work programmes do not contain sufficient details on planned procurements and grants to support financing decisions in the sense of Article 64 of the Implementing Rules to its Financial Regulation. Including such details in the annual work programme would allow a more effective monitoring of procurements and grants. | Completed |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2012

Following high-level risk assessments carried out by an external consultation in 2012 and by the Commission’s Internal Audit Service in February 2013, a number of potential critical risks were identified in the operation of the Authority’s internal controls, particularly in the areas of data management, business continuity and IT security. The Authority started a comprehensive self-assessment of its internal control system in 2012. The process is ongoing and implementation of corrective actions is planned for 2013.

Ongoing

2013

According to the Authority’s self-assessment of its internal control system which was carried out in 2012 and 2013, the majority of internal control standards (ICS) are met. This is not yet the case for ICS 4 (Staff appraisal and development) and ICS 11 (Document management), for which corrective action was still ongoing at the time of the audit.

Completed

2013

The Authority’s annual work programmes do not contain sufficient details on planned procurements and grants to support financing decisions in the sense of Article 64 of the Implementing Rules to its Financial Regulation. Including such details in the annual work programme would allow a more effective monitoring of procurements and grants.

Completed

---

ANNEX II

European Food Safety Authority (Parma)

Competences and Activities

| Areas of Union competence deriving from the Treaty | Collection of information







  — | Common agricultural policy (Article 38 of the Treaty on the functioning of the European Union (TFEU)). |
| --- | --- | --- |

Areas of Union competence deriving from the Treaty

Collection of information

—

Common agricultural policy (Article 38 of the Treaty on the functioning of the European Union (TFEU)).

| — | Functioning of the Internal Market (Article 114 TFEU). |
| --- | --- |

—

Functioning of the Internal Market (Article 114 TFEU).

| — | Public health (Article 168 TFEU). |
| --- | --- |

—

Public health (Article 168 TFEU).

| — | Common trade policy (Article 206 TFEU). |
| --- | --- |

—

Common trade policy (Article 206 TFEU).

Competences of the Authority

(Regulation (EC) No 178/2002 of the European Parliament and of the Council)

Objectives

| — | To provide scientific opinions and scientific and technical support for the legislation and policies which have a direct or indirect impact on food and feed safety, |
| --- | --- |

—

To provide scientific opinions and scientific and technical support for the legislation and policies which have a direct or indirect impact on food and feed safety,

| — | to provide independent information on risks relating to food safety, |
| --- | --- |

—

to provide independent information on risks relating to food safety,

| — | to contribute to the achievement of a high level of protection of human life and health, |
| --- | --- |

—

to contribute to the achievement of a high level of protection of human life and health,

| — | to collect and analyse data needed to allow characterisation and monitoring of risks. |
| --- | --- |

—

to collect and analyse data needed to allow characterisation and monitoring of risks.

Tasks

| — | To issue scientific opinions and studies, |
| --- | --- |

—

To issue scientific opinions and studies,

| — | to promote uniform risk-assessment methodologies, |
| --- | --- |

—

to promote uniform risk-assessment methodologies,

| — | to assist the Commission, |
| --- | --- |

—

to assist the Commission,

| — | to search for, analyse and summarise the requisite scientific and technical data, |
| --- | --- |

—

to search for, analyse and summarise the requisite scientific and technical data,

| — | to identify and characterise emerging risks, |
| --- | --- |

—

to identify and characterise emerging risks,

| — | to establish a network of organisations operating in similar fields, |
| --- | --- |

—

to establish a network of organisations operating in similar fields,

| — | to provide scientific and technical assistance in crisis management, |
| --- | --- |

—

to provide scientific and technical assistance in crisis management,

| — | to improve international cooperation, |
| --- | --- |

—

to improve international cooperation,

| — | to provide the public and interested parties with reliable, objective and easily comprehensible information, |
| --- | --- |

—

to provide the public and interested parties with reliable, objective and easily comprehensible information,

| — | to take part in the Commission’s rapid alert system. |
| --- | --- |

—

to take part in the Commission’s rapid alert system.

Governance

Management Board

Composition

14 members appointed by the Council (in cooperation with the European Parliament and the Commission) and one representative of the Commission.

Task

To adopt the work programme and the budget and ensure that they are implemented.

Executive Director

Appointed by the Management Board on the basis of a list of candidates proposed by the Commission, following a hearing before the European Parliament.

Advisory Forum

Composition

One representative per Member State.

Task

To advise the Executive Director.

Scientific Committee and scientific panels

To draw up the Authority’s scientific opinions.

External audit

European Court of Auditors

Internal audit

EFSA Internal Audit Capability.

European Commission Internal Audit Service (IAS).

Discharge authority

European Parliament acting on recommendation by the Council.

Resources made available to the Authority in 2014 (2013)

Budget

79,8(78,1) million euro of which 100 % (100 %) is a European Union subsidy.

Staff as at 31 December 2014

Posts in the establishment plan: 344 (351), of which occupied:

| — | staff (temporary staff and officials): 330 (328) |
| --- | --- |

—

staff (temporary staff and officials): 330 (328)

| — | other staff (contractual, seconded national experts): 119 (120). |
| --- | --- |

—

other staff (contractual, seconded national experts): 119 (120).

Total staff (including seven offer letters sent as per 31.12.2014): 449 (448), of which for:

| — | operational duties: 333 (332) |
| --- | --- |

—

operational duties: 333 (332)

| — | administrative duties: 116 (116) |
| --- | --- |

—

administrative duties: 116 (116)

Products and services 2014 (2013)

Scientific outputs and supporting publications 2014

Activity 1: Provision of scientific opinions and advice and risk assessment approaches

| — | Guidance of the Scientific Committee/Scientific Panel: 1 (2) |
| --- | --- |

—

Guidance of the Scientific Committee/Scientific Panel: 1 (2)

| — | Opinion of the Scientific Committee/Scientific Panel: 88 (44) |
| --- | --- |

—

Opinion of the Scientific Committee/Scientific Panel: 88 (44)

| — | Scientific Report of EFSA: 11 (12) |
| --- | --- |

—

Scientific Report of EFSA: 11 (12)

| — | Statement of EFSA: 1 (2) |
| --- | --- |

—

Statement of EFSA: 1 (2)

| — | Statement of the Scientific Committee/Scientific Panel: 3 (2) |
| --- | --- |

—

Statement of the Scientific Committee/Scientific Panel: 3 (2)

Total scientific outputs activity 1
  = 104 (62)

Activity 2: Evaluation of products, substances and claims subject to authorisation

| — | Conclusion on Pesticides Peer Review: 40 (45) |
| --- | --- |

—

Conclusion on Pesticides Peer Review: 40 (45)

| — | Guidance of EFSA: 4 (2) |
| --- | --- |

—

Guidance of EFSA: 4 (2)

| — | Guidance of the Scientific Committee/Scientific Panel: 0 (3) |
| --- | --- |

—

Guidance of the Scientific Committee/Scientific Panel: 0 (3)

| — | Opinion of the Scientific Committee/Scientific Panel: 197 (203) |
| --- | --- |

—

Opinion of the Scientific Committee/Scientific Panel: 197 (203)

| — | Scientific Report of EFSA: 3 (0) |
| --- | --- |

—

Scientific Report of EFSA: 3 (0)

| — | Statement of the Scientific Committee/Scientific Panel: 3 (8) |
| --- | --- |

—

Statement of the Scientific Committee/Scientific Panel: 3 (8)

| — | Statement of EFSA: 9 (6) |
| --- | --- |

—

Statement of EFSA: 9 (6)

| — | Reasoned opinions = 84 (0) |
| --- | --- |

—

Reasoned opinions = 84 (0)

Total scientific outputs activity 2
  = 340 (267)
   (1)

Activity 3: Data Collection, scientific cooperation and networking

| — | Guidance of EFSA: 4 (2) |
| --- | --- |

—

Guidance of EFSA: 4 (2)

| — | Statement of EFSA: 0 (0) |
| --- | --- |

—

Statement of EFSA: 0 (0)

| — | Reasoned Opinion: 0 (113) |
| --- | --- |

—

Reasoned Opinion: 0 (113)

| — | Scientific Report of EFSA: 9 (7) |
| --- | --- |

—

Scientific Report of EFSA: 9 (7)

Total scientific outputs activity 3
  = 13 (122)
   (2)

Supporting publications

| — | Event report: 10 (11) |
| --- | --- |

—

Event report: 10 (11)

| — | External Scientific Report: 79 (74) |
| --- | --- |

—

External Scientific Report: 79 (74)

| — | Technical report: 105 (70) |
| --- | --- |

—

Technical report: 105 (70)

Total Supporting publications
  = 194 (155)

Total outputs
  = 651 (606)

| — | Scientific outputs supported by communication activities: 14 % (7 %) |
| --- | --- |

—

Scientific outputs supported by communication activities: 14 % (7 %)

| — | Public consultations: 49 (56) |
| --- | --- |

—

Public consultations: 49 (56)

| — | Web visits: 2,8(4,7) million |
| --- | --- |

—

Web visits: 2,8(4,7) million

| — | Highlights subscribers: 33  947(31  912) |
| --- | --- |

—

Highlights subscribers: 33  947(31  912)

| — | Media coverage: 14  913(11  820) |
| --- | --- |

—

Media coverage: 14  913(11  820)

| — | Media queries: 564 (625) |
| --- | --- |

—

Media queries: 564 (625)

| — | Press releases: 10 (16) |
| --- | --- |

—

Press releases: 10 (16)

| — | Web news stories: 32 (54) |
| --- | --- |

—

Web news stories: 32 (54)

| — | Interviews: 65 (95) |
| --- | --- |

—

Interviews: 65 (95)

---

(1)  Reasoned opinions were under Activity 3 in 2013

(2)  Reasoned opinions are now under Activity 2

Source: Annex supplied by the Authority.

---

THE AUTHORITY’S REPLY

| 11. | Concerning ECA’s comment on the salary underpayments dating back to 2005 for staff members who had already been employed before the 2004 Staff Regulations entered into force, EFSA would like to specify that the treatment and calculation of the payroll costs are similar to other EU agencies externalised by the Authority to the PMO (department of the European Commission). |
| --- | --- |

11.

Concerning ECA’s comment on the salary underpayments dating back to 2005 for staff members who had already been employed before the 2004 Staff Regulations entered into force, EFSA would like to specify that the treatment and calculation of the payroll costs are similar to other EU agencies externalised by the Authority to the PMO (department of the European Commission).

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/168 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/168

---

REPORT

on the annual accounts of the European Institute for Gender Equality for the financial year 2014, together with the Institute’s reply

(2015/C 409/19)

INTRODUCTION

| 1. | The European Institute for Gender Equality (hereinafter ‘the Institute’, aka ‘EIGE’), which is located in Vilnius, was established by Regulation (EC) No 1922/2006 of the European Parliament and of the Council (1). The Institute’s task is to collect, analyse and disseminate information as regards gender equality and to develop, analyse, evaluate and disseminate methodological tools in order to support the integration of gender equality into all Union policies and the resulting national policies (2). |
| --- | --- |

1.

The European Institute for Gender Equality (hereinafter ‘the Institute’, aka ‘EIGE’), which is located in Vilnius, was established by Regulation (EC) No 1922/2006 of the European Parliament and of the Council (1). The Institute’s task is to collect, analyse and disseminate information as regards gender equality and to develop, analyse, evaluate and disseminate methodological tools in order to support the integration of gender equality into all Union policies and the resulting national policies (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Institute’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Institute’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Institute, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Institute, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Institute and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Institute’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Institute after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Institute in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Institute and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Institute’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Institute after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Institute in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Institute are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Institute are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Institute’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Institute’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Institute’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Institute’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | The level of carry-overs for committed appropriations was high for Title III (operational expenditure) at 1,8 million euro, i.e. 54 % (2013: 2,0 million euro, i.e. 56 %). The main reasons were delayed procurements of surveys and studies and ongoing studies which are expected to be finalised as planned in 2015. |
| --- | --- |

11.

The level of carry-overs for committed appropriations was high for Title III (operational expenditure) at 1,8 million euro, i.e. 54 % (2013: 2,0 million euro, i.e. 56 %). The main reasons were delayed procurements of surveys and studies and ongoing studies which are expected to be finalised as planned in 2015.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 12. | An overview of the corrective actions taken in response to the Court's comments from the previous years is provided in Annex I. |
| --- | --- |

12.

An overview of the corrective actions taken in response to the Court's comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 403, 30.12.2006, p. 9.

1

(2)  Annex II summarises the Institute’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

---

ANNEX I

Follow-up of previous year’s comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2011 | The European Commission’s Internal Audit Service carried out a ‘Limited review of the implementation of Internal Control Standards’ at the Institute in December 2011. The Institute accepted the recommendations to finalise the procedure for the implementation of the Internal Control Standards and management adopted an action plan to be implemented in 2012. | Completed |
| 2012 | The Court identified shortcomings in the documentation of recruitment procedures. There is no evidence that questions for written tests and interviews, as well as their respective weightings were prepared before the examination of the applications. | Completed |
| 2013 | In 2013 the overall level of committed appropriations was 99 %, indicating that commitments were made in a timely manner. The Institute has further reduced the overall level of carry-overs of committed appropriations from 2,5 million euro (32 %) in 2012 to 2,2 million euro (29 %) in 2013. These carry-overs mainly relate to Title III (operational expenditure) with 2,0 million euro, representing 56 % of the corresponding committed appropriations. They mainly concern procurement procedures that were concluded late in the year due to reasons mostly beyond the Institute’s control, such as a late communication by the Presidency of the EU Council regarding a study to be performed (1,1 million euro) and complex IT-related projects for which procurement was time-consuming (0,6 million euro). | N/A |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2011

The European Commission’s Internal Audit Service carried out a ‘Limited review of the implementation of Internal Control Standards’ at the Institute in December 2011. The Institute accepted the recommendations to finalise the procedure for the implementation of the Internal Control Standards and management adopted an action plan to be implemented in 2012.

Completed

2012

The Court identified shortcomings in the documentation of recruitment procedures. There is no evidence that questions for written tests and interviews, as well as their respective weightings were prepared before the examination of the applications.

Completed

2013

In 2013 the overall level of committed appropriations was 99 %, indicating that commitments were made in a timely manner. The Institute has further reduced the overall level of carry-overs of committed appropriations from 2,5 million euro (32 %) in 2012 to 2,2 million euro (29 %) in 2013. These carry-overs mainly relate to Title III (operational expenditure) with 2,0 million euro, representing 56 % of the corresponding committed appropriations. They mainly concern procurement procedures that were concluded late in the year due to reasons mostly beyond the Institute’s control, such as a late communication by the Presidency of the EU Council regarding a study to be performed (1,1 million euro) and complex IT-related projects for which procurement was time-consuming (0,6 million euro).

N/A

---

ANNEX II

European Institute for Gender Equality (Vilnius)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Articles 2 and 3 of the Treaty of the European Union) | The Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. These values are common to the Member States in a society in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail.
  It shall combat social exclusion and discrimination, and shall promote social justice and protection, equality between women and men, solidarity between generations and protection of the rights of the child. |
| --- | --- |
| Competences of the Institute


  (Regulation (EC) No 1922/2006 of the European Parliament and of the Council) | Objectives

  To contribute to and strengthen the promotion of gender equality including gender mainstreaming in all Union policies and the resulting national policies, and the fight against discrimination based on sex, and to raise EU citizens’ awareness of gender equality.

  Tasks







  — | To collect, analyse and disseminate relevant comparable and reliable information as regards gender equality, |

Areas of Union competence deriving from the Treaty

(Articles 2 and 3 of the Treaty of the European Union)

The Union is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities. These values are common to the Member States in a society in which pluralism, non-discrimination, tolerance, justice, solidarity and equality between women and men prevail.

It shall combat social exclusion and discrimination, and shall promote social justice and protection, equality between women and men, solidarity between generations and protection of the rights of the child.

Competences of the Institute

(Regulation (EC) No 1922/2006 of the European Parliament and of the Council)

Objectives

To contribute to and strengthen the promotion of gender equality including gender mainstreaming in all Union policies and the resulting national policies, and the fight against discrimination based on sex, and to raise EU citizens’ awareness of gender equality.

Tasks

—

To collect, analyse and disseminate relevant comparable and reliable information as regards gender equality,

| — | to develop methods to improve the objectivity, comparability and reliability of data at European level, |
| --- | --- |

—

to develop methods to improve the objectivity, comparability and reliability of data at European level,

| — | to develop, analyse, evaluate and disseminate methodological tools in order to support the integration of gender equality into all Union policies and the resulting national policies and to support gender mainstreaming in all Union institutions and bodies, |
| --- | --- |

—

to develop, analyse, evaluate and disseminate methodological tools in order to support the integration of gender equality into all Union policies and the resulting national policies and to support gender mainstreaming in all Union institutions and bodies,

| — | to carry out surveys on the situation in Europe as regards gender equality, |
| --- | --- |

—

to carry out surveys on the situation in Europe as regards gender equality,

| — | to set up and coordinate a European Network on Gender Equality, |
| --- | --- |

—

to set up and coordinate a European Network on Gender Equality,

| — | to organise ad hoc meetings of experts to support the Institute’s research work, |
| --- | --- |

—

to organise ad hoc meetings of experts to support the Institute’s research work,

| — | in order to raise EU citizens’ awareness of gender equality, to organise, with relevant stakeholders, conferences, campaigns and meetings at EU level, and present the findings and conclusions to the Commission, |
| --- | --- |

—

in order to raise EU citizens’ awareness of gender equality, to organise, with relevant stakeholders, conferences, campaigns and meetings at EU level, and present the findings and conclusions to the Commission,

| — | to disseminate information regarding positive examples of non-stereotypical roles for women and men in every walk of life, to present its findings together with initiatives designed to publicise and build on such success stories, |
| --- | --- |

—

to disseminate information regarding positive examples of non-stereotypical roles for women and men in every walk of life, to present its findings together with initiatives designed to publicise and build on such success stories,

| — | to develop dialogue and cooperation with non-governmental and equal opportunities organisations, universities and experts, research centres, social partners, |
| --- | --- |

—

to develop dialogue and cooperation with non-governmental and equal opportunities organisations, universities and experts, research centres, social partners,

| — | to set up documentation resources accessible to the public, |
| --- | --- |

—

to set up documentation resources accessible to the public,

| — | to make information on gender mainstreaming available to public and private organisations, |
| --- | --- |

—

to make information on gender mainstreaming available to public and private organisations,

| — | to provide the Union institutions with information on gender equality and gender mainstreaming in accession and candidate countries. |
| --- | --- |

—

to provide the Union institutions with information on gender equality and gender mainstreaming in accession and candidate countries.

Governance

Management Board

Composition

18 representatives appointed by the Council, on a proposal from each Member State concerned and one member representing the Commission, appointed by the Commission. The members are appointed on the basis of the highest standards of competence and a broad range of relevant and trans-disciplinary expertise in the area of gender equality. The Council and the Commission aim to achieve a balanced representation between men and women on the Management Board. The members appointed by the Council shall represent 18 Member States in the order of the rotating Presidencies.

Duties

| — | To adopt the annual and mid-term work programmes, the budget and annual report. |
| --- | --- |

—

To adopt the annual and mid-term work programmes, the budget and annual report.

| — | To adopt the internal rules of the Institute and rules of procedure of the Management Board. |
| --- | --- |

—

To adopt the internal rules of the Institute and rules of procedure of the Management Board.

Experts’ Forum

Composition

Members from competent bodies specialised in gender equality issues, one representative designated by each Member State, two members designated by the European Parliament representing other relevant organisations specialised in gender equality issues, three members designated by the Commission.

Duties

Supports the Director in ensuring the excellence and independence of the Institute’s activities, constitutes a mechanism for an exchange of information in relation to gender equality issues and the pooling of knowledge, and ensures close cooperation between the Institute and competent bodies in the Member States.

The Director is appointed by the Management Board on the basis of a list of candidates proposed by the Commission after an open competition.

Duties

Responsible for performance of the tasks referred to in Regulation (EC) Noo1922/2006, preparing and implementing the Institute’s annual and medium-term programmes of activities; preparing the meetings of the Management Board and the Experts’‘ Forum; preparing and publishing the annual report; all staff-related matters: matters of day-to-day administration; implementation of effective monitoring and evaluation procedures relating to the Institute’s performance.

External audit

European Court of Auditors.

Internal audit

European Commission’s Internal Audit Service (IAS).

Discharge authority

European Parliament on a recommendation from the Council.

Resources made available to the Institute in 2014 (2013)

Final Budget

7,4(7,5) million euro of which the Union subsidy is 98,5 % (100 %)

Staff as at 31 December 2014

29 (30) posts in the establishment plan, of which occupied: 29 (30);

11 (16) other staff (contract staff, seconded national experts).

Total staff as at 31 December 2014

40 (46), undertaking the following tasks:

| — | operational: 28 (32) |
| --- | --- |

—

operational: 28 (32)

| — | administrative: 9 (11) |
| --- | --- |

—

administrative: 9 (11)

| — | mixed: 3 (3) |
| --- | --- |

—

mixed: 3 (3)

Products and services in 2014 (2013)

Focal Areas

Comparable and reliable data and indicators on gender equality; implementing gender equality and gender mainstreaming; resource and documentation centre (RDC); awareness-raising, networking and communication.

Number of studies launched: 8 (14)

Number of contributions to Presidency countries: 2 (2)

Number of experts’ and working group meetings: 26 (13)

International conferences: 1 (2)

Number of research reports: 2 (2)

Annual reports: 1 (1)

Source: Annex supplied by the Institute.

---

THE INSTITUTE’S REPLY

| 11. | Agreed. Since the beginning of its operation EIGE has made great efforts to decrease the amount of carry-overs in the operational budget. EIGE follows, as advised, acceptable ceilings by Title (Title I: max. 10 %, Title II: max. 20 %, Title III: max. 30 %). However, under operational appropriations delays are due to circumstances very often outside EIGE’s control, i.e. a delayed decision by the Presidency of the Council of the EU regarding a subject of study. |
| --- | --- |

11.

Agreed. Since the beginning of its operation EIGE has made great efforts to decrease the amount of carry-overs in the operational budget. EIGE follows, as advised, acceptable ceilings by Title (Title I: max. 10 %, Title II: max. 20 %, Title III: max. 30 %). However, under operational appropriations delays are due to circumstances very often outside EIGE’s control, i.e. a delayed decision by the Presidency of the Council of the EU regarding a subject of study.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/175 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/175

---

REPORT

on the annual accounts of the European Insurance and Occupational Pensions Authority for the financial year 2014 together with the Authority’s reply

(2015/C 409/20)

INTRODUCTION

| 1. | The European Insurance and Occupational Pensions Authority (hereinafter ‘the Authority’, aka ‘EIOPA’), which is located in Frankfurt, was established by Regulation (EU) No 1094/2010 of the European Parliament and of the Council (1). The Authority’s task is to contribute to the establishment of high-quality common regulatory and supervisory standards and practices, to contribute to the consistent application of legally binding Union acts, to stimulate and facilitate the delegation of tasks and responsibilities among competent authorities, to monitor and assess market developments in the area of its competence and to foster the protection of policyholders, pension scheme members and beneficiaries (2). The Authority was set up on 1 January 2011. |
| --- | --- |

1.

The European Insurance and Occupational Pensions Authority (hereinafter ‘the Authority’, aka ‘EIOPA’), which is located in Frankfurt, was established by Regulation (EU) No 1094/2010 of the European Parliament and of the Council (1). The Authority’s task is to contribute to the establishment of high-quality common regulatory and supervisory standards and practices, to contribute to the consistent application of legally binding Union acts, to stimulate and facilitate the delegation of tasks and responsibilities among competent authorities, to monitor and assess market developments in the area of its competence and to foster the protection of policyholders, pension scheme members and beneficiaries (2). The Authority was set up on 1 January 2011.

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Authority’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Authority’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Authority, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Authority, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Authority and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Authority’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Authority after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Authority in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Authority and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Authority’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Authority after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Authority in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Authority are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Authority are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Authority’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Authority’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Authority’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Authority’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | The overall level of committed appropriations was high at 95 %. The level of committed appropriations carried over also remained high at 5,6 million euro, i.e. 26 % (2013: 5,2 million euro, i.e. 28 %), particularly for the operational budget (title III) at 4,7 million euro, i.e. 66 % (2013: 3,7 million euro or 85 %). Carry-overs are mainly related to specific contracts with a cumulative value of 2,4 million euro signed late in the year, particularly for the on-going development and maintenance of a database (1,8 million euro) and other IT services to be provided in 2015. Part of the committed appropriations carried over are related to budget transfers made in November and December 2014, when the Authority increased the operational budget (title III) by 1,1 million euro (19 %) through transfers from the staff budget (title I) of 8 58  828 euro and from administrative expenditure (title II) of 2 66  360 euro. The transfers were intended to compensate for shortfalls in the Authority’s 2015 budget following substantial budget cuts decided by the discharge authorities. These shortfalls would not have allowed the Authority to continue implementing its multiannual IT strategy, which was one of its core operational activities. |
| --- | --- |

11.

The overall level of committed appropriations was high at 95 %. The level of committed appropriations carried over also remained high at 5,6 million euro, i.e. 26 % (2013: 5,2 million euro, i.e. 28 %), particularly for the operational budget (title III) at 4,7 million euro, i.e. 66 % (2013: 3,7 million euro or 85 %). Carry-overs are mainly related to specific contracts with a cumulative value of 2,4 million euro signed late in the year, particularly for the on-going development and maintenance of a database (1,8 million euro) and other IT services to be provided in 2015. Part of the committed appropriations carried over are related to budget transfers made in November and December 2014, when the Authority increased the operational budget (title III) by 1,1 million euro (19 %) through transfers from the staff budget (title I) of 8 58  828 euro and from administrative expenditure (title II) of 2 66  360 euro. The transfers were intended to compensate for shortfalls in the Authority’s 2015 budget following substantial budget cuts decided by the discharge authorities. These shortfalls would not have allowed the Authority to continue implementing its multiannual IT strategy, which was one of its core operational activities.

| 12. | Although budget transfers, carry-overs and related commitments are in line with the specific provisions of the EU Financial Regulation and were executed following Management Board decisions, the extent to which 2015 activities will be covered by 2014 appropriations is at odds with the budgetary principle of annuality. There is a need to better align the funds made available in the agency’s annual budgets with the financial needs for the implementation of its multiannual IT strategy. |
| --- | --- |

12.

Although budget transfers, carry-overs and related commitments are in line with the specific provisions of the EU Financial Regulation and were executed following Management Board decisions, the extent to which 2015 activities will be covered by 2014 appropriations is at odds with the budgetary principle of annuality. There is a need to better align the funds made available in the agency’s annual budgets with the financial needs for the implementation of its multiannual IT strategy.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 13. | An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I. |
| --- | --- |

13.

An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 331, 15.12.2010, p. 48.

1

(2)  Annex II summarises the Authority’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

---

ANNEX I

Follow-up of previous years’ comments

| Year | Court’s comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2012 | The carry-over of committed appropriations to 2013 was very high for title III (operational expenditure) at 79 % of total appropriations. This mainly results from the complexity and lengthy duration of one IT procurement procedure for which the contract of 2,2 million euro was signed as planned in December 2012. | N/A |
| 2013 | The Management Board adopted the Authority’s 16 Internal Control Standards in March 2013. At the end of the year, their implementation was ongoing on the basis of a clear action plan agreed with the Commission’s Internal Audit Service. | Completed |
| 2013 | Legal commitments were not always authorised by officers with a proper delegation and were not always preceded by a properly authorised budgetary commitment. This shows the need to improve the definition of, and compliance with, financial circuits in accordance with the Financial Regulation. | Completed |
| 2013 | The overall level of committed appropriations was 95 %. However, the level of committed appropriations carried over further increased as compared with previous years and was high at 5,2 million euro (28 %), particularly for title II at 1,0 million euro (30 %) and title III at 3,7 million euro (85 %). This mainly resulted from specific contracts with a cumulative value of 3 million euro signed late in the year, particularly for the development and maintenance of a European database (2,6 million euro) and other IT services to be provided in 2014. Although the related commitments are legal and regular and low cancellation rates for carry-overs from 2012 confirmed sound estimations, the extent to which 2013 appropriations were used to cover 2014 activities is at odds with the budgetary principle of annuality. | N/A |

Year

Court’s comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2012

The carry-over of committed appropriations to 2013 was very high for title III (operational expenditure) at 79 % of total appropriations. This mainly results from the complexity and lengthy duration of one IT procurement procedure for which the contract of 2,2 million euro was signed as planned in December 2012.

N/A

2013

The Management Board adopted the Authority’s 16 Internal Control Standards in March 2013. At the end of the year, their implementation was ongoing on the basis of a clear action plan agreed with the Commission’s Internal Audit Service.

Completed

2013

Legal commitments were not always authorised by officers with a proper delegation and were not always preceded by a properly authorised budgetary commitment. This shows the need to improve the definition of, and compliance with, financial circuits in accordance with the Financial Regulation.

Completed

2013

The overall level of committed appropriations was 95 %. However, the level of committed appropriations carried over further increased as compared with previous years and was high at 5,2 million euro (28 %), particularly for title II at 1,0 million euro (30 %) and title III at 3,7 million euro (85 %). This mainly resulted from specific contracts with a cumulative value of 3 million euro signed late in the year, particularly for the development and maintenance of a European database (2,6 million euro) and other IT services to be provided in 2014. Although the related commitments are legal and regular and low cancellation rates for carry-overs from 2012 confirmed sound estimations, the extent to which 2013 appropriations were used to cover 2014 activities is at odds with the budgetary principle of annuality.

N/A

---

ANNEX II

European Insurance and Occupational Pensions Authority (Frankfurt am Main)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Articles 26, 114, 290, 291 of the Treaty on the Functioning of the European Union) | Establish or ensure the functioning of the internal market, in accordance with the relevant provisions of the Treaties.
  Prepare draft technical standards as preparatory work for non-legislative acts of general application to supplement or amend certain non-essential elements of the legislative act or where uniform conditions for implementing legally binding Union acts are needed. |
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| Competences of the Authority


  (Regulation (EU) No 1094/2010 of the European Parliament and of the Council establishing the Authority, Articles 1(6) and Article 8 on tasks and powers) | Objectives

  Protect the public interest by contributing to the short, medium and long-term stability and effectiveness of the financial system, for the Union economy, its citizens and businesses.

  Tasks







  — | To contribute to the establishment of high-quality common regulatory and supervisory standards and practices, |

Areas of Union competence deriving from the Treaty

(Articles 26, 114, 290, 291 of the Treaty on the Functioning of the European Union)

Establish or ensure the functioning of the internal market, in accordance with the relevant provisions of the Treaties.

Prepare draft technical standards as preparatory work for non-legislative acts of general application to supplement or amend certain non-essential elements of the legislative act or where uniform conditions for implementing legally binding Union acts are needed.

Competences of the Authority

(Regulation (EU) No 1094/2010 of the European Parliament and of the Council establishing the Authority, Articles 1(6) and Article 8 on tasks and powers)

Objectives

Protect the public interest by contributing to the short, medium and long-term stability and effectiveness of the financial system, for the Union economy, its citizens and businesses.

Tasks

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To contribute to the establishment of high-quality common regulatory and supervisory standards and practices,

| — | to contribute to the consistent application of legally binding Union acts, to stimulate and facilitate the delegation of tasks and responsibilities among competent authorities, |
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to contribute to the consistent application of legally binding Union acts, to stimulate and facilitate the delegation of tasks and responsibilities among competent authorities,

| — | to cooperate closely with the ESRB, |
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to cooperate closely with the ESRB,

| — | to organise and conduct peer review analyses of competent authorities, |
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to organise and conduct peer review analyses of competent authorities,

| — | to monitor and assess market developments in the area of its competences, |
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to monitor and assess market developments in the area of its competences,

| — | to undertake economic analyses of markets to inform the discharge of the Authority’s functions, |
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to undertake economic analyses of markets to inform the discharge of the Authority’s functions,

| — | to foster the protection of policyholders, pension scheme members and beneficiaries, |
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to foster the protection of policyholders, pension scheme members and beneficiaries,

| — | to contribute to the consistent and coherent functioning of colleges of supervisors, the monitoring, assessment and measurement of systemic risk, the development and coordination of recovery and resolution plans, providing a high level of protection to policy holders, to beneficiaries and throughout the Union, |
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to contribute to the consistent and coherent functioning of colleges of supervisors, the monitoring, assessment and measurement of systemic risk, the development and coordination of recovery and resolution plans, providing a high level of protection to policy holders, to beneficiaries and throughout the Union,

| — | to fulfil any other specific tasks set out in this Regulation or in other legislative acts, |
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to fulfil any other specific tasks set out in this Regulation or in other legislative acts,

| — | to publish on its website, and to update regularly, information relating to its field of activities, |
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to publish on its website, and to update regularly, information relating to its field of activities,

| — | to take over, as appropriate, all existing and ongoing tasks from the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS). |
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to take over, as appropriate, all existing and ongoing tasks from the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS).

Governance

(Regulation (EU) No 1094/2010 establishing the Authority: Articles 40-44: Board of Supervisors;
  Articles 45-47: Management Board; Articles 48-50: Chair; Articles 51-53: Executive Director)

Board of Supervisors (BoS)

Composition

Chairperson (non-voting), the head of the national public authority competent for the supervision of financial institutions in each Member State (one voting member per Member State), one representative of the Commission (non-voting), of the European Systemic Risk Board (non-voting), the European Banking Authority, the European Securities Markets Authority (both non-voting); observers may be permitted and the Executive Director may participate in meetings (non-voting).

Tasks

The Authority’s main decision-making body.

Management Board (MB)

Composition

Chairperson of the Authority (voting), six Voting Members of the BoS (voting), one representative of the European Commission (voting for budget issues). The Executive Director shall participate in meetings of the MB without the right to vote.

Tasks

The MB shall ensure that the Authority carries out its mission and performs the tasks assigned to it in accordance with Regulation (EU) No 1094/2010.

The Authority’s Chairperson

Represents the Authority, prepares the work of the Board of Supervisors (BoS), chairs the BoS and MB meetings.

The Authority’s Executive Director

Is in charge of the management of the Authority and the implementation of the annual work programme and the budget; prepares the work of the Management Board, the budget, the work programme.

Quality Control Committee

Composition

The Authority’s Alternate Chairperson (chair) and two Members of the Management Board. The Executive Director participates as observer.

Tasks

To oversee and assess appropriate implementation of the internal procedures and decisions.

External audit

European Court of Auditors.

Internal audit

European Commission’s Internal Audit Service (IAS).

Discharge authority

European Parliament acting on a recommendation from the Council.

Resources made available to the Authority in 2014 (2013)

Final Budget

Final Budget Appropriations: 2 1 5 95  704(1 8 7 67  470) euro

Establishment Plan

Statutory staff: 87 (80) posts authorised in the establishment plan, of which occupied: 87 (80)

Establishment plan 100 % (100 %) fulfilled

Contract staff posts: 37 planned in the budget, 33 occupied (22/19)

Seconded National Expert posts: 21 (12) planned in the budget, of which occupied: 14 (11)

Total: 134 (110) staff

Products and services in 2014

Regulatory tasks

| — | 18 drafts implementing technical standards prepared on Solvency II. |
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18 drafts implementing technical standards prepared on Solvency II.

| — | Consultation and finalisation of around 500 guidelines relating to Solvency II. |
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Consultation and finalisation of around 500 guidelines relating to Solvency II.

| — | Associated impact assessments in respect of each draft implementing technical standard and each set of guidelines. |
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Associated impact assessments in respect of each draft implementing technical standard and each set of guidelines.

| — | Consultation on how EIOPA will implement its statutory obligation to publish the risk-free rate of interest for a large number of currencies. |
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Consultation on how EIOPA will implement its statutory obligation to publish the risk-free rate of interest for a large number of currencies.

| — | Enhanced annual report on number of cross-border IORPs. |
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Enhanced annual report on number of cross-border IORPs.

| — | Consultation paper on the solvency of IORPs. |
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Consultation paper on the solvency of IORPs.

| — | Report on an EU single market in personal pensions. |
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Report on an EU single market in personal pensions.

| — | Work on six peer reviews during 2014. |
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Work on six peer reviews during 2014.

| — | Revision of reports on the equivalence of the insurance framework of Bermuda, Japan and Switzerland. |
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Revision of reports on the equivalence of the insurance framework of Bermuda, Japan and Switzerland.

| — | Number of dialogues with important third countries including US and China. |
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Number of dialogues with important third countries including US and China.

| — | Professional secrecy & gap analysis reports for Isle of Man, Canada, Albania, FYR Macedonia, Montenegro and Turkey. |
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Professional secrecy & gap analysis reports for Isle of Man, Canada, Albania, FYR Macedonia, Montenegro and Turkey.

Supervisory tasks

| — | Attendance of College of Supervisors’ meetings and/or telephone conferences for 77 groups. |
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Attendance of College of Supervisors’ meetings and/or telephone conferences for 77 groups.

| — | 127 meetings for 83 groups including the colleges for which a proportionate approach has been taken. |
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127 meetings for 83 groups including the colleges for which a proportionate approach has been taken.

| — | Altogether 144 meeting-days. |
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Altogether 144 meeting-days.

| — | Proportionate approach was applied by EIOPA towards 15 colleges. |
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Proportionate approach was applied by EIOPA towards 15 colleges.

| — | 23 groups are preparing an internal model application under Article 231 of the SII Directive aiming for day 1 approval where a joint decision is needed. |
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23 groups are preparing an internal model application under Article 231 of the SII Directive aiming for day 1 approval where a joint decision is needed.

| — | Excellent examples of an approach to forming a shared view have been observed in 6 different NCAs. These examples are or will be published as Practical Solutions and Examples (PSEs) on the restricted area of EIOPA’s website. |
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Excellent examples of an approach to forming a shared view have been observed in 6 different NCAs. These examples are or will be published as Practical Solutions and Examples (PSEs) on the restricted area of EIOPA’s website.

| — | Progress has been made in the preparation for the application process (detailed planning, milestones, and discussion of blocking points for the internal model colleges aiming for day one approval). |
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Progress has been made in the preparation for the application process (detailed planning, milestones, and discussion of blocking points for the internal model colleges aiming for day one approval).

| — | Two events for Group Supervisors were organised. |
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Two events for Group Supervisors were organised.

| — | Proposal for an efficient collective signing procedure of the coordination arrangements was prepared during the year. |
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Proposal for an efficient collective signing procedure of the coordination arrangements was prepared during the year.

| — | Action Plan for Colleges 2015-2016 was disseminated. |
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Action Plan for Colleges 2015-2016 was disseminated.

| — | Interim and end of the year report on the Functioning of Colleges and the Accomplishments of the 2014 Action Plan. |
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Interim and end of the year report on the Functioning of Colleges and the Accomplishments of the 2014 Action Plan.

| — | Continuous update of the Helsinki Plus list on the restricted area of EIOPA’s website. |
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Continuous update of the Helsinki Plus list on the restricted area of EIOPA’s website.

| — | EIOPA list of groups for which a College of supervisors is in place was updated and published. |
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EIOPA list of groups for which a College of supervisors is in place was updated and published.

| — | Guidelines on the operational functioning of colleges of supervisors including a template for a coordination arrangement and emergency plan have been published. |
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Guidelines on the operational functioning of colleges of supervisors including a template for a coordination arrangement and emergency plan have been published.

| — | Guidelines on information exchange on a systematic basis within college published for public consultation. |
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Guidelines on information exchange on a systematic basis within college published for public consultation.

| — | EIOPA has held meetings with 4 supervisors. With 2 of them specifically on their experience with the supervision of branches, and with 1 on the implementation of its internally integrated approach towards the colleges they lead and attend. |
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EIOPA has held meetings with 4 supervisors. With 2 of them specifically on their experience with the supervision of branches, and with 1 on the implementation of its internally integrated approach towards the colleges they lead and attend.

| — | Common Internal Models Application Package was developed and its use promoted with an EIOPA Opinion. |
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Common Internal Models Application Package was developed and its use promoted with an EIOPA Opinion.

| — | Five good practice notes on assessing internal models have been published on the members’ area of the website. |
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Five good practice notes on assessing internal models have been published on the members’ area of the website.

| — | A note ‘Practical Guidance on Internal Model Joint Decisions’, which included a model timetable for the six months of the approval process was produced for NSAs. |
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A note ‘Practical Guidance on Internal Model Joint Decisions’, which included a model timetable for the six months of the approval process was produced for NSAs.

| — | A benchmarking exercise on market risk in internal models across several countries was carried out. |
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A benchmarking exercise on market risk in internal models across several countries was carried out.

Consumer protection and financial innovation

| — | Joint Consultation paper on cross selling. |
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Joint Consultation paper on cross selling.

| — | Joint Discussion Paper on Key Information Documents (KIDs). |
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Joint Discussion Paper on Key Information Documents (KIDs).

| — | Consultation Paper on Product Intervention Powers under the Regulation on Key Information Documents for Packaged Retail and Insurance-Based Investment Products. |
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Consultation Paper on Product Intervention Powers under the Regulation on Key Information Documents for Packaged Retail and Insurance-Based Investment Products.

| — | Consultation Paper on the proposal for Guidelines on product oversight and governance arrangements by insurance undertakings. |
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Consultation Paper on the proposal for Guidelines on product oversight and governance arrangements by insurance undertakings.

| — | Consultation Paper on Conflicts of Interest in direct and intermediated sales of insurance-based products (PRIIPs). |
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Consultation Paper on Conflicts of Interest in direct and intermediated sales of insurance-based products (PRIIPs).

| — | Discussion Paper on Conflicts of Interest in direct and intermediated sales of insurance-based investment products (PRIIPs). |
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Discussion Paper on Conflicts of Interest in direct and intermediated sales of insurance-based investment products (PRIIPs).

| — | 3rd Consumer Trends Report. |
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3rd Consumer Trends Report.

| — | One minute guide: EIOPA Guidelines on Complaints-Handling by Insurance Intermediaries. |
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One minute guide: EIOPA Guidelines on Complaints-Handling by Insurance Intermediaries.

| — | Report on feed-back from National Competent Authorities regarding EIOPA’s Opinion on Payment Protection Insurance. |
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Report on feed-back from National Competent Authorities regarding EIOPA’s Opinion on Payment Protection Insurance.

| — | Towards an EU-single market for personal pension products: An EIOPA Preliminary Report (supervisory and consumer protection). |
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Towards an EU-single market for personal pension products: An EIOPA Preliminary Report (supervisory and consumer protection).

| — | Report on issues leading to detriment for occupational scheme members and beneficiaries and potential scope of action for EIOPA. |
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Report on issues leading to detriment for occupational scheme members and beneficiaries and potential scope of action for EIOPA.

| — | Report on the implementation of the Test Achat ruling into national legislation. |
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Report on the implementation of the Test Achat ruling into national legislation.

Joint Committee

| — | Produced two joint reports on cross-sectorial risks and vulnerabilities in the EU financial system, which were submitted to the March and September meetings of Economic and Financial Committee of the Council (EFC-FST) and the European Systemic Risk Board (ESRB) and published on the ESAs websites. |
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Produced two joint reports on cross-sectorial risks and vulnerabilities in the EU financial system, which were submitted to the March and September meetings of Economic and Financial Committee of the Council (EFC-FST) and the European Systemic Risk Board (ESRB) and published on the ESAs websites.

| — | Published Joint Guidelines on the consistency of supervisory practices for financial conglomerates, developed in accordance with Article 11(1) of the Financial Conglomerates Directive (Directive 2002/87/EC). |
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Published Joint Guidelines on the consistency of supervisory practices for financial conglomerates, developed in accordance with Article 11(1) of the Financial Conglomerates Directive (Directive 2002/87/EC).

| — | Submitted to the European Commission a joint draft Regulatory Technical Standard (RTS) on risk concentration and intra-group transactions, in accordance with Article 21a (1a) of the Financial Conglomerates Directive. |
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Submitted to the European Commission a joint draft Regulatory Technical Standard (RTS) on risk concentration and intra-group transactions, in accordance with Article 21a (1a) of the Financial Conglomerates Directive.

| — | Joint Committee published its updated 2014 list of identified Financial Conglomerates in October 2014. The list shows 71 financial conglomerates with the head of group in an EU/EEA country. |
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Joint Committee published its updated 2014 list of identified Financial Conglomerates in October 2014. The list shows 71 financial conglomerates with the head of group in an EU/EEA country.

| — | Provided support to the Board of Appeal which decided on two appeal cases in 2014 and finalised one appeal case lodged in 2013. |
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Provided support to the Board of Appeal which decided on two appeal cases in 2014 and finalised one appeal case lodged in 2013.

Common supervisory culture

| — | Three cross-sector seminars. |
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Three cross-sector seminars.

| — | 17 seminars for national competent authorities. |
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17 seminars for national competent authorities.

Financial stability

| — | Two bi-annual Financial Stability Reports (incl. thematic articles). |
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Two bi-annual Financial Stability Reports (incl. thematic articles).

| — | Completion of quantitative tools for modelling reserves and premiums. |
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Completion of quantitative tools for modelling reserves and premiums.

| — | Production of quarterly Risk Dashboard. |
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Production of quarterly Risk Dashboard.

| — | Completion of Europe-wide stress test for the insurance sector (including low yield module). |
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Completion of Europe-wide stress test for the insurance sector (including low yield module).

| — | Issuance of recommendations to NCAs for supervisory action in response to the stress test findings. |
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Issuance of recommendations to NCAs for supervisory action in response to the stress test findings.

| — | Preparatory study on stress testing of the IORPs sector. |
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Preparatory study on stress testing of the IORPs sector.

| — | Publication of revised and revamped annual insurance statistics. |
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Publication of revised and revamped annual insurance statistics.

Crisis management

| — | Implementation of process for regular consideration of the need for EIOPA preventive action in response to adverse developments and risks. |
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Implementation of process for regular consideration of the need for EIOPA preventive action in response to adverse developments and risks.

| — | Completion of studies on liquidity swaps, search for yield, monetisation of future profits and cyber risk. |
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Completion of studies on liquidity swaps, search for yield, monetisation of future profits and cyber risk.

| — | Extension of EIOPA’s crisis management framework to the IORPs sector. |
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Extension of EIOPA’s crisis management framework to the IORPs sector.

| — | Publication of EIOPA Opinion on Sound Principles for Crisis Prevention, Management and Resolution preparedness of NCAs. |
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Publication of EIOPA Opinion on Sound Principles for Crisis Prevention, Management and Resolution preparedness of NCAs.

| — | Creation of GSII Forum to ensure a common EU approach to implementation of the supervisory measures required for GSIIs. |
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Creation of GSII Forum to ensure a common EU approach to implementation of the supervisory measures required for GSIIs.

External relations

| — | 10 meetings, including a joint one with BoS, of IRSG and OPSG, 10 official opinions and feedback statements on public documents, two own initiative papers and two responses to informal consultations. |
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10 meetings, including a joint one with BoS, of IRSG and OPSG, 10 official opinions and feedback statements on public documents, two own initiative papers and two responses to informal consultations.

| — | 21 Regulatory and Supervisory Dialogues with third country supervisors and supervisory associations from Austral-Asia, Latin and North America, South Africa, Iceland and Switzerland. |
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21 Regulatory and Supervisory Dialogues with third country supervisors and supervisory associations from Austral-Asia, Latin and North America, South Africa, Iceland and Switzerland.

| — | Active participation in and contributions to the IAIS Executive Committee, Technical and Financial Stability Committee, Solvency & Actuarial Subcommittee and IAIS Annual Conference. EIOPA coordinated the selection process for a total of 6 seats in the IAIS Executive Committee belonging to the Western European and the Central and Eastern European and Transcaucasia Regions. |
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Active participation in and contributions to the IAIS Executive Committee, Technical and Financial Stability Committee, Solvency & Actuarial Subcommittee and IAIS Annual Conference. EIOPA coordinated the selection process for a total of 6 seats in the IAIS Executive Committee belonging to the Western European and the Central and Eastern European and Transcaucasia Regions.

| — | Strong contribution to the IAIS work on the development of global Insurance Capital Standards, through the Capital Development and the Field Testing Working Groups. Continuous interaction with EIOPA Members to foster increased coordination. |
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Strong contribution to the IAIS work on the development of global Insurance Capital Standards, through the Capital Development and the Field Testing Working Groups. Continuous interaction with EIOPA Members to foster increased coordination.

| — | EU-US Insurance Project: the strategic Way Forward document was updated to reflect progress to date and new ambitions, regular Steering Committee Meetings, the Technical Committees progressing on plan and Public Event in Amsterdam. |
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EU-US Insurance Project: the strategic Way Forward document was updated to reflect progress to date and new ambitions, regular Steering Committee Meetings, the Technical Committees progressing on plan and Public Event in Amsterdam.

| — | Equivalence: Gap analysis of the (re)insurance regime of the Isle of Man and Canada. Revision of 2011 Equivalence assessments for Bermuda, Japan and Switzerland. Public consultation on the revised reports was published by the end of 2014. Finalisation of professional secrecy assessment of 4 countries in Central and Eastern Europe (Albania, FYR Macedonia, Montenegro, Turkey). In 2014, 10 meetings of the EIOPA Equivalence took place. |
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Equivalence: Gap analysis of the (re)insurance regime of the Isle of Man and Canada. Revision of 2011 Equivalence assessments for Bermuda, Japan and Switzerland. Public consultation on the revised reports was published by the end of 2014. Finalisation of professional secrecy assessment of 4 countries in Central and Eastern Europe (Albania, FYR Macedonia, Montenegro, Turkey). In 2014, 10 meetings of the EIOPA Equivalence took place.

| — | Implementation of the Operational Memorandum of Understanding signed between EIOPA and the World Bank, among other things by organising a Joint Seminar on Risk-Based supervision with focus on countries in Central and Eastern Europe, co-organisation of GIS Conference, and several high-level meetings between EIOPA and the World Bank. |
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Implementation of the Operational Memorandum of Understanding signed between EIOPA and the World Bank, among other things by organising a Joint Seminar on Risk-Based supervision with focus on countries in Central and Eastern Europe, co-organisation of GIS Conference, and several high-level meetings between EIOPA and the World Bank.

Conferences/other public events 2014

| — | Five conferences and events (Conference on Global Insurance Supervision (GIS), ‘Insurance Mediation Directive 1.5’ and, ‘Personal Pensions’ Public Events, annual EIOPA Conference and 2nd Joint ESAs Consumer Protection Day). |
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Five conferences and events (Conference on Global Insurance Supervision (GIS), ‘Insurance Mediation Directive 1.5’ and, ‘Personal Pensions’ Public Events, annual EIOPA Conference and 2nd Joint ESAs Consumer Protection Day).

Source: Annex supplied by the Authority.

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THE AUTHORITY’S REPLY

| 11. | EIOPA acknowledges that the percentage of carried-over appropriations from 2013 to 2014 and from 2014 to 2015 in title III was high; this was due to the multiannual nature of the work, the challenging time frame (mainly driven by the Solvency II calendar with the preparatory phase starting in 2015 and full implementation in 2016). In addition, the substantial cut of the 2015 EIOPA budget required the rationalisation of the 2014 budget to use the available resources effectively and efficiently in 2015, and minimise its impact on the ongoing IT projects, with an increased number of budget transfers to title III as a consequence. The carried-over commitments are critical to the continued execution of the IT implementation plan in accordance with the statutory timelines. It is to be expected that the carry-over percentages in the coming year will decline as EIOPA’s IT capability will be in place, reducing the need to carry over high amounts in title III to a strict minimum. |
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11.

EIOPA acknowledges that the percentage of carried-over appropriations from 2013 to 2014 and from 2014 to 2015 in title III was high; this was due to the multiannual nature of the work, the challenging time frame (mainly driven by the Solvency II calendar with the preparatory phase starting in 2015 and full implementation in 2016). In addition, the substantial cut of the 2015 EIOPA budget required the rationalisation of the 2014 budget to use the available resources effectively and efficiently in 2015, and minimise its impact on the ongoing IT projects, with an increased number of budget transfers to title III as a consequence. The carried-over commitments are critical to the continued execution of the IT implementation plan in accordance with the statutory timelines. It is to be expected that the carry-over percentages in the coming year will decline as EIOPA’s IT capability will be in place, reducing the need to carry over high amounts in title III to a strict minimum.

| 12. | EIOPA is aware that part of the 2015 activities are covered by a relatively high proportion of carried-over appropriations from 2014. This is explained by the need to finance its complex and multiannual IT plan, ensuring a proper implementation of Solvency II. With this IT plan being largely implemented in 2016, the level of carry-over appropriations will be limited in the future to a strict minimum, in line with the principle of annuality. In addition, in order to better align the budgetary funds available for the given year, EIOPA’s budget and procurement processes have already been revised to guarantee a full integration into the overall planning and coordination processes of EIOPA, within the framework of the Annual Work Programme. |
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12.

EIOPA is aware that part of the 2015 activities are covered by a relatively high proportion of carried-over appropriations from 2014. This is explained by the need to finance its complex and multiannual IT plan, ensuring a proper implementation of Solvency II. With this IT plan being largely implemented in 2016, the level of carry-over appropriations will be limited in the future to a strict minimum, in line with the principle of annuality. In addition, in order to better align the budgetary funds available for the given year, EIOPA’s budget and procurement processes have already been revised to guarantee a full integration into the overall planning and coordination processes of EIOPA, within the framework of the Annual Work Programme.

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| 9.12.2015 | EN | Official Journal of the European Union | C 409/187 |
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9.12.2015

EN

Official Journal of the European Union

C 409/187

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REPORT

on the annual accounts of the European Institute of Innovation and Technology for the financial year 2014, together with the Institute’s reply

(2015/C 409/21)

INTRODUCTION

| 1. | The European Institute of Innovation and Technology (hereinafter ‘the Institute’, aka ‘EIT’), which is located in Budapest, was created by Regulation (EC) No 294/2008 of the European Parliament and of the Council (1). The Institute’s objective is to contribute to sustainable European economic growth and competitiveness by reinforcing the innovation capacity of the Member States and the European Union. The Institute awards grants to an increasing number of ‘Knowledge and Innovation Communities’ (KICs), linking the higher education, research and business sectors with one another and aiming thereby to boost innovation and entrepreneurship (2). KICs coordinate the activities of hundreds of partners. The grants provided by EIT reimburse partners’ costs and costs stemming from the KICs’ coordination activities. |
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1.

The European Institute of Innovation and Technology (hereinafter ‘the Institute’, aka ‘EIT’), which is located in Budapest, was created by Regulation (EC) No 294/2008 of the European Parliament and of the Council (1). The Institute’s objective is to contribute to sustainable European economic growth and competitiveness by reinforcing the innovation capacity of the Member States and the European Union. The Institute awards grants to an increasing number of ‘Knowledge and Innovation Communities’ (KICs), linking the higher education, research and business sectors with one another and aiming thereby to boost innovation and entrepreneurship (2). KICs coordinate the activities of hundreds of partners. The grants provided by EIT reimburse partners’ costs and costs stemming from the KICs’ coordination activities.

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Institute’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
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2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Institute’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Institute, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and |
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STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Institute, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and

| (b) | the legality and regularity of the transactions underlying those accounts. |
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(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Institute and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Institute's annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Institute after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Institute in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Institute and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Institute's annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Institute after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Institute in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Institute are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Institute are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Institute’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Institute’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Institute’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Institute’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

Emphasis of matter

| 10. | Without calling into question the unqualified opinion expressed in paragraph 9, the Court draws attention to the fact that the EIT financial contribution may not exceed 25 % of the KIC’s global expenditure over the first five years, from 1 January 2010 to 31 December 2014. According to the figures reported by the KICs, this ceiling was respected. The EIT obtained audit certificates by 31 March 2015 on the costs of KIC complementary activities (KCA) incurred during 2010-2014. In addition to obtaining the audit certificates, in 2015 the EIT conducted a review of the portfolio of KIC complementary activities to ensure that only those activities are accepted that meet all legal and operational requirements set for KCAs including to have a link with KIC added value activities funded by the EIT. |
| --- | --- |

10.

Without calling into question the unqualified opinion expressed in paragraph 9, the Court draws attention to the fact that the EIT financial contribution may not exceed 25 % of the KIC’s global expenditure over the first five years, from 1 January 2010 to 31 December 2014. According to the figures reported by the KICs, this ceiling was respected. The EIT obtained audit certificates by 31 March 2015 on the costs of KIC complementary activities (KCA) incurred during 2010-2014. In addition to obtaining the audit certificates, in 2015 the EIT conducted a review of the portfolio of KIC complementary activities to ensure that only those activities are accepted that meet all legal and operational requirements set for KCAs including to have a link with KIC added value activities funded by the EIT.

| 11. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

11.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON INTERNAL CONTROLS

| 12. | The EIT has gradually improved its financial verification of the KICs’ cost claims. However, the operational verification of deliverables is lagging behind. The KICs’ annual business plans still include an inadequate definition of deliverables and there is no clear link between planned deliverables and eligible cost per partner and cost category. Also, the Court has found cases where the full amount of the EIT grant was paid out even if some of the objectives set in the business plan have not been achieved. |
| --- | --- |

12.

The EIT has gradually improved its financial verification of the KICs’ cost claims. However, the operational verification of deliverables is lagging behind. The KICs’ annual business plans still include an inadequate definition of deliverables and there is no clear link between planned deliverables and eligible cost per partner and cost category. Also, the Court has found cases where the full amount of the EIT grant was paid out even if some of the objectives set in the business plan have not been achieved.

COMMENTS ON BUDGETARY MANAGEMENT

| 13. | The Institute overestimated its budgetary needs for 2014 by 13,1 million euro, i.e. 5,6 % (2013: 3,4 million Euro, i.e. 2,5 %) and only 220 million of the 233,1 million euro available were committed. The low implementation rate is mainly related to non-used appropriations for grants (11,4 million euro) to fund KIC activities. The KIC’s business plans, on the basis of which grant agreements were signed, did not require the use of total 2014 appropriations available to the Institute. The appropriations not used will be re-entered in the Institute’s budgets for the years 2015-2017 as stipulated in the Institute’s Financial Regulation. |
| --- | --- |

13.

The Institute overestimated its budgetary needs for 2014 by 13,1 million euro, i.e. 5,6 % (2013: 3,4 million Euro, i.e. 2,5 %) and only 220 million of the 233,1 million euro available were committed. The low implementation rate is mainly related to non-used appropriations for grants (11,4 million euro) to fund KIC activities. The KIC’s business plans, on the basis of which grant agreements were signed, did not require the use of total 2014 appropriations available to the Institute. The appropriations not used will be re-entered in the Institute’s budgets for the years 2015-2017 as stipulated in the Institute’s Financial Regulation.

OTHER COMMENTS

| 14. | While the KICs are to develop strategies for financial sustainability, to date, and in the fifth year of their existence, they remain fully dependent on financing by the Institute and KIC partners. |
| --- | --- |

14.

While the KICs are to develop strategies for financial sustainability, to date, and in the fifth year of their existence, they remain fully dependent on financing by the Institute and KIC partners.

| 15. | Since its creation in 2009, the Institute has suffered from high staff turnover and instability at management level. In June 2014, the Governing Board decided to second the Institute’s Director on a long-term research mission to the European University Institute in Florence for the remaining eleven months of his mandate. The interim Director took over duties in August 2014 (just after his recruitment and appointment as Chief Operating Officer (COO)) and is now the fourth person occupying the Director’s post within a period of six years. The vacancy notice to recruit a new Director was published in July 2015. |
| --- | --- |

15.

Since its creation in 2009, the Institute has suffered from high staff turnover and instability at management level. In June 2014, the Governing Board decided to second the Institute’s Director on a long-term research mission to the European University Institute in Florence for the remaining eleven months of his mandate. The interim Director took over duties in August 2014 (just after his recruitment and appointment as Chief Operating Officer (COO)) and is now the fourth person occupying the Director’s post within a period of six years. The vacancy notice to recruit a new Director was published in July 2015.

| 16. | Two of the three Head of Unit posts have been vacant since 2013. One is occupied ad interim since 2013 which is in contradiction with the Staff Regulations that stipulate a maximum period of one year. The other is currently occupied by the COO who also serves as the interim Director and who thus fulfils three roles at the same time. |
| --- | --- |

16.

Two of the three Head of Unit posts have been vacant since 2013. One is occupied ad interim since 2013 which is in contradiction with the Staff Regulations that stipulate a maximum period of one year. The other is currently occupied by the COO who also serves as the interim Director and who thus fulfils three roles at the same time.

| 17. | Although the situation has improved in comparison with 2013, 20 % of the posts in the EIT establishment plan were still vacant at the end of 2014 (compared with one third at the end of 2013). |
| --- | --- |

17.

Although the situation has improved in comparison with 2013, 20 % of the posts in the EIT establishment plan were still vacant at the end of 2014 (compared with one third at the end of 2013).

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 18. | An overview of the corrective actions taken in response to the Court's comments from the previous years is provided in Annex I. |
| --- | --- |

18.

An overview of the corrective actions taken in response to the Court's comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 15 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 97, 9.4.2008, p. 1.

1

(2)  Annex II summarises the Institute's competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

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ANNEX I

Follow-up of previous year’s comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2012 | In addition to the matter described in paragraphs 9 to 13, budgets for grant agreements signed in 2010 and 2011, which resulted in payments in 2012, were not sufficiently specific. There was no link between the approved funds and the activities to be implemented. Grant agreements did not set individual thresholds for specific cost categories (i.e. staff costs, sub-contracting, legal services, etc.) and did not include rules for the procurement of goods and services by the KICs and their partners.
  EIT also carried out technical verifications for all funded projects as part of its ex ante verifications. However, there was a lack of quantifiable targets that hampered an effective assessment of project activities and results. Business plans did not define in detail the activities to be implemented; nor did they set clear milestones, deliverables per activity or quality criteria.
  Out of the committed appropriations carried over from 2011 amounting to some 22 million euro, some 10 million euro (45 %) were cancelled in 2012. The high level of cancellations is mainly due to lower than estimated costs claimed by beneficiaries under 2011 grant agreements (9,2 million euro or 92 % of cancelled carry-overs). | Ongoing |
| 2013 | In 2013, the Institute made final payments and clearings of pre-financings (transactions) for grants amounting to 84,1 million euro (2012 activities). Grant expenditure represents some 97 % of total 2013 expenditure. All grant transactions are subject to review by the Commission before authorisation by EIT. The Institute itself continued to make considerable efforts to implement effective ex ante verifications with the aim of providing reasonable assurance on the legality and regularity of grant transactions. About 87 % of grant expenditure claimed by the KICs is covered by certificates issued by independent audit firms contracted by the KICs and their partners. EIT itself carried out ex ante verifications consisting of comprehensive desk checks. Supporting documents obtained from the KICs and their partners were reviewed by EIT in the case of particular risks identified. The Court found however that, although the quality of the audit certificates is improving, in part due to better guidance, there is room for further improvement in the work of the independent audit firms, in general. | Completed |
| 2013 | In order to have a second layer of assurance on the legality and regularity of grant transactions, EIT contracted complementary ex post verifications for grant transactions that were carried out by an independent audit firm. The cost claims of 29 of the 300 KIC partners were verified ex post, corresponding to 29 % of the total grant transactions made in 2013. Ex post verification results confirmed that ex ante verifications are improving, but not yet fully effective. On the basis of the errors detected by the ex post verifications, EIT decided in 2014 to recover a total amount of 5 75  593 euro, corresponding to 3 % of the audited 2012 grants. | Completed |
| 2013 | Payments amounting to some 6 65  000 euro and 1 05  000 euro, in respect of two framework contracts which had been concluded in 2010 and 2012 using a negotiated procedure, were made in 2013. From the audit it emerged that the use of a negotiated procedure was not justified, the resulting payments are therefore irregular. | Completed |
| 2013 | The combined error rate of the matters explained in paragraphs 9 to 11 is between 2 % and 3 % of total 2013 expenditure. | Completed |
| 2013 | The Framework Partnership Agreements (FPA) with the three KICs stipulate that the EIT financial contribution may cover up to 25 % of the KIC’s global expenditure over the first four years, from 1 January 2010 to December 2013. According to the figures reported by the KICs, this ceiling was respected by all three KICs. However, as these figures will not be audited before 2015, there is no appropriate audit evidence that the EIT funding did not exceed this 25 % ceiling. | Ongoing |
| 2013 | In 2013 the overall level of committed appropriations was 97 %, indicating that overall commitments were made in a timely manner. The budget implementation rate was low, however, at 74 % of the EU contributions for title I (staff expenditure), which is mainly related to the high turnover of staff and the outstanding adoption of the regulations on salary adjustments. | N/A |
| 2013 | The Institute carried over committed appropriations under title II (administrative expenditure) amounting to 1 93  420 euro (24 %). Carry-overs mainly concerned invoices not yet received and ongoing IT projects. It did not implement 91  918 euro (29 %) of the committed appropriations carried over from 2012 to 2013 under this title, which were largely due to overestimated costs for a Governing Board meeting. | N/A |
| 2013 | The Institute had budgeted 3 4 0 78  025 euro under title III (operational expenditure) for KIC grants. The relatively low execution rate of 82 % is due to the fact that the KICs did not fully absorb the available funding for 2012 activities (2012 grants). | N/A |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2012

In addition to the matter described in paragraphs 9 to 13, budgets for grant agreements signed in 2010 and 2011, which resulted in payments in 2012, were not sufficiently specific. There was no link between the approved funds and the activities to be implemented. Grant agreements did not set individual thresholds for specific cost categories (i.e. staff costs, sub-contracting, legal services, etc.) and did not include rules for the procurement of goods and services by the KICs and their partners.

EIT also carried out technical verifications for all funded projects as part of its ex ante verifications. However, there was a lack of quantifiable targets that hampered an effective assessment of project activities and results. Business plans did not define in detail the activities to be implemented; nor did they set clear milestones, deliverables per activity or quality criteria.

Out of the committed appropriations carried over from 2011 amounting to some 22 million euro, some 10 million euro (45 %) were cancelled in 2012. The high level of cancellations is mainly due to lower than estimated costs claimed by beneficiaries under 2011 grant agreements (9,2 million euro or 92 % of cancelled carry-overs).

Ongoing

2013

In 2013, the Institute made final payments and clearings of pre-financings (transactions) for grants amounting to 84,1 million euro (2012 activities). Grant expenditure represents some 97 % of total 2013 expenditure. All grant transactions are subject to review by the Commission before authorisation by EIT. The Institute itself continued to make considerable efforts to implement effective ex ante verifications with the aim of providing reasonable assurance on the legality and regularity of grant transactions. About 87 % of grant expenditure claimed by the KICs is covered by certificates issued by independent audit firms contracted by the KICs and their partners. EIT itself carried out ex ante verifications consisting of comprehensive desk checks. Supporting documents obtained from the KICs and their partners were reviewed by EIT in the case of particular risks identified. The Court found however that, although the quality of the audit certificates is improving, in part due to better guidance, there is room for further improvement in the work of the independent audit firms, in general.

Completed

2013

In order to have a second layer of assurance on the legality and regularity of grant transactions, EIT contracted complementary ex post verifications for grant transactions that were carried out by an independent audit firm. The cost claims of 29 of the 300 KIC partners were verified ex post, corresponding to 29 % of the total grant transactions made in 2013. Ex post verification results confirmed that ex ante verifications are improving, but not yet fully effective. On the basis of the errors detected by the ex post verifications, EIT decided in 2014 to recover a total amount of 5 75  593 euro, corresponding to 3 % of the audited 2012 grants.

Completed

2013

Payments amounting to some 6 65  000 euro and 1 05  000 euro, in respect of two framework contracts which had been concluded in 2010 and 2012 using a negotiated procedure, were made in 2013. From the audit it emerged that the use of a negotiated procedure was not justified, the resulting payments are therefore irregular.

Completed

2013

The combined error rate of the matters explained in paragraphs 9 to 11 is between 2 % and 3 % of total 2013 expenditure.

Completed

2013

The Framework Partnership Agreements (FPA) with the three KICs stipulate that the EIT financial contribution may cover up to 25 % of the KIC’s global expenditure over the first four years, from 1 January 2010 to December 2013. According to the figures reported by the KICs, this ceiling was respected by all three KICs. However, as these figures will not be audited before 2015, there is no appropriate audit evidence that the EIT funding did not exceed this 25 % ceiling.

Ongoing

2013

In 2013 the overall level of committed appropriations was 97 %, indicating that overall commitments were made in a timely manner. The budget implementation rate was low, however, at 74 % of the EU contributions for title I (staff expenditure), which is mainly related to the high turnover of staff and the outstanding adoption of the regulations on salary adjustments.

N/A

2013

The Institute carried over committed appropriations under title II (administrative expenditure) amounting to 1 93  420 euro (24 %). Carry-overs mainly concerned invoices not yet received and ongoing IT projects. It did not implement 91  918 euro (29 %) of the committed appropriations carried over from 2012 to 2013 under this title, which were largely due to overestimated costs for a Governing Board meeting.

N/A

2013

The Institute had budgeted 3 4 0 78  025 euro under title III (operational expenditure) for KIC grants. The relatively low execution rate of 82 % is due to the fact that the KICs did not fully absorb the available funding for 2012 activities (2012 grants).

N/A

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ANNEX II

European Institute of Innovation and Technology (Budapest)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Article 173 of the Treaty on the Functioning of the European Union) | The Union and the Member States shall ensure that the conditions necessary for the competitiveness of the Union’s industry exist.
  For that purpose, in accordance with a system of open and competitive markets, their action shall be aimed at:






  — | speeding up the adjustment of industry to structural changes, |
| --- | --- | --- |

Areas of Union competence deriving from the Treaty

(Article 173 of the Treaty on the Functioning of the European Union)

The Union and the Member States shall ensure that the conditions necessary for the competitiveness of the Union’s industry exist.

For that purpose, in accordance with a system of open and competitive markets, their action shall be aimed at:

—

speeding up the adjustment of industry to structural changes,

| — | encouraging an environment favourable to initiative and to the development of undertakings throughout the Union, particularly small and medium-sized undertakings, |
| --- | --- |

—

encouraging an environment favourable to initiative and to the development of undertakings throughout the Union, particularly small and medium-sized undertakings,

| — | encouraging an environment favourable to cooperation between undertakings, |
| --- | --- |

—

encouraging an environment favourable to cooperation between undertakings,

| — | fostering better exploitation of the industrial potential of policies of innovation, research and technological development. |
| --- | --- |

—

fostering better exploitation of the industrial potential of policies of innovation, research and technological development.

Competences of the Institute

(Regulation (EC) No 294/2008 of the European Parliament and of the Council as amended by Regulation (EU) No 1292/2013 of the European Parliament and of the Council)

Objectives

The Institute’s objective is to contribute to sustainable European economic growth and competitiveness by reinforcing the innovation capacity of the Member States and the Union. It shall do this by promoting and integrating higher education, research and innovation of the highest standards.

Tasks

In order to achieve its objective, the Institute shall:

| (a) | identify its main priorities and activities; |
| --- | --- |

(a)

identify its main priorities and activities;

| (b) | raise awareness among potential partner organisations and encourage their participation in its activities; |
| --- | --- |

(b)

raise awareness among potential partner organisations and encourage their participation in its activities;

| (c) | select and designate KICs in the priority fields and define their rights and obligations by agreement; provide them with appropriate support; apply appropriate quality control measures; continuously monitor and periodically evaluate their activities; and ensure an appropriate level of coordination between them; |
| --- | --- |

(c)

select and designate KICs in the priority fields and define their rights and obligations by agreement; provide them with appropriate support; apply appropriate quality control measures; continuously monitor and periodically evaluate their activities; and ensure an appropriate level of coordination between them;

| (d) | mobilise funds from public and private sources and use its resources in accordance with this Regulation. It shall in particular seek to raise a significant and increasing proportion of its budget from private sources and from income generated by its own activities; |
| --- | --- |

(d)

mobilise funds from public and private sources and use its resources in accordance with this Regulation. It shall in particular seek to raise a significant and increasing proportion of its budget from private sources and from income generated by its own activities;

| (e) | encourage the recognition in the Member States of degrees and diplomas which are awarded by higher education institutions that are partner organisations and which may be labelled EIT degrees and diplomas; |
| --- | --- |

(e)

encourage the recognition in the Member States of degrees and diplomas which are awarded by higher education institutions that are partner organisations and which may be labelled EIT degrees and diplomas;

| (f) | promote the dissemination of good practices for the integration of the knowledge triangle in order to develop a common innovation and knowledge transfer culture; |
| --- | --- |

(f)

promote the dissemination of good practices for the integration of the knowledge triangle in order to develop a common innovation and knowledge transfer culture;

| (g) | seek to become a world class body for excellence in higher education, research and innovation; |
| --- | --- |

(g)

seek to become a world class body for excellence in higher education, research and innovation;

| (h) | promote multidisciplinary approaches to innovation, including the integration of technological, social and non-technological solutions, organisational approaches and new business models; |
| --- | --- |

(h)

promote multidisciplinary approaches to innovation, including the integration of technological, social and non-technological solutions, organisational approaches and new business models;

| (i) | ensure complementarity and synergy between the Institute's activities and other Community programmes. |
| --- | --- |

(i)

ensure complementarity and synergy between the Institute's activities and other Community programmes.

| (j) | promote the KICs as excellent innovation partners inside and outside the Union; |
| --- | --- |

(j)

promote the KICs as excellent innovation partners inside and outside the Union;

| (k) | establish a Stakeholder Forum to inform about the activities of the EIT, its experiences, best practices and contribution to Union innovation, research and education policies and objectives and to allow stakeholders to express their views. |
| --- | --- |

(k)

establish a Stakeholder Forum to inform about the activities of the EIT, its experiences, best practices and contribution to Union innovation, research and education policies and objectives and to allow stakeholders to express their views.

Governance

Governing Board

Composition

The Institute's Governing Board (GB) consists of 12 appointed members providing a balance between experience and excellence in business, higher education and research, and three representative members proposed by the Knowledge and Innovation Communities (KICs). The European Commission has observer status.

Tasks

The Governing Board is responsible for steering the activities of the Institute, for the selection, designation, grant allocation to and evaluation of the KICs, and for all other strategic decisions.

Executive Committee

Composition

The Executive Committee consists of four Governing Board members, including the Chairperson and Vice-Chairperson. It is chaired by the Chairperson of the Governing Board.

Tasks

The Executive Committee oversees the running of the Institute and takes such decisions as are necessary between meetings of the Governing Board.

Director

Appointed by and responsible to the Governing Board for the administrative and financial management of the Institute; the Institute's legal representative.

External audit

European Court of Auditors.

Discharge authority

European Parliament acting on a recommendation from the Council.

Resources made available to the Institute in 2014 (2013)

Final Budget

235,40(142,20) million euro for commitment appropriations and 174,91 (98,76) million euro for payment appropriations.

Staff as at 31 December 2014

Authorised posts: 60 (58)

Posts occupied: 48 (41)

Other posts: 0 (0)

Total staff: 48 (41) assigned to the following duties:

| — | operational tasks: 33 (25) |
| --- | --- |

—

operational tasks: 33 (25)

| — | administrative and support tasks: 15 (16) |
| --- | --- |

—

administrative and support tasks: 15 (16)

Products and services in 2014

| — | Selection and nomination of two new KICs in the areas of Health and Raw Materials by the EIT Governing Board in December. |
| --- | --- |

—

Selection and nomination of two new KICs in the areas of Health and Raw Materials by the EIT Governing Board in December.

| — | Decision of the Governing Board on 11 December 2014 to allocate in 2015 a total of 268 million euro to the funding of KIC Value Added Activities for the five KICs after the implementation of a process of Competitive Funding corresponding to 40 % of the overall budget. |
| --- | --- |

—

Decision of the Governing Board on 11 December 2014 to allocate in 2015 a total of 268 million euro to the funding of KIC Value Added Activities for the five KICs after the implementation of a process of Competitive Funding corresponding to 40 % of the overall budget.

| — | The three KICs managed a total budget of 21 5 2 64  780 euro for EIT funding of KIC Value Added Activities and a budget of 1  08 7 4 26  142 euro for non-EIT Funding of KAVA activities and complementary activities. |
| --- | --- |

—

The three KICs managed a total budget of 21 5 2 64  780 euro for EIT funding of KIC Value Added Activities and a budget of 1  08 7 4 26  142 euro for non-EIT Funding of KAVA activities and complementary activities.

| — | The total number of KIC partners involved in the three KICs rose to 605 organizations, i.e. 216 for Climate-KIC, 122 for EIT ICT Labs, and 267 for KIC InnoEnergy. |
| --- | --- |

—

The total number of KIC partners involved in the three KICs rose to 605 organizations, i.e. 216 for Climate-KIC, 122 for EIT ICT Labs, and 267 for KIC InnoEnergy.

| — | The KICs provided EIT with 6 core Key Performance Indicators and their respective supporting documents for the year 2013; they were assessed and validated by EIT, as part of the KICs past performance assessment in view of the competitive funding process for the 2015 allocation. The KICs also provided EIT with estimates for their 2014 Key Performance Indicators. |
| --- | --- |

—

The KICs provided EIT with 6 core Key Performance Indicators and their respective supporting documents for the year 2013; they were assessed and validated by EIT, as part of the KICs past performance assessment in view of the competitive funding process for the 2015 allocation. The KICs also provided EIT with estimates for their 2014 Key Performance Indicators.

| — | Organisation of the EIT 2014 Call for Knowledge and Innovation Communities (KICs) Information Day in Budapest (Hungary) on 14 March 2014. |
| --- | --- |

—

Organisation of the EIT 2014 Call for Knowledge and Innovation Communities (KICs) Information Day in Budapest (Hungary) on 14 March 2014.

| — | Development of a refined Strategy for the EIT Awards (including conceptualisation of a third category, i.e. EIT Innovators Award). |
| --- | --- |

—

Development of a refined Strategy for the EIT Awards (including conceptualisation of a third category, i.e. EIT Innovators Award).

| — | Development of a refined Concept for the EIT Roundtable of Entrepreneurs. |
| --- | --- |

—

Development of a refined Concept for the EIT Roundtable of Entrepreneurs.

| — | Adoption of the EIT Community Brand Book and launch on 1 December 2014. |
| --- | --- |

—

Adoption of the EIT Community Brand Book and launch on 1 December 2014.

Source: Annex supplied by the Institute.

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THE INSTITUTE’S REPLY

| 10. | On the basis of the audit certificates obtained for KIC complementary activities, the EIT funding percentages for the period 2010-2014 are 16 % for Climate KIC, 19 % for KIC InnoEnergy and 21 % for EIT ICT Labs. All of these are well below the 25 % ceiling set out in the EIT-KIC Framework Partnership Agreements. In addition, the EIT has drawn valuable conclusions from the review of KCA portfolios mentioned by the European Court of Auditors that will be used to improve the relevance of KIC complementary activities as well as the link between KIC complementary activities and KIC added value activities funded by the EIT. |
| --- | --- |

10.

On the basis of the audit certificates obtained for KIC complementary activities, the EIT funding percentages for the period 2010-2014 are 16 % for Climate KIC, 19 % for KIC InnoEnergy and 21 % for EIT ICT Labs. All of these are well below the 25 % ceiling set out in the EIT-KIC Framework Partnership Agreements. In addition, the EIT has drawn valuable conclusions from the review of KCA portfolios mentioned by the European Court of Auditors that will be used to improve the relevance of KIC complementary activities as well as the link between KIC complementary activities and KIC added value activities funded by the EIT.

| 12. | The EIT agrees that there is still room for improvement in the verification of KICs’ performance. However, the ex-ante technical assessment of the implementation of KIC activities has already improved significantly in comparison with previous years. The 2013 KIC Reports were prepared in accordance with the improved Guidelines for the Preparation of Reports issued by the EIT. A structured analysis of the vast amount of information received, complementing the work done by external experts, allowed the EIT to obtain a satisfactory level of assurance about the provision of deliverables by KICs, which were included in the Business Plans. As a result of improved guidance provided by the EIT to the KICs, Business Plans for 2014 and onwards provide significantly more details on each planned KIC added value activity. Moreover, a more robust methodology is now in place to assess the KICs’ performance based on the reporting.
  Notwithstanding the comment of the European Court of Auditors on cases of partial achievement of Business Plan objectives, it is important to note that the EIT does not accept costs associated to non-implemented parts of KIC added value activities. Furthermore, if a KIC underperforms in its activities compared to the Business Plan targets in a given year, this will have a negative impact on the maximum grant allocated to that particular KIC for year N+2, as a result of the EIT’s annual competitive funding allocation exercise. |
| --- | --- |

12.

The EIT agrees that there is still room for improvement in the verification of KICs’ performance. However, the ex-ante technical assessment of the implementation of KIC activities has already improved significantly in comparison with previous years. The 2013 KIC Reports were prepared in accordance with the improved Guidelines for the Preparation of Reports issued by the EIT. A structured analysis of the vast amount of information received, complementing the work done by external experts, allowed the EIT to obtain a satisfactory level of assurance about the provision of deliverables by KICs, which were included in the Business Plans. As a result of improved guidance provided by the EIT to the KICs, Business Plans for 2014 and onwards provide significantly more details on each planned KIC added value activity. Moreover, a more robust methodology is now in place to assess the KICs’ performance based on the reporting.

Notwithstanding the comment of the European Court of Auditors on cases of partial achievement of Business Plan objectives, it is important to note that the EIT does not accept costs associated to non-implemented parts of KIC added value activities. Furthermore, if a KIC underperforms in its activities compared to the Business Plan targets in a given year, this will have a negative impact on the maximum grant allocated to that particular KIC for year N+2, as a result of the EIT’s annual competitive funding allocation exercise.

| 13. | Significant uncertainties surrounded the EIT’s 2014 annual budget due to the ongoing negotiations related to the 2014-2020 Multiannual Financial Framework and Horizon 2020. Therefore, the EIT Governing Board took a prudent approach and decided in September 2013 to allocate only 180 million euro, as a first tranche, for the 2014 grant agreements. After the 2014 annual budget had been confirmed, the EIT awarded further grants totalling 38,5 million euro, as a second tranche, to the three KICs in March 2014. However, it was not possible to use the full amount of the remaining commitment appropriations, as KICs had requested less EIT grant than what would have been possible to be awarded on the basis of the remaining available EIT budget. Furthermore, as the second tranche of grants was allocated when three months had already passed from the calendar year, awarding higher amounts would have put in risk the full implementation of the Business Plans. |
| --- | --- |

13.

Significant uncertainties surrounded the EIT’s 2014 annual budget due to the ongoing negotiations related to the 2014-2020 Multiannual Financial Framework and Horizon 2020. Therefore, the EIT Governing Board took a prudent approach and decided in September 2013 to allocate only 180 million euro, as a first tranche, for the 2014 grant agreements. After the 2014 annual budget had been confirmed, the EIT awarded further grants totalling 38,5 million euro, as a second tranche, to the three KICs in March 2014. However, it was not possible to use the full amount of the remaining commitment appropriations, as KICs had requested less EIT grant than what would have been possible to be awarded on the basis of the remaining available EIT budget. Furthermore, as the second tranche of grants was allocated when three months had already passed from the calendar year, awarding higher amounts would have put in risk the full implementation of the Business Plans.

| 14. | While the EIT agrees that the EIT grant was the main source of funding for KIC added value activities in 2013, it is important to note that the steps made by KICs by developing strategies for financial sustainability are in full compliance with the relevant legal obligations. Pursuant to the EIT Founding Regulation, a KIC ‘shall normally have a time-frame of seven to fifteen years’. Furthermore, the EIT Strategic Innovation Agenda provides that ‘while KICs will not be fully financially independent from the EIT during the first years of operation, they will be encouraged to become sustainable in the medium-term; i.e. gradually reduce their dependency from EIT funding for their further consolidation and further expansion’.
  In line with the EIT Founding Regulation, KICs are further improving their strategies for financial sustainability. A summary of these strategies has been presented both in Business Plans 2014 and 2015. Furthermore, the EIT Governing Board adopted the ‘Principles on KICs’ Financial Sustainability’ on 5 March 2015. This document sets a clear direction by providing definitions, funding principles and incentives for the KICs to work towards financial sustainability. As a next step, the EIT will provide the KICs with specific guidelines for the proper implementation of the ‘Principles on KICs’ Financial Sustainability’, including a specific template for reporting on the progress made towards financial sustainability. |
| --- | --- |

14.

While the EIT agrees that the EIT grant was the main source of funding for KIC added value activities in 2013, it is important to note that the steps made by KICs by developing strategies for financial sustainability are in full compliance with the relevant legal obligations. Pursuant to the EIT Founding Regulation, a KIC ‘shall normally have a time-frame of seven to fifteen years’. Furthermore, the EIT Strategic Innovation Agenda provides that ‘while KICs will not be fully financially independent from the EIT during the first years of operation, they will be encouraged to become sustainable in the medium-term; i.e. gradually reduce their dependency from EIT funding for their further consolidation and further expansion’.

In line with the EIT Founding Regulation, KICs are further improving their strategies for financial sustainability. A summary of these strategies has been presented both in Business Plans 2014 and 2015. Furthermore, the EIT Governing Board adopted the ‘Principles on KICs’ Financial Sustainability’ on 5 March 2015. This document sets a clear direction by providing definitions, funding principles and incentives for the KICs to work towards financial sustainability. As a next step, the EIT will provide the KICs with specific guidelines for the proper implementation of the ‘Principles on KICs’ Financial Sustainability’, including a specific template for reporting on the progress made towards financial sustainability.

| 15. | In order to mitigate the high staff turnover, the EIT has identified improvements in the vacancy management and they are being implemented according to an action plan. In addition, the EIT put in place an appraisal and re-classification system in autumn 2014 to provide a better career perspective to EIT staff. The EIT also revised and improved its training policy. Moreover, exit interviews are now carried out with all staff analysing the reasons for departure. The EIT also set up a HR Working Group in 2015. Furthermore, the EIT has strengthened the middle management level, as a new Head of Unit has been appointed for managing grant operations and will take up duties on 1 August 2015. As a result of the ongoing mitigating actions, staff turnover has dropped to 12 % in 2014 as compared with the 20 %-25 % experienced in 2012-2013. |
| --- | --- |

15.

In order to mitigate the high staff turnover, the EIT has identified improvements in the vacancy management and they are being implemented according to an action plan. In addition, the EIT put in place an appraisal and re-classification system in autumn 2014 to provide a better career perspective to EIT staff. The EIT also revised and improved its training policy. Moreover, exit interviews are now carried out with all staff analysing the reasons for departure. The EIT also set up a HR Working Group in 2015. Furthermore, the EIT has strengthened the middle management level, as a new Head of Unit has been appointed for managing grant operations and will take up duties on 1 August 2015. As a result of the ongoing mitigating actions, staff turnover has dropped to 12 % in 2014 as compared with the 20 %-25 % experienced in 2012-2013.

| 16. | The management vacancies are gradually being filled, i.e. the Chief Operating Officer is already in place since August 2014 and the Head of Unit Partnerships Management will take up duties on 1 August 2015. The position of the Head of Unit Policy and Communications is expected to be filled by end of 2015. The EIT will complete the recruitment procedures of the management posts in a fully regular and transparent manner, ending the temporary arrangements which became necessary in order to ensure operational continuity. |
| --- | --- |

16.

The management vacancies are gradually being filled, i.e. the Chief Operating Officer is already in place since August 2014 and the Head of Unit Partnerships Management will take up duties on 1 August 2015. The position of the Head of Unit Policy and Communications is expected to be filled by end of 2015. The EIT will complete the recruitment procedures of the management posts in a fully regular and transparent manner, ending the temporary arrangements which became necessary in order to ensure operational continuity.

| 17. | Whilst accepting the comment of the European Court of Auditors on the vacancy rate at the end of 2014, it is important to note that, as of June 2015, there are only seven vacant positions out of the 60 authorised posts in the EIT, i.e. the vacancy rate has dropped to 12 % from 20 % in the first half of 2015. The remaining vacant positions are expected to be filled during 2015. |
| --- | --- |

17.

Whilst accepting the comment of the European Court of Auditors on the vacancy rate at the end of 2014, it is important to note that, as of June 2015, there are only seven vacant positions out of the 60 authorised posts in the EIT, i.e. the vacancy rate has dropped to 12 % from 20 % in the first half of 2015. The remaining vacant positions are expected to be filled during 2015.

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| 9.12.2015 | EN | Official Journal of the European Union | C 409/197 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/197

---

REPORT

on the annual accounts of the European Medicines Agency for the financial year 2014 together with the Agency’s reply

(2015/C 409/22)

INTRODUCTION

| 1. | The European Medicines Agency (hereinafter ‘the Agency’, aka ‘EMA’), which is located in London, was established by Council Regulation (EEC) No 2309/93, which was replaced by Regulation (EC) No 726/2004 of the European Parliament and of the Council (1). The Agency operates through a network and coordinates the scientific resources made available by the national authorities in order to ensure the evaluation and supervision of medicinal products for human or veterinary use (2). |
| --- | --- |

1.

The European Medicines Agency (hereinafter ‘the Agency’, aka ‘EMA’), which is located in London, was established by Council Regulation (EEC) No 2309/93, which was replaced by Regulation (EC) No 726/2004 of the European Parliament and of the Council (1). The Agency operates through a network and coordinates the scientific resources made available by the national authorities in order to ensure the evaluation and supervision of medicinal products for human or veterinary use (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON THE LEGALITY AND REGULARITY OF TRANSACTIONS

| 11. | The Agency’s fee regulation provides due dates for the collection of fees from applicants and the Agency’s related payments to National Competent Authorities (9). These due dates were not respected for most of the transactions audited by the Court. |
| --- | --- |

11.

The Agency’s fee regulation provides due dates for the collection of fees from applicants and the Agency’s related payments to National Competent Authorities (9). These due dates were not respected for most of the transactions audited by the Court.

COMMENTS ON INTERNAL CONTROLS

| 12. | In 2014, the Agency carried out an administrative procedure against its Information, Communication and Technology (ICT) manager. Significant weaknesses in management control were reported, implying considerable operational and financial risks to the Agency. An action plan to address the issue was established and implemented. However, the effectiveness of the measures taken has yet to be evaluated by the Agency. |
| --- | --- |

12.

In 2014, the Agency carried out an administrative procedure against its Information, Communication and Technology (ICT) manager. Significant weaknesses in management control were reported, implying considerable operational and financial risks to the Agency. An action plan to address the issue was established and implemented. However, the effectiveness of the measures taken has yet to be evaluated by the Agency.

OTHER COMMENTS

| 13. | One of the Agency’s tasks is to distribute appropriate pharmacovigilance information to Member States and to the general public. This information is collected from individual national authorities and verified with the pharmaceutical companies concerned. However, the Agency is largely dependent on controls and inspections carried out by Member States’ authorities. These determine the completeness and accuracy of information disseminated to the public. |
| --- | --- |

13.

One of the Agency’s tasks is to distribute appropriate pharmacovigilance information to Member States and to the general public. This information is collected from individual national authorities and verified with the pharmaceutical companies concerned. However, the Agency is largely dependent on controls and inspections carried out by Member States’ authorities. These determine the completeness and accuracy of information disseminated to the public.

| 14. | In 2014 the Agency concluded a 15 million euro framework contract (covering the years 2014 to 2017) for high-level management consultancy services. The objectives and activities to be carried out were not sufficiently specific to justify the procurement decision or the volume of the contract. There is no evidence that the Management Board had been consulted on the procurement decision, which would have been appropriate given the nature and value of the contract, even though the Financial Regulation does not require it. |
| --- | --- |

14.

In 2014 the Agency concluded a 15 million euro framework contract (covering the years 2014 to 2017) for high-level management consultancy services. The objectives and activities to be carried out were not sufficiently specific to justify the procurement decision or the volume of the contract. There is no evidence that the Management Board had been consulted on the procurement decision, which would have been appropriate given the nature and value of the contract, even though the Financial Regulation does not require it.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 15. | An overview of the corrective actions taken in response to the Court’s comments from previous years is provided in Annex I. |
| --- | --- |

15.

An overview of the corrective actions taken in response to the Court’s comments from previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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(1)  OJ L 214, 24.8.1993, p. 1, and OJ L 136, 30.4.2004, p. 1. In accordance with the latter Regulation, the Agency’s original name, the European Agency for the Evaluation of Medicinal Products, was changed to the European Medicines Agency.

1

(2)  Annex II summarises the Agency’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

(9)  Agency’s fee regulation, Articles 10(1) and 11(1).

9

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ANNEX I

Follow-up of previous years’ comments

| Year | Court’s comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2012 | In addition to the education allowances provided for in the Staff Regulations (1), the Agency pays education contributions directly to schools for staff whose children attend primary or secondary school without having contracts with schools in place. Total 2012 education contributions amounted to some 3 89  000 euro. Such expenditure is not covered by the Staff Regulations and irregular. | Completed |

Year

Court’s comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2012

In addition to the education allowances provided for in the Staff Regulations (1), the Agency pays education contributions directly to schools for staff whose children attend primary or secondary school without having contracts with schools in place. Total 2012 education contributions amounted to some 3 89  000 euro. Such expenditure is not covered by the Staff Regulations and irregular.

Completed

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(1)  Article 3 of Annex VII provides for twice the basic allowance of 252,81 euro = 505,62 euro.

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ANNEX II

European Medicines Agency (London)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Article 168 of the Treaty on the Functioning of the European Union) | Collection of information

  A high level of human health protection shall be ensured in the definition and implementation of all Union policies and activities.
  Union action, which shall complement national policies, shall be directed towards improving public health, preventing physical and mental illness and diseases, and obviating sources of danger to physical and mental health. Such action shall cover the fight against the major health scourges, by promoting research into their causes, their transmission and their prevention, as well as health information and education, and monitoring, early warning of and combating serious cross-border threats to health. |
| --- | --- |
| Competences of the Agency


  (Regulation (EC) No 726/2004 of the European Parliament and of the Council) | Objectives







  — | To coordinate the scientific resources that the Member States’ authorities make available to the Agency for the authorisation and supervision of medicinal products for human and veterinary use; |

Areas of Union competence deriving from the Treaty

(Article 168 of the Treaty on the Functioning of the European Union)

Collection of information

A high level of human health protection shall be ensured in the definition and implementation of all Union policies and activities.

Union action, which shall complement national policies, shall be directed towards improving public health, preventing physical and mental illness and diseases, and obviating sources of danger to physical and mental health. Such action shall cover the fight against the major health scourges, by promoting research into their causes, their transmission and their prevention, as well as health information and education, and monitoring, early warning of and combating serious cross-border threats to health.

Competences of the Agency

(Regulation (EC) No 726/2004 of the European Parliament and of the Council)

Objectives

—

To coordinate the scientific resources that the Member States’ authorities make available to the Agency for the authorisation and supervision of medicinal products for human and veterinary use;

| — | to provide the Member States and the institutions of the European Union with scientific advice on medicinal products for human or veterinary use. |
| --- | --- |

—

to provide the Member States and the institutions of the European Union with scientific advice on medicinal products for human or veterinary use.

Tasks

| — | To coordinate the scientific evaluation of medicinal products which are subject to Union marketing authorisation procedures; |
| --- | --- |

—

To coordinate the scientific evaluation of medicinal products which are subject to Union marketing authorisation procedures;

| — | to coordinate the supervision of medicinal products which have been authorised within the Union (Pharmacovigilance); |
| --- | --- |

—

to coordinate the supervision of medicinal products which have been authorised within the Union (Pharmacovigilance);

| — | to advise on the maximum limits for residues of veterinary medicinal products which may be accepted in foodstuffs of animal origin; |
| --- | --- |

—

to advise on the maximum limits for residues of veterinary medicinal products which may be accepted in foodstuffs of animal origin;

| — | to coordinate verification of compliance with the principles of good manufacturing practice, good laboratory practice and good clinical practice; |
| --- | --- |

—

to coordinate verification of compliance with the principles of good manufacturing practice, good laboratory practice and good clinical practice;

| — | to record the status of marketing authorisations granted for medicinal products. |
| --- | --- |

—

to record the status of marketing authorisations granted for medicinal products.

Governance

The Committee for Medicinal Products for Human Use (CHMP) is responsible for preparing the Agency’s opinions on all questions concerning medicines for human use. The CHMP consists of one member and one alternate from each Member State, one member and an alternate nominated by Iceland and by Norway and up to five co-opted members.

The Committee for Medicinal Products for Veterinary Use (CVMP) is responsible for preparing the Agency’s opinions on all questions concerning veterinary medicines. The CVMP consists of one member and one alternate from each Member State, one member and an alternate nominated by Iceland and by Norway and up to five co-opted members.

The Committee on Orphan Medicinal Products (COMP) is responsible for reviewing applications from people or companies seeking orphan medicinal product designation. The COMP consists of one member from each Member State, three members nominated by the European Commission representing patients’ organisations, three members nominated by the European Commission on the Agency’s recommendation, one member nominated by Iceland, one by Liechtenstein and one by Norway, and one European Commission representative.

The Committee on Herbal Medicinal Products (HMPC) is responsible for preparing the Agency’s opinions on herbal medicines. The HMPC consists of one member and one alternate from each Member State and from Iceland and Norway, and up to five co-opted members.

The Paediatric Committee (PDCO) is responsible for assessing the content of applications for paediatric investigation plans, waivers, deferrals and compliance checks, and adopting opinions on them. The PDCO consists of five members of the CHMP and their five alternates, one member and one alternate from each Member State which is not represented by the five above, and six members and alternates appointed by the European Commission representing healthcare professionals and patients’ associations.

The Committee for Advanced Therapy (CAT) is responsible for assessing the quality, safety and efficacy of advanced therapy medicinal products (ATMPs) and following scientific developments in the field. The CAT consists of five members of the CHMP and their five alternates, one member and one alternate from each Member State which is not represented by the five above, and four members and four alternates appointed by the European Commission representing patients’ associations and clinicians.

The Pharmacovigilance Risk Assessment Committee (PRAC) is responsible for assessing and monitoring safety issues for human medicines. The PRAC consists of one member and one alternate from each Member State, one member and an alternate nominated by Iceland and by Norway, six independent scientific experts nominated by the European Commission and two members and two alternates nominated by the European Commission to represent healthcare professionals and patients’ organisations.

The Management Board consists of one member and one alternate from each Member State, two representatives of the Commission, two representatives of the European Parliament and two representatives from patients’ organisations, one representative from doctors’ organisations and one representative from veterinarians’ organisations. The Board adopts the work programme and the annual report.

The Executive Director is appointed by the Management Board on a proposal from the Commission.

Internal audit

European Commission Internal Audit Service (IAS) & EMA Internal Audit Capability (IAC).

External audit

European Court of Auditors.

Discharge authority

European Parliament, acting on a recommendation from the Council.

Resources made available to the Agency in 2014 (2013)

Final Budget

282,47(251,56) million euro (1); Union contribution: 8,2 % (13,0 %)
   (2)

Staff as at 31 December 2014

599 (611) posts in the establishment plan, of which occupied: 580 (583)

210 (144) other staff (contract staff, seconded national experts, employment agency staff)

Total staff: 790 (727) undertaking the following tasks: operational: 621 (590), administrative: 169 (137)

Products and services in 2014 (2013)

Medicinal Products for Human Use

| — | Applications for marketing authorisations: 100 (80) |
| --- | --- |

—

Applications for marketing authorisations: 100 (80)

| — | Favourable opinions: 82 (80) |
| --- | --- |

—

Favourable opinions: 82 (80)

| — | Average evaluation time: 179 (200) days |
| --- | --- |

—

Average evaluation time: 179 (200) days

| — | Opinions after authorisation: 5  958(5  447) |
| --- | --- |

—

Opinions after authorisation: 5  958(5  447)

| — | Pharmacovigilance (CAP EEA and non-EEA ADR reports): 6 91  897(6 79  413) reports |
| --- | --- |

—

Pharmacovigilance (CAP EEA and non-EEA ADR reports): 6 91  897(6 79  413) reports

| — | Periodic safety update reports (PSUR): 471 (3)
  (525) |
| --- | --- |

—

Periodic safety update reports (PSUR): 471 (3)
  (525)

| — | Scientific advice finalised: 532 (474) |
| --- | --- |

—

Scientific advice finalised: 532 (474)

| — | Mutual Recognition Procedures and Decentralised Procedures (4): started 7  231(6  293); ended 6  412(6  242) |
| --- | --- |

—

Mutual Recognition Procedures and Decentralised Procedures (4): started 7  231(6  293); ended 6  412(6  242)

| — | Applications for paediatric procedures at the PDCO: 485 (480)
   (5) |
| --- | --- |

—

Applications for paediatric procedures at the PDCO: 485 (480)
   (5)

Medicinal Products for Veterinary Use

| — | Applications for marketing authorisations: 12 (23) |
| --- | --- |

—

Applications for marketing authorisations: 12 (23)

| — | Applications for variations: 340 (315) |
| --- | --- |

—

Applications for variations: 340 (315)

| — | Applications for line extensions: 6 (5) |
| --- | --- |

—

Applications for line extensions: 6 (5)

Inspections

Inspections: 506 (480)

Herbal Medicinal Products

Herbal monographs: 11 (9)

List of herbal substances, preparations and combinations thereof: 1 (0)

Orphan Medicinal Products

| — | Designation applications: 329 (201) |
| --- | --- |

—

Designation applications: 329 (201)

| — | Favourable Orphan designation opinions: 196 (136) |
| --- | --- |

—

Favourable Orphan designation opinions: 196 (136)

SMEs

| — | Requests for SME status 499 (401) |
| --- | --- |

—

Requests for SME status 499 (401)

| — | Applications for fee reduction or deferrals 333 (336) |
| --- | --- |

—

Applications for fee reduction or deferrals 333 (336)

---

(1)  This is the final budget, not the actual total of the budgetary outturn account.

(2)  This is the percentage of the budgeted EU contribution (excluding special contribution for orphan fee reductions and excluding the use of surplus n-2) in relation to the final budget.

(3)  The figures take into account the PSURs finalised as of end of 2014.

(4)  Includes initial MRP/DCP, type IA, IB, II and worksharing variations.

(5)  Data for 2014 (and for 2013) are reported now for all PDCO procedures, including first PIP applications, modifications of agreed PIP, waiver applications, and compliance check applications.

Source: Annex supplied by the Agency.

---

THE AGENCY’S REPLY

| 11. | During 2013-14, the Agency has redesigned and streamlined its main operational processes including financial authorisations and fee collections. The further planned automation of the latter was delayed because of the Agency’s reorganisation in 2014. To ensure compliance with the Agency’s fee regulation concerning due dates, this automation is now planned to be implemented by the end of 2015. |
| --- | --- |

11.

During 2013-14, the Agency has redesigned and streamlined its main operational processes including financial authorisations and fee collections. The further planned automation of the latter was delayed because of the Agency’s reorganisation in 2014. To ensure compliance with the Agency’s fee regulation concerning due dates, this automation is now planned to be implemented by the end of 2015.

| 12. | Whilst weaknesses in management control were detected, no considerable financial risks were reported in the administrative enquiry report to the Executive Director.
  The effectiveness of the measures taken by the Agency is to be evaluated through the already planned audits in 2015 by the Internal Audit Service of the EC and the Internal Audit Capability of the Agency. |
| --- | --- |

12.

Whilst weaknesses in management control were detected, no considerable financial risks were reported in the administrative enquiry report to the Executive Director.

The effectiveness of the measures taken by the Agency is to be evaluated through the already planned audits in 2015 by the Internal Audit Service of the EC and the Internal Audit Capability of the Agency.

| 13. | The agency takes note of the Court’s comment. The regulation of medicinal products in the European Union is based on a network model. EMA coordinates the EU pharmacovigilance network system and manages key information systems to support data exchange in pharmacovigilance, in particular EudraVigilance and the Article 57 database of medicinal products. We will continue to work with our stakeholders/partners to ensure adequate protection to the EU citizen in this area. |
| --- | --- |

13.

The agency takes note of the Court’s comment. The regulation of medicinal products in the European Union is based on a network model. EMA coordinates the EU pharmacovigilance network system and manages key information systems to support data exchange in pharmacovigilance, in particular EudraVigilance and the Article 57 database of medicinal products. We will continue to work with our stakeholders/partners to ensure adequate protection to the EU citizen in this area.

| 14. | An inter-service consultation was conducted prior to the launch of the procurement procedure for a framework contract leading to an estimate of 15  000 person days over four years. The consultation sought to identify for the departments from the perspective of the time certain objectives, estimated profiles, and person days, as well as the assumed nature of services and approximate timing. Given the advance nature of the required estimates the Agency cannot share the Court’s comments. Furthermore, as the Court acknowledges, the Agency was not required to consult the Management Board prior to launch of the tender. |
| --- | --- |

14.

An inter-service consultation was conducted prior to the launch of the procurement procedure for a framework contract leading to an estimate of 15  000 person days over four years. The consultation sought to identify for the departments from the perspective of the time certain objectives, estimated profiles, and person days, as well as the assumed nature of services and approximate timing. Given the advance nature of the required estimates the Agency cannot share the Court’s comments. Furthermore, as the Court acknowledges, the Agency was not required to consult the Management Board prior to launch of the tender.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/206 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/206

---

REPORT

on the annual accounts of the European Monitoring Centre for Drugs and Drug Addiction for the financial year 2014 together with the Centre’s reply

(2015/C 409/23)

INTRODUCTION

| 1. | The European Monitoring Centre for Drugs and Drug Addiction (hereinafter ‘the Centre’, aka ‘EMCDDA’), which is located in Lisbon, was created by Council Regulation (EEC) No 302/93 (1). Its main task is to collect, analyse and disseminate information as regards drugs and drug addiction in order to prepare and publish information at European level that is objective, reliable and comparable. The information is intended to provide a basis for analysing the demand for drugs and ways of reducing it, as well as, in general, phenomena associated with the drug market (2). |
| --- | --- |

1.

The European Monitoring Centre for Drugs and Drug Addiction (hereinafter ‘the Centre’, aka ‘EMCDDA’), which is located in Lisbon, was created by Council Regulation (EEC) No 302/93 (1). Its main task is to collect, analyse and disseminate information as regards drugs and drug addiction in order to prepare and publish information at European level that is objective, reliable and comparable. The information is intended to provide a basis for analysing the demand for drugs and ways of reducing it, as well as, in general, phenomena associated with the drug market (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Centre’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Centre’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Centre, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Centre, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Centre and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Centre’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Centre after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Centre in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Centre and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Centre’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Centre after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Centre in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Centre are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Centre are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Centre’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Centre’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Centre’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Centre’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | Carry-over of committed appropriations were high for Title II (administrative expenditure) with 6 73  534 euro, i.e. 26 % (2013: 2 17  061 euro, i.e. 9 %). They mainly relate to an accelerated implementation of the multiannual ICT strategy, arising from resources initially planned for salary increases but not needed following a decision by the European Court of Justice. |
| --- | --- |

11.

Carry-over of committed appropriations were high for Title II (administrative expenditure) with 6 73  534 euro, i.e. 26 % (2013: 2 17  061 euro, i.e. 9 %). They mainly relate to an accelerated implementation of the multiannual ICT strategy, arising from resources initially planned for salary increases but not needed following a decision by the European Court of Justice.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 12. | An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I. |
| --- | --- |

12.

An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 36, 12.2.1993, p. 1. This Regulation and its amendments were repealed by Regulation (EC) No 1920/2006 of the European Parliament and of the Council (OJ L 376, 27.12.2006, p. 1).

1

(2)  Annex II summarises the Centre’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

---

ANNEX I

Follow-up of previous years’ comments

| Year | Court’s comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2012 | In 2012, the Centre gave grants to Member States’ national drug monitoring centres (beneficiaries) in order to support cooperation under the Reitox network (1). Total grant expenditure in 2012 was 2,6 million euro, representing 16 % of total operating expenditure. The Centre’s ex ante verifications before reimbursement of costs claimed by beneficiaries consist of a desk analysis of cost claims and of audit certificates issued by external auditors contracted by the beneficiaries. The Centre does not usually obtain from beneficiaries any documents to substantiate the eligibility and accuracy of the costs claimed. Ex post on-the-spot verifications of costs at beneficiary level are rare (2). Existing controls therefore provide only limited assurance to the Centre’s management as to the eligibility and accuracy of the costs claimed by beneficiaries. For the transactions audited by the Court supporting documentation was obtained by the Centre on the Court’s behalf which provided reasonable assurance as to their legality and regularity. A random verification of supporting documents and a higher coverage of beneficiaries by on-the-spot verifications could considerably increase assurance. | Completed |
| 2012 | No ex post verifications were carried out for any transactions made after 2008, except for grants. | Completed |
| 2011 and 2012 (Merged) | The Centre currently bears the annual cost of about 2 00  000 euro (2011: 2 75  000 euro) for unused office space in its former building and in the new Headquarters. The Centre should continue, in cooperation with the Commission and National Authorities, to seek adequate solutions for this unused office space. | Completed |
| 2013 | The Centre launched a procurement procedure to rent photocopying machines over a four-year period for a maximum amount of 1 60  000 euro. The technical requirements were subject to a significant modification during the procedure. Following this modification, an amended contract notice was published extending the deadline for the submission of tenders, but there was no clear indication of the changes in the technical requirements. The latter were again adjusted for the conclusion of the contract, in accordance with the option announced in the published specifications, leading to a decrease in the contract value by 35 %. The information published on the contract’s price structure was not sufficiently clear and this led to a misinterpretation by one bidder, who therefore had lower chances to win the procedure. In addition, the evaluation criteria were not sufficiently specific to ensure full transparency and equal treatment of bidders. The above referred weaknesses affected the efficiency and effectiveness of this procurement procedure and created a risk of hampering competition. | N/A |

Year

Court’s comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2012

In 2012, the Centre gave grants to Member States’ national drug monitoring centres (beneficiaries) in order to support cooperation under the Reitox network (1). Total grant expenditure in 2012 was 2,6 million euro, representing 16 % of total operating expenditure. The Centre’s ex ante verifications before reimbursement of costs claimed by beneficiaries consist of a desk analysis of cost claims and of audit certificates issued by external auditors contracted by the beneficiaries. The Centre does not usually obtain from beneficiaries any documents to substantiate the eligibility and accuracy of the costs claimed. Ex post on-the-spot verifications of costs at beneficiary level are rare (2). Existing controls therefore provide only limited assurance to the Centre’s management as to the eligibility and accuracy of the costs claimed by beneficiaries. For the transactions audited by the Court supporting documentation was obtained by the Centre on the Court’s behalf which provided reasonable assurance as to their legality and regularity. A random verification of supporting documents and a higher coverage of beneficiaries by on-the-spot verifications could considerably increase assurance.

Completed

2012

No ex post verifications were carried out for any transactions made after 2008, except for grants.

Completed

2011 and 2012 (Merged)

The Centre currently bears the annual cost of about 2 00  000 euro (2011: 2 75  000 euro) for unused office space in its former building and in the new Headquarters. The Centre should continue, in cooperation with the Commission and National Authorities, to seek adequate solutions for this unused office space.

Completed

2013

The Centre launched a procurement procedure to rent photocopying machines over a four-year period for a maximum amount of 1 60  000 euro. The technical requirements were subject to a significant modification during the procedure. Following this modification, an amended contract notice was published extending the deadline for the submission of tenders, but there was no clear indication of the changes in the technical requirements. The latter were again adjusted for the conclusion of the contract, in accordance with the option announced in the published specifications, leading to a decrease in the contract value by 35 %. The information published on the contract’s price structure was not sufficiently clear and this led to a misinterpretation by one bidder, who therefore had lower chances to win the procedure. In addition, the evaluation criteria were not sufficiently specific to ensure full transparency and equal treatment of bidders. The above referred weaknesses affected the efficiency and effectiveness of this procurement procedure and created a risk of hampering competition.

N/A

---

(1)  Under the European Information Network on Drugs and Drug Addiction (Reitox) the Centre collects country data on drugs from national drug monitoring centres.

(2)  In 2011, two ex post verifications were carried out in two Member States. No such verifications took place in 2012.

---

ANNEX II

European Monitoring Centre for Drugs and Drug Addiction (Lisbon)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Articles 168 and 114 of the Treaty on the Functioning of the European Union) | The Union shall complement the Member States’ action in reducing drugs-related health damage, including information and prevention. |
| --- | --- |
| Competences of the Centre


  (Regulation (EC) No 1920/2006 of the Parliament and of the Council) | Objectives

  To provide the Union and its Member States with factual, objective, reliable and comparable information at Union level concerning drugs, drug addiction and their consequences.
  The Monitoring Centre is to focus on the following priority areas:






  (1) | monitoring the state of the drugs problem, and emerging trends, in particular those involving multi-drug use; |

Areas of Union competence deriving from the Treaty

(Articles 168 and 114 of the Treaty on the Functioning of the European Union)

The Union shall complement the Member States’ action in reducing drugs-related health damage, including information and prevention.

Competences of the Centre

(Regulation (EC) No 1920/2006 of the Parliament and of the Council)

Objectives

To provide the Union and its Member States with factual, objective, reliable and comparable information at Union level concerning drugs, drug addiction and their consequences.

The Monitoring Centre is to focus on the following priority areas:

(1)

monitoring the state of the drugs problem, and emerging trends, in particular those involving multi-drug use;

| (2) | monitoring the solutions and providing information on best practices; |
| --- | --- |

(2)

monitoring the solutions and providing information on best practices;

| (3) | assessing the risks of new psychoactive substances and maintaining a rapid information system; |
| --- | --- |

(3)

assessing the risks of new psychoactive substances and maintaining a rapid information system;

| (4) | developing tools and instruments to help Member States to monitor and evaluate their national policies and the Commission to monitor and evaluate Union policies. |
| --- | --- |

(4)

developing tools and instruments to help Member States to monitor and evaluate their national policies and the Commission to monitor and evaluate Union policies.

Tasks

| — | To collect and analyse data; |
| --- | --- |

—

To collect and analyse data;

| — | to improve data-comparison methods; |
| --- | --- |

—

to improve data-comparison methods;

| — | to disseminate data; |
| --- | --- |

—

to disseminate data;

| — | to cooperate with European and international bodies and organisations and with countries outside the Union; |
| --- | --- |

—

to cooperate with European and international bodies and organisations and with countries outside the Union;

| — | to identify new developments and changing trends. |
| --- | --- |

—

to identify new developments and changing trends.

Governance

Management Board

Comprises one representative from each Member State, two representatives from the Commission and two independent experts, designated by the European Parliament, who are particularly knowledgeable in the field of drugs.

The Management Board adopts the work programme, the general activities report and the budget, and gives an opinion on the final accounts.

Executive Committee

Composition

Chairperson of the Management Board.

Vice-Chairperson of the Management Board.

Two other elected members from the Management Board representing the Member States.

Two representatives from the Commission.

Director

Appointed by the Management Board at the Commission’s proposal.

Scientific Committee

Delivers opinions. It consists of, at most, fifteen well-known scientists appointed in view of their excellence by the Management Board following a call for expressions of interest. The Management Board may also appoint a panel of experts to the extended Scientific Committee for the risk assessment of new psychoactive substances.

External audit

European Court of Auditors.

Internal audit

European Commission’s Internal Audit Service (IAS).

Discharge authority

European Parliament, acting on a recommendation from the Council.

Resources made available to the Centre in 2014 (2013)

Budget

15,85 (16,31) million euro. Union subsidy: 93,4 % (95,4 %)

Staff at 31 December 2014

Number of posts in establishment plan: 84 (84)

Posts occupied: 76 (76) + 26 (24) other staff (seconded national experts, contract staff and temporary replacements)

Total staff: 102 (100)

Allocated to the following tasks:

| — | operational: 63 (61) |
| --- | --- |

—

operational: 63 (61)

| — | administrative and IT support: 28,5(28,5) |
| --- | --- |

—

administrative and IT support: 28,5(28,5)

| — | mixed: 10,5 (10,5) |
| --- | --- |

—

mixed: 10,5 (10,5)

Products and services 2014 (2013)

Network

The Centre runs a computerised network for the collection and exchange of information called the ‘European Information Network on Drugs and Drug Addiction’ (Reitox); this network connects national drug information networks, specialist centres in the Member States and the information systems of international organisations working with the Centre.

Publications

| — | European Drug Report — Trends and developments (23 language versions), publication and interactive website. |
| --- | --- |

—

European Drug Report — Trends and developments (23 language versions), publication and interactive website.

| — | Perspectives on drugs (PODs) — 6 (11), EN, interactive website. |
| --- | --- |

—

Perspectives on drugs (PODs) — 6 (11), EN, interactive website.

| — | Statistical bulletin and interactive website, General Report of Activities — annual, EN. |
| --- | --- |

—

Statistical bulletin and interactive website, General Report of Activities — annual, EN.

| — | A year in review: Highlights from the EMCDDA’s General Report of Activities 2013 — annual, EN. |
| --- | --- |

—

A year in review: Highlights from the EMCDDA’s General Report of Activities 2013 — annual, EN.

| — | Drugnet Europe newsletter — 4 issues, EN (4). |
| --- | --- |

—

Drugnet Europe newsletter — 4 issues, EN (4).

| — | Centre Insights — 2 (1), EN. |
| --- | --- |

—

Centre Insights — 2 (1), EN.

| — | Manuals — 0 (1), EN. |
| --- | --- |

—

Manuals — 0 (1), EN.

| — | Centre thematic papers — 0 (2). — this old EMCDDA series is no longer in production. |
| --- | --- |

—

Centre thematic papers — 0 (2). — this old EMCDDA series is no longer in production.

| — | EMCDDA Papers — 9 (4), ENG (one Paper also in CS). |
| --- | --- |

—

EMCDDA Papers — 9 (4), ENG (one Paper also in CS).

| — | Policy profiles — 2 (1), ENG. |
| --- | --- |

—

Policy profiles — 2 (1), ENG.

| — | Joint publications — 1 (1): EN. |
| --- | --- |

—

Joint publications — 1 (1): EN.

| — | Outputs linked to the implementation of the Council Decision on new psychoactive substances (2005/387/JHA) — 15 (2), EN. |
| --- | --- |

—

Outputs linked to the implementation of the Council Decision on new psychoactive substances (2005/387/JHA) — 15 (2), EN.

| — | Drug profiles — zero new (zero) and zero updated (0). |
| --- | --- |

—

Drug profiles — zero new (zero) and zero updated (0).

| — | Technical and scientific studies, including articles and scientific summaries 24 (28). |
| --- | --- |

—

Technical and scientific studies, including articles and scientific summaries 24 (28).

| — | Ad-hoc publications — 0 (1), EN. |
| --- | --- |

—

Ad-hoc publications — 0 (1), EN.

| — | Brochures — 2 (1), EN. |
| --- | --- |

—

Brochures — 2 (1), EN.

| — | Work programmes and strategies — 1 (3), ENG. |
| --- | --- |

—

Work programmes and strategies — 1 (3), ENG.

| — | Data collection, validation, storage and retrieval system (Fonte). |
| --- | --- |

—

Data collection, validation, storage and retrieval system (Fonte).

Other websites

Reorganisation/updating/content development of public Centre website including:

| — | Country overviews. |
| --- | --- |

—

Country overviews.

| — | Drug treatment overviews, health and social responses profiles, prevention profiles. |
| --- | --- |

—

Drug treatment overviews, health and social responses profiles, prevention profiles.

| — | European database on new drugs. |
| --- | --- |

—

European database on new drugs.

| — | European legal database on drugs. |
| --- | --- |

—

European legal database on drugs.

| — | Evaluation instruments bank. |
| --- | --- |

—

Evaluation instruments bank.

| — | Best practice portal (exchange on drug demand reduction action, harm reduction and treatment modules). |
| --- | --- |

—

Best practice portal (exchange on drug demand reduction action, harm reduction and treatment modules).

| — | Topic pages. |
| --- | --- |

—

Topic pages.

| — | Publications database. |
| --- | --- |

—

Publications database.

Promotional material

Conference materials — 1 EN (4).

Media products: 9 (12) news releases and 12 (13) fact sheets, EN.

Participation in international conferences, technical, scientific and institutional meetings 291 (285).

Source: Annex supplied by the Centre.

---

THE CENTRE’S REPLY

| 11. | As observed by the Court, the need for this carry-forward originated from external factors, i.e. the unexpected ruling of the EU Court of Justice on the retroactive adjustment of the EU staff’s remuneration relating to 2011, 2012 and 2013. The carry-forward was the result of a well-founded, structured process aimed at ensuring the sound management of these operations. The EMCDDA has a proven capacity to correctly use carried-forward appropriations (C8), as confirmed by the fact that the rate of use of such appropriations consistently exceeds 95 %. |
| --- | --- |

11.

As observed by the Court, the need for this carry-forward originated from external factors, i.e. the unexpected ruling of the EU Court of Justice on the retroactive adjustment of the EU staff’s remuneration relating to 2011, 2012 and 2013. The carry-forward was the result of a well-founded, structured process aimed at ensuring the sound management of these operations. The EMCDDA has a proven capacity to correctly use carried-forward appropriations (C8), as confirmed by the fact that the rate of use of such appropriations consistently exceeds 95 %.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/216 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/216

---

REPORT

on the annual accounts of the European Maritime Safety Agency for the financial year 2014, together with the Agency’s reply

(2015/C 409/24)

INTRODUCTION

| 1. | The European Maritime Safety Agency (hereinafter ‘the Agency’, aka ‘EMSA’), which is located in Lisbon, was set up by Regulation (EC) No 1406/2002 of the European Parliament and of the Council (1). The Agency's tasks are to ensure a high level of maritime safety and to prevent pollution by ships, provide the Commission and the Member States with technical assistance, and monitor the implementation of Union legislation, as well as to evaluate its effectiveness (2). |
| --- | --- |

1.

The European Maritime Safety Agency (hereinafter ‘the Agency’, aka ‘EMSA’), which is located in Lisbon, was set up by Regulation (EC) No 1406/2002 of the European Parliament and of the Council (1). The Agency's tasks are to ensure a high level of maritime safety and to prevent pollution by ships, provide the Commission and the Member States with technical assistance, and monitor the implementation of Union legislation, as well as to evaluate its effectiveness (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Agency's annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Agency's annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 10. | An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I. |
| --- | --- |

10.

An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 208, 5.8.2002, p. 1.

1

(2)  Annex II summarises the Agency’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

---

ANNEX I

Follow-up of previous years’ comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2011 | The Court identified the need to improve the Agency’s asset management. There are unexplained differences between the recorded annual and cumulated depreciation. For internally created intangible assets, accounting procedures and information on costs are not reliable. Evidence of a physical inventory of administrative equipment within the required period is lacking. | Completed for physical inventory
  Ongoing for internally-created intangible assets |
| 2012 | Accounting procedures and information in respect of costs for internally generated intangible assets are not fully reliable. | Ongoing |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2011

The Court identified the need to improve the Agency’s asset management. There are unexplained differences between the recorded annual and cumulated depreciation. For internally created intangible assets, accounting procedures and information on costs are not reliable. Evidence of a physical inventory of administrative equipment within the required period is lacking.

Completed for physical inventory

Ongoing for internally-created intangible assets

2012

Accounting procedures and information in respect of costs for internally generated intangible assets are not fully reliable.

Ongoing

---

ANNEX II

European Maritime Safety Agency (Lisbon)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Article 100 of the Treaty on the Functioning of the European Union) | Common transport policy


  ‘The European Parliament and the Council, acting in accordance with the ordinary legislative procedure, may lay down appropriate provisions for sea and air transport’. |
| --- | --- |
| Competences of the Agency

  (Regulation (EC) No 1406/2002 of the European Parliament and of the Council, as amended by Regulations (EC) No 1644/2003 and (EC) No 724/2004 and Regulation (EU) No 100/2013) | Objectives

  The European Maritime Safety Agency has been established for the purpose of ensuring a high, uniform and effective level of maritime safety, maritime security and prevention and response of pollution by ships within the Union.
  The Agency provides the Member States and the Commission with the technical and scientific assistance needed, and with a high level of expertise, in order to help them:






  — | apply EU legislation properly in the field of maritime safety and prevention of pollution by ships, |

Areas of Union competence deriving from the Treaty

(Article 100 of the Treaty on the Functioning of the European Union)

Common transport policy

‘The European Parliament and the Council, acting in accordance with the ordinary legislative procedure, may lay down appropriate provisions for sea and air transport’.

Competences of the Agency

Competences of the Agency

(Regulation (EC) No 1406/2002 of the European Parliament and of the Council, as amended by Regulations (EC) No 1644/2003 and (EC) No 724/2004 and Regulation (EU) No 100/2013)

Regulation (EC) No 1406/2002 of the European Parliament and of the Council, as amended by Regulations (EC) No 1644/2003 and (EC) No 724/2004 and Regulation (EU) No 100/2013)

Objectives

Objectives

The European Maritime Safety Agency has been established for the purpose of ensuring a high, uniform and effective level of maritime safety, maritime security and prevention and response of pollution by ships within the Union.

The Agency provides the Member States and the Commission with the technical and scientific assistance needed, and with a high level of expertise, in order to help them:

—

apply EU legislation properly in the field of maritime safety and prevention of pollution by ships,

| — | monitor its implementation, |
| --- | --- |

—

monitor its implementation,

| — | evaluate the effectiveness of the measures in place. |
| --- | --- |

—

evaluate the effectiveness of the measures in place.

The Agency also provides operational means, upon request, as well as technical and scientific assistance, to help Member States and the Commission respond to marine pollution by ships within the EU.

Tasks

Tasks

The last amendment has further fine-tuned the Agency’s mandate, enabling EMSA to better assist the Commission and the Member States in its core tasks and make broader use of its resources to help EU Member States respond to pollution caused by ships as well as respond to marine pollution caused by oil and gas installations. Moreover, ancillary tasks have been introduced, with the possibility for the Agency to use its expertise and tools for other EU activities related to the Union maritime transport policy.

The Agency’s tasks are broadly divided into four key areas in line with its founding Regulation and relevant EU legislation. Firstly, the Agency assists the Commission in monitoring the implementation of EU legislation relating, among other things, to ship survey and certification, the certification of marine equipment, ship security, the training of seafarers and port state control.

Secondly, the Agency develops and operates maritime information capabilities at EU level. Significant examples are SafeSeaNet, the vessel traffic monitoring system to enable EU-wide tracking of vessels and their cargoes, and accidents and incidents; the EU LRIT cooperative data centre, to ensure the identification and tracking of EU-flagged ships worldwide; and Thetis, the information system to support the new port state control regime.

In parallel, marine pollution preparedness, detection and response capability is provided by EMSA to coastal states. This includes a European network of stand-by oil spill response vessels as well as a European satellite oil spill and vessel detection service (CleanSeaNet), contributing to an effective system for protecting EU coasts and waters from pollution by ships.

Finally, the Agency provides technical and scientific advice to the Commission in the field of maritime safety and prevention of pollution by ships in the continuous process of evaluating the effectiveness of the measures in place, and in the updating and development of new legislation. It also provides support to, and facilitates co-operation between, the Member States, and disseminates information on best practice.

Governance

Governance

Administrative Board

Administrative Board

Composition

Composition

One representative per Member State, four representatives of the Commission and four representatives without the right to vote from the professional sectors concerned.

Tasks

Tasks

| — | To adopt the multi-annual staff policy plan, the annual budget, the work programme, the annual report and a detailed plan for the Agency’s pollution preparedness and responses activities, |
| --- | --- |

—

To adopt the multi-annual staff policy plan, the annual budget, the work programme, the annual report and a detailed plan for the Agency’s pollution preparedness and responses activities,

| — | to supervise the work undertaken by the Executive Director. |
| --- | --- |

—

to supervise the work undertaken by the Executive Director.

Executive Director

Executive Director

Appointed by the Administrative Board. The Commission may propose one or more candidates.

External audit

External audit

European Court of Auditors.

Internal audit

Internal audit

| — | European Commission’s Internal Audit Service (IAS). |
| --- | --- |

—

European Commission’s Internal Audit Service (IAS).

| — | Internal Audit Capability of the Agency (IAC). |
| --- | --- |

—

Internal Audit Capability of the Agency (IAC).

Discharge authority

Discharge authority

European Parliament, acting on a recommendation from the Council.

Resources made available to the Agency in 2014 (2013)

Resources made available to the Agency in 2014 (2013)

Final Budget

Final Budget

Commitment Appropriations (C1)

Commitment Appropriations (C1)

52,4(57,8) million euro

(57,8)

Payment Appropriations (C1)

Payment Appropriations (C1)

52,7(54,0) million euro

(54,0)

Amending budgets published in the Official Journal of the European Union cover a variety of fund sources, with C1 being almost the exclusive fund source. For the sake of clarity and transparency, only predominant and therefore relevant C1 budget appropriations are quoted. Figures reflect the final figures (amended budget).

Official Journal of the European Union

Staff as at 31 December 2014

Staff as at 31 December 2014

Statutory Staff

Statutory Staff

210 (213) posts authorised in the establishment plan, of which occupied: 198 (203)

(213)

(203)

Contract staff

Contract staff

30 (29) posts planned in the budget, of which occupied: 27 (25). The Agency also recruited five additional project-financed contract staff.

(29)

(25

Seconded National Experts

Seconded National Experts

18 (15) posts planned in the budget, of which occupied: 15 (14)

(15)

(14)

N.B.: As regards statutory posts, EMSA has taken into consideration the target of 207 posts to be implemented on 1 January 2015 rather than the number of posts (210) authorised in the establishment plan for 2014.

N.B

Products and services 2014 (2013)

Products and services 2014 (2013)

| — | 61 (53) workshops and other events (with 1  689(1  424) participants in workshops), |
| --- | --- |

—

61 (53) workshops and other events (with 1  689(1  424) participants in workshops),

(53)

(1  424)

| — | 45 (35) different training sessions which resulted in 812 (861) national experts trained, |
| --- | --- |

—

45 (35) different training sessions which resulted in 812 (861) national experts trained,

(35)

(861)

| — | 64 (74) inspections and visits, |
| --- | --- |

—

64 (74) inspections and visits,

(74)

| — | SSN was 99,74 % (99,43 %) available throughout the year, |
| --- | --- |

—

SSN was 99,74 % (99,43 %) available throughout the year,

(99,43 %)

| — | 2  521(2  547) satellite images ordered and analysed through CleanSeaNet, |
| --- | --- |

—

2  521(2  547) satellite images ordered and analysed through CleanSeaNet,

(2  547)

| — | EU LRIT data centre 99,53 % available throughout the year, |
| --- | --- |

—

EU LRIT data centre 99,53 % available throughout the year,

| — | 17 (16) anti-pollution vessels contracted, |
| --- | --- |

—

17 (16) anti-pollution vessels contracted,

(16)

| — | 71 (69) drills and 26 (21) exercises with the anti-pollution vessels (12 (10) operational exercises and 14 (11) notification exercises), |
| --- | --- |

—

71 (69) drills and 26 (21) exercises with the anti-pollution vessels (12 (10) operational exercises and 14 (11) notification exercises),

(69)

(21)

(10)

(11)

| — | EMSA Maritime Support Services operating on a 24/7 basis, |
| --- | --- |

—

EMSA Maritime Support Services operating on a 24/7 basis,

| — | Thetis 99,64 % (99,61 %) available throughout the year. |
| --- | --- |

—

Thetis 99,64 % (99,61 %) available throughout the year.

(99,61 %)

Source: Annex supplied by the Agency.

Source:

---

THE AGENCY’S REPLY

The Agency has taken note of the Court’s report.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/223 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/223

---

REPORT

on the annual accounts of the European Union Agency for Network and Information Security for the financial year 2014, together with the Agency’s reply

(2015/C 409/25)

INTRODUCTION

| 1. | The European Union Agency for Network and Information Security (hereinafter ‘the Agency’, aka ‘ENISA’), which is located in Athens and Heraklion (1), was created by Regulation (EC) No 460/2004 of the European Parliament and of the Council (2) which, following different amendments was superseded by Regulation (EU) No 526/2013 (3). The Agency's main task is to enhance the Union’s capability to prevent and respond to network and information security problems by building on national and Union efforts (4). |
| --- | --- |

1.

The European Union Agency for Network and Information Security (hereinafter ‘the Agency’, aka ‘ENISA’), which is located in Athens and Heraklion (1), was created by Regulation (EC) No 460/2004 of the European Parliament and of the Council (2) which, following different amendments was superseded by Regulation (EU) No 526/2013 (3). The Agency's main task is to enhance the Union’s capability to prevent and respond to network and information security problems by building on national and Union efforts (4).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency's supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency's supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Agency, which comprise the financial statements (5) and the reports on the implementation of the budget (6) for the financial year ended 31 December 2014, and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Agency, which comprise the financial statements (5) and the reports on the implementation of the budget (6) for the financial year ended 31 December 2014, and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (7):






  (a) | The management’s responsibilities in respect of the Agency's annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (8); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (7):

(a)

The management’s responsibilities in respect of the Agency's annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (8); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (9) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (9) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (10). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (10).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | The overall level of committed appropriations was high at 100 % (94 % in 2013). In total, committed appropriations carried over to 2015 amount to 1,3 million euro, i.e. 15 % of total appropriations (2013: 1,2 million euro, i.e. 13,5 %). Commitment appropriations carried over are high for title II (administrative expenditure) at 0,6 million euro, i.e. 49 % (2013: 0,8 million euro, i.e. 59 %). These were linked to investments in IT infrastructure ordered as planned near the year-end for the Agency’s two offices. |
| --- | --- |

11.

The overall level of committed appropriations was high at 100 % (94 % in 2013). In total, committed appropriations carried over to 2015 amount to 1,3 million euro, i.e. 15 % of total appropriations (2013: 1,2 million euro, i.e. 13,5 %). Commitment appropriations carried over are high for title II (administrative expenditure) at 0,6 million euro, i.e. 49 % (2013: 0,8 million euro, i.e. 59 %). These were linked to investments in IT infrastructure ordered as planned near the year-end for the Agency’s two offices.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 12. | An overview of the corrective actions taken in response to the Court's comments from the previous years is provided in Annex I. |
| --- | --- |

12.

An overview of the corrective actions taken in response to the Court's comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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(1)  The Agency’s operational staff were relocated to Athens in March 2013. Its administrative staff remain in Heraklion.

1

(2)  OJ L 77, 13.3.2004, p. 1.

2

(3)  OJ L 165, 18.6.2013, p. 41.

3

(4)  Annex II summarises the Agency's competences and activities. It is presented for information purposes.

4

Annex II

(5)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

5

(6)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

6

(7)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

7

(8)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

8

(9)  Article 107 of Regulation (EU) No 1271/2013.

9

(10)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

10

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ANNEX I

Follow-up of previous years’ comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2012 | Whereas the Financial Regulation and the corresponding Implementing Rules provide for a physical inventory of fixed assets at least every three years, the Agency has not carried out a comprehensive physical inventory since 2009. | Ongoing |
| 2013 | The overall level of committed appropriations was 94 %, which is explained mainly by the fact that additional funds requested from the Commission to finance the refurbishment of the new office in Athens were only approved in November 2013. In this context, an amount of 0,5 million euro that was not yet committed at year-end was carried over following a Management Board decision. | N/A |
| 2013 | In total, non-committed and committed appropriations carried over to 2014 amounted to 1,2 million euro (or 13,5 % of total appropriations). This mainly concerned title II (administrative expenditure) with 0,8 million euro or 59 % of title II appropriations. This high level is explained by the 0,5 million euro carry-over referred to in paragraph 11 and an additional 0,3 million euro carried over in order to finance furniture and networking equipment for the Athens office which was ordered towards the year-end. | N/A |
| 2013 | Operational staff of ENISA were relocated to Athens in 2013 while administrative staff remain in Heraklion. It is likely that the administrative costs could be reduced if all staff were centralised in one location. | N/A |
| 2013 | According to the lease agreement between the Greek authorities, the Agency and the landlord, rent for the offices in Athens is paid by the Greek authorities. This rent is constantly paid with a delay of several months which is a business continuity and financial risk to the Agency: its operations would be affected, and its investments in office fitting and refurbishment would be lost, if the landlord were to cancel the lease agreement because of these delays in payment. | Completed |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2012

Whereas the Financial Regulation and the corresponding Implementing Rules provide for a physical inventory of fixed assets at least every three years, the Agency has not carried out a comprehensive physical inventory since 2009.

Ongoing

2013

The overall level of committed appropriations was 94 %, which is explained mainly by the fact that additional funds requested from the Commission to finance the refurbishment of the new office in Athens were only approved in November 2013. In this context, an amount of 0,5 million euro that was not yet committed at year-end was carried over following a Management Board decision.

N/A

2013

In total, non-committed and committed appropriations carried over to 2014 amounted to 1,2 million euro (or 13,5 % of total appropriations). This mainly concerned title II (administrative expenditure) with 0,8 million euro or 59 % of title II appropriations. This high level is explained by the 0,5 million euro carry-over referred to in paragraph 11 and an additional 0,3 million euro carried over in order to finance furniture and networking equipment for the Athens office which was ordered towards the year-end.

N/A

2013

Operational staff of ENISA were relocated to Athens in 2013 while administrative staff remain in Heraklion. It is likely that the administrative costs could be reduced if all staff were centralised in one location.

N/A

2013

According to the lease agreement between the Greek authorities, the Agency and the landlord, rent for the offices in Athens is paid by the Greek authorities. This rent is constantly paid with a delay of several months which is a business continuity and financial risk to the Agency: its operations would be affected, and its investments in office fitting and refurbishment would be lost, if the landlord were to cancel the lease agreement because of these delays in payment.

Completed

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ANNEX II

European Union Agency for Network and Information Security (Athens and Heraklion)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Article 114 of the Treaty on the Functioning of the European Union) | The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.
  The Internal Market responsibility is a shared competence between the Union and the Member States (Article 4(2)(a) TFEU). |
| --- | --- |
| Competences of the Agency

  (Regulation (EU) No 526/2013 of the European Parliament and of the Council) | Objectives







  1. | The Agency shall develop and maintain a high level of expertise. |

Areas of Union competence deriving from the Treaty

(Article 114 of the Treaty on the Functioning of the European Union)

The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.

The Internal Market responsibility is a shared competence between the Union and the Member States (Article 4(2)(a) TFEU).

Competences of the Agency

(Regulation (EU) No 526/2013 of the European Parliament and of the Council)

Objectives

1.

The Agency shall develop and maintain a high level of expertise.

| 2. | The Agency shall assist the Union institutions, bodies, offices and agencies in developing policies in network and information security. |
| --- | --- |

2.

The Agency shall assist the Union institutions, bodies, offices and agencies in developing policies in network and information security.

| 3. | The Agency shall assist the Union institutions, bodies, offices and agencies and the Member States in implementing the policies necessary to meet the legal and regulatory requirements of network and information security under existing and future legal acts of the Union, thus contributing to the proper functioning of the internal market. |
| --- | --- |

3.

The Agency shall assist the Union institutions, bodies, offices and agencies and the Member States in implementing the policies necessary to meet the legal and regulatory requirements of network and information security under existing and future legal acts of the Union, thus contributing to the proper functioning of the internal market.

| 4. | The Agency shall assist the Union and the Member States in enhancing and strengthening their capability and preparedness to prevent, detect and respond to network and information security problems and incidents. |
| --- | --- |

4.

The Agency shall assist the Union and the Member States in enhancing and strengthening their capability and preparedness to prevent, detect and respond to network and information security problems and incidents.

| 5. | The Agency shall use its expertise to stimulate broad cooperation between actors from the public and private sectors. |
| --- | --- |

5.

The Agency shall use its expertise to stimulate broad cooperation between actors from the public and private sectors.

Tasks

| 1. | The Agency shall perform the following tasks:






  (a) | support the development of Union policy and law, by:






  (i) | assisting and advising on all matters relating to Union network and information security policy and law; |
| --- | --- | --- | --- |

1.

The Agency shall perform the following tasks:

(a)

support the development of Union policy and law, by:

(i)

assisting and advising on all matters relating to Union network and information security policy and law;

| (ii) | providing preparatory work, advice and analyses relating to the development and update of Union network and information security policy and law; |
| --- | --- |

(ii)

providing preparatory work, advice and analyses relating to the development and update of Union network and information security policy and law;

| (iii) | analysing publicly available network and information security strategies and promoting their publication; |
| --- | --- |

(iii)

analysing publicly available network and information security strategies and promoting their publication;

| (b) | support capability building by:






  (i) | supporting Member States, at their request, in their efforts to develop and improve the prevention, detection and analysis of and the capability to respond to network and information security problems and incidents, and providing them with the necessary knowledge; |
| --- | --- | --- |

(b)

support capability building by:

(i)

supporting Member States, at their request, in their efforts to develop and improve the prevention, detection and analysis of and the capability to respond to network and information security problems and incidents, and providing them with the necessary knowledge;

| (ii) | promoting and facilitating voluntary cooperation among the Member States and between the Union institutions, bodies, offices and agencies and the Member States in their efforts to prevent, detect and respond to network and information security problems and incidents where these have an impact across borders; |
| --- | --- |

(ii)

promoting and facilitating voluntary cooperation among the Member States and between the Union institutions, bodies, offices and agencies and the Member States in their efforts to prevent, detect and respond to network and information security problems and incidents where these have an impact across borders;

| (iii) | assisting the Union institutions, bodies, offices and agencies in their efforts to develop the prevention, detection and analysis of and the capability to respond to network and information security problems and incidents, in particular by supporting the operation of a Computer Emergency Response Team (CERT) for them; |
| --- | --- |

(iii)

assisting the Union institutions, bodies, offices and agencies in their efforts to develop the prevention, detection and analysis of and the capability to respond to network and information security problems and incidents, in particular by supporting the operation of a Computer Emergency Response Team (CERT) for them;

| (iv) | supporting the raising of the level of capabilities of national/governmental and Union CERTs, including by promoting dialogue and exchange of information, with a view to ensuring that, with regard to the state of the art, each CERT meets a common set of minimum capabilities and operates according to best practices; |
| --- | --- |

(iv)

supporting the raising of the level of capabilities of national/governmental and Union CERTs, including by promoting dialogue and exchange of information, with a view to ensuring that, with regard to the state of the art, each CERT meets a common set of minimum capabilities and operates according to best practices;

| (v) | supporting the organisation and running of Union network and information security exercises, and, at their request, advising Member States on national exercises; |
| --- | --- |

(v)

supporting the organisation and running of Union network and information security exercises, and, at their request, advising Member States on national exercises;

| (vi) | assisting the Union institutions, bodies, offices and agencies and the Member States in their efforts to collect, analyse and, in line with Member States’ security requirements, disseminate relevant network and information security data; and on the basis of information provided by the Union institutions, bodies, offices and agencies and the Member States in accordance with provisions of Union law and national provisions in compliance with Union law, maintaining the awareness, on the part of the Union institutions, bodies, offices and agencies as well as the Member States of the latest state of network and information security in the Union for their benefit; |
| --- | --- |

(vi)

assisting the Union institutions, bodies, offices and agencies and the Member States in their efforts to collect, analyse and, in line with Member States’ security requirements, disseminate relevant network and information security data; and on the basis of information provided by the Union institutions, bodies, offices and agencies and the Member States in accordance with provisions of Union law and national provisions in compliance with Union law, maintaining the awareness, on the part of the Union institutions, bodies, offices and agencies as well as the Member States of the latest state of network and information security in the Union for their benefit;

| (vii) | supporting the development of a Union early warning mechanism that is complementary to Member States’ mechanisms; |
| --- | --- |

(vii)

supporting the development of a Union early warning mechanism that is complementary to Member States’ mechanisms;

| (viii) | offering network and information security training for relevant public bodies, where appropriate in cooperation with stakeholders; |
| --- | --- |

(viii)

offering network and information security training for relevant public bodies, where appropriate in cooperation with stakeholders;

| (c) | support voluntary cooperation among competent public bodies, and between stakeholders, including universities and research centres in the Union, and support awareness raising, inter alia, by:






  (i) | promoting cooperation between national and governmental CERTs or Computer Security Incident Response Teams (CSIRTs), including the CERT for the Union institutions, bodies, offices and agencies; |
| --- | --- | --- |

(c)

support voluntary cooperation among competent public bodies, and between stakeholders, including universities and research centres in the Union, and support awareness raising, inter alia, by:

(i)

promoting cooperation between national and governmental CERTs or Computer Security Incident Response Teams (CSIRTs), including the CERT for the Union institutions, bodies, offices and agencies;

| (ii) | promoting the development and sharing of best practices with the aim of attaining an advanced level of network and information security; |
| --- | --- |

(ii)

promoting the development and sharing of best practices with the aim of attaining an advanced level of network and information security;

| (iii) | facilitating dialogue and efforts to develop and exchange best practices; |
| --- | --- |

(iii)

facilitating dialogue and efforts to develop and exchange best practices;

| (iv) | promoting best practices in information sharing and awareness raising; |
| --- | --- |

(iv)

promoting best practices in information sharing and awareness raising;

| (v) | supporting the Union institutions, bodies, offices and agencies and, at their request, the Member States and their relevant bodies in organising awareness raising, including at the level of individual users, and other outreach activities to increase network and information security and its visibility by providing best practices and guidelines; |
| --- | --- |

(v)

supporting the Union institutions, bodies, offices and agencies and, at their request, the Member States and their relevant bodies in organising awareness raising, including at the level of individual users, and other outreach activities to increase network and information security and its visibility by providing best practices and guidelines;

| (d) | support research and development and standardisation, by:






  (i) | facilitating the establishment and take-up of European and international standards for risk management and for the security of electronic products, networks and services; |
| --- | --- | --- |

(d)

support research and development and standardisation, by:

(i)

facilitating the establishment and take-up of European and international standards for risk management and for the security of electronic products, networks and services;

| (ii) | advising the Union and the Member States on research needs in the area of network and information security with a view to enabling effective responses to current and emerging network and information security risks and threats, including with respect to new and emerging information and communications technologies, and to using risk-prevention technologies effectively; |
| --- | --- |

(ii)

advising the Union and the Member States on research needs in the area of network and information security with a view to enabling effective responses to current and emerging network and information security risks and threats, including with respect to new and emerging information and communications technologies, and to using risk-prevention technologies effectively;

| (e) | cooperate with Union institutions, bodies, offices and agencies, including those dealing with cybercrime and the protection of privacy and personal data, with a view to addressing issues of common concern, including by:






  (i) | exchanging know-how and best practices; |
| --- | --- | --- |

(e)

cooperate with Union institutions, bodies, offices and agencies, including those dealing with cybercrime and the protection of privacy and personal data, with a view to addressing issues of common concern, including by:

(i)

exchanging know-how and best practices;

| (ii) | providing advice on relevant network and information security aspects in order to develop synergies; |
| --- | --- |

(ii)

providing advice on relevant network and information security aspects in order to develop synergies;

| (f) | contribute to the Union’s efforts to cooperate with third countries and international organisations to promote international cooperation on network and information security issues, including by:






  (i) | being engaged, where appropriate, as an observer and in the organisation of international exercises, and analysing and reporting on the outcome of such exercises; |
| --- | --- | --- |

(f)

contribute to the Union’s efforts to cooperate with third countries and international organisations to promote international cooperation on network and information security issues, including by:

(i)

being engaged, where appropriate, as an observer and in the organisation of international exercises, and analysing and reporting on the outcome of such exercises;

| (ii) | facilitating exchange of best practices of relevant organisations; |
| --- | --- |

(ii)

facilitating exchange of best practices of relevant organisations;

| (iii) | providing the Union institutions with expertise. |
| --- | --- |

(iii)

providing the Union institutions with expertise.

| 2. | Union institutions, bodies, offices and agencies and Member State bodies may request advice from the Agency in the event of breach of security or loss of integrity with a significant impact on the operation of networks and services. |
| --- | --- |

2.

Union institutions, bodies, offices and agencies and Member State bodies may request advice from the Agency in the event of breach of security or loss of integrity with a significant impact on the operation of networks and services.

| 3. | The Agency shall carry out tasks conferred on it by legal acts of the Union. |
| --- | --- |

3.

The Agency shall carry out tasks conferred on it by legal acts of the Union.

| 4. | The Agency shall express independently its own conclusions, guidance and advice on matters within the scope and objectives of this Regulation. |
| --- | --- |

4.

The Agency shall express independently its own conclusions, guidance and advice on matters within the scope and objectives of this Regulation.

Governance

Management Board

The Management Board is composed of one representative of each Member State, and two representatives appointed by the Commission. All representatives have voting rights. Each member of the Management Board has an alternate to represent the member in his/her absence.

Members of the Management Board and their alternates are appointed in light of their knowledge of the Agency’s tasks and objectives, taking into account the managerial, administrative and budgetary skills relevant to fulfil the tasks of a member of the Management Board.

The term of office of members of the Management Board and of their alternates is four years. That term is renewable.

Permanent Stakeholders Group

The Management Board, acting on a proposal by the Executive Director, sets up a Permanent Stakeholders’ Group composed of recognised experts representing the relevant stakeholders, such as the ICT industry, providers of electronic communications networks or services available to the public, consumer groups, academic experts in network and information security, and representatives of national regulatory authorities notified under Directive 2002/21/EC as well as of law enforcement and privacy protection authorities. The term of office of the Permanent Stakeholders’ Group’s members is two-and-a-half years.

The Permanent Stakeholders’ Group advises the Agency in respect of the performance of its activities. In particular, it advises the Executive Director on drawing up a proposal for the Agency’s work programme, and on ensuring communication with the relevant stakeholders on all issues related to the work programme.

Executive Director

The Executive Director is appointed by the Management Board, from a list of candidates proposed by the Commission, following an open and transparent selection procedure, for a term of five years which is renewable.

Executive Board

The Executive Board is made up of five members appointed from among the members of the Management Board and includes the Chairperson of the Management Board, who may also chair the Executive Board, and one of the representatives of the Commission.

External audit

European Court of Auditors.

Internal audit

Internal Audit Service of the European Commission.

Discharge authority

European Parliament on a recommendation from the Council.

Resources made available to the Agency in 2014 (2013)

Final Budget

9,7 million euro (9,7 million euro) of which the Union subsidy is 94 % (93 %).

Staff at 31 December 2014

48 (47) posts in the establishment plan, of which occupied: 46 (43).

Other posts occupied: 14 (13) contract staff, two (three) Seconded National Experts.

Total staff: 62 (59), undertaking the following tasks:

operational: 44 (42)

administrative: 18 (17)

Products and services in 2014 (2013)

The core activities of ENISA for 2014 have been grouped into three work streams (WSs).

WS
   (1)
  1 — Support EU Policy Building

During 2014, ENISA provided support for the policy marking process. This was achieved by making available to policy makers consolidated information on the emerging threat landscape and by formulating key messages to the Member States on how to ensure that their policies and capabilities are aligned with EU objectives taking into account lessons learned within the different Member States. These results relied on the unification of available information sources under a common context and at the same time required the collaboration and involvement of important stakeholders in the areas of threat assessment, risk mitigation and policy definition.

The following objectives and results were achieved.

| — | Identification of technological evolution, risks and challenges: identification of trends, security challenges, associated risks and required countermeasures, for emerging technologies (with special attention to selected areas/sectors). |
| --- | --- |

—

Identification of technological evolution, risks and challenges: identification of trends, security challenges, associated risks and required countermeasures, for emerging technologies (with special attention to selected areas/sectors).

| — | Contribution to EU policy initiatives: supporting policy initiatives by providing security perspective and recommending security measures and security and data protection best practices. |
| --- | --- |

—

Contribution to EU policy initiatives: supporting policy initiatives by providing security perspective and recommending security measures and security and data protection best practices.

| — | Support for the EU in education, research & standardisation: fostering collaboration and cooperation to improve the uptake of security standards and of security research; promoting NIS in education at all levels. |
| --- | --- |

—

Support for the EU in education, research & standardisation: fostering collaboration and cooperation to improve the uptake of security standards and of security research; promoting NIS in education at all levels.

Number of deliverables: 10 (7)

WS2 — Support Capacity Building

A number of activities aimed at supporting ENISA’s key stakeholders in developing new operational and policy capabilities to address the various challenges in cybersecurity and to extend existing capabilities were carried out during 2014.

EU Member States and private sector companies have different maturity levels in respect of their capabilities to address cyber-attacks and disruptions. ENISA’s activities carried out within this work stream were aimed at raising the level of security across Member States and the private sector by collecting and disseminating good practice for public and private sectors and for the European citizen in general.

The objectives and consequently results of this Work Stream were to:

| — | Support Member States’ capacity building: assisting MSs in the development and harmonization of National Cyber Security Strategies (NCSS), PPPs as well as security methodologies and training materials in the area of CERTs. |
| --- | --- |

—

Support Member States’ capacity building: assisting MSs in the development and harmonization of National Cyber Security Strategies (NCSS), PPPs as well as security methodologies and training materials in the area of CERTs.

| — | Support private sector capacity building: developing best practice guides, guidelines, minimum security recommendations or harmonization guidelines in different areas of NIS (i.e. NIS and procurement, certification of smart grids, ICS SCADA, ISP providers, Cloud computing). |
| --- | --- |

—

Support private sector capacity building: developing best practice guides, guidelines, minimum security recommendations or harmonization guidelines in different areas of NIS (i.e. NIS and procurement, certification of smart grids, ICS SCADA, ISP providers, Cloud computing).

| — | Raising the level of preparedness of EU citizens: providing technical guidance, dissemination materials and supporting EU Cyber Security Month. |
| --- | --- |

—

Raising the level of preparedness of EU citizens: providing technical guidance, dissemination materials and supporting EU Cyber Security Month.

Number of deliverables: 16 (16)

WS3 — Support Cooperation

Cooperation is a necessary prerequisite for enhancing and strengthening NIS in the European single market and for building the NIS capacities of Member States, EU institutions and third countries.

In 2014, ENISA continued its work in this area by building on existing collaboration in relevant communities developed since the creation of the agency. ENISA supported cooperation by continuing to build trust, bridging the gap between the products and services offered in the market and their needs, and continuously updating the information provided to those implementing NIS policy. Another means to support cooperation covered in 2014 addressed the development of tools to facilitate and improve the international communication and interchange of security-relevant information within communities sharing the same interest in different Member States.

The objectives and results of this Work Stream were:

| — | Crisis cooperation exercises: organizing Cyber Europe 2014: exercise plan, exercise carried out and report on cyber crisis cooperation. |
| --- | --- |

—

Crisis cooperation exercises: organizing Cyber Europe 2014: exercise plan, exercise carried out and report on cyber crisis cooperation.

| — | Implementation of EU legislation: preparation of technical guidelines and security measures following analysis of Annual 2013 Incident Reports and Recommendations on addressing significant incidents. |
| --- | --- |

—

Implementation of EU legislation: preparation of technical guidelines and security measures following analysis of Annual 2013 Incident Reports and Recommendations on addressing significant incidents.

| — | Regular cooperation among NIS communities: updating and enhancing the operational capabilities of Member States’ institutions by helping the CERT community to increase its level of efficiency and effectiveness. |
| --- | --- |

—

Regular cooperation among NIS communities: updating and enhancing the operational capabilities of Member States’ institutions by helping the CERT community to increase its level of efficiency and effectiveness.

Number of deliverables: 9 (15)

NOTE: Some deliverables of 2014 have more than one outcome/publication — i.e. the work of WP 3.2 D1 resulted in 6 publications.

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(1)  WS: Work stream.

Source: Annex supplied by the Agency.

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THE AGENCY’S REPLY

| 11. | A significant building project related to the refurbishment of the office in Athens was completed in late December 2014. The time of completion of the main works was such that additional or complementary investments in infrastructure, mainly in Athens building, needed to be contracted for at the end of the year 2014. Subsequently, the delivery of such complementary investments was planned in the first months of 2015 and thus the high rate of carry overs was observed. |
| --- | --- |

11.

A significant building project related to the refurbishment of the office in Athens was completed in late December 2014. The time of completion of the main works was such that additional or complementary investments in infrastructure, mainly in Athens building, needed to be contracted for at the end of the year 2014. Subsequently, the delivery of such complementary investments was planned in the first months of 2015 and thus the high rate of carry overs was observed.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/234 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/234

---

REPORT

on the annual accounts of the Europol Pension Fund for the financial year 2014, together with the Fund’s reply

(2015/C 409/26)

INTRODUCTION

| 1. | The Europol Pension Fund (hereinafter ‘the Fund’, aka ‘EPF’), which is located in The Hague, was established by Article 37, Appendix 6, of the former Staff Regulations of the European Police Office, The Hague (Europol). Rules on the implementation of the Fund were established by Council Act of 12 March 1999 (1) and amended by Council Decision 2011/400/EU (2). The objective of the Fund is to finance and pay pensions for staff already employed by Europol before it became a European Agency on 1 January 2010. |
| --- | --- |

1.

The Europol Pension Fund (hereinafter ‘the Fund’, aka ‘EPF’), which is located in The Hague, was established by Article 37, Appendix 6, of the former Staff Regulations of the European Police Office, The Hague (Europol). Rules on the implementation of the Fund were established by Council Act of 12 March 1999 (1) and amended by Council Decision 2011/400/EU (2). The objective of the Fund is to finance and pay pensions for staff already employed by Europol before it became a European Agency on 1 January 2010.

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of the Fund’s internal controls. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of the Fund’s internal controls. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Fund (3) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Fund (3) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Fund and the legality and regularity of the underlying transactions (4).






  (a) | The management’s responsibilities in respect of the Fund’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; applying the accounting rules for the Fund as adopted by the Council (5) and making accounting estimates that are reasonable in the circumstances. The Management Board of the Fund and the Director of the European Police Office approve the annual accounts after the Fund’s accounting officer has prepared them on the basis of all available information. They also establish a note to accompany the accounts in which they declare, inter alia, that they have reasonable assurance that the accounts present a true and fair view of the financial position of the Fund in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Fund and the legality and regularity of the underlying transactions (4).

(a)

The management’s responsibilities in respect of the Fund’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; applying the accounting rules for the Fund as adopted by the Council (5) and making accounting estimates that are reasonable in the circumstances. The Management Board of the Fund and the Director of the European Police Office approve the annual accounts after the Fund’s accounting officer has prepared them on the basis of all available information. They also establish a note to accompany the accounts in which they declare, inter alia, that they have reasonable assurance that the accounts present a true and fair view of the financial position of the Fund in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (6) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Fund are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (6) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Fund are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts.

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Fund’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Council. |
| --- | --- |

8.

In the Court’s opinion, the Fund’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Council.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

Emphasis of Matter

| 10. | The Court draws attention to Notes 2.6 and 2.7 to the Fund’s Annual Report 2014. The Fund’s Management Board prepared the accounts on a going concern basis. However, it is expected that 2015 will lead to a further settlement of most of the currently still unpaid pension rights via a transfer to another pension scheme and that by 31 December 2015 there will be no active participants. The Fund’s Board and Europol’s Management Board together with the Council are currently assessing options for the future of the Fund, one of which is liquidation shortly after 31 December 2015. |
| --- | --- |

10.

The Court draws attention to Notes 2.6 and 2.7 to the Fund’s Annual Report 2014. The Fund’s Management Board prepared the accounts on a going concern basis. However, it is expected that 2015 will lead to a further settlement of most of the currently still unpaid pension rights via a transfer to another pension scheme and that by 31 December 2015 there will be no active participants. The Fund’s Board and Europol’s Management Board together with the Council are currently assessing options for the future of the Fund, one of which is liquidation shortly after 31 December 2015.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 11. | An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in the Annex. |
| --- | --- |

11.

An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in the Annex.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  Document 5397/99 on the Council’s public register: http://register.consilium.europa.eu/

1

(2)  OJ L 179, 7.7.2011, p. 5.

2

(3)  The accounts comprise the balance sheet, the statement of income and expenses, the cash-flow statement and the explanatory notes.

3

(4)  Articles 33 and 43 of Commission Regulation (EC, Euratom) No 2343/2002 (OJ L 357, 31.12.2002, p. 72).

4

(5)  In accordance with Council Act of 12 March 1999 adopting rules on the EPF and Council Decision of 28 June 2011 amending the latter, the accounts are prepared on the basis of The Netherlands accounting rules on Pension Funds, namely Directive 610 of the Dutch financial reporting rules, and on the international Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

5

(6)  Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 (OJ L 248, 16.9.2002, p. 1).

6

---

ANNEX

Follow-up of previous years’ comments

| Year | Court’s comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2012 | Europol Staff Regulations set the capitalisation of pension contributions paid by officials at an annual rate of 3,5 %. Since contributions are made monthly and can be different from one month to another, the use of an annual rate is incorrect and a monthly rate should be applied. However, there is no material effect on the annual accounts. | N/A |

Year

Court’s comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2012

Europol Staff Regulations set the capitalisation of pension contributions paid by officials at an annual rate of 3,5 %. Since contributions are made monthly and can be different from one month to another, the use of an annual rate is incorrect and a monthly rate should be applied. However, there is no material effect on the annual accounts.

N/A

---

THE FUND’S REPLY

| 10. | The Europol Management Board Meeting (MB) of 12—13 May 2015 unanimously agreed to propose to the legislator the dissolution of the Europol Pension Fund (EPF), alongside the redistribution of the general reserve (‘surplus’) of the fund to its contributors. The corresponding legal instrument is currently being examined by the concerned prepartory bodies of the Council. |
| --- | --- |

10.

The Europol Management Board Meeting (MB) of 12—13 May 2015 unanimously agreed to propose to the legislator the dissolution of the Europol Pension Fund (EPF), alongside the redistribution of the general reserve (‘surplus’) of the fund to its contributors. The corresponding legal instrument is currently being examined by the concerned prepartory bodies of the Council.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/238 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/238

---

REPORT

on the annual accounts of the European Railway Agency for the financial year 2014, together with the Agency’s reply

(2015/C 409/27)

INTRODUCTION

| 1. | The European Railway Agency (hereinafter ‘the Agency’, aka ‘ERA’), which is located in Lille and Valenciennes, was created by Regulation (EC) No 881/2004 of the European Parliament and of the Council (1). The Agency's task is to enhance the level of interoperability of railway systems and to develop a common approach to safety in order to contribute to creating a more competitive European railway sector with a high level of safety (2). |
| --- | --- |

1.

The European Railway Agency (hereinafter ‘the Agency’, aka ‘ERA’), which is located in Lille and Valenciennes, was created by Regulation (EC) No 881/2004 of the European Parliament and of the Council (1). The Agency's task is to enhance the level of interoperability of railway systems and to develop a common approach to safety in order to contribute to creating a more competitive European railway sector with a high level of safety (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Agency's annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Agency's annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208 (4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208 (4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | The overall level of committed appropriations was high at 97 %. However, there was also a high level of committed appropriations carried over for the operational budget (title III) at 2,2 million euro, i.e. 37,7 % (2013: 1,6 million euro, i.e. 25 %) due to delayed operational projects (safety, European Railways Traffic Management System — ERTMS) and delayed IT projects. This situation is at odds with the budgetary principle of annuality. |
| --- | --- |

11.

The overall level of committed appropriations was high at 97 %. However, there was also a high level of committed appropriations carried over for the operational budget (title III) at 2,2 million euro, i.e. 37,7 % (2013: 1,6 million euro, i.e. 25 %) due to delayed operational projects (safety, European Railways Traffic Management System — ERTMS) and delayed IT projects. This situation is at odds with the budgetary principle of annuality.

OTHER COMMENTS

| 12. | When implementing a multiple framework contract on ERTMS project follow-up, the Agency reopened a competition procedure for the award of a specific contract. However, both the excessive weighting of quality and the high maximum contract value in the reopening tender resulted in financial offers close to the maximum contract value. This is in contradiction with the objective of reopening a competition procedure, which is to ensure competition on price. |
| --- | --- |

12.

When implementing a multiple framework contract on ERTMS project follow-up, the Agency reopened a competition procedure for the award of a specific contract. However, both the excessive weighting of quality and the high maximum contract value in the reopening tender resulted in financial offers close to the maximum contract value. This is in contradiction with the objective of reopening a competition procedure, which is to ensure competition on price.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 13. | An overview of the corrective actions taken in response to the Court's comments from the previous years is provided in Annex I. |
| --- | --- |

13.

An overview of the corrective actions taken in response to the Court's comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 220, 21.6.2004, p. 3.

1

(2)  Annex II summarises the Agency's competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

---

ANNEX I

Follow-up of previous years’ comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2011 | The Agency’s Founding Regulation sets maximum employment periods for temporary staff recruited by the Agency from the professionals of the railways sector. According to these provisions, the Agency will have to replace half of its operational staff in the period 2013-2015, which may cause major disruptions in the Agency’s operational activities (1). | On-going |
| 2011 | There is room to improve the Agency’s recruitment procedures in order to fully ensure transparency and equal treatment of candidates. As an example, vacancy notices did not provide information on the required minimum number of years of post-secondary or university studies which however was used as a selection criterion. The pass marks for interviews and reserve lists, the scoring of selection criteria, the questions for oral and written tests and the weightings between written and oral tests were not set before applications were examined. | On-going |
| 2012 | The Agency does not comply with its Internal Control Standard regarding business continuity; there are no approved IT Business Continuity and Disaster Recovery plans. | Completed |
| 2013 | There is room to improve the accuracy and documentation of information used in the Agency’s procurement procedures. | Completed |
| 2013 | According to the Agency's founding regulation (1), staff shall consist of:






  — | temporary employees recruited by the Agency for a maximum of five years from among professionals from the railways sector on the basis of their qualifications and experience in the field of railway safety and interoperability; |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2011

The Agency’s Founding Regulation sets maximum employment periods for temporary staff recruited by the Agency from the professionals of the railways sector. According to these provisions, the Agency will have to replace half of its operational staff in the period 2013-2015, which may cause major disruptions in the Agency’s operational activities (1).

On-going

2011

There is room to improve the Agency’s recruitment procedures in order to fully ensure transparency and equal treatment of candidates. As an example, vacancy notices did not provide information on the required minimum number of years of post-secondary or university studies which however was used as a selection criterion. The pass marks for interviews and reserve lists, the scoring of selection criteria, the questions for oral and written tests and the weightings between written and oral tests were not set before applications were examined.

On-going

2012

The Agency does not comply with its Internal Control Standard regarding business continuity; there are no approved IT Business Continuity and Disaster Recovery plans.

Completed

2013

There is room to improve the accuracy and documentation of information used in the Agency’s procurement procedures.

Completed

2013

According to the Agency's founding regulation (1), staff shall consist of:

—

temporary employees recruited by the Agency for a maximum of five years from among professionals from the railways sector on the basis of their qualifications and experience in the field of railway safety and interoperability;

| — | officials assigned or seconded by the Commission or Member States for a maximum of five years; and |
| --- | --- |

—

officials assigned or seconded by the Commission or Member States for a maximum of five years; and

| — | other servants to carry out implementing or secretarial tasks. |
| --- | --- |

—

other servants to carry out implementing or secretarial tasks.

At the end of 2013, 136 temporary employees were working for the Agency. The founding regulation also stipulates that during the first ten years of the Agency’s operations, the five-year period for them may be extended by up to a maximum of a further three years when required to guarantee business continuity. The Agency used this option as standard practice until mid-2013. Furthermore, in the period from September 2013 to March 2014, the Agency re-employed four temporary employees (for an eight-year period) whose contracts with ERA had ended in 2013 after the maximum eight-year period.

In 2013 the Agency adopted a new decision in agreement with its Administrative Board and the Commission, according to which temporary employees can have indefinite contracts. The proposal for a revised founding regulation for ERA includes similar provisions but it is unclear if and when this will be adopted by Parliament and Council.

On-going

2013

The Agency is located in Lille and Valenciennes. As the Court mentioned in its Specific Annual Report for the financial year 2006, it is likely that costs could be reduced if all operations were centralised in one location. This might also facilitate a comprehensive seat agreement with the host Member State thereby clarifying the conditions under which the Agency and its staff operate.

On-going

---

(1)  Article 24(3) of Regulation (EC) No 881/2004.

---

ANNEX II

European Railway Agency (Lille and Valenciennes)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Article 91(1) of the Treaty on the Functioning of the European Union) | ‘For the purpose of implementing Article 90, and taking into account the distinctive features of transport, the European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee and the Committee of the Regions, lay down:






  (a) | common rules applicable to international transport to or from the territory of a Member State or passing across the territory of one or more Member States, |
| --- | --- | --- |

Areas of Union competence deriving from the Treaty

(Article 91(1) of the Treaty on the Functioning of the European Union)

‘For the purpose of implementing Article 90, and taking into account the distinctive features of transport, the European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee and the Committee of the Regions, lay down:

(a)

common rules applicable to international transport to or from the territory of a Member State or passing across the territory of one or more Member States,

| (b) | the conditions under which non-resident carriers may operate transport services within a Member State, |
| --- | --- |

(b)

the conditions under which non-resident carriers may operate transport services within a Member State,

| (c) | measures to improve transport safety, |
| --- | --- |

(c)

measures to improve transport safety,

| (d) | any other appropriate provisions.’ |
| --- | --- |

(d)

any other appropriate provisions.’

Competences of the Agency

(Regulation (EC) No 881/2004 of the European Parliament and of the Council)

Objectives

To contribute, on technical matters, to the implementation of the Union legislation aimed at:

| — | improving the competitive position of the railway systems, |
| --- | --- |

—

improving the competitive position of the railway systems,

| — | developing a common approach to safety on the European railway system, |
| --- | --- |

—

developing a common approach to safety on the European railway system,

in order to contribute to creating a European railway area without frontiers and guaranteeing a high level of safety.

Tasks

| 1. | To address recommendations to the Commission on:






  — | the common safety methods (CMS) and common safety targets (CSTs) provided in the Railway Safety Directive (2004/49/EC), |
| --- | --- | --- |

1.

To address recommendations to the Commission on:

—

the common safety methods (CMS) and common safety targets (CSTs) provided in the Railway Safety Directive (2004/49/EC),

| — | safety certificates and measures in the field of safety, |
| --- | --- |

—

safety certificates and measures in the field of safety,

| — | development of technical specifications for interoperability, |
| --- | --- |

—

development of technical specifications for interoperability,

| — | vocational competencies, |
| --- | --- |

—

vocational competencies,

| — | registration of rolling stock. |
| --- | --- |

—

registration of rolling stock.

| 2. | To issue opinions on:






  — | national safety rules, |
| --- | --- | --- |

2.

To issue opinions on:

—

national safety rules,

| — | monitoring the quality of the work of notified bodies, |
| --- | --- |

—

monitoring the quality of the work of notified bodies,

| — | interoperability of the trans-European network. |
| --- | --- |

—

interoperability of the trans-European network.

| 3. | To coordinate national bodies:
  Coordination of national safety authorities and national investigation bodies (as described in Directive 2004/49/EC, Articles 17 and 21). |
| --- | --- |

3.

To coordinate national bodies:

Coordination of national safety authorities and national investigation bodies (as described in Directive 2004/49/EC, Articles 17 and 21).

| 4. | Publications and databases:






  — | report on safety performance (every two years), |
| --- | --- | --- |

4.

Publications and databases:

—

report on safety performance (every two years),

| — | report on progress with interoperability (every two years), |
| --- | --- |

—

report on progress with interoperability (every two years),

| — | public database of safety documents, |
| --- | --- |

—

public database of safety documents,

| — | public register of documents on interoperability. |
| --- | --- |

—

public register of documents on interoperability.

Governance

Administrative Board

Comprises one representative from each Member State, four representatives from the Commission and six representatives, without the right to vote, from the professional sectors concerned.

Director

Appointed by the Administrative Board on a proposal from the Commission.

External audit

European Court of Auditors.

Discharge authority

European Parliament, following a recommendation from the Council.

Resources made available to the Agency in 2014 (2013)

Budget

25,7(25,8) million euro

Staff at 31 December 2014

Posts listed in the establishment plan: 140 (143)

Posts occupied on 31.12.2014: 132 (135)

Other staff: 19 (15)

Total staff: 151 (150), of which assigned to:

| — | operational tasks: 117 (116) |
| --- | --- |

—

operational tasks: 117 (116)

| — | administrative tasks: 34 (34) |
| --- | --- |

—

administrative tasks: 34 (34)

Products and services in 2014

Development of a programme plan setting out milestones to deliver a single safety certificate.

Monitoring of and biennial report on safety performance.

Evaluating transposition of the Safety Directive.

NSA audits.

NIB assessments.

Drafting a recommendation on a revised Common Safety Method for assessing CSTs and NRVs.

Annual reporting on CSTs.

Running a pilot on a new regulatory monitoring matrix.

Reviewing the current framework on assessment and supervision by NSAs.

Implementing TSIs with extended geographical scope and guiding, supporting and advising the rail sector and Member States when implementing the telematics TSIs.

Revising the PRM TSI.

Closing the remaining open points.

Developing the Reference Document Database.

Facilitating trial ‘one-stop-shop’ authorisations.

Facilitating migration to the 4th Railway Package.

Follow-up of the development, testing and implementation of ERTMS.

Developing a roadmap to enable ETCS communications on packet-switched radio technologies.

Developing and publishing guideline documents to simplify and standardise the engineering in relation to ERTMS.

Supporting harmonised operations with ERTMS.

Cooperation with the INEA Executive Agency in evaluating specific ERTMS projects.

Continuously implementing appropriate tools and resources in order to become a modern organisation which can quickly adapt to any changes.

Source: Annex supplied by the Agency.

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THE AGENCY’S REPLY

| 11. | The Agency has taken note of the Court’s comment and further improved the monitoring of the budgetary implementation of in particular title III that should help in reaching an acceptable level of appropriations to be carried over in the future. |
| --- | --- |

11.

The Agency has taken note of the Court’s comment and further improved the monitoring of the budgetary implementation of in particular title III that should help in reaching an acceptable level of appropriations to be carried over in the future.

| 12. | The Agency has taken note of the Court’s comment and is preparing internal guidance on the use of the reopening of competition procedure to ensure better competition on price. |
| --- | --- |

12.

The Agency has taken note of the Court’s comment and is preparing internal guidance on the use of the reopening of competition procedure to ensure better competition on price.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/247 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/247

---

REPORT

on the annual accounts of the European Research Council Executive Agency for the financial year 2014 together with the Agency’s reply

(2015/C 409/28)

INTRODUCTION

| 1. | The European Research Council Executive Agency (hereinafter ‘the Agency’, aka ‘ERCEA’), which is located in Brussels, was created by Commission Decision 2008/37/EC (1). The Agency was established for a period beginning on 1 January 2008 and ending on 31 December 2017 with the aim of managing the ‘Ideas’ specific programme under the 7th Framework Programme for Research (2). |
| --- | --- |

1.

The European Research Council Executive Agency (hereinafter ‘the Agency’, aka ‘ERCEA’), which is located in Brussels, was created by Commission Decision 2008/37/EC (1). The Agency was established for a period beginning on 1 January 2008 and ending on 31 December 2017 with the aim of managing the ‘Ideas’ specific programme under the 7th Framework Programme for Research (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Steering Committee approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Steering Committee approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts.

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON INTERNAL CONTROLS

| 11. | Procedures with regard to tangible and intangible assets need to be further strengthened in order to ensure their proper safeguarding and the preparation of timely, accurate and complete information in this area. The Assets Register needs to be kept up-to-date in respect of the location of its assets, inventory procedures need to be formalised and the Agency’s guidelines on the capitalisation of internally developed intangible assets need to include sufficient detail to ensure it uses a consistent approach. |
| --- | --- |

11.

Procedures with regard to tangible and intangible assets need to be further strengthened in order to ensure their proper safeguarding and the preparation of timely, accurate and complete information in this area. The Assets Register needs to be kept up-to-date in respect of the location of its assets, inventory procedures need to be formalised and the Agency’s guidelines on the capitalisation of internally developed intangible assets need to include sufficient detail to ensure it uses a consistent approach.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 9, 12.1.2008, p. 15.

1

(2)  The Annex summarises the Agency’s competences and activities. It is presented for information purposes.

2

Annex

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 38 to 42 of the Financial Regulation of the Agency.

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Articles 87 to 92 of the Financial Regulation of the Agency

7

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ANNEX

European Research Council Executive Agency (Brussels)

Competences and activities

| Areas of Union competence deriving from the Treaty

  (Article 182 of the Treaty on the Functioning of the European Union) | 1. | A multiannual framework programme, setting out all the activities of the Union, shall be adopted by the European Parliament and the Council, after consulting the Economic and Social Committee. The framework programme shall:






  — | establish the scientific and technological objectives to be achieved by the activities provided for in Article 180 and fix the relevant priorities, |
| --- | --- | --- | --- |

Areas of Union competence deriving from the Treaty

(Article 182 of the Treaty on the Functioning of the European Union)

1.

A multiannual framework programme, setting out all the activities of the Union, shall be adopted by the European Parliament and the Council, after consulting the Economic and Social Committee. The framework programme shall:

—

establish the scientific and technological objectives to be achieved by the activities provided for in Article 180 and fix the relevant priorities,

| — | indicate the broad lines of such activities, |
| --- | --- |

—

indicate the broad lines of such activities,

| — | fix the maximum overall amount and the detailed rules for Union financial participation in the framework programme and the respective shares in each of the activities provided for. |
| --- | --- |

—

fix the maximum overall amount and the detailed rules for Union financial participation in the framework programme and the respective shares in each of the activities provided for.

| 2. | The framework programme shall be adapted or supplemented as the situation changes. |
| --- | --- |

2.

The framework programme shall be adapted or supplemented as the situation changes.

| 3. | The framework programme shall be implemented through specific programmes developed within each activity. Each specific programme shall define the detailed rules for implementing it, fix its duration and provide for the means deemed necessary. The sum of the amounts deemed necessary, fixed in the specific programmes, may not exceed the overall maximum amount fixed for the framework programme and each activity. |
| --- | --- |

3.

The framework programme shall be implemented through specific programmes developed within each activity. Each specific programme shall define the detailed rules for implementing it, fix its duration and provide for the means deemed necessary. The sum of the amounts deemed necessary, fixed in the specific programmes, may not exceed the overall maximum amount fixed for the framework programme and each activity.

| 4. | The Council, acting in accordance with a special legislative procedure and after consulting the European Parliament and the Economic and Social Committee, shall adopt the specific programmes. |
| --- | --- |

4.

The Council, acting in accordance with a special legislative procedure and after consulting the European Parliament and the Economic and Social Committee, shall adopt the specific programmes.

Competences of the Agency

(Commission Implementing Decision 2013/779/EU)

(Commission Decision C(2013)9428, as amended by Commission Decision C(2014)9437)

Objectives

The Agency was set up in December 2013 by Commission Decision 2013/779/EU, for the management of the specific objective ‘Strengthening frontier research through the activities of the European Research Council’ of Part I ‘Excellent Science’ of the Specific Programme implementing Horizon 2020 (2014-2020). This specific objective is implemented by the European Research Council (ERC), comprising an independent Scientific Council which establishes the ERC’s scientific strategy and monitors its implementation by the Agency that handles the operational management.

The Agency succeeds the Executive Agency established by Decision 2008/37/EC and operates in accordance with the general statute of Council Regulation (EC) No 58/2003.

The Agency has also been entrusted with the implementation of the legacy of the Specific Programme ‘Ideas’, which was managed by its predecessor within the Seventh Framework Programme (2007-2013).

Tasks

The tasks of the Agency are described in the Delegation Act (See Commission Decision C(2013)9428 as amended by Commission Decision C(2014)9437), namely in Article 4 and Annexes I to III thereof. Among these tasks, the Agency has been entrusted with tasks covering:

| — | all aspects of administrative implementation and programme execution and in particular, the evaluation procedures, peer review and selection process according to the principles established by the Scientific Council; |
| --- | --- |

—

all aspects of administrative implementation and programme execution and in particular, the evaluation procedures, peer review and selection process according to the principles established by the Scientific Council;

| — | the financial and scientific management of the grants; |
| --- | --- |

—

the financial and scientific management of the grants;

| — | the necessary support to the Scientific Council in the conduct of its tasks. |
| --- | --- |

—

the necessary support to the Scientific Council in the conduct of its tasks.

Governance

(Commission decision C(2014) 430 as amended by Commission decision(2014) 9447)

(Regulation (EU) No 1291/2013)

(Council Decision 2013/743/EU)

(Council Regulation (EC) No 58/2003)

Steering Committee

The Steering Committee is the body that supervises the operations of the Agency and is appointed by the Commission (See Commission Decision C(2014) 430 as amended by Commission Decision C(2014) 9447). It adopts the Agency’s annual work programme (after approval by the Commission), administrative budget and annual reports. It is composed of five members.

Scientific Council of the ERC

The Scientific Council of the ERC is entrusted by virtue of Regulation (EU) No 1291/2013 with establishing the overall scientific strategy for the objective of the Specific Programme, deciding on the type of research to be funded in accordance with Section 1.2 of Part I of Annex I thereto. It operates autonomously. These are essential features of the ERC: guaranteeing the effectiveness of its scientific programme, the quality of its operations and peer-review process and its credibility in the scientific community. As set out in Article 7 of Council Decision 2013/743/EU, its tasks cover, in particular, the establishment of the annual work programme for the implementation of the ERC activities, and of the peer review process, as well as the monitoring and quality control of the implementation of the specific objective ‘The European Research Council (ERC)’, without prejudice to the responsibility of the Commission. It is composed of twenty-two members appointed by the Commission.

Director of the Agency

Appointed by the European Commission for 4 years.

External audit

European Court of Auditors.

Discharge authority

European Parliament, following a recommendation from the Council.

Resources made available to the Agency in 2014 (2013)

Budget

36,3 (40,1) million euro (final budget adopted by the executive agency)

Staff at 31 December 2014

The 2014 operating budget provides for an establishment plan of 100 (100) temporary Staff (TS) and a budget for 289 (289) contract staff (CS) and seconded national experts (SNE), i.e. a total of 389 (389) staff. Of these posts, 388 (379) were occupied at year-end 2014:

| — | 99 (99) temporary staff, out of which 15 (13) seconded TS and 84 (86) external TS; |
| --- | --- |

—

99 (99) temporary staff, out of which 15 (13) seconded TS and 84 (86) external TS;

| — | 277 (270) contract staff; |
| --- | --- |

—

277 (270) contract staff;

| — | 12 (10) SNEs. |
| --- | --- |

—

12 (10) SNEs.

Allocated to:

| — | operational activities (Scientific and Grant Management departments): 70 % (70 %); |
| --- | --- |

—

operational activities (Scientific and Grant Management departments): 70 % (70 %);

| — | administrative activities (other departments): 30 % (30 %). |
| --- | --- |

—

administrative activities (other departments): 30 % (30 %).

Products and services in 2014 (2013)

| 1. | Monitor the grant agreements awarded under the Horizon 2020 (H2020) Programme, calls for Starting Grants (StG), Consolidator Grants (CoG), Advanced Grants (AdG), and Proof-of-Concept Grants (PoC). The H2020 work programme is implemented via the publication of the annual calls for proposals, which is followed by an evaluation (by external experts), the preparation and signing of grant agreements and finally the monitoring of project implementation. Each call for proposals results in a series of Grant Agreements, with an expected project cycle of about 5 years. |
| --- | --- |

1.

Monitor the grant agreements awarded under the Horizon 2020 (H2020) Programme, calls for Starting Grants (StG), Consolidator Grants (CoG), Advanced Grants (AdG), and Proof-of-Concept Grants (PoC). The H2020 work programme is implemented via the publication of the annual calls for proposals, which is followed by an evaluation (by external experts), the preparation and signing of grant agreements and finally the monitoring of project implementation. Each call for proposals results in a series of Grant Agreements, with an expected project cycle of about 5 years.

| 2. | Execution of the 2014 calls for proposals for the H2020 work programme (Starting Grants, Consolidator Grants, Advanced Grants, and Proof-of-Concept Grants): 8  530 proposal applications were submitted in 2014, out of which 3  273 were for Starting Grants, 2  528 were for Consolidator Grants, 2  287 for Advanced Grants, and 442 for Proof-of-Concept Grants (total for the 2 deadlines). Of these a total of 8  374 were eligible and thus evaluated by the review panels. A total of 378 proposals were selected for the granting process for StG and PoC calls. The CoG 2014 call is not yet completed and the AdG 2014 call is still in the evaluation phase as the calls calendar was shifted by 5 months due to the late adoption of the H2020 programme by the Council and Parliament. |
| --- | --- |

2.

Execution of the 2014 calls for proposals for the H2020 work programme (Starting Grants, Consolidator Grants, Advanced Grants, and Proof-of-Concept Grants): 8  530 proposal applications were submitted in 2014, out of which 3  273 were for Starting Grants, 2  528 were for Consolidator Grants, 2  287 for Advanced Grants, and 442 for Proof-of-Concept Grants (total for the 2 deadlines). Of these a total of 8  374 were eligible and thus evaluated by the review panels. A total of 378 proposals were selected for the granting process for StG and PoC calls. The CoG 2014 call is not yet completed and the AdG 2014 call is still in the evaluation phase as the calls calendar was shifted by 5 months due to the late adoption of the H2020 programme by the Council and Parliament.

| 3. | Generation and dissemination of information on the H2020 Work Programme and the Agency’s activities in 2014. |
| --- | --- |

3.

Generation and dissemination of information on the H2020 Work Programme and the Agency’s activities in 2014.

| 4. | The Scientific Council held regular meetings in 2014 both in Brussels and across Europe, usually at the invitation of national authorities. Meeting in different countries, either EU Member States or Associated Countries, is a way of making the ERC more visible. The meetings are also considered important events both by the national authorities as well as the local scientific and research community. Five Scientific Council plenary sessions were organised between 1 January and 31 December 2014: in January, March and December in Brussels (Belgium), in June in Oslo (Norway) and in October in Zagreb (Croatia). |
| --- | --- |

4.

The Scientific Council held regular meetings in 2014 both in Brussels and across Europe, usually at the invitation of national authorities. Meeting in different countries, either EU Member States or Associated Countries, is a way of making the ERC more visible. The meetings are also considered important events both by the national authorities as well as the local scientific and research community. Five Scientific Council plenary sessions were organised between 1 January and 31 December 2014: in January, March and December in Brussels (Belgium), in June in Oslo (Norway) and in October in Zagreb (Croatia).

Following the recommendations of the panel on the review of the ERC’s structures and mechanisms in 2009, the Scientific Council established two standing committees: the first providing guidance on conflicts of interest, scientific misconduct and ethical issues (CoIME) and the second dealing with the selection of evaluation panellists. The Executive Agency supported the operational activities of the two committees, which met two and three times respectively in 2014.

The members of the Scientific Council also meet in working groups (WGs) addressing specific issues. In 2014, various meetings of the ERC working groups on innovation and relations with industry, open access, strengthening international participation, gender balance and key performance indicators were organised by the Executive Agency. The WGs carry out analyses and contribute to the ERC’s scientific strategy through proposals to be adopted by the Scientific Council in plenary in the areas covered by their mandates: to examine the ERC’s relationship with the industrial/business sector and the impact of ERC-funded research on innovation; to develop an ERC position on open access; to ensure that the ERC is at the forefront of best practice with regard to the gender balance in research; to explore suitable mechanisms to increase the participation of researchers in ERC calls from countries outside the EU; to develop a roadmap for monitoring and evaluating the ERC’s accomplishment of its mission, beyond indicators and targets, to support the short-, medium- and long-term policies of the Scientific Council.

A new group started its activities in 2014, the WG on widening European participation. Its mission is to encourage Central and Eastern European countries to better nurture their scientific talent and invest more in research. It will raise awareness about the ERC schemes in these countries and better inform the research communities there about what ERC grants can offer to scientists from the region and strengthen the participation of yet undiscovered scientific talent from there.

A series of working documents containing analyses and key messages on the specific issues dealt with by the WGs and by the standing committees were prepared by the Executive Agency, in collaboration with members of the groups.

The main activities linked to the work of these WGs in 2014 included:

Innovation and relations with industry: In July 2014, nine ERC grantees holding Proof of Concept grants were first trained and then invited to present their ideas to investors in three-minute long ‘elevator pitches’ to a network comprising leading innovators in industry and academia as well as some venture capitalists. This is the second event of this type organised by the ERC in collaboration with the media company ScienceBusiness. The first took place in February 2013.

Open Access: A session on open access and scientific excellence was organised within the framework of the ERC–DNRF Joint Workshop ‘Fostering academic excellence in a changing world’ which took place in June as a satellite event to ESOF 2014.

Later on, in September, a 2-day workshop on research data management and sharing attracted more than 140 participants from across Europe. Other events included several seminars with representatives from specific open access infrastructures, such as the data repositories Dryad and figshare, from the OAPEN foundation that is running a platform for open access books, and from the Reproducibility Initiative. In cooperation with STM, the International Association of Scientific, Technical & Medical Publishers, two further seminars took place, one on the pricing of journals, the other on long-text format publishing in a digital environment.

Gender balance: In an attempt to continue tackling the low numbers of applications to ERC calls from female researchers, in June 2014 the ERC Scientific Council adopted the ERC Gender Equality Plan 2014-2020. The document, drafted by the working group on gender balance, is intended to take further the objectives of the 2007-2013 ERC Gender Equality Plan.

In addition, the working group on gender balance commissioned an independent study, the ERCAREER project, to look into the differences and similarities in the career paths and patterns of male and female ERC grantees and to provide recommendations.

Source: Annex supplied by the Agency.

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THE AGENCY’S REPLY

| 11. | The Agency has taken note of the Court’s report and will implement your comments on internal controls (paragraph 11). |
| --- | --- |

11.

The Agency has taken note of the Court’s report and will implement your comments on internal controls (paragraph 11).

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| 9.12.2015 | EN | Official Journal of the European Union | C 409/255 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/255

---

REPORT

on the annual accounts of the European Securities and Markets Authority for the financial year 2014 together with the Authority’s reply

(2015/C 409/29)

INTRODUCTION

| 1. | The European Securities and Markets Authority (hereinafter ‘the Authority’, aka ‘ESMA’), which is located in Paris, was established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council (1). The Authority’s task is to improve the functioning of the EU internal financial market by ensuring a high, effective and consistent level of regulation and supervision, promoting the integrity and stability of the financial systems and strengthening international supervisory coordination in order to ensure the stability and effectiveness of the financial system (2). ESMA was set up on 1 January 2011. |
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1.

The European Securities and Markets Authority (hereinafter ‘the Authority’, aka ‘ESMA’), which is located in Paris, was established by Regulation (EU) No 1095/2010 of the European Parliament and of the Council (1). The Authority’s task is to improve the functioning of the EU internal financial market by ensuring a high, effective and consistent level of regulation and supervision, promoting the integrity and stability of the financial systems and strengthening international supervisory coordination in order to ensure the stability and effectiveness of the financial system (2). ESMA was set up on 1 January 2011.

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Authority’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
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2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Authority’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Authority, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and |
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STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Authority, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
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(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Authority and the legality and regularity of the underlying transactions (5).






  (a) | The management’s responsibilities in respect of the Authority’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Authority after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Authority in all material respects. |
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4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Authority and the legality and regularity of the underlying transactions (5).

(a)

The management’s responsibilities in respect of the Authority’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Authority after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Authority in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
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(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Authority are free from material misstatement and the transactions underlying them are legal and regular. |
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5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Authority are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Authority’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
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6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Authority’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
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7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Authority’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
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8.

In the Court’s opinion, the Authority’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
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9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
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10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON THE RELIABILITY OF THE ACCOUNTS

| 11. | The amount of fees charged to supervised entities (Credit Rating Agencies and Trade Repositories) in 2014 (6 6 23  000 euro) appearing as revenue in the provisional statement of financial performance was based on estimated rather than actual costs of supervisory activities carried out (9). Fees levied on supervised entities should be as close as possible to the actual cost incurred in this area. An Activity Based Cost modelling exercise is currently being carried out by ESMA in order to achieve this. |
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11.

The amount of fees charged to supervised entities (Credit Rating Agencies and Trade Repositories) in 2014 (6 6 23  000 euro) appearing as revenue in the provisional statement of financial performance was based on estimated rather than actual costs of supervisory activities carried out (9). Fees levied on supervised entities should be as close as possible to the actual cost incurred in this area. An Activity Based Cost modelling exercise is currently being carried out by ESMA in order to achieve this.

COMMENTS ON THE LEGALITY AND REGULARITY OF TRANSACTIONS

| 12. | When ESMA was established in 2010 it inherited a number of IT framework contracts from its predecessor body CESR (Committee of European Securities Regulators) for the hosting of its data centres as well as the development and maintenance of its IT systems. Failure to replace these framework contracts with timely calls for tender led to a situation where two of them were extended beyond their original duration. It also resulted in the Authority procuring some IT services using a French central purchasing body (Union de Groupements d’Achats Publics — UGAP). The Authority also made use of UGAP to buy furniture and stationery during the year. Total payments in 2014 amounted to 9 56  000 euro. The Court informed the Authority that the use of UGAP was not in compliance with the Financial Regulation and it has since ceased to do so. The Authority has now also replaced all CESR IT framework contracts with its own. |
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12.

When ESMA was established in 2010 it inherited a number of IT framework contracts from its predecessor body CESR (Committee of European Securities Regulators) for the hosting of its data centres as well as the development and maintenance of its IT systems. Failure to replace these framework contracts with timely calls for tender led to a situation where two of them were extended beyond their original duration. It also resulted in the Authority procuring some IT services using a French central purchasing body (Union de Groupements d’Achats Publics — UGAP). The Authority also made use of UGAP to buy furniture and stationery during the year. Total payments in 2014 amounted to 9 56  000 euro. The Court informed the Authority that the use of UGAP was not in compliance with the Financial Regulation and it has since ceased to do so. The Authority has now also replaced all CESR IT framework contracts with its own.

COMMENTS ON BUDGETARY MANAGEMENT

| 13. | The total cancellation rate for appropriations carried over from 2013 was high at 19 % i.e. 9 40  054 euro. This mainly stems from delays on the part of contractors in delivering requested services, but also the cancelled purchase of licenses for a cancelled project, difficulties encountered in implementing a contract for interim staff and in making the changeover from the previous to the new IT consultancy framework contract. |
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13.

The total cancellation rate for appropriations carried over from 2013 was high at 19 % i.e. 9 40  054 euro. This mainly stems from delays on the part of contractors in delivering requested services, but also the cancelled purchase of licenses for a cancelled project, difficulties encountered in implementing a contract for interim staff and in making the changeover from the previous to the new IT consultancy framework contract.

| 14. | The overall level of committed appropriations increased from 93 % in 2013 to 99 % in 2014, indicating that commitments were made in a more timely manner. However, the level of committed appropriations carried over to 2015 was high for title III (operational expenditure) at 4 0 63  580 euro, i.e. 45 % (2013: 3 6 88  487 euro, i.e. 58 %). Of this amount approximately 2 million euro relate to IT and other services provided in 2014 that had not been paid for by the Authority by the year-end. Another 1,3 million euro worth of contracts had been contracted towards the year-end and related services were expected to be delivered in 2015. The remaining amount of carry-overs is explained by the multiannual nature of the contacts signed. |
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14.

The overall level of committed appropriations increased from 93 % in 2013 to 99 % in 2014, indicating that commitments were made in a more timely manner. However, the level of committed appropriations carried over to 2015 was high for title III (operational expenditure) at 4 0 63  580 euro, i.e. 45 % (2013: 3 6 88  487 euro, i.e. 58 %). Of this amount approximately 2 million euro relate to IT and other services provided in 2014 that had not been paid for by the Authority by the year-end. Another 1,3 million euro worth of contracts had been contracted towards the year-end and related services were expected to be delivered in 2015. The remaining amount of carry-overs is explained by the multiannual nature of the contacts signed.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 15. | An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I. |
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15.

An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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(1)  OJ L 331, 15.12.2010, p. 84.

1

(2)  Annex II summarises the Authority’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

(9)  The need to levy fees based on actual costs is mentioned in Article 4 of Commission Delegated Regulation (EU) No 1003/2013 of 12 July 2013 on trade repositories (OJ L 279, 19.10.2013, p. 4) supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council, and Article 19(3) of the Authority’s Financial Regulation.

9

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ANNEX I

Follow-up of previous years’ comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
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| 2011 | The Authority’s budget for the financial year 2011 amounted to 16,9 million euro. In accordance with Article 62(1) of its Founding Regulation, 60 % of the 2011 budget was financed from Member States’ and EFTA countries’ contributions and 40 % from the Union budget. At the end of 2011, ESMA recorded a positive budget outturn of 4,3 million euro. In compliance with its Financial Regulation, the full amount was then recorded in the accounts as a liability towards the European Commission. | negative budget result was reported in 2014 |
| 2011 | Weaknesses were noted as regards six legal commitments made in advance of budget commitments (4 83  845 euro). | Ongoing (1) |
| 2011 | The Court identified a number of cases with a total value of 2 07  442 euro in which payment appropriations carried over to 2012 did not correspond to legal commitments made. These carry-overs were therefore irregular and should be cancelled. | Completed |
| 2012 | During its second year of activity, the Authority took an important step with the adoption and implementation of the baseline requirements for all internal control standards. However, full implementation of the standards has not been achieved. | Ongoing |
| 2012 | There is considerable room to improve the timeliness and documentation of procurement procedures. | Ongoing |
| 2012 | In 2012, the Authority made 22 budget transfers amounting to 3,2 million euro (16 % of total 2012 budget), which indicates weaknesses in budget planning. | Completed |
| 2013 | The overall level of committed appropriations increased from 86 % in 2012 to 93 % in 2013, indicating that commitments were made on a more timely basis. However, the level of committed appropriations carried over to 2014 was high for title III (operational expenditure) at 3 6 88  487 euro (58 %). This was caused by IT services received in 2013 but not yet paid for (0,8 million euro), IT services planned in the 2014 work programme and contracted at year-end (1,1 million euro), some delays in IT procurements (0,4 million euro) and also the multiannual nature of some IT projects. | N/A |
| 2013 | In 2013 the Authority made 12 budget transfers amounting to 5,1 million euro or 18 % of the budget (2012: 22 transfers amounting to 3,2 million euro or 16 % of the budget), which indicates continued weaknesses in budget planning. | Completed |
| 2013 | Some 27 % of payments made in 2013 for goods and services received were late. Where payments were late, they were overdue by an average of 32 days. Late interest paid in 2013 amounted to 3  834 euro. | Ongoing |
| 2013 | According to the Protocol on the privileges and immunities of the European Union (2) and the EU VAT Directive (3), the Authority is exempt from indirect taxes. Total VAT charged to ESMA in the period 2011-2013 was 3,3 million euro. Following lengthy discussions with the host Member State, the Authority started claiming VAT reimbursements in the last quarter of 2012, but only 1,3 million euro had been claimed back by the end of 2013. | Completed |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2011

The Authority’s budget for the financial year 2011 amounted to 16,9 million euro. In accordance with Article 62(1) of its Founding Regulation, 60 % of the 2011 budget was financed from Member States’ and EFTA countries’ contributions and 40 % from the Union budget. At the end of 2011, ESMA recorded a positive budget outturn of 4,3 million euro. In compliance with its Financial Regulation, the full amount was then recorded in the accounts as a liability towards the European Commission.

negative budget result was reported in 2014

2011

Weaknesses were noted as regards six legal commitments made in advance of budget commitments (4 83  845 euro).

Ongoing (1)

2011

The Court identified a number of cases with a total value of 2 07  442 euro in which payment appropriations carried over to 2012 did not correspond to legal commitments made. These carry-overs were therefore irregular and should be cancelled.

Completed

2012

During its second year of activity, the Authority took an important step with the adoption and implementation of the baseline requirements for all internal control standards. However, full implementation of the standards has not been achieved.

Ongoing

2012

There is considerable room to improve the timeliness and documentation of procurement procedures.

Ongoing

2012

In 2012, the Authority made 22 budget transfers amounting to 3,2 million euro (16 % of total 2012 budget), which indicates weaknesses in budget planning.

Completed

2013

The overall level of committed appropriations increased from 86 % in 2012 to 93 % in 2013, indicating that commitments were made on a more timely basis. However, the level of committed appropriations carried over to 2014 was high for title III (operational expenditure) at 3 6 88  487 euro (58 %). This was caused by IT services received in 2013 but not yet paid for (0,8 million euro), IT services planned in the 2014 work programme and contracted at year-end (1,1 million euro), some delays in IT procurements (0,4 million euro) and also the multiannual nature of some IT projects.

N/A

2013

In 2013 the Authority made 12 budget transfers amounting to 5,1 million euro or 18 % of the budget (2012: 22 transfers amounting to 3,2 million euro or 16 % of the budget), which indicates continued weaknesses in budget planning.

Completed

2013

Some 27 % of payments made in 2013 for goods and services received were late. Where payments were late, they were overdue by an average of 32 days. Late interest paid in 2013 amounted to 3  834 euro.

Ongoing

2013

According to the Protocol on the privileges and immunities of the European Union (2) and the EU VAT Directive (3), the Authority is exempt from indirect taxes. Total VAT charged to ESMA in the period 2011-2013 was 3,3 million euro. Following lengthy discussions with the host Member State, the Authority started claiming VAT reimbursements in the last quarter of 2012, but only 1,3 million euro had been claimed back by the end of 2013.

Completed

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(1)  In 2014 there were 15 commitments made a posteriori for a total value of 5 72  167,95 euro, plus 4 commitment increases made a posteriori for a total value of 1  391,72 euro.

(2)  Protocol (No 7) on the privileges and immunities of the European Union (OJ C 115, 9.5.2008, p. 266).

(3)  Council Directive 2006/112/EC (OJ L 347, 11.12.2006, p. 1).

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ANNEX II

European Securities and Markets Authority (Paris)

Competences and Activities

| Areas of Union competence deriving from the Treaty


  (Article 114 of the Treaty on the Functioning of the European Union) | The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market. |
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| Competences of the Authority


  (Regulation (EU) No 1095/2010 of the European Parliament and of the Council and Regulation (EC) No 1060/2009 of the European Parliament and of the Council) | Tasks







  — | To develop draft regulatory technical standards. |

Areas of Union competence deriving from the Treaty

(Article 114 of the Treaty on the Functioning of the European Union)

The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.

Competences of the Authority

(Regulation (EU) No 1095/2010 of the European Parliament and of the Council and Regulation (EC) No 1060/2009 of the European Parliament and of the Council)

Tasks

—

To develop draft regulatory technical standards.

| — | To develop draft implementing technical standards. |
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—

To develop draft implementing technical standards.

| — | To issue guidelines and recommendations. |
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—

To issue guidelines and recommendations.

| — | To issue recommendations where a national competent authority has not applied sectoral acts or has applied them in a way which appears to be a breach of Union law. |
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—

To issue recommendations where a national competent authority has not applied sectoral acts or has applied them in a way which appears to be a breach of Union law.

| — | To take individual decisions addressed to competent authorities in certain emergency situations and in settlement of disagreements between competent authorities in cross-border situations. |
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—

To take individual decisions addressed to competent authorities in certain emergency situations and in settlement of disagreements between competent authorities in cross-border situations.

| — | In cases concerning directly applicable Union law, to take individual decisions addressed to financial market participants, where: (i) a national competent authority has not applied sectoral acts or has applied them in a way which appears to be a breach of Union law and where the competent authority has not complied with a formal opinion of the Commission; (ii) in certain emergency situations where a competent authority does not comply with the decision of the Authority adopted; (iii) in settlement of disagreements between competent authorities in cross-border situations where a competent authority has not complied with the decision of the Authority. |
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—

In cases concerning directly applicable Union law, to take individual decisions addressed to financial market participants, where: (i) a national competent authority has not applied sectoral acts or has applied them in a way which appears to be a breach of Union law and where the competent authority has not complied with a formal opinion of the Commission; (ii) in certain emergency situations where a competent authority does not comply with the decision of the Authority adopted; (iii) in settlement of disagreements between competent authorities in cross-border situations where a competent authority has not complied with the decision of the Authority.

| — | To issue opinions to the European Parliament, the Council or the Commission on all issues related to its areas of competence. |
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—

To issue opinions to the European Parliament, the Council or the Commission on all issues related to its areas of competence.

| — | To collect the necessary information concerning financial market participants to carry out the duties assigned to it. |
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—

To collect the necessary information concerning financial market participants to carry out the duties assigned to it.

| — | To develop common methodologies for assessing the effect of product characteristics and distribution processes on the financial position of financial market participants and on consumer protection. |
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—

To develop common methodologies for assessing the effect of product characteristics and distribution processes on the financial position of financial market participants and on consumer protection.

| — | To provide a centrally accessible database of registered financial market participants in the area of its competence where specified in sectoral legislation. |
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—

To provide a centrally accessible database of registered financial market participants in the area of its competence where specified in sectoral legislation.

| — | To issue warnings in the event that a financial activity poses a serious threat to its objectives. |
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—

To issue warnings in the event that a financial activity poses a serious threat to its objectives.

| — | To temporarily prohibit or restrict certain financial activities that threaten the orderly functioning and integrity of financial markets or the stability of the whole or part of the financial system in the Union in the cases specified and under the conditions laid down in sectoral legislation or if so required in the case of an emergency situation. |
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—

To temporarily prohibit or restrict certain financial activities that threaten the orderly functioning and integrity of financial markets or the stability of the whole or part of the financial system in the Union in the cases specified and under the conditions laid down in sectoral legislation or if so required in the case of an emergency situation.

| — | To participate in the activities of colleges of supervisors, including on-site examination, carried out jointly by two or more competent authorities. |
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—

To participate in the activities of colleges of supervisors, including on-site examination, carried out jointly by two or more competent authorities.

| — | To address any risk of disruption in financial services that is caused by an impairment of all or parts of the financial system and has the potential to have serious negative consequences for the internal market and the real economy. |
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—

To address any risk of disruption in financial services that is caused by an impairment of all or parts of the financial system and has the potential to have serious negative consequences for the internal market and the real economy.

| — | To draw up additional guidelines and recommendations for key financial market participants, to take account of the systemic risk posed by them. |
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—

To draw up additional guidelines and recommendations for key financial market participants, to take account of the systemic risk posed by them.

| — | To conduct an inquiry into a particular type of financial activity or type of product or type of conduct in order to assess potential threats to the integrity of financial markets or the stability of the financial system and make appropriate recommendations for action to the competent authorities concerned. |
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—

To conduct an inquiry into a particular type of financial activity or type of product or type of conduct in order to assess potential threats to the integrity of financial markets or the stability of the financial system and make appropriate recommendations for action to the competent authorities concerned.

| — | To carry out tasks and responsibilities delegated by competent authorities. |
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—

To carry out tasks and responsibilities delegated by competent authorities.

| — | To provide opinions to competent authorities. |
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—

To provide opinions to competent authorities.

| — | To conduct peer reviews of the activities of competent authorities. |
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—

To conduct peer reviews of the activities of competent authorities.

| — | To coordinate between competent authorities, in particular where adverse development could potentially jeopardise the orderly functioning and integrity of financial markets or the stability of the financial system in the Union. |
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—

To coordinate between competent authorities, in particular where adverse development could potentially jeopardise the orderly functioning and integrity of financial markets or the stability of the financial system in the Union.

| — | To initiate and coordinate Union-wide assessments of the resilience of financial market participants to adverse market developments. |
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—

To initiate and coordinate Union-wide assessments of the resilience of financial market participants to adverse market developments.

| — | To take decisions on applications for certification and registration of credit rating agencies and on withdrawal of such certification and registration. |
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—

To take decisions on applications for certification and registration of credit rating agencies and on withdrawal of such certification and registration.

| — | To establish cooperation agreements with the relevant credit rating agency supervisory authorities of third countries. |
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—

To establish cooperation agreements with the relevant credit rating agency supervisory authorities of third countries.

| — | To conduct investigations of and on-site inspections at the premises of credit rating agencies, rated entities and related third parties. |
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—

To conduct investigations of and on-site inspections at the premises of credit rating agencies, rated entities and related third parties.

| — | Where a credit rating agency has committed an infringement, to take decisions to withdraw its registration, temporarily prohibit it from issuing credit ratings, suspend the use for regulatory purposes of the credit ratings it issued, require the infringement to be brought to an end, and/or issue public notices. |
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—

Where a credit rating agency has committed an infringement, to take decisions to withdraw its registration, temporarily prohibit it from issuing credit ratings, suspend the use for regulatory purposes of the credit ratings it issued, require the infringement to be brought to an end, and/or issue public notices.

| — | Where a credit rating agency has committed an infringement intentionally or negligently, to take decisions to impose a fine. |
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—

Where a credit rating agency has committed an infringement intentionally or negligently, to take decisions to impose a fine.

| — | To authorise and supervise EU-based trade repositories and recognise non-EU clearing houses wishing to offer services to EU clients. |
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—

To authorise and supervise EU-based trade repositories and recognise non-EU clearing houses wishing to offer services to EU clients.

| — | To establish cooperation agreements with the relevant derivatives supervisory authorities of third countries. |
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—

To establish cooperation agreements with the relevant derivatives supervisory authorities of third countries.

| — | To conduct investigations of and on-site inspections at the premises of trade repositories, or related third parties. |
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—

To conduct investigations of and on-site inspections at the premises of trade repositories, or related third parties.

| — | Where a trade repository has committed an infringement, to take supervisory actions. |
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—

Where a trade repository has committed an infringement, to take supervisory actions.

| — | Where a trade repository has committed an infringement intentionally or negligently, to take decisions to impose a fine. |
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—

Where a trade repository has committed an infringement intentionally or negligently, to take decisions to impose a fine.

Governance

Board of Supervisors

Composition

Chairperson (non-voting); the head of the national public authority competent for the supervision of financial market participants in each Member State; one representative of the Commission (non-voting); one representative of the European Systemic Risk Board (non-voting); one representative of each of the other two European Supervisory Authorities (non-voting).

Tasks

Gives guidance to the work of the Authority and is in charge of taking decisions referred to in Chapter II of the founding Regulation.

Management Board

Composition

Chairperson and six other members of the Board of Supervisors, elected by and from the voting members of the Board of Supervisors. The Executive Director and a representative of the Commission participate in meetings without the right to vote (though the representative of the Commission can vote on budgetary matters).

Tasks

Ensures that the Authority carries out its mission and performs the tasks assigned to it in accordance with the founding Regulation.

Chairperson

Representative of the Authority responsible for preparing the work of the Board of Supervisors and chairing the meetings of the Board of Supervisors and the Management Board. Appointed by the Board of Supervisors after having been heard by the European Parliament.

Executive Director

Appointed by the Board of Supervisors after confirmation by the European Parliament. In charge of the management of the Authority and prepares the work of the Management Board.

Internal audit

European Commission’s Internal Audit Service (IAS).

External audit

European Court of Auditors.

Discharge authority

European Parliament, acting on a recommendation from the Council.

Resources made available to the Authority in 2014

Final Budget

| — | Total budget: 33,24 million euro, including:






  — | Union subsidy: 11,07 million euro |
| --- | --- | --- |

—

Total budget: 33,24 million euro, including:

—

Union subsidy: 11,07 million euro

| — | Contributions from National Competent Authorities: 15,55 million euro |
| --- | --- |

—

Contributions from National Competent Authorities: 15,55 million euro

| — | Fees from supervised entities: 6,62 million euro (Credit Rating Agencies 5,58 million euro; trade repositories 1,04 million euro) |
| --- | --- |

—

Fees from supervised entities: 6,62 million euro (Credit Rating Agencies 5,58 million euro; trade repositories 1,04 million euro)

Staff as at 31 December 2014

| — | Statutory staff: 133 temporary posts authorised in the establishment plan; posts filled on 31.12.2014: 125 |
| --- | --- |

—

Statutory staff: 133 temporary posts authorised in the establishment plan; posts filled on 31.12.2014: 125

| — | Contract staff: 32 contract staff FTE planned in the budget (beginning of the year); contract staff employed on 31.12.2014: 27 |
| --- | --- |

—

Contract staff: 32 contract staff FTE planned in the budget (beginning of the year); contract staff employed on 31.12.2014: 27

| — | Seconded National Experts: 21 Seconded National Expert FTE planned in the budget (beginning of the year); Seconded National Experts employed on 31.12.2014: 16 |
| --- | --- |

—

Seconded National Experts: 21 Seconded National Expert FTE planned in the budget (beginning of the year); Seconded National Experts employed on 31.12.2014: 16

Products and services in 2014

| — | Monitoring financial stability. Issued several periodic risk reports and trend summaries of financial markets. |
| --- | --- |

—

Monitoring financial stability. Issued several periodic risk reports and trend summaries of financial markets.

| — | Conducted tailored economic research and impact assessments. Published economic working papers on hedge funds and derivatives markets. |
| --- | --- |

—

Conducted tailored economic research and impact assessments. Published economic working papers on hedge funds and derivatives markets.

| — | Contributed to ESRB work on systemic risk. |
| --- | --- |

—

Contributed to ESRB work on systemic risk.

| — | Reviewed the Implementation of EBA-ESMA Recommendations to Euribor-EBF. |
| --- | --- |

—

Reviewed the Implementation of EBA-ESMA Recommendations to Euribor-EBF.

| — | Expanded work on monitoring markets and financial innovation through a financial innovation framework. |
| --- | --- |

—

Expanded work on monitoring markets and financial innovation through a financial innovation framework.

| — | Conducted analysis of innovative financial products and processes. |
| --- | --- |

—

Conducted analysis of innovative financial products and processes.

| — | Monitored and analysed retail investor trends and issued good practices for structured retail product governance. |
| --- | --- |

—

Monitored and analysed retail investor trends and issued good practices for structured retail product governance.

| — | Called for an EU-common approach on crowdfunding. |
| --- | --- |

—

Called for an EU-common approach on crowdfunding.

| — | Worked on investor education, including cooperation with OECD International Network on Investor Education. |
| --- | --- |

—

Worked on investor education, including cooperation with OECD International Network on Investor Education.

| — | Advised on reinforced investor protection regime under MiFID II/MiFIR. Prepared for future investor protection work. |
| --- | --- |

—

Advised on reinforced investor protection regime under MiFID II/MiFIR. Prepared for future investor protection work.

| — | Provided implementing rules for MiFID II on secondary markets issues. |
| --- | --- |

—

Provided implementing rules for MiFID II on secondary markets issues.

| — | Issued EU-wide investor warnings and good practices for structured retail product governance. |
| --- | --- |

—

Issued EU-wide investor warnings and good practices for structured retail product governance.

| — | Issued guidelines on compliance for Guidelines on remuneration policies and practices (MiFID). |
| --- | --- |

—

Issued guidelines on compliance for Guidelines on remuneration policies and practices (MiFID).

| — | Drafted Implementing Technical Standards on main indices and recognised exchanges under the Capital Requirements Regulation. |
| --- | --- |

—

Drafted Implementing Technical Standards on main indices and recognised exchanges under the Capital Requirements Regulation.

| — | Strengthened its credit rating agencies (CRA) supervision. |
| --- | --- |

—

Strengthened its credit rating agencies (CRA) supervision.

| — | Issued call for evidence on Choice and Conflicts of Interests in the CRA Industry. |
| --- | --- |

—

Issued call for evidence on Choice and Conflicts of Interests in the CRA Industry.

| — | Assessed CRA’s compliance with the new requirements focusing on the disclosure aspects of sovereign ratings, pricing policies and procedures. |
| --- | --- |

—

Assessed CRA’s compliance with the new requirements focusing on the disclosure aspects of sovereign ratings, pricing policies and procedures.

| — | Assessed applications of central counterparties (CCPs) established in non-EEA countries. |
| --- | --- |

—

Assessed applications of central counterparties (CCPs) established in non-EEA countries.

| — | Supervised EU-based trade repositories and worked on third country issues/equivalence. |
| --- | --- |

—

Supervised EU-based trade repositories and worked on third country issues/equivalence.

| — | Prepared Technical Standards under the CSD Regulation. |
| --- | --- |

—

Prepared Technical Standards under the CSD Regulation.

| — | Issued guidelines on access to a CCP or a Trading Venue by a CSD. |
| --- | --- |

—

Issued guidelines on access to a CCP or a Trading Venue by a CSD.

| — | Prepared EMIR clearing obligation. |
| --- | --- |

—

Prepared EMIR clearing obligation.

| — | Issued 11 EMIR Q&As further explaining the practical implementation. |
| --- | --- |

—

Issued 11 EMIR Q&As further explaining the practical implementation.

| — | Defined products, counterparties and starting dates for the clearing of interest rate swaps. |
| --- | --- |

—

Defined products, counterparties and starting dates for the clearing of interest rate swaps.

| — | Issued guidelines regarding the implementation of the CPSS-IOSCO Principles for Financial Market Infrastructures in respect of Central Counterparties. |
| --- | --- |

—

Issued guidelines regarding the implementation of the CPSS-IOSCO Principles for Financial Market Infrastructures in respect of Central Counterparties.

| — | Advised on equivalence of Japan for CCP II — Commodities CCPs. |
| --- | --- |

—

Advised on equivalence of Japan for CCP II — Commodities CCPs.

| — | Discussed Share classes of UCITS. |
| --- | --- |

—

Discussed Share classes of UCITS.

| — | Issued guidelines on asset segregation under the AIFMD. |
| --- | --- |

—

Issued guidelines on asset segregation under the AIFMD.

| — | Advised European Commission on delegated acts required by the UCITS V Directive. |
| --- | --- |

—

Advised European Commission on delegated acts required by the UCITS V Directive.

| — | Provided Key Information Documents for Packaged Retail and Insurance-based Investment Products (PRIIPs). |
| --- | --- |

—

Provided Key Information Documents for Packaged Retail and Insurance-based Investment Products (PRIIPs).

| — | Consulted on the implementing measures of the Regulations on EuSEF and EuVECA. |
| --- | --- |

—

Consulted on the implementing measures of the Regulations on EuSEF and EuVECA.

| — | Consulted on major shareholders disclosures. |
| --- | --- |

—

Consulted on major shareholders disclosures.

| — | Drafted Regulatory Technical Standards on major shareholdings and indicative list of financial instruments subject to notification requirements under the revised Transparency Directive. |
| --- | --- |

—

Drafted Regulatory Technical Standards on major shareholdings and indicative list of financial instruments subject to notification requirements under the revised Transparency Directive.

| — | Drafted Regulatory Technical Standards on European Electronic Access Point (EEAP). |
| --- | --- |

—

Drafted Regulatory Technical Standards on European Electronic Access Point (EEAP).

| — | Responded to public consultation on the IAS Regulation. |
| --- | --- |

—

Responded to public consultation on the IAS Regulation.

| — | Provided Guidelines on enforcement of financial information. |
| --- | --- |

—

Provided Guidelines on enforcement of financial information.

| — | Issued Guidelines on Alternative Performance Measures. |
| --- | --- |

—

Issued Guidelines on Alternative Performance Measures.

| — | Contributed to IFRS development in international for a such as IASB. |
| --- | --- |

—

Contributed to IFRS development in international for a such as IASB.

| — | Reviewed supervisory practices on MiFID investor information. |
| --- | --- |

—

Reviewed supervisory practices on MiFID investor information.

| — | Reviewed MiFID’s Conduct of Business rules on fair, clear and not misleading information. |
| --- | --- |

—

Reviewed MiFID’s Conduct of Business rules on fair, clear and not misleading information.

Source: Annex supplied by the Authority.

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THE AUTHORITY’S REPLY

| 11. | As indicated in the comment, ESMA developed in 2014 an Activity-Based-Costing model to allow accurate follow-up of the expenditures of its supervision activities. ESMA will apply this model in 2015. Therefore, from this year the fee revenue charged to supervised entities will be defined on the basis of the actual, rather than estimated, cost of the supervisory activities. |
| --- | --- |

11.

As indicated in the comment, ESMA developed in 2014 an Activity-Based-Costing model to allow accurate follow-up of the expenditures of its supervision activities. ESMA will apply this model in 2015. Therefore, from this year the fee revenue charged to supervised entities will be defined on the basis of the actual, rather than estimated, cost of the supervisory activities.

| 12. | ESMA confirms the closure of all contracts emanating from CESR (the last contract was closed on 20 August 2014) and that it has stopped using UGAP both for service and supply purchases. |
| --- | --- |

12.

ESMA confirms the closure of all contracts emanating from CESR (the last contract was closed on 20 August 2014) and that it has stopped using UGAP both for service and supply purchases.

| 13. | ESMA is aware of the high cancellation rate for appropriations carried over from 2013. In order to limit the risk of cancellations, in 2014 the end of the year process was revised through the provision of timely and accurate instructions and the organisation of internal meetings with ESMA’s financial actors. |
| --- | --- |

13.

ESMA is aware of the high cancellation rate for appropriations carried over from 2013. In order to limit the risk of cancellations, in 2014 the end of the year process was revised through the provision of timely and accurate instructions and the organisation of internal meetings with ESMA’s financial actors.

| 14. | Regarding the high level of carry-overs in title III, the comment of the Court is noted and the explanation related to the multiannual nature of the legally mandated IT projects is confirmed. |
| --- | --- |

14.

Regarding the high level of carry-overs in title III, the comment of the Court is noted and the explanation related to the multiannual nature of the legally mandated IT projects is confirmed.

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| 9.12.2015 | EN | Official Journal of the European Union | C 409/266 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/266

---

REPORT

on the annual accounts of the European Training Foundation for the financial year 2014, together with the Foundation’s reply

(2015/C 409/30)

INTRODUCTION

| 1. | The European Training Foundation (hereinafter ‘the Foundation’, aka ‘ETF’), which is located in Turin, was established by Council Regulation (EEC) No 1360/90 (1) (recast (EC) No 1339/2008). The Foundation’s task is to support the reform of vocational training in the European Union’s partner countries. To do this, it assists the Commission in the implementation of various programmes (e.g. IPA, FRAME, GEMM) (2). |
| --- | --- |

1.

The European Training Foundation (hereinafter ‘the Foundation’, aka ‘ETF’), which is located in Turin, was established by Council Regulation (EEC) No 1360/90 (1) (recast (EC) No 1339/2008). The Foundation’s task is to support the reform of vocational training in the European Union’s partner countries. To do this, it assists the Commission in the implementation of various programmes (e.g. IPA, FRAME, GEMM) (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Foundation’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Foundation’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Foundation, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Foundation, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Foundation and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Foundation’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Foundation after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Foundation in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Foundation and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Foundation’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Foundation after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Foundation in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Foundation are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Foundation are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Foundation’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Foundation’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Foundation’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Foundation’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | Cancellations of appropriations carried-over from 2013 were high for title I (15,9 %) and title II (7,6 %) which indicates an over-estimation of financial needs. |
| --- | --- |

11.

Cancellations of appropriations carried-over from 2013 were high for title I (15,9 %) and title II (7,6 %) which indicates an over-estimation of financial needs.

| 12. | The overall level of committed appropriations was high at 99,9 %. The level of committed appropriations carried over to 2015 was high for title II (administrative expenditure) at 0,75 million euro, i.e. 36,2 % (2013: 0,55 million euro, i.e. 30 %). The main reason was planned purchases made at the end of 2014 for the renewal of office furniture (0,37 million euro), software (0,14 million euro) and hardware (0,1 million euro). |
| --- | --- |

12.

The overall level of committed appropriations was high at 99,9 %. The level of committed appropriations carried over to 2015 was high for title II (administrative expenditure) at 0,75 million euro, i.e. 36,2 % (2013: 0,55 million euro, i.e. 30 %). The main reason was planned purchases made at the end of 2014 for the renewal of office furniture (0,37 million euro), software (0,14 million euro) and hardware (0,1 million euro).

OTHER COMMENT

| 13. | In 2005 new EU Staff Regulations entered into force, including provisions that future remunerations of officials recruited before 1 May 2004 should not be less than under the previous EU Staff Regulations. The Court’s audit revealed that this was not complied with and, in the case of 2 of the 96 temporary agents employed at that time, this led to a total underpayment of 14  745 euro (salary cost for ETF) for the period 2005 to 2014. The Foundation has made the supplementary salary payments in June 2015. |
| --- | --- |

13.

In 2005 new EU Staff Regulations entered into force, including provisions that future remunerations of officials recruited before 1 May 2004 should not be less than under the previous EU Staff Regulations. The Court’s audit revealed that this was not complied with and, in the case of 2 of the 96 temporary agents employed at that time, this led to a total underpayment of 14  745 euro (salary cost for ETF) for the period 2005 to 2014. The Foundation has made the supplementary salary payments in June 2015.

FOLLOW-UP OF PREVIOUS YEAR’S COMMENTS

| 14. | An overview of the corrective actions taken in response to the Court’s comments from the previous year is provided in Annex I. |
| --- | --- |

14.

An overview of the corrective actions taken in response to the Court’s comments from the previous year is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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(1)  OJ L 131, 23.5.1990, p. 1.

1

(2)  Annex II summarises the Foundation’s competences and activities. It is presented for information proposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

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ANNEX I

Follow-up of previous year’s comments

| Year | Court’s comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2013 | At the end of 2013, the Foundation had 7,5 million euro in accounts at a single bank with a low credit rating (F3, BBB). | Ongoing
  (amount reduced to 1,8 million euro) |

Year

Court’s comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2013

At the end of 2013, the Foundation had 7,5 million euro in accounts at a single bank with a low credit rating (F3, BBB).

Ongoing

(amount reduced to 1,8 million euro)

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ANNEX II

European Training Foundation (Turin)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Article 166(3) of the Treaty on the Functioning of the European Union) | The Union and the Member States shall foster cooperation with third countries and the competent international organisations in the sphere of vocational training. |
| --- | --- |
| Competences of the Foundation


  (Council Regulation (EEC) No 1360/90) | Objective







  — | To contribute, in the context of EU external relations policies, to improving human capital development in the following countries: the countries eligible for support under Council Regulation (EC) No 1085/2006 and Regulation No 1638/2006 of the European Parliament and of the Council and subsequent related legal acts; other countries designated by decision of the Governing Board on the basis of a proposal supported by two-thirds of its members and a Commission opinion, and covered by a Union instrument or international agreement that includes an element of human capital development, and as far as available resources allow. |

Areas of Union competence deriving from the Treaty

(Article 166(3) of the Treaty on the Functioning of the European Union)

The Union and the Member States shall foster cooperation with third countries and the competent international organisations in the sphere of vocational training.

Competences of the Foundation

(Council Regulation (EEC) No 1360/90)

Objective

—

To contribute, in the context of EU external relations policies, to improving human capital development in the following countries: the countries eligible for support under Council Regulation (EC) No 1085/2006 and Regulation No 1638/2006 of the European Parliament and of the Council and subsequent related legal acts; other countries designated by decision of the Governing Board on the basis of a proposal supported by two-thirds of its members and a Commission opinion, and covered by a Union instrument or international agreement that includes an element of human capital development, and as far as available resources allow.

| — | For the purpose of the ETF Founding Regulation, ‘human capital development’ shall be defined as work which contributes to the lifelong development of individuals’ skills and competences through the improvement of vocational education and training systems. |
| --- | --- |

—

For the purpose of the ETF Founding Regulation, ‘human capital development’ shall be defined as work which contributes to the lifelong development of individuals’ skills and competences through the improvement of vocational education and training systems.

Tasks

For the purpose of achieving the objective, the Foundation, within the limits of the powers conferred on the Governing Board and following the general guidelines established at Union level, shall have the following functions:

| — | to provide information, policy analyses and advice on human capital development issues in the partner countries; |
| --- | --- |

—

to provide information, policy analyses and advice on human capital development issues in the partner countries;

| — | to promote knowledge and analysis of skills needs in national and local labour markets; |
| --- | --- |

—

to promote knowledge and analysis of skills needs in national and local labour markets;

| — | to support relevant stakeholders in partner countries in building capacity in human capital development; |
| --- | --- |

—

to support relevant stakeholders in partner countries in building capacity in human capital development;

| — | to facilitate the exchange of information and experience among donors engaged in human capital development reform in partner countries; |
| --- | --- |

—

to facilitate the exchange of information and experience among donors engaged in human capital development reform in partner countries;

| — | to support the delivery of Union assistance to partner countries in the field of human capital development; |
| --- | --- |

—

to support the delivery of Union assistance to partner countries in the field of human capital development;

| — | to disseminate information and encourage networking and the exchange of experience and good practice between the EU and partner countries and amongst partner countries in human capital development issues; |
| --- | --- |

—

to disseminate information and encourage networking and the exchange of experience and good practice between the EU and partner countries and amongst partner countries in human capital development issues;

| — | to contribute, at the Commission’s request, to the analysis of the overall effectiveness of training assistance to the partner countries; |
| --- | --- |

—

to contribute, at the Commission’s request, to the analysis of the overall effectiveness of training assistance to the partner countries;

| — | to undertake such other tasks as may be agreed between the Governing Board and the Commission, within the general framework of this Regulation. |
| --- | --- |

—

to undertake such other tasks as may be agreed between the Governing Board and the Commission, within the general framework of this Regulation.

Governance

Governing Board

One representative of each Member State.

Three representatives of the Commission.

Three non-voting experts appointed by the European Parliament.

In addition, three representatives of the partner countries may attend meetings of the Governing Board as observers.

Director

Appointed by the Governing Board on a proposal from the Commission.

External audit

European Court of Auditors.

Internal audit

European Commission’s Internal Audit Service (IAS).

Discharge authority

European Parliament acting on a recommendation from the Council.

Resources made available to the Foundation in 2014 (2013)

Budget at 31 December 2014

Received 21,4 million euro (22,0) for commitments and payments, of which:

EU Contribution 20,2 million euro composed of:

| — | 20,1 million euro (20,1) funded by EU contribution |
| --- | --- |

—

20,1 million euro (20,1) funded by EU contribution

| — | 14  552,88 euro (0) in interest generated on EU contribution. |
| --- | --- |

—

14  552,88 euro (0) in interest generated on EU contribution.

Other contributions:

| — | 1,1 million euro (1,8) subsidy from European Commission services for FRAME project (DG ELARG Agreement Number 2013/316-651) and GEMM project (DG DEVCO grant contract number ENPI/2012/302-153) |
| --- | --- |

—

1,1 million euro (1,8) subsidy from European Commission services for FRAME project (DG ELARG Agreement Number 2013/316-651) and GEMM project (DG DEVCO grant contract number ENPI/2012/302-153)

| — | 314,66 euro (1  081,20) in interest generated on Italian Trust Fund contribution |
| --- | --- |

—

314,66 euro (1  081,20) in interest generated on Italian Trust Fund contribution

| — | 1 24  924,46 euro (14  946,19) in miscellaneous revenues (recovered expenditure). |
| --- | --- |

—

1 24  924,46 euro (14  946,19) in miscellaneous revenues (recovered expenditure).

Staff at 31 December 2014

94 (96) temporary posts in the establishment plan, of which 92 (92) posts occupied.

41 (40) other staff (local staff, contract staff, seconded national experts)

Total staff: 133 (132), assigned to the following duties:

| — | operational tasks: 76 (76,5) |
| --- | --- |

—

operational tasks: 76 (76,5)

| — | administrative tasks: 28 (28) + 2 from the ETF’s replacement pool depending on needs |
| --- | --- |

—

administrative tasks: 28 (28) + 2 from the ETF’s replacement pool depending on needs

| — | corporate coordination and communication tasks: 27 (25,5). |
| --- | --- |

—

corporate coordination and communication tasks: 27 (25,5).

Products and services supplied during the financial year 2014 (2013)

Activities

The Foundation contributes, in the context of the EU’s external relations policies, to improving human capital development (HCD) in 30 Partner Countries designated by its regulation and the Governing Board. The main activities are supporting EU policies and projects, providing policy analyses, disseminating and exchanging information and experience and supporting partner-country capacity building.

The Foundation’s added value comes from its neutral, non-commercial and unique established knowledge base consisting of expertise in human capital development and its links to employment. This includes expertise in adapting the approaches to human capital development in the EU and its Member States to the context of the partner countries.

The ETF 2014 Work Programme identifies 19 corporate results contributing to improving human capital development in neighbouring countries. These impact-oriented results were shaped by the ETF’s role in projecting the external dimension of EU skills policies and instruments to support the EU as a global actor.

The dynamic environment in which the ETF operates, with evolving partner country contexts and EU priorities, demanded as always a high level of flexibility in continually updating and adjusting expected results. The 2014 context was marked in particular by continuing political instability in the Southern and Eastern Mediterranean, and in Eastern Europe owing to the military crisis in Ukraine.

In line with the ETF Mid Term Perspective 2014-17, the 2014 results advance three corporate strategic objectives: (1) reinforcing evidence-based VET (Vocational education and training) policy analysis; (2) modernising VET systems in a lifelong learning perspective; (3) increasing the relevance of VET provision.

The following table shows the completion rate of the results according to actions and outputs achieved under each strategic objective.

| 2014-17 mid-term strategic objectives and 2014 annual objectives | 2014 completion % |
| --- | --- |
| Strategic objective 1: Reinforce evidence-based VET policy analysis

  Annual objective 1: To reinforce partner country policy analysis capacity in the field of human capital development | 88 % |
| Strategic objective 2: Modernise VET systems in a lifelong learning Perspective

  Annual objective 2: To support partner countries in modernising their VET systems in a lifelong learning perspective — including multi-level governance and quality assurance. | 94 % |
| Strategic objective 3: Increase the relevance of VET provision in respect of the labour market, economic and social cohesion

  Annual objective 3: To increase the relevance of VET provision through innovative approaches — qualifications and qualification systems, learning and teaching in VET, employment and employability, skills dimension of migration and mobility and entrepreneurial learning and enterprise skills. | 92 % |
| Completion rate | 91 % |

2014-17 mid-term strategic objectives and 2014 annual objectives

2014 completion %

Strategic objective 1: Reinforce evidence-based VET policy analysis

Annual objective 1: To reinforce partner country policy analysis capacity in the field of human capital development

88 %

Strategic objective 2: Modernise VET systems in a lifelong learning Perspective

Annual objective 2: To support partner countries in modernising their VET systems in a lifelong learning perspective — including multi-level governance and quality assurance.

94 %

Strategic objective 3: Increase the relevance of VET provision in respect of the labour market, economic and social cohesion

Annual objective 3: To increase the relevance of VET provision through innovative approaches — qualifications and qualification systems, learning and teaching in VET, employment and employability, skills dimension of migration and mobility and entrepreneurial learning and enterprise skills.

92 %

Completion rate

91 %

In addition to completing the 2014 results, the ETF also delivered a further eight corporate outputs from its 2013 Work Programme resulting from changes in its environment. These outputs represented an additional 6 % of ETF work in 2014. This leads to an overall completion rate of 97 %, when referring to the ETF interventions in the partner countries.

In 2013 the completion rate against outputs was 144 over 152 representing 94,73 %.

A further confirmation of the ETF’s strong performance and the value of its contribution to the EU as a global actor is the increasing demand for ETF support to EU external relations assistance. In 2014 the ETF received and managed a total of 82 requests for assistance from EU services at headquarters and from EU Delegations, compared with 78 in 2013. In the context of its work programme 2014, the Foundation also responded to direct requests from the European Commission throughout the year.

| | 2014 | 2013 |
| --- | --- | --- |
| Ongoing Commission requests | 82 | 78 |
| % Requests addressed to countries in South Eastern Europe and Turkey | 34 % | 38 % |
| % Requests addressed to Southern and Eastern Mediterranean countries | 42 % | 28 % |
| % Requests addressed to Eastern European countries | 17 % | 18 % |
| % Requests addressed to Central Asian countries | 7 % | 15 % |

2014

2013

Ongoing Commission requests

82

78

% Requests addressed to countries in South Eastern Europe and Turkey

34 %

38 %

% Requests addressed to Southern and Eastern Mediterranean countries

42 %

28 %

% Requests addressed to Eastern European countries

17 %

18 %

% Requests addressed to Central Asian countries

7 %

15 %

Source: Annex supplied by the Foundation.

---

THE FOUNDATION’S REPLY

| 11. | The ETF acknowledges ECA’s comment on the cancellation of appropriations carried-over from 2013. These cancellations, amongst others, were mainly due to unexpected delays and unforeseen staff issues. The ETF has already improved considerably compared to 2012 (21,87 % cancelled on title I) and ensures its continuous efforts to strengthen financial planning and monitoring. |
| --- | --- |

11.

The ETF acknowledges ECA’s comment on the cancellation of appropriations carried-over from 2013. These cancellations, amongst others, were mainly due to unexpected delays and unforeseen staff issues. The ETF has already improved considerably compared to 2012 (21,87 % cancelled on title I) and ensures its continuous efforts to strengthen financial planning and monitoring.

| 12. | The ETF acknowledges ECA’s comment on the relatively high level of carry-forward appropriations for title II. This is merely because ETF wants to optimise the use of its budget (principle of effectiveness) and therefore a number of transactions were concluded at the end of the year. Furthermore, several suppliers sent their invoices late, which is outside the control of the ETF. The ETF will continue its longstanding efforts to reduce future carry-forwards. |
| --- | --- |

12.

The ETF acknowledges ECA’s comment on the relatively high level of carry-forward appropriations for title II. This is merely because ETF wants to optimise the use of its budget (principle of effectiveness) and therefore a number of transactions were concluded at the end of the year. Furthermore, several suppliers sent their invoices late, which is outside the control of the ETF. The ETF will continue its longstanding efforts to reduce future carry-forwards.

| 13. | The ETF has analysed and informed the Court on additional salary payments related to transitional careers. The amount identified for the ETF is not material and there is indeed no need to adjust the accounts. |
| --- | --- |

13.

The ETF has analysed and informed the Court on additional salary payments related to transitional careers. The amount identified for the ETF is not material and there is indeed no need to adjust the accounts.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/275 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/275

---

REPORT

on the annual accounts of the European Agency for the operational management of large-scale IT systems in the area of freedom, security and justice (eu-LISA) for the financial year 2014, together with the Agency’s reply

(2015/C 409/31)

INTRODUCTION

| 1. | The European Agency for the operational management of large-scale IT systems in the area of freedom, security and justice (eu-LISA), hereinafter ‘the Agency’, which is located in Tallinn, Strasbourg and St. Johann im Pongau, was established by Regulation (EU) No 1077/2011 of the European Parliament and of the Council (1). The core mission of this Agency is to fulfil the operational management tasks for the Second Generation Schengen Information System (SIS II), the Visa Information System (VIS) and Eurodac (2). |
| --- | --- |

1.

The European Agency for the operational management of large-scale IT systems in the area of freedom, security and justice (eu-LISA), hereinafter ‘the Agency’, which is located in Tallinn, Strasbourg and St. Johann im Pongau, was established by Regulation (EU) No 1077/2011 of the European Parliament and of the Council (1). The core mission of this Agency is to fulfil the operational management tasks for the Second Generation Schengen Information System (SIS II), the Visa Information System (VIS) and Eurodac (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5).






  (a) | The management’s responsibilities in respect of the Agency's annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5).

(a)

The management’s responsibilities in respect of the Agency's annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and statement of assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and statement of assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the annual accounts of the Agency present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the annual accounts of the Agency present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

Emphasis of matter in relation to the reliability of the accounts

| 10. | Without calling into question the opinion expressed in paragraph 8, the Court draws attention to the valuation of the Schengen Information System (SIS II), the Visa Information System (VIS) and Eurodac (systems) in the Agency’s accounts. The operational management of these systems is the Agency’s core task. In the absence of reliable and complete information in respect of their total development cost, they are recorded in the Agency’s accounts at their net book values as per the Commission’s books and updated at year end (approximately 6,6 million euro at date of transfer and 2,1 million euro at 31 December 2014). These values relate mainly to hardware and off-the-shelf software components and do not include software development costs (see note 6.3.1 to the annual accounts of the Agency). |
| --- | --- |

10.

Without calling into question the opinion expressed in paragraph 8, the Court draws attention to the valuation of the Schengen Information System (SIS II), the Visa Information System (VIS) and Eurodac (systems) in the Agency’s accounts. The operational management of these systems is the Agency’s core task. In the absence of reliable and complete information in respect of their total development cost, they are recorded in the Agency’s accounts at their net book values as per the Commission’s books and updated at year end (approximately 6,6 million euro at date of transfer and 2,1 million euro at 31 December 2014). These values relate mainly to hardware and off-the-shelf software components and do not include software development costs (see note 6.3.1 to the annual accounts of the Agency).

| 11. | The comments which follow do not call the Court’s opinion on the reliability of the accounts and its opinion on the legality and regularity of the transactions underlying the accounts into question. |
| --- | --- |

11.

The comments which follow do not call the Court’s opinion on the reliability of the accounts and its opinion on the legality and regularity of the transactions underlying the accounts into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 12. | Out of the 6,6 million euro committed appropriations for titles I (staff expenditure) and II (administrative expenditure) which were carried over from 2013 to 2014, 1,7 million euro (26 %) were cancelled in 2014, showing that budgetary needs were overestimated at the end of 2013. |
| --- | --- |

12.

Out of the 6,6 million euro committed appropriations for titles I (staff expenditure) and II (administrative expenditure) which were carried over from 2013 to 2014, 1,7 million euro (26 %) were cancelled in 2014, showing that budgetary needs were overestimated at the end of 2013.

| 13. | Committed appropriations carried over to 2015 were very high for title II (administrative expenditure) at 15 million euro, i.e. 87 % (2013: 6 million euro or 79 %). These carry-overs mainly resulted from delayed procurements for the extension and refurbishment of the Agency’s site in Strasbourg. Carry-overs of committed appropriations were also high for title III (operational expenditure) at 24,5 million euro (85 %) (2013: no comparative figures available), mainly in relation to multi-annual contracts for the maintenance of the IT systems. The high levels of cancelled carry-overs from 2013 and the extent of carry-overs made from 2014 to 2015 is at odds with the budgetary principle of annuality. Reliable procedures for budget planning, execution and monitoring need to be put in place. |
| --- | --- |

13.

Committed appropriations carried over to 2015 were very high for title II (administrative expenditure) at 15 million euro, i.e. 87 % (2013: 6 million euro or 79 %). These carry-overs mainly resulted from delayed procurements for the extension and refurbishment of the Agency’s site in Strasbourg. Carry-overs of committed appropriations were also high for title III (operational expenditure) at 24,5 million euro (85 %) (2013: no comparative figures available), mainly in relation to multi-annual contracts for the maintenance of the IT systems. The high levels of cancelled carry-overs from 2013 and the extent of carry-overs made from 2014 to 2015 is at odds with the budgetary principle of annuality. Reliable procedures for budget planning, execution and monitoring need to be put in place.

FOLLOW-UP OF PREVIOUS YEAR’S COMMENTS

| 14. | An overview of the corrective actions taken in response to the Court's comments from the previous year is provided in Annex I. |
| --- | --- |

14.

An overview of the corrective actions taken in response to the Court's comments from the previous year is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 15 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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(1)  OJ L 286, 1.11.2011, p. 1.

1

(2)  Annex II summarises the Agency’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

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ANNEX I

Follow-up of previous year’s comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2013 | Emphasis of matter in relation to the reliability of the accounts








  11. | Without calling into question the opinion expressed in paragraph 9, the Court draws attention to the valuation of the Schengen Information System (SIS II), the Visa Information System (VIS) and Eurodac (systems) in the Agency’s accounts. The operational management of these systems was transferred to the Agency from the Commission in May 2013 by way of a non-exchange transaction and is the core task of the Agency. In the absence of reliable and complete information in respect of their total development cost, they are recorded in the Agency’s accounts at their net book values as per the Commission’s books and updated at year end. These values relate mainly to hardware and off-the-shelf software components and do not include software development costs (see note 6.3.1 to the annual accounts of the Agency). |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2013

Emphasis of matter in relation to the reliability of the accounts

11.

Without calling into question the opinion expressed in paragraph 9, the Court draws attention to the valuation of the Schengen Information System (SIS II), the Visa Information System (VIS) and Eurodac (systems) in the Agency’s accounts. The operational management of these systems was transferred to the Agency from the Commission in May 2013 by way of a non-exchange transaction and is the core task of the Agency. In the absence of reliable and complete information in respect of their total development cost, they are recorded in the Agency’s accounts at their net book values as per the Commission’s books and updated at year end. These values relate mainly to hardware and off-the-shelf software components and do not include software development costs (see note 6.3.1 to the annual accounts of the Agency).

N/A

2013

The development of the Agency’s Internal Control Standards was ongoing at the end of the year. They were approved by the Management Board in June 2014.

Completed

2013

There is no insurance coverage for fixed tangible assets, except for multi-risk fire for the premises in Tallinn.

Ongoing

2013

According to the Agency’s Founding Regulation, the Commission was responsible for the establishment and initial operation of the Agency until it was granted financial autonomy on 22 May 2013. The migration of data on commitment and payment appropriations from the Commission to the Agency was a complex process and a reconciliation of the figures between the Commission’s and the Agency’s accounting systems was finally completed in June 2014. This affected the Agency’s payment planning and the preparation of its provisional accounts.

N/A

2013

According to the Agency’s final accounts budget implementation rates were 96 % for commitment appropriations and 67 % for payment appropriations. Due to the fact that part of the Agency’s total annual budget was executed by the Commission and the differences between the Commission’s and the Agency’s budgetary structures, a more detailed analysis per budget title could not be carried out for 2013.

N/A

2013

According to the Agency’s Founding Regulation, countries associated with the implementation, application and development of the Schengen acquis and Eurodac-related measures must make a contribution to the Agency’s budget. Although Schengen associated countries were using the systems managed by the Agency in 2013 the Commission’s negotiations were still ongoing.

Ongoing

2013

Though the seat of the Agency is in Tallinn (with 46 occupied posts), operational activities are carried out in Strasbourg (with 79 occupied posts). It is likely that management effectiveness could be increased and administrative costs reduced if all staff were centralised in one location.

N/A

(Not under the Agency’s control)

2013

A headquarters agreement that would clarify the conditions under which the Agency and its staff operate has not yet been signed with the host Member State, Estonia, and negotiations were still ongoing at the time of the audit.

Completed

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ANNEX II

EU Agency for the operational management of large scale IT systems in the area of freedom, security and justice (Tallinn)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Article 74, 77(2)(a) and (b), 78(2)(e), 79(2)(c), 82(1)(d), 85(1), 87(2)(a) and Article 88(2) of the Treaty on the Functioning of the European Union) | Contribute to the creation of an area of free circulation of people by increasing cooperation on cross-border issues, such as asylum, immigration, border control, as well as judicial and police cooperation in criminal matters. |
| --- | --- |
| Competences of the Agency


  (Regulation (EU) No 1077/2011 of the European Parliament and of the Council) | With reference to its establishing Regulation (EU) No 1077/2011 of 25 October 2011, and without prejudice to the respective responsibilities of the Commission and of the Member States under the legislative instruments governing large-scale IT Systems, the Agency objectives are the following:






  (a) | effective, secure and continuous operation of large-scale IT systems (at present the second generation Schengen Information System (SIS II), the Visa Information System (VIS) and a large-scale database for the comparison of fingerprints for the effective application of the Dublin Convention (Eurodac)); |

Areas of Union competence deriving from the Treaty

(Article 74, 77(2)(a) and (b), 78(2)(e), 79(2)(c), 82(1)(d), 85(1), 87(2)(a) and Article 88(2) of the Treaty on the Functioning of the European Union)

Contribute to the creation of an area of free circulation of people by increasing cooperation on cross-border issues, such as asylum, immigration, border control, as well as judicial and police cooperation in criminal matters.

Competences of the Agency

(Regulation (EU) No 1077/2011 of the European Parliament and of the Council)

With reference to its establishing Regulation (EU) No 1077/2011 of 25 October 2011, and without prejudice to the respective responsibilities of the Commission and of the Member States under the legislative instruments governing large-scale IT Systems, the Agency objectives are the following:

(a)

effective, secure and continuous operation of large-scale IT systems (at present the second generation Schengen Information System (SIS II), the Visa Information System (VIS) and a large-scale database for the comparison of fingerprints for the effective application of the Dublin Convention (Eurodac));

| (b) | the efficient and financially accountable management of large-scale IT systems; |
| --- | --- |

(b)

the efficient and financially accountable management of large-scale IT systems;

| (c) | an adequately high quality of service for users of large-scale IT systems; |
| --- | --- |

(c)

an adequately high quality of service for users of large-scale IT systems;

| (d) | continuity and uninterrupted service; |
| --- | --- |

(d)

continuity and uninterrupted service;

| (e) | a high level of data protection, in accordance with the applicable rules, including specific provisions for each large-scale IT system; |
| --- | --- |

(e)

a high level of data protection, in accordance with the applicable rules, including specific provisions for each large-scale IT system;

| (f) | an appropriate level of data and physical security, in accordance with the applicable rules, including specific provisions for each large-scale IT system; and |
| --- | --- |

(f)

an appropriate level of data and physical security, in accordance with the applicable rules, including specific provisions for each large-scale IT system; and

| (g) | the use of an adequate project management structure for efficiently developing large-scale IT systems. |
| --- | --- |

(g)

the use of an adequate project management structure for efficiently developing large-scale IT systems.

Governance

| 1. | Management Board
  The eu-LISA Management Board is composed of one member designated by each Member State, two representatives of the European Commission plus one member from each country associated with the implementation, application and development of the Schengen acquis and Eurodac-related measures. Its function is to ensure that the Agency carry out its tasks, including the appointment and if appropriate the dismissal of the Executive Director. |
| --- | --- |

1.

The eu-LISA Management Board is composed of one member designated by each Member State, two representatives of the European Commission plus one member from each country associated with the implementation, application and development of the Schengen acquis and Eurodac-related measures. Its function is to ensure that the Agency carry out its tasks, including the appointment and if appropriate the dismissal of the Executive Director.

| 2. | Executive Director
  The eu-LISA Executive Director is appointed by the Management Board on the basis of a list of eligible candidates identified in an open competition organised by the Commission. His/her function is to manage and represent the Agency. For this purpose he/she shall assume full responsibility for the tasks entrusted to the Agency and shall be subject to the procedure for annual discharge by the European Parliament for the implementation of the budget. |
| --- | --- |

2.

The eu-LISA Executive Director is appointed by the Management Board on the basis of a list of eligible candidates identified in an open competition organised by the Commission. His/her function is to manage and represent the Agency. For this purpose he/she shall assume full responsibility for the tasks entrusted to the Agency and shall be subject to the procedure for annual discharge by the European Parliament for the implementation of the budget.

| 3. | Advisory Groups: SISII Advisory Group, VIS Advisory Group and Eurodac Advisory Group
  The Advisory Groups are composed of a representative of each Member State and the Commission plus one member from each country associated with the implementation, application and development of the Schengen acquis and Eurodac-related measures. Their function is to provide the Management Board with expertise relating to large-scale IT systems and, in particular, in the context of the preparation of the annual work program and the annual activity report. |
| --- | --- |

3.

The Advisory Groups are composed of a representative of each Member State and the Commission plus one member from each country associated with the implementation, application and development of the Schengen acquis and Eurodac-related measures. Their function is to provide the Management Board with expertise relating to large-scale IT systems and, in particular, in the context of the preparation of the annual work program and the annual activity report.

| 4. | External audit
  European Court of Auditors |
| --- | --- |

4.

European Court of Auditors

| 5. | Internal audit
  eu-LISA Internal Audit Capability (IAC)
  European Commission’s Internal Audit Service (IAS) |
| --- | --- |

5.

eu-LISA Internal Audit Capability (IAC)

European Commission’s Internal Audit Service (IAS)

| 6. | Discharge authority
  European Parliament acting on a recommendation by the Council |
| --- | --- |

6.

European Parliament acting on a recommendation by the Council

Resources made available to the Agency in 2014 (2013)

Budget

59,38 (61,35) million euro (commitment appropriations)

64,91 (34,38) million euro (payment appropriations) of which 100 % (100 %) is a European Union subsidy.

Staff as at 31 December 2014

Authorised:

| — | 120 (120) temporary staff |
| --- | --- |

—

120 (120) temporary staff

| — | 8 (6) contract staff |
| --- | --- |

—

8 (6) contract staff

| — | 6 (6) seconded national experts |
| --- | --- |

—

6 (6) seconded national experts

Occupied:

| — | 119 (120) temporary staff |
| --- | --- |

—

119 (120) temporary staff

| — | 5 (5) contract staff |
| --- | --- |

—

5 (5) contract staff

| — | 5 (3) seconded national experts |
| --- | --- |

—

5 (3) seconded national experts

Products and services in 2014 (2013)

Products and services in 2014 included:

| — | Operational management and evolution of SISII, VIS and EURODAC, |
| --- | --- |

—

Operational management and evolution of SISII, VIS and EURODAC,

| — | Helpdesk: provide first level support services to users across all systems under the management of eu-LISA, |
| --- | --- |

—

Helpdesk: provide first level support services to users across all systems under the management of eu-LISA,

| — | Monitoring and evolution of appropriate Service Level Agreements for such systems under the management of the Agency, |
| --- | --- |

—

Monitoring and evolution of appropriate Service Level Agreements for such systems under the management of the Agency,

| — | Provision of coordination, security and supervision of relations between the Member States and the network provider for the communication infrastructure for SIS II, Eurodac and VIS (sTESTA network), |
| --- | --- |

—

Provision of coordination, security and supervision of relations between the Member States and the network provider for the communication infrastructure for SIS II, Eurodac and VIS (sTESTA network),

| — | Participation in preparatory processes to design, develop and implement new systems, |
| --- | --- |

—

Participation in preparatory processes to design, develop and implement new systems,

| — | Statistics: timely and accurate provision of statistics and information on the performance of the systems as provided for in the relevant legal bases, |
| --- | --- |

—

Statistics: timely and accurate provision of statistics and information on the performance of the systems as provided for in the relevant legal bases,

| — | Reporting: fulfilment of all reporting obligations laid down in the establishing Regulation and legal bases for the IT systems under the Agency's management, |
| --- | --- |

—

Reporting: fulfilment of all reporting obligations laid down in the establishing Regulation and legal bases for the IT systems under the Agency's management,

| — | Monitoring of new technologies and solutions relevant for the operational management and evolution of SIS II, VIS, Eurodac and other large-scale IT systems, |
| --- | --- |

—

Monitoring of new technologies and solutions relevant for the operational management and evolution of SIS II, VIS, Eurodac and other large-scale IT systems,

| — | Training: provision of bespoke system training plans for national authorities on IT systems managed by the Agency, |
| --- | --- |

—

Training: provision of bespoke system training plans for national authorities on IT systems managed by the Agency,

| — | Establishment of an informal network of security experts with the Member States for the exchange of early warnings in cyber areas, best practices and security incident management. |
| --- | --- |

—

Establishment of an informal network of security experts with the Member States for the exchange of early warnings in cyber areas, best practices and security incident management.

Source: Annex supplied by the Agency.

---

THE AGENCY’S REPLY

| 10. | The Agency notes the matter highlighted by the Court. It is anticipated that the net book value of these migrated assets will be less than 2 00  000 euro at 31 December 2015. |
| --- | --- |

10.

The Agency notes the matter highlighted by the Court. It is anticipated that the net book value of these migrated assets will be less than 2 00  000 euro at 31 December 2015.

| 12. | The Agency acknowledges the comment. Upon becoming financial independent in 2013, a number of commitments for administrative expenditure were migrated from DG HOME to the Agency. The business case supporting these commitments did not always prove relevant in the new organisational/logistical set up of the Agency. In addition to that, by the time the decision for carry-forward was made, the Agency had still not attained its full staff complement, so that budget management capacity was limited in some areas.
  The Agency has meanwhile significantly improved its capacity to monitor and implement carry-forwards. It is expected that the volume and percentage of cancellations will decrease in 2015 compared to 2014. |
| --- | --- |

12.

The Agency acknowledges the comment. Upon becoming financial independent in 2013, a number of commitments for administrative expenditure were migrated from DG HOME to the Agency. The business case supporting these commitments did not always prove relevant in the new organisational/logistical set up of the Agency. In addition to that, by the time the decision for carry-forward was made, the Agency had still not attained its full staff complement, so that budget management capacity was limited in some areas.

The Agency has meanwhile significantly improved its capacity to monitor and implement carry-forwards. It is expected that the volume and percentage of cancellations will decrease in 2015 compared to 2014.

| 13. | The Agency recognises the importance of accurate budget planning and has taken steps to improve its capacity to plan, monitor and implement available appropriations. Closer coordination between the operational and administrative functions, the further design of effective internal controls, as well as the progressive increase in the Agency’s experience and expertise after financial independence in 2013, are all expected to contribute to an improved control of the budget implementation cycle. In addition to that, specific organisational measures, including the formalisation of budget line ownership and responsibility at the level of operational verification, the establishment of a Budget Officer post, regular budget implementation reporting, are being implemented to support improved control over budget control and monitoring.
  The Agency closely followed the Financial Regulation as regards carry-forwards, resulting in both automatic and non-automatic carry-overs as allowed by the applicable rules on annuality.
  As regards non-automatic carry-overs for the Strasbourg site, these were approved by the Management Board based on a duly justified proposal by the Agency in compliance with applicable rules.
  The differentiated nature of appropriations in title III should be highlighted when assessing of the volume of commitments carried forward. Already in 2013, upon financial independence, C8 commitments amounting to 40 million euro were migrated from DG HOME to the Agency. At the same time, the 2014, 2015 and — based on preliminary indications — 2016 budgets will foresee an equalisation of commitment and payment appropriations in the Agency’s budget. This poses a challenge to the reduction of the volume of C8 commitments carried forward in title III over the next years. |
| --- | --- |

13.

The Agency recognises the importance of accurate budget planning and has taken steps to improve its capacity to plan, monitor and implement available appropriations. Closer coordination between the operational and administrative functions, the further design of effective internal controls, as well as the progressive increase in the Agency’s experience and expertise after financial independence in 2013, are all expected to contribute to an improved control of the budget implementation cycle. In addition to that, specific organisational measures, including the formalisation of budget line ownership and responsibility at the level of operational verification, the establishment of a Budget Officer post, regular budget implementation reporting, are being implemented to support improved control over budget control and monitoring.

The Agency closely followed the Financial Regulation as regards carry-forwards, resulting in both automatic and non-automatic carry-overs as allowed by the applicable rules on annuality.

As regards non-automatic carry-overs for the Strasbourg site, these were approved by the Management Board based on a duly justified proposal by the Agency in compliance with applicable rules.

The differentiated nature of appropriations in title III should be highlighted when assessing of the volume of commitments carried forward. Already in 2013, upon financial independence, C8 commitments amounting to 40 million euro were migrated from DG HOME to the Agency. At the same time, the 2014, 2015 and — based on preliminary indications — 2016 budgets will foresee an equalisation of commitment and payment appropriations in the Agency’s budget. This poses a challenge to the reduction of the volume of C8 commitments carried forward in title III over the next years.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/284 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/284

---

REPORT

on the annual accounts of the European Agency for Safety and Health at Work for the financial year 2014 together with the Agency’s reply

(2015/C 409/32)

INTRODUCTION

| 1. | The European Agency for Safety and Health at Work (hereinafter ‘the Agency’, aka ‘EU-OSHA’), which is located in Bilbao, was created by Council Regulation (EC) No 2062/94 (1). The Agency’s task is to collect and disseminate information on national and Union priorities in the field of health and safety at work, to support national and Union organisations involved in policymaking and implementation and provide information on preventive measures (2). |
| --- | --- |

1.

The European Agency for Safety and Health at Work (hereinafter ‘the Agency’, aka ‘EU-OSHA’), which is located in Bilbao, was created by Council Regulation (EC) No 2062/94 (1). The Agency’s task is to collect and disseminate information on national and Union priorities in the field of health and safety at work, to support national and Union organisations involved in policymaking and implementation and provide information on preventive measures (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | The overall level of committed appropriations was 99 % as in 2013. However, the level of committed appropriations carried over to 2015 for title II (administrative expenditure) was high at 4 43  412 euro, i.e. 34 % (2013: 6 01  426 euro, i.e. 30 %). |
| --- | --- |

11.

The overall level of committed appropriations was 99 % as in 2013. However, the level of committed appropriations carried over to 2015 for title II (administrative expenditure) was high at 4 43  412 euro, i.e. 34 % (2013: 6 01  426 euro, i.e. 30 %).

| 12. | These mainly relate to the purchase of goods and services, as planned, at the end of the year in connection with the Agency’s fitting out of its new premises, with the renewal of annual IT contracts and the cost of audit services. |
| --- | --- |

12.

These mainly relate to the purchase of goods and services, as planned, at the end of the year in connection with the Agency’s fitting out of its new premises, with the renewal of annual IT contracts and the cost of audit services.

OTHER COMMENTS

| 13. | In 2005 new EU Staff Regulations entered into force, including provisions that future remunerations of officials recruited before 1 May 2004 should not be less than under the previous EU Staff Regulations. The Court’s audit revealed that this was not complied with and, in the case of 1 of the 26 officials employed at that time, this led to an underpayment of 5  300 euro for the period 2005 to 2014. The Agency will make the supplementary salary payments in due course. |
| --- | --- |

13.

In 2005 new EU Staff Regulations entered into force, including provisions that future remunerations of officials recruited before 1 May 2004 should not be less than under the previous EU Staff Regulations. The Court’s audit revealed that this was not complied with and, in the case of 1 of the 26 officials employed at that time, this led to an underpayment of 5  300 euro for the period 2005 to 2014. The Agency will make the supplementary salary payments in due course.

FOLLOW-UP OF PREVIOUS YEAR’S COMMENTS

| 14. | An overview of the corrective actions taken in response to the Court’s comments from the previous year is provided in Annex I. |
| --- | --- |

14.

An overview of the corrective actions taken in response to the Court’s comments from the previous year is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 216, 20.8.1994, p. 1. The Regulation was last amended by Regulation (EC) No 1112/2005 (OJ L 184, 15.7.2005, p. 5).

1

(2)  Annex II summarises the Agency’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

---

ANNEX I

Follow-up of previous year’s comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2013 | The overall level of committed appropriations was 99 % as compared to 95 % in 2012. However, the level of committed appropriations carried over to 2014 was high at 6 01  426 euro (30 %) for title II (administrative expenditure) and 3 6 93  549 euro (46 %) for title III (operational expenditure). | N/A |
| 2013 | For title II, this was caused by the purchase of goods and services, as planned, at the end of the year in connection with the Agency’s move to its new premises and with the renewal of annual IT contracts. For title III, the high level of planned carry-overs mainly resulted from the multiannual nature of major projects launched in 2013, such as the European Survey of Enterprises on New and Emerging Risks (ESENER-2). | N/A |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2013

The overall level of committed appropriations was 99 % as compared to 95 % in 2012. However, the level of committed appropriations carried over to 2014 was high at 6 01  426 euro (30 %) for title II (administrative expenditure) and 3 6 93  549 euro (46 %) for title III (operational expenditure).

N/A

2013

For title II, this was caused by the purchase of goods and services, as planned, at the end of the year in connection with the Agency’s move to its new premises and with the renewal of annual IT contracts. For title III, the high level of planned carry-overs mainly resulted from the multiannual nature of major projects launched in 2013, such as the European Survey of Enterprises on New and Emerging Risks (ESENER-2).

N/A

---

ANNEX II

European Agency for Safety and Health at Work (Bilbao)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Articles 151 and 153 of the Treaty on the Functioning of the European Union) | Article 151

  The Union and the Member States [...], shall have as their objectives the promotion of employment, improved living and working conditions, so as to make possible their harmonisation while the improvement is being maintained, proper social protection, dialogue between management and labour, the development of human resources with a view to lasting high employment and the combating of exclusion.

  Article 153

  With a view to achieving the objectives of Article 151, the Union shall support and complement the activities of the Member States in the following fields:






  (a) | improvement in particular of the working environment to protect workers’ health and safety; |
| --- | --- | --- |

Areas of Union competence deriving from the Treaty

(Articles 151 and 153 of the Treaty on the Functioning of the European Union)

Article 151

The Union and the Member States [...], shall have as their objectives the promotion of employment, improved living and working conditions, so as to make possible their harmonisation while the improvement is being maintained, proper social protection, dialogue between management and labour, the development of human resources with a view to lasting high employment and the combating of exclusion.

Article 153

With a view to achieving the objectives of Article 151, the Union shall support and complement the activities of the Member States in the following fields:

(a)

improvement in particular of the working environment to protect workers’ health and safety;

| (b) | working conditions;
  [...] |
| --- | --- |

(b)

working conditions;

[...]

| (e) | the information and consultation of workers;
  [...] |
| --- | --- |

(e)

the information and consultation of workers;

[...]

| (h) | the integration of persons excluded from the labour market, without prejudice to Article 166; |
| --- | --- |

(h)

the integration of persons excluded from the labour market, without prejudice to Article 166;

| (i) | equality between men and women with regard to labour market opportunities and treatment at work; |
| --- | --- |

(i)

equality between men and women with regard to labour market opportunities and treatment at work;

| (j) | the combating of social exclusion;
  [...]. |
| --- | --- |

(j)

the combating of social exclusion;

[...].

Competences of the Agency

(Council Regulation (EC) No 2062/94)

Objectives

In order to improve the working environment, as regards the protection of the safety and health of workers as provided for in the Treaty and successive strategies and action programmes concerning health and safety at the workplace, the aim of the Agency shall be to provide the Union and the Member States, the social partners and those involved in the field with technical, scientific and economic information of use in the field of safety and health at work (Article 2).

Tasks

| — | To collect, analyse and disseminate information on national and Union priorities and on research; |
| --- | --- |

—

To collect, analyse and disseminate information on national and Union priorities and on research;

| — | to promote cooperation and the exchange of information, including information on training programmes; |
| --- | --- |

—

to promote cooperation and the exchange of information, including information on training programmes;

| — | to supply the Union bodies and the Member States with the information they require for formulating and implementing policies, in particular as regards the impact on small and medium-sized enterprises; |
| --- | --- |

—

to supply the Union bodies and the Member States with the information they require for formulating and implementing policies, in particular as regards the impact on small and medium-sized enterprises;

| — | to make available information on preventive activities; |
| --- | --- |

—

to make available information on preventive activities;

| — | to contribute to the development of strategies and Union action programmes; |
| --- | --- |

—

to contribute to the development of strategies and Union action programmes;

| — | to set up a network comprising national focal points. |
| --- | --- |

—

to set up a network comprising national focal points.

Governance

Governing Board (GB)

| — | One representative of the Government of each Member State. |
| --- | --- |

—

One representative of the Government of each Member State.

| — | One representative of the employers’ organisations of each Member State. |
| --- | --- |

—

One representative of the employers’ organisations of each Member State.

| — | One representative of the employees’ organisations of each Member State. |
| --- | --- |

—

One representative of the employees’ organisations of each Member State.

| — | Three representatives of the Commission. |
| --- | --- |

—

Three representatives of the Commission.

| — | Members and alternate members from the first three categories shall be appointed from the members and alternate members of the Advisory Committee on Safety and Health at Work. |
| --- | --- |

—

Members and alternate members from the first three categories shall be appointed from the members and alternate members of the Advisory Committee on Safety and Health at Work.

Bureau of the GB

| — | Chair and three vice-chairs of the Board. |
| --- | --- |

—

Chair and three vice-chairs of the Board.

| — | Coordinators from each of the three interest groups. |
| --- | --- |

—

Coordinators from each of the three interest groups.

| — | One additional member from each of the groups and the Commission. |
| --- | --- |

—

One additional member from each of the groups and the Commission.

Director

is appointed by the Governing Board on the basis of a short-list from the Commission.

Committees

Mandatory consultation of the European Commission and the Advisory Committee on Safety and Health at Work in respect of the work programme and budget.

External audit

European Court of Auditors.

Discharge authority

European Parliament, acting on a recommendation from the Council.

Resources available to the Agency in 2014 (2013)

Budget

17,3(17,5) million euro of which:

| — | Union subsidy, DG Employment: 84,1 % (86,3 %). |
| --- | --- |

—

Union subsidy, DG Employment: 84,1 % (86,3 %).

| — | Other Union subsidy, DG Employment: 11,6 % (9,4 %) |
| --- | --- |

—

Other Union subsidy, DG Employment: 11,6 % (9,4 %)

| — | Other Union subsidy, DG Enlargement: 2,6 % (3,2 %) |
| --- | --- |

—

Other Union subsidy, DG Enlargement: 2,6 % (3,2 %)

| — | Other Union subsidy, DG DEVCO: 1,1 % (-.- %) |
| --- | --- |

—

Other Union subsidy, DG DEVCO: 1,1 % (-.- %)

| — | Other: 0,6 % (1,0 %) |
| --- | --- |

—

Other: 0,6 % (1,0 %)

Staff at 31 December 2014

43 (44) posts provided for in the establishment plan, of which, 40 (42) posts were occupied.

Other staff:

| — | Seconded National Experts: 0 (0) |
| --- | --- |

—

Seconded National Experts: 0 (0)

| — | contract staff: 24 (25 — one of which financed from earmarked funds) |
| --- | --- |

—

contract staff: 24 (25 — one of which financed from earmarked funds)

| — | local staff: 1 (1) |
| --- | --- |

—

local staff: 1 (1)

Total staff employed: 65 (67)

Allocated to:

| — | operational activities: 46 (48) |
| --- | --- |

—

operational activities: 46 (48)

| — | administrative tasks:10 (10) |
| --- | --- |

—

administrative tasks:10 (10)

| — | mixed tasks: 9 (9) |
| --- | --- |

—

mixed tasks: 9 (9)

Products and services in 2014

(Collecting and analysing information)

Priority Area 1: Anticipating Change

Activity 1.1: Foresight of new and emerging OSH risks associated with new technologies in green jobs

Summary report of foresight workshop with the electricity sectoral social dialogue committee (Brussels March) was published and promoted in July 2014.

The organisation of a second workshop for the transport sector is still under discussion with B.1 unit at DG EMP (2015).

Activity 1.2: Large-scale foresight

The scoping study for foresight topics (promoted in September) will be used as the basis for specifying the second large-scale foresight project starting in 2015. The report on emerging risks in the healthcare sector was published in October.

The project on success factors to transfer foresight findings into policy making has been postponed from 2015 to 2016.

Priority Area 2: Facts and figures

Activity 2.1: European Survey of Enterprises on New & Emerging Risks (ESENER)

ESENER-2 fieldwork in all 36 countries, and final dataset finalised. Technical reports — methodological and fieldwork, final coding, weighting, data editing and cleaning; quality control will follow early 2015.

First findings report to be published February 2015, followed by an overview report and a summary report (translated) in Q2 2015.

Activity 2.2: OSH overview: Older workers

Final pre-financing received from EC in May in line with delegation agreement.

Second interim payment processed upon delivery of OSH and ageing workforce review; age and gender review; OiRA sub-module for developers (final) and review of available tools (final); country report; case studies on rehabilitation programmes; case studies from the workplace; draft analysis plan.

Discussion workshops with intermediaries in selected Member States (Finland, Denmark, Netherlands, Belgium, France, Austria, Germany, Poland, Greece and United Kingdom) to obtain their views and experiences took place in July with FOP involvement.

Draft final country reports were sent to the Focal Points for information and as an opportunity for final comment.

Preliminary project results presented at various events.

Planning started to link the project to HWC 2016-17, including web data visualisation

Activity 2.3: OSH overview: Micro and small enterprises

Kick-off meeting for project held and specific contract for work package 1 signed

Work package includes in-depth review of available data relevant to OSH in micro and small enterprises in the EU.

Activity 2.4: OSH overview: Work-related diseases

Workshop on workplace risks to reproductivity held in January and its seminar online summary published in May. First results discussed with Focal Points in February and Prevention and Research Advisory Group in March.

Report on workplace risks to reproduction under revision to include recent policy developments and findings of workshop.

Report on work-related cancer and summary promoted in 2014.

Workshop on burden of disease held in October, seminar online summary available on Agency’s website

Activity 2.5: OSH overview: Costs and benefits of OSH

Expert meeting was held in June 2014 (seminar online summary published) with experts on modelling of costs of poor OSH and gave highly useful input for the further development of the project, which led to revised scheduling: call for tender for a larger OSH overview report will be published early 2015 and the feasibility study planned for the end of 2014 was cancelled

Report ‘The business case for safety and health: Cost–benefit analyses of interventions in small and medium-sized enterprises’ promoted in September.

Conference ‘Investing in OSH — how benefits beat the costs’ organised by the Focal Points of the BENELUX countries in close cooperation with the Dutch Ministry of Social Affairs and Employment, EU-OSHA and TNO (seminar online summary published)

Priority Area 3: Tools for OSH management

Activity 3.1: Online interactive Risk Assessment (OiRA) tool

OiRA tools published in 2014: 42 (further ones anticipated before year-end) exceeding initial target of 35. Five agreements signed and 15 events organised.

Eight low value contracts to adapt and translate existing OiRA tools into other languages/national contexts (six further contracts before the end of the year) in order to encourage development of OiRA tools at national level. More detailed information on progress in the OiRA http://www.oiraproject.eu/Resources

Activity 3.2: Tool for implementing OSH solutions

First discussions on feasibility study ‘exploring practical online OSH tools’ took place at Prevention and Research Advisory Group (PRAG) meetings in March and October.

Seminar on topic held in Paris in October gathering main stakeholders. The Agency is also working on the content of the new section ‘e-tools’ to be included in the next EU-OSHA corporate website.

Priority Area 4: Raising awareness

Activity 4.1: Healthy Workplace Campaign (HWC) 2012-2013, Working together for risk prevention

The Healthy Workplaces Campaign (HWC) 2012-2013 ‘Working together for risk prevention’ drew to a close setting an unprecedented record in terms of delivery of a broad range of awareness-raising initiatives at the European and national level, as well as in terms of official campaign and media partners.

At the end of 2013, the IES (Institute for Employment Studies) was commissioned to produce the ‘Ex-post evaluation of the Healthy Workplaces Campaign 2012-2013: Working Together for Risk Prevention’. The final report, which was published in October 2014, incorporates both quantitative and qualitative data, stemming from desk research, online surveys, focus groups and interviews with focal points, campaign partners, and other relevant stakeholders.

The contract for the report on ‘Review of successful OSH benchmarking initiatives’ was signed at the end of August 2014 and the work started with a survey on benchmarking initiatives among campaign partners.

Activity 4.2: Healthy Workplace Campaign (HWC) 2014-2015, ‘Healthy Workplaces Manage Stress’

The Healthy Workplaces Campaign (HWC) 2014-15 ‘Healthy Workplaces Manage Stress’ was launched on 7 April by the EU Commissioner for Employment, Social Affairs and Inclusion, László Andor; Greek Deputy Minister for Labour, Social Security and Welfare, Vasilis Kegkeroglou and Director of EU-OSHA, Christa Sedlatschek. On the same date the campaign website was launched, with tools and resources available in 25 languages.

The 2014 European Campaign Assistance Package (ECAP), which provides the Agency’s network of national focal points with financial and logistical support for implementing campaign activities at national level was successfully implemented. During the year, focal points ordered a total of 22 national partnership meetings, 61 stakeholders’ seminars, 15 press conferences, 18 press releases, 5 journalists’ round tables, 4 radio phone-ins and 6 professional articles. Among the campaign material, 88  720 campaign-branded items, 4 76  125 publications in 25 languages, and 62 campaign stands, 15 exhibition kits, were distributed. A special highlight of the campaign was also the release of the DVD ‘Napo in...When stress strikes’.

Among other campaign-related products and publications, a literature review ‘Calculating the cost of work-related stress and psychosocial risks’ discussing the financial burden of psychosocial risks at societal, organisational and individual level was published online in June. Another key product developed for the campaign was the ‘Managing stress and psychosocial risk e-guide’. The e-guide was made available in 30 national versions and aims to motivate managers in SMEs to conduct psychosocial risk management based on the available national resources. In addition, a joint EU-OSHA-Eurofound report on psychosocial risks was published and promoted at an expert seminar on 16—17 October 2014.

The 2014-15 HWC Official Campaign Partnership Offer succeeded in recruiting more than 100 official campaign partners, including workers’ and employers’ organisations, multinational companies and organisations representing a wide range of OSH professions — the highest number of partners supporting a single Healthy Workplaces Campaign. In addition, a total of 29 media partners from 14 countries are now engaged in the 2014-15 HWC.

The European Good Practice Awards Competition (GPA) was launched on 15 April. A good practice awards promotion package was produced to support focal points and organisations interested in sharing good practices both at national and European level.

The campaign was also presented at the EU Conference on ‘Occupational safety and health — OSH policy in the future’ Athens, 16—17 June 2014, as part of the Greek EU Presidency programme.

In 2014, for the first time, the campaign was supported by an integrated social media campaign, engaging different audiences with campaign products developed specifically for social media such as infographics and videos.

Activity 4.3: Healthy Workplace Campaign (HWC) 2016-2017

The Campaign scope and goals were agreed. The goals are as follows:

| — | To promote sustainable work and healthy ageing right from the start and stress the importance of prevention throughout working life. |
| --- | --- |

—

To promote sustainable work and healthy ageing right from the start and stress the importance of prevention throughout working life.

| — | To assist employers and workers (including micro enterprises) by providing information and tools for managing OSH in the context of an ageing workforce. |
| --- | --- |

—

To assist employers and workers (including micro enterprises) by providing information and tools for managing OSH in the context of an ageing workforce.

| — | To facilitate exchange of information and good practice in this area. |
| --- | --- |

—

To facilitate exchange of information and good practice in this area.

The Campaign Strategy was finalised by the end of the year.

A call for tender for the development of an e-guide was launched in September and work is planned to start at the beginning of 2015.

Activity 4.4: Awareness raising actions

23 focal points responded to the 2014 Awareness Raising Package (ARP) offer. ARP activities included: 14 OSH film screenings and debates, 13 OSH photo exhibitions and promotion of Napo for teachers’ toolkit in two countries. In addition, 12 Napo costumes have been produced and distributed as part of the ARP.

The Napo Consortium initiated the development of a new film about electricity related OSH risks. External evaluation of the ‘Napo for teachers’ activity’ was commissioned to an external contractor with an interim report being received in November. More than 20  000 copies of the DVD ‘Napo in....no laughing matter’ were distributed in April to national Labour Inspectorates in more than 20 Member States to support the Senior Labour Inspectors’ Committee (SLIC) campaign about prevention of slips and trips. An updated version of a Napo leaflet has been produced, translated and distributed to interested Focal Points (portfolio).

The 2014 edition of the Healthy Workplaces Film Award with DOK Leipzig was launched in April with a deadline for submission of applications on the 10 July. Eight films were nominated from countries such as France, Germany, Poland and Spain. The winner, ‘Harvest’, was announced at the award ceremony on 1 November. The subtitling of the 2013 winning film C(us)todians in 13 EU languages was finalised and delivery to the Focal Points (portfolio) accomplished by end-July.

On Europe Day, 9 May, a tent was set up on the street in Bilbao to promote, jointly, the contributions made by Europe Direct Bizkaia (European Commission), the European Union and EU-OSHA behalf of the citizen. EU-OSHA’s participation with a stand at the Exhibition Fair (linked to the OSH World Congress in Frankfurt) — 25-28 August was a success, Highlights at the stand included the official launch of the OSHwiki, the Healthy Workplaces Manage Stress campaign and OiRA.

Priority Area 5: Networking knowledge

Activity 5.1: OSHwiki

PEROSH members invited to the OSHwiki Scientific Committee’s first meeting helped to define how OSHwiki can serve the needs of the research community as well as discussing how it can provide EU-OSHA guidance on strategic issues and source potential authors and readers (meeting held in June).

OSHwiki Communication Plan finalised; Beta Launch carried out in May. News items posted on the OSHmail, Twitter and Linkedin and a tailored e-mail was sent to existing accredited authors, Focal Points, Advisory Groups and the Governing Board.

OSHwiki was officially launched in August at the XX World Congress on Safety and Health at Work 2014 in Frankfurt, Germany and there are now over 100 accredited authors.

Activity 5.2: Other networking knowledge actions

Legislation section: work focused on making legislation webpage ready for migration to new corporate EU-OSHA website (checking and updating).

Information regarding national strategies in OSH wiki articles updated (it will be updated on a continuous basis following input from the Focal Points).

Research priorities: Position papers drafted and short list of priorities based on the report published in 2013 to influence the HORIZON 2020 work programme and content of the calls. A seminar to discuss the position papers and the short list will be held in November in Brussels. Directors and research directors of major OSH research institutes and funding bodies and EU Commission representatives will participate in the seminar.

Priority Area 6: Networking and corporate communication

Activity 6.1: Strategic networking.

Further development of the Agency’s strategic networks, in particular the tripartite governance networks (Board and Bureau), the Advisory Groups and the European networks.

Activity 6.2: Operational networking

Continued engagement with the Agency’s international network partners and focal point network, including promotion of networking at Member State level.

The ongoing focus of the activities is to ensure engagement with social partners at national level in the Member States. At the international level, in line with the priority identified in the 2014-2020 European Commission Communication on a Strategic Framework on OSH, EU-OSHA is working to develop better coordination and linkage with actors in non-Member States, International and Regional Organisations.

The communication partnerships were also further developed.

Activity 6.3: Corporate communications

In relation to the Agency’s online strategy 2014, preparatory actions for the implementation of the next EU-OSHA Corporate website saw a first internal release of the website deployed at the end of September. The new website should be launched in the first half of 2015.

Other online developments since the beginning of 2014 saw the launch of the Healthy Workplaces Campaign (HWC) 2014-15 website on 7 April and the redesign of the OiRA site. Several new or revamped web sections were also delivered

With regard to the Agency’s corporate promotion strategy, the Agency has also been very active on social media since the launch of the new HWC Campaign 2014-15. Our YouTube account now has over 1  000 subscribers (288 in June 2013) and we have reached 3 12  842 views (35  000 in June 2013). The Agency’s Facebook page’s popularity is steadily growing with 16  500 fans at end October (1  654 in June 2013). The Agency’s Twitter account is also more popular with 10  840 followers (7  179 in June 2013). We also have 4  797 LinkedIn followers compared to 2  766 in June 2013. 11 posts have been published on the Agency’s Blog since January. The number of OSHmail subscribers is steadily increasing. There are now over 67  000 OSHmail subscribers.

With regard to the Agency’s corporate publications strategy, the corporate branding of the new EU-OSHA premises was delivered, the 2013 Annual report and summary were produced and delivery of the report accomplished. In addition, a set of 5 infographics translated into all EU official languages was produced to support the publication of the Annual Report and summary. A new EU-OSHA’s corporate brochure was finalized and translated. A corporate video introducing the multiannual strategic programme (in 25 languages) was published as well as a video to support the launch of the e-Guide on stress.

Several reports, summaries and literature reviews of the Annual Management Plan 2014 were produced and published including: ‘Research guides design of the 2014 ESENER survey’, ‘OSH in the Hairdressing sector’, ‘Priorities for OSH Research in Europe 2013-2020’, ‘Estimating the costs of accidents and ill-health at work’, ‘E-fact and Checklist OSH in the wind energy sector’, ‘Calculating costs related to stress and psychosocial risks at work’, ‘Scoping study for a foresight on new and emerging risks and challenges’ and ‘Psychosocial risks in Europe: Prevalence and strategies for prevention’ (with Eurofound).

In addition, the HWC 2014-15 Campaign materials (Guide, leaflet, flyer, banner stands and giveaways) were produced and delivered. A set of three infographics and a video were produced to support the launch of the Campaign and a leaflet was produced for Europe Day.

Regarding the press office, 13 news releases were published and more than 90 media info requests/interviews responded to. Several press conferences/media encounters with the Director were organized to highlight relevant moments, such as the visit of the President of the EU Parliament, the inauguration of the Agency’s premises and the OSHwiki launch in Frankfurt. Over 1  300 online clippings and more than 5  800 social media posts have been recorded.

Activity 6.4: Preparatory measures for the Western Balkans and Turkey

The programme for the Western Balkans and Turkey came to an end in November 2014. Under the programme, actions were implemented to support the countries covered in becoming active participants in the Agency’s networks.

On 10 December 2014 the Commission Implementing Decision adopting a Multi-country Action Programme for the year 2014 (C(2014)9407 Final) was signed, under which EU-OSHA will receive as a direct grant award 4 10  000 euro for actions in the IPA II beneficiary countries.

Following on from this Decision, EU-OSHA will sign an agreement with the Commission in Quarter 1, 2015. Once signed, then EU-OSHA will continue its work in the region. It is anticipated that this agreement will last for 24 months.

Activity 6.5: Preparatory measures for the collaboration of ENP countries with EU-OSHA

This programme for the European Neighbourhood countries was initiated in 2014 in order to develop OSH actions and networks in the countries involved. In this initial phase of the two-year agreement, EU-OSHA is establishing single contact points in the beneficiary countries and supporting actions identified by the beneficiary countries as being a priority.

Corporate management

Programming of 2015 activities, in particular the 2015 management plan. Reporting and evaluation actions.

Corporate management, including business continuity, data protection, risk management, legal advice and internal control.

Administrative support

Main achievements in 2014 include:

| — | Signature of seat agreement on 31 March 2014 with the Kingdom of Spain |
| --- | --- |

—

Signature of seat agreement on 31 March 2014 with the Kingdom of Spain

| — | Adoption of EU-OSHA Financial Regulation and Financial Implementing Rules |
| --- | --- |

—

Adoption of EU-OSHA Financial Regulation and Financial Implementing Rules

| — | Staff Regulations, adoption of Implementing Rules |
| --- | --- |

—

Staff Regulations, adoption of Implementing Rules

| — | ABB (Activity Based Budget implementation) |
| --- | --- |

—

ABB (Activity Based Budget implementation)

Source: Annex supplied by the Agency.

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THE AGENCY’S REPLY

| 11-12. | The Agency notes the Court’s comment related to the level of planned carry-overs for title II. |
| --- | --- |

11-12.

The Agency notes the Court’s comment related to the level of planned carry-overs for title II.

| 13. | The Agency acknowledges the comment from the Court. Following the necessary checks, action has been taken to proceed with the payment of the amount due for the period 2005-2014 (5  300 euro) to one of the temporary staff (AD) employed at 1.5.2004 and subject to multiplication factor. |
| --- | --- |

13.

The Agency acknowledges the comment from the Court. Following the necessary checks, action has been taken to proceed with the payment of the amount due for the period 2005-2014 (5  300 euro) to one of the temporary staff (AD) employed at 1.5.2004 and subject to multiplication factor.

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| 9.12.2015 | EN | Official Journal of the European Union | C 409/299 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/299

---

REPORT

on the annual accounts of the Euratom Supply Agency for the financial year 2014 together with the Agency’s reply

(2015/C 409/33)

INTRODUCTION

| 1. | The Euratom Supply Agency (hereinafter ‘the Agency’), located in Luxembourg, was created in 1958 (1). Council Decision 2008/114/EC, Euratom (2) replaced the preceding Statutes of the Agency. The Agency’s main task is to ensure a regular supply of nuclear materials, in particular nuclear fuels, to EU users, by means of a common supply policy based on the principle of equal access to sources of supply. |
| --- | --- |

1.

The Euratom Supply Agency (hereinafter ‘the Agency’), located in Luxembourg, was created in 1958 (1). Council Decision 2008/114/EC, Euratom (2) replaced the preceding Statutes of the Agency. The Agency’s main task is to ensure a regular supply of nuclear materials, in particular nuclear fuels, to EU users, by means of a common supply policy based on the principle of equal access to sources of supply.

| 2. | From 2008 up to and including 2011, the Agency did not receive a budget of its own to cover its operations. The Commission bore all costs incurred by the Agency when implementing its activities. As from 2012, the Agency was granted its own budget by the Commission, which however only covers a minor part of its expenditure. |
| --- | --- |

2.

From 2008 up to and including 2011, the Agency did not receive a budget of its own to cover its operations. The Commission bore all costs incurred by the Agency when implementing its activities. As from 2012, the Agency was granted its own budget by the Commission, which however only covers a minor part of its expenditure.

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 3. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations. |
| --- | --- |

3.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations.

| STATEMENT OF ASSURANCE









  4. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

4.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 5. | The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5).






  (a) | The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6) making accounting estimates that are reasonable in the circumstances. The Director-General approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. |
| --- | --- | --- |

5.

The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5).

(a)

The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6) making accounting estimates that are reasonable in the circumstances. The Director-General approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 6. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

6.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular.

| 7. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. |
| --- | --- |

7.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts.

| 8. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

8.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 9. | In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

9.

In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 10. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

10.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 11. | An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I. |
| --- | --- |

11.

An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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(1)  OJ 27, 6.12.1958, p. 534/58.

1

(2)  OJ L 41, 15.2.2008, p. 15.

2

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

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ANNEX I

Follow-up of previous years’ comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2012 | Without calling into question the opinion expressed in paragraph 9, the Court wishes to draw attention to the following matter. Between 2008 and 2011, the Agency did not receive its own budget and the European Commission directly financed and discharged all expenditure. The Court had considered this situation to be at odds with the Statutes of the Agency.
  For 2012, following the Court’s comments, the Commission granted the Agency its own budget (...). Whereas Article 54 of the Treaty Establishing the European Atomic Energy Community and Article 6 of the Agency’s Statutes provide that it shall have financial autonomy, most of the Agency’s expenditure (staff, office space and IT systems) is still financed directly by the Commission. As far as staff costs are concerned, this is foreseen in Article 4 of its Statutes. The provisions are contradictory which goes against the required financial autonomy of the Agency. | N/A |
| 2013 | The notes to the Agency’s 2013 annual accounts explain that all salaries and some additional costs for administrative services were paid directly from the Commission’s budget. The salary costs are disclosed, but no details are provided on the costs for the administrative services. Therefore the extent to which the Agency is dependent upon the Commission is not fully visible. | Completed |
| 2013 | There is insufficient documentation of the main elements of the Agency’s internal controls, such as a risk management and control strategy, procedures to monitor performance, an assessment of the functioning of the internal control system and a code of professional standards. | Completed |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2012

Without calling into question the opinion expressed in paragraph 9, the Court wishes to draw attention to the following matter. Between 2008 and 2011, the Agency did not receive its own budget and the European Commission directly financed and discharged all expenditure. The Court had considered this situation to be at odds with the Statutes of the Agency.

For 2012, following the Court’s comments, the Commission granted the Agency its own budget (...). Whereas Article 54 of the Treaty Establishing the European Atomic Energy Community and Article 6 of the Agency’s Statutes provide that it shall have financial autonomy, most of the Agency’s expenditure (staff, office space and IT systems) is still financed directly by the Commission. As far as staff costs are concerned, this is foreseen in Article 4 of its Statutes. The provisions are contradictory which goes against the required financial autonomy of the Agency.

N/A

2013

The notes to the Agency’s 2013 annual accounts explain that all salaries and some additional costs for administrative services were paid directly from the Commission’s budget. The salary costs are disclosed, but no details are provided on the costs for the administrative services. Therefore the extent to which the Agency is dependent upon the Commission is not fully visible.

Completed

2013

There is insufficient documentation of the main elements of the Agency’s internal controls, such as a risk management and control strategy, procedures to monitor performance, an assessment of the functioning of the internal control system and a code of professional standards.

Completed

---

ANNEX II

Euratom Supply Agency (Luxembourg)

Competencies and activities

| Areas of Union competence deriving from the Treaty | Common supply policy for nuclear materials in accordance with the principles and the objectives (security of supply) set by the Euratom Treaty.
  The Euratom Supply Agency (ESA) was established directly by Article 52 of the Euratom Treaty, signed in 1957. The ESA is further governed by its Statutes, laid down by a Council decision on the legal basis of Article 54 of the Euratom Treaty. |
| --- | --- |
| Competences of the Agency


  (as defined in the Euratom Treaty, mainly Chapter 6 thereof, and Council Decision of 12 February 2008 establishing Statutes for the Euratom Supply Agency (2008/114/EC, Euratom)) | Objectives







  — | Ensure the supply of nuclear materials, by means of a common supply policy, on the principle of equal access to sources of supply. |

Areas of Union competence deriving from the Treaty

Common supply policy for nuclear materials in accordance with the principles and the objectives (security of supply) set by the Euratom Treaty.

The Euratom Supply Agency (ESA) was established directly by Article 52 of the Euratom Treaty, signed in 1957. The ESA is further governed by its Statutes, laid down by a Council decision on the legal basis of Article 54 of the Euratom Treaty.

Competences of the Agency

(as defined in the Euratom Treaty, mainly Chapter 6 thereof, and Council Decision of 12 February 2008 establishing Statutes for the Euratom Supply Agency (2008/114/EC, Euratom))

Objectives

—

Ensure the supply of nuclear materials, by means of a common supply policy, on the principle of equal access to sources of supply.

| — | Ensure that all users in the Community receive a regular and equitable supply of ores and nuclear fuels. |
| --- | --- |

—

Ensure that all users in the Community receive a regular and equitable supply of ores and nuclear fuels.

| — | Identify and monitor market trends likely to affect security of supply for nuclear materials and services in the European Union. |
| --- | --- |

—

Identify and monitor market trends likely to affect security of supply for nuclear materials and services in the European Union.

| — | Contribute to the Community policies by providing expertise, information and advice on any subject connected with the operation of the market in nuclear materials and services. |
| --- | --- |

—

Contribute to the Community policies by providing expertise, information and advice on any subject connected with the operation of the market in nuclear materials and services.

Tasks

As per the Euratom Treaty, the ESA is endowed with a right of option on nuclear materials produced in the territories of Member States and with an exclusive right to conclude contracts relating to the nuclear materials coming from inside the Community or from outside.

In the light of the above, the ESA’s tasks include:

| — | to assess the commitments negotiated between the parties concerned and, consequently, conclude, deny concluding or accept to conclude only under certain conditions, any contract, or amendment to it, pertaining to the supply of materials in the meaning of Article 52 of the Euratom Treaty, |
| --- | --- |

—

to assess the commitments negotiated between the parties concerned and, consequently, conclude, deny concluding or accept to conclude only under certain conditions, any contract, or amendment to it, pertaining to the supply of materials in the meaning of Article 52 of the Euratom Treaty,

| — | to receive notification of all contracts relating to the processing, conversion or shaping of ores, source materials or special fissile materials, as per Article 75 of the Euratom Treaty, and process them, |
| --- | --- |

—

to receive notification of all contracts relating to the processing, conversion or shaping of ores, source materials or special fissile materials, as per Article 75 of the Euratom Treaty, and process them,

| — | to receive notification of all transfers, import or export operations concerning small quantities of ores, source materials or special fissile materials, as per Article 74 of the Euratom Treaty, and process them, |
| --- | --- |

—

to receive notification of all transfers, import or export operations concerning small quantities of ores, source materials or special fissile materials, as per Article 74 of the Euratom Treaty, and process them,

| — | to instruct the files and take all the preparatory steps in view of a Commission decision in cases for which, pursuant to Euratom law, the agreement of the College is required, |
| --- | --- |

—

to instruct the files and take all the preparatory steps in view of a Commission decision in cases for which, pursuant to Euratom law, the agreement of the College is required,

| — | to manage, as appropriate, the contracts which it concluded or of which it received notification, |
| --- | --- |

—

to manage, as appropriate, the contracts which it concluded or of which it received notification,

| — | to collect and process information with a view to constantly monitoring the market of nuclear materials and services in the EU. In 2013, the observatory role of ESA has been further enlarged to cover the aspects of the supply of medical radioisotopes in the EU, |
| --- | --- |

—

to collect and process information with a view to constantly monitoring the market of nuclear materials and services in the EU. In 2013, the observatory role of ESA has been further enlarged to cover the aspects of the supply of medical radioisotopes in the EU,

| — | to publish regular reports for internal use, and/or for the general public, regarding the operation of, and recent trends in, the market of nuclear materials and services, |
| --- | --- |

—

to publish regular reports for internal use, and/or for the general public, regarding the operation of, and recent trends in, the market of nuclear materials and services,

| — | to provide the Community, upon request, with expertise and advice on any subject connected with the operation of the market of nuclear materials and services, |
| --- | --- |

—

to provide the Community, upon request, with expertise and advice on any subject connected with the operation of the market of nuclear materials and services,

| — | to liaise with the ESA’s Advisory Committee (AC) and seek the opinion thereof and to participate, as appropriate, including by providing a secretariat, to the said AC’s meetings. |
| --- | --- |

—

to liaise with the ESA’s Advisory Committee (AC) and seek the opinion thereof and to participate, as appropriate, including by providing a secretariat, to the said AC’s meetings.

Governance

| — | The Agency is endowed with legal personality and financial autonomy. |
| --- | --- |

—

The Agency is endowed with legal personality and financial autonomy.

| — | It operates under the supervision of the Commission, on a non-profit-making basis. |
| --- | --- |

—

It operates under the supervision of the Commission, on a non-profit-making basis.

| — | The Director and the staff of the ESA have to be, or to become, officials of the European Communities. They have to possess a security clearance. Their salaries are paid by the Commission. |
| --- | --- |

—

The Director and the staff of the ESA have to be, or to become, officials of the European Communities. They have to possess a security clearance. Their salaries are paid by the Commission.

| — | The Euratom Treaty and the ESA’s Statutes determine the Agency’s capital and the conditions upon which it is subscribed. |
| --- | --- |

—

The Euratom Treaty and the ESA’s Statutes determine the Agency’s capital and the conditions upon which it is subscribed.

Director-General

Appointed by the Commission, for an indefinite period of time. The DG’s duties and powers are determined, in particular, in the ESA’s Statutes.

The Euratom Supply Agency’s Supervision by the Commission

The Commission may issue directives to the Agency and possesses a right of veto over the Agency’s decisions. Moreover, certain decisions of the ESA are subject to prior Commission authorisation. The Agency’s Rules require approval by the Commission.

Advisory Committee

Composed from members of the Member States, who are appointed intuitu personae for a (renewable) 3-year term. The AC assists the Agency in carrying out its tasks. It acts as a link between the ESA and both producers and users in the nuclear industry. The Committee may be consulted upon all matters in the Agency’s purview. It has to give its opinion on all matters listed in Article 13 of the Statutes. It normally meets twice every year.

External audit

European Court of Auditors.

Discharge authority

European Parliament.

Resources made available to the Agency in 2014 (2013)

Budget

1 04  000(1 04  000) euro, including contribution from the Commission: 98  000(98  000) euro.

Staff on 31 December 2014

Total staff number: 18 (18) (including the Director).

Products and services provided in 2014 (2013)

Security of supply ensured

Transactions processed

Some 276 (279) transactions, including contracts, amendments and notifications of the front-end activities, were processed by the Agency in 2014.

Reports

In 2014, the Agency issued:

| — | the Agency’s Annual Report for 2013, |
| --- | --- |

—

the Agency’s Annual Report for 2013,

| — | 3 (4) Quarterly Uranium Market Reports, |
| --- | --- |

—

3 (4) Quarterly Uranium Market Reports,

| — | 47 (40) Weekly Nuclear News Briefs, for readers inside the EC. |
| --- | --- |

—

47 (40) Weekly Nuclear News Briefs, for readers inside the EC.

Participation in activities of the Euratom Supply Agency’s Advisory Committee

| — | The Agency’s AC held two meetings (in April and November), with the Agency’s support and participation. |
| --- | --- |

—

The Agency’s AC held two meetings (in April and November), with the Agency’s support and participation.

| — | The Agency facilitated the activities of two Working Groups of its AC. |
| --- | --- |

—

The Agency facilitated the activities of two Working Groups of its AC.

Relations with other EU Institutions and International Cooperation

Relations with the European Commission as described above.

Each year the Agency has to submit to the EP, the Council and the Commission a report covering its activities in the previous year, as well as its work programme for the coming year.

ESA also cooperates with international organisations, namely the IAEA (International Atomic Energy Agency) and the OECD/NEA (Nuclear Energy Agency). In that context, the Agency participates in the joint NEA/IAEA Uranium Group and in the NEA High-Level Group on the Security of Supply of Medical Radioisotopes (HLG-MR).

Security of supply of medical radioisotopes

In 2014, ESA continued its chairmanship of the European Observatory on the Supply of Medical Radioisotopes to help implement a European Council policy towards ensuring continuity of supply for medical radioisotopes.

Source: Annex supplied by the Agency.

---

THE AGENCY’S REPLY

| 12. | The Agency has taken note of the Court’s report. |
| --- | --- |

12.

The Agency has taken note of the Court’s report.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/307 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/307

---

REPORT

on the annual accounts of the European Foundation for the Improvement of Living and Working Conditions for the financial year 2014, together with the Foundation’s reply

(2015/C 409/34)

INTRODUCTION

| 1. | The European Foundation for the Improvement of Living and Working Conditions (hereinafter ‘the Foundation’, aka ‘Eurofound’), which is located in Dublin, was established by Council Regulation (EEC) No 1365/75 (1). The Foundation’s task is to contribute to the planning and establishment of better living and working conditions in the Union by increasing and disseminating knowledge which is relevant to this subject (2). |
| --- | --- |

1.

The European Foundation for the Improvement of Living and Working Conditions (hereinafter ‘the Foundation’, aka ‘Eurofound’), which is located in Dublin, was established by Council Regulation (EEC) No 1365/75 (1). The Foundation’s task is to contribute to the planning and establishment of better living and working conditions in the Union by increasing and disseminating knowledge which is relevant to this subject (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Foundation’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Foundation’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Foundation, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Foundation, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Foundation and the legality and regularity of the underlying transactions (5).






  (a) | The management’s responsibilities in respect of the Foundation’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Foundation after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Foundation in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Foundation and the legality and regularity of the underlying transactions (5).

(a)

The management’s responsibilities in respect of the Foundation’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Foundation after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Foundation in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Foundation are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Foundation are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and statement of assurance, the Court considered the audit work of the independent external auditor performed on the Foundation’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and statement of assurance, the Court considered the audit work of the independent external auditor performed on the Foundation’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Foundation’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Foundation’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | In 2014, the overall level of committed appropriations was high at 99,7 %, indicating that commitments were made in a timely manner. However, the level of committed appropriations carried over to 2015 was high for title III (operational expenditure) at 3 8 14  156 euro, i.e. 53,7 % (2013: 3 3 75  781 euro, i.e. 48,6 %), mainly in relation to multiannual projects, for which activities were implemented and payments were made according to schedule, and in relation to one multi-annual project for which implementation was brought forward to 2014 but where payments are only due in 2015. |
| --- | --- |

11.

In 2014, the overall level of committed appropriations was high at 99,7 %, indicating that commitments were made in a timely manner. However, the level of committed appropriations carried over to 2015 was high for title III (operational expenditure) at 3 8 14  156 euro, i.e. 53,7 % (2013: 3 3 75  781 euro, i.e. 48,6 %), mainly in relation to multiannual projects, for which activities were implemented and payments were made according to schedule, and in relation to one multi-annual project for which implementation was brought forward to 2014 but where payments are only due in 2015.

OTHER COMMENTS

| 12. | In 2005 new EU Staff Regulations entered into force, including provisions that future remunerations of officials recruited before 5 August 2005 should not be less than under the previous EU Staff Regulations. The Court’s audit revealed that this was not complied with and, in the case of 20 of the 75 officials employed at that time, this led to a total underpayment of 1 28  735 euro for the period 2005 to 2014. The Foundation’s accounts include a provision for this amount. |
| --- | --- |

12.

In 2005 new EU Staff Regulations entered into force, including provisions that future remunerations of officials recruited before 5 August 2005 should not be less than under the previous EU Staff Regulations. The Court’s audit revealed that this was not complied with and, in the case of 20 of the 75 officials employed at that time, this led to a total underpayment of 1 28  735 euro for the period 2005 to 2014. The Foundation’s accounts include a provision for this amount.

FOLLOW-UP OF PREVIOUS YEAR’S COMMENTS

| 13. | An overview of the corrective actions taken in response to the Court’s comments from the previous year is provided in Annex I. |
| --- | --- |

13.

An overview of the corrective actions taken in response to the Court’s comments from the previous year is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 139, 30.5.1975, p. 1.

1

(2)  Annex II summarises the Foundation’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

---

ANNEX I

Follow-up of previous year’s comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2013 | The Foundation carried out a comprehensive physical inventory exercise at the end of 2013 and the beginning of 2014. At the time of the Court’s audit in February 2014, a physical inventory report had not yet been finalised. Tests carried out by the Court revealed that not all fixed assets were barcoded and recorded in the register and accounts. Equipment with a value of 2 09  843 euro (1) had been expensed instead of being capitalised, the error was corrected following the Court’s audit. Some assets could not be traced to the suppliers’ delivery notes in order to ensure the correct starting date for the calculation of the depreciation charge. | Completed |
| 2013 | The facts presented in the previous paragraph represent considerable internal control weaknesses in the area of fixed assets registration and accounting. | Completed |
| 2013 | In 2013, the overall level of committed appropriations was 99 %, indicating that commitments were made in a timely manner. However, the level of committed appropriations carried over to 2014 however was high at some 6 62  831 euro (35,6 %) for title II (administrative expenditure) and some 3 3 75  781 euro (48,6 %) for title III (operating expenditure). | N/A |
| 2013 | Carry-overs of committed title II appropriations mainly related to the procurement of IT hard- and software (2 81  934 euro, of which purchases amounting to 1 89  934 euro were originally planned for 2014), urgent and unforeseen repair works (69  000 euro) and refurbishment works to be contracted and planned for the beginning of 2014 (2 30  718 euro). | N/A |
| 2013 | For title III, committed appropriations carried over amounting to 2 6 25  543 euro concerned multi-annual projects for which activities were implemented and payments were made according to schedule. Unplanned carry-overs of 7 50  238 euro mainly related to an increase in the budget for several projects to enhance their scope and quality (65 %), translation services ordered in December 2013 but originally planned for 2014 (14 %), delays in procurement procedures (7 %), late invoicing by contractors (14 %) and other events beyond the Foundation’s control. | N/A |
| 2013 | The Foundation became operational in 1975 and has, to date, worked on the basis of correspondence and exchanges with the host Member State. However, a comprehensive headquarters agreement between the Foundation and the Member State has not been signed. Such an agreement would further promote transparency in respect of the conditions under which the Foundation and its staff operate. | Ongoing |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2013

The Foundation carried out a comprehensive physical inventory exercise at the end of 2013 and the beginning of 2014. At the time of the Court’s audit in February 2014, a physical inventory report had not yet been finalised. Tests carried out by the Court revealed that not all fixed assets were barcoded and recorded in the register and accounts. Equipment with a value of 2 09  843 euro (1) had been expensed instead of being capitalised, the error was corrected following the Court’s audit. Some assets could not be traced to the suppliers’ delivery notes in order to ensure the correct starting date for the calculation of the depreciation charge.

Completed

2013

The facts presented in the previous paragraph represent considerable internal control weaknesses in the area of fixed assets registration and accounting.

Completed

2013

In 2013, the overall level of committed appropriations was 99 %, indicating that commitments were made in a timely manner. However, the level of committed appropriations carried over to 2014 however was high at some 6 62  831 euro (35,6 %) for title II (administrative expenditure) and some 3 3 75  781 euro (48,6 %) for title III (operating expenditure).

N/A

2013

Carry-overs of committed title II appropriations mainly related to the procurement of IT hard- and software (2 81  934 euro, of which purchases amounting to 1 89  934 euro were originally planned for 2014), urgent and unforeseen repair works (69  000 euro) and refurbishment works to be contracted and planned for the beginning of 2014 (2 30  718 euro).

N/A

2013

For title III, committed appropriations carried over amounting to 2 6 25  543 euro concerned multi-annual projects for which activities were implemented and payments were made according to schedule. Unplanned carry-overs of 7 50  238 euro mainly related to an increase in the budget for several projects to enhance their scope and quality (65 %), translation services ordered in December 2013 but originally planned for 2014 (14 %), delays in procurement procedures (7 %), late invoicing by contractors (14 %) and other events beyond the Foundation’s control.

N/A

2013

The Foundation became operational in 1975 and has, to date, worked on the basis of correspondence and exchanges with the host Member State. However, a comprehensive headquarters agreement between the Foundation and the Member State has not been signed. Such an agreement would further promote transparency in respect of the conditions under which the Foundation and its staff operate.

Ongoing

---

(1)  Air conditioning system and other equipment in the Foundation’s Conference Centre.

---

ANNEX II

European Foundation for the Improvement of Living and Working Conditions (Dublin)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Article 151 of the Treaty on the Functioning of the European Union) | The Union and the Member States, having in mind fundamental social rights such as those set out in the European Social Charter signed at Turin on 18 October 1961 and in the 1989 Community Charter of the Fundamental Social Rights of Workers, shall have as their objectives the promotion of employment, improved living and working conditions, so as to make possible their harmonisation while the improvement is being maintained, proper social protection, dialogue between management and labour, the development of human resources with a view to lasting high employment and the combating of exclusion. [...] |
| --- | --- |
| Competences of the Foundation


  (Council Regulation (EEC) No 1365/75, as amended by Regulation (EC) No 1111/2005) | Objectives

  The aim of the Foundation shall be to contribute to the establishment of better living and working conditions by increasing and disseminating knowledge which is relevant to this subject. In particular, it is required to consider the following areas:






  — | man at work, |

Areas of Union competence deriving from the Treaty

(Article 151 of the Treaty on the Functioning of the European Union)

The Union and the Member States, having in mind fundamental social rights such as those set out in the European Social Charter signed at Turin on 18 October 1961 and in the 1989 Community Charter of the Fundamental Social Rights of Workers, shall have as their objectives the promotion of employment, improved living and working conditions, so as to make possible their harmonisation while the improvement is being maintained, proper social protection, dialogue between management and labour, the development of human resources with a view to lasting high employment and the combating of exclusion. [...]

Competences of the Foundation

(Council Regulation (EEC) No 1365/75, as amended by Regulation (EC) No 1111/2005)

Objectives

The aim of the Foundation shall be to contribute to the establishment of better living and working conditions by increasing and disseminating knowledge which is relevant to this subject. In particular, it is required to consider the following areas:

—

man at work,

| — | organisation of work and particularly job design, |
| --- | --- |

—

organisation of work and particularly job design,

| — | problems peculiar to certain categories of workers, |
| --- | --- |

—

problems peculiar to certain categories of workers,

| — | long-term aspects of the improvement of the environment, |
| --- | --- |

—

long-term aspects of the improvement of the environment,

| — | the distribution of human activities in space and in time. |
| --- | --- |

—

the distribution of human activities in space and in time.

Tasks

| — | To foster the exchange of information and experience in these fields, |
| --- | --- |

—

To foster the exchange of information and experience in these fields,

| — | to facilitate contact between universities, study and research institutes, economic and social administrations and organisations, |
| --- | --- |

—

to facilitate contact between universities, study and research institutes, economic and social administrations and organisations,

| — | to carry out studies or to conclude study contracts and to provide assistance for pilot projects, |
| --- | --- |

—

to carry out studies or to conclude study contracts and to provide assistance for pilot projects,

| — | to cooperate as closely as possible with existing specialised institutes in the Member States and at international level. |
| --- | --- |

—

to cooperate as closely as possible with existing specialised institutes in the Member States and at international level.

Governance

The Governing Board (GB)

| — | From each Member State: one government representative, one representative from employers’ organisations and one workers’ representative, |
| --- | --- |

—

From each Member State: one government representative, one representative from employers’ organisations and one workers’ representative,

| — | three representatives from the Commission, |
| --- | --- |

—

three representatives from the Commission,

| — | one regular meeting per year. |
| --- | --- |

—

one regular meeting per year.

The Bureau of the GB

| — | Consists of 11 members; three members from each of the social partners and the governments, two from the Commission, |
| --- | --- |

—

Consists of 11 members; three members from each of the social partners and the governments, two from the Commission,

| — | it monitors the implementation of decisions of the GB and takes measures to ensure proper management between GB meetings, |
| --- | --- |

—

it monitors the implementation of decisions of the GB and takes measures to ensure proper management between GB meetings,

| — | six regular meetings per year. |
| --- | --- |

—

six regular meetings per year.

The Director and Deputy Director are appointed by the Commission from a list of candidates submitted by the GB. The Director implements the decisions of the GB and its Bureau and manages the Foundation.

Internal audit

European Commission’s Internal Audit Service (IAS).

External audit

European Court of Auditors.

Discharge authority

European Parliament acting on a recommendation by the Council.

Resources available to the Foundation in 2014 (2013)

Budget

20,9(20,6) million euro

Staff at 31 December 2014

Officials and temporary staff:

99 (101) posts provided for in the establishment plan, of which 96 (99) were occupied at 31 December 2014

Other staff:

Seconded National Experts: 0 (0)

Contract staff: 14 (13)

Total staff employed: 110 (112)

Allocated to
   (1)
  :

Operations (Operating activities): 79 (78)

Administration & Coordination (Administrative tasks): 19 (29)

Mixed: 12 (5)

Activities and services provided in 2014

Increasing labour market participation and combating unemployment by creating jobs, improving labour market functioning and promoting integration

| — | European Restructuring Monitor (ERM): 1  464 restructuring fact sheets added; four issues of ERM quarterly published |
| --- | --- |

—

European Restructuring Monitor (ERM): 1  464 restructuring fact sheets added; four issues of ERM quarterly published

| — | European Restructuring Monitor: ERM report 2014 — Restructuring in the Public Sector |
| --- | --- |

—

European Restructuring Monitor: ERM report 2014 — Restructuring in the Public Sector

| — | Report on ‘Labour mobility: Recent trends and policies’ |
| --- | --- |

—

Report on ‘Labour mobility: Recent trends and policies’

| — | Report on ‘Effects of restructuring at regional level and approaches to dealing with the consequences’ |
| --- | --- |

—

Report on ‘Effects of restructuring at regional level and approaches to dealing with the consequences’

| — | Report ‘Mapping youth transitions in Europe’ |
| --- | --- |

—

Report ‘Mapping youth transitions in Europe’

| — | Searchable database on restructuring case studies developed, showing how companies anticipate and manage change. |
| --- | --- |

—

Searchable database on restructuring case studies developed, showing how companies anticipate and manage change.

Improving working conditions and making work sustainable throughout the life course

| — | Establishment of the European Observatory of Working Life as an integrated observatory on industrial relations and working conditions in the EU |
| --- | --- |

—

Establishment of the European Observatory of Working Life as an integrated observatory on industrial relations and working conditions in the EU

| — | Fifth European Working Conditions Survey: Policy lessons from the fifth EWCS: The pursuit of more and better jobs |
| --- | --- |

—

Fifth European Working Conditions Survey: Policy lessons from the fifth EWCS: The pursuit of more and better jobs

| — | Preparation of Sixth European Working Conditions Survey (fieldwork to start in February 2015) |
| --- | --- |

—

Preparation of Sixth European Working Conditions Survey (fieldwork to start in February 2015)

| — | Report: National working conditions surveys in Europe: A compilation |
| --- | --- |

—

Report: National working conditions surveys in Europe: A compilation

| — | Report: Psychosocial risks in Europe: Prevalence and strategies for prevention |
| --- | --- |

—

Report: Psychosocial risks in Europe: Prevalence and strategies for prevention

| — | Report: Employment opportunities for people with chronic diseases. |
| --- | --- |

—

Report: Employment opportunities for people with chronic diseases.

Developing industrial relations to ensure equitable and productive solutions in a changing policy context

| — | Establishment of the European Observatory of Working Life as an integrated observatory on industrial relations and working conditions in the EU (see also above) |
| --- | --- |

—

Establishment of the European Observatory of Working Life as an integrated observatory on industrial relations and working conditions in the EU (see also above)

| — | Report: Industrial relations and working conditions developments in Europe 2013 |
| --- | --- |

—

Report: Industrial relations and working conditions developments in Europe 2013

| — | Report: Social partners and gender equality in Europe |
| --- | --- |

—

Report: Social partners and gender equality in Europe

| — | Report: Changes to wage-setting mechanisms in the context of the crisis and the EU’s new economic governance regime |
| --- | --- |

—

Report: Changes to wage-setting mechanisms in the context of the crisis and the EU’s new economic governance regime

| — | Report: Social dialogue in micro and small enterprises. |
| --- | --- |

—

Report: Social dialogue in micro and small enterprises.

Improving standards of living and promoting social cohesion in the face of economic disparities and social inequalities

| — | Third European Quality of Life Survey:






  — | Foundation Findings: Quality of life in urban and rural Europe; Work preferences after 50; Social situation of young people in Europe |
| --- | --- | --- |

—

Third European Quality of Life Survey:

—

Foundation Findings: Quality of life in urban and rural Europe; Work preferences after 50; Social situation of young people in Europe

| — | Trends in quality of life: reports published on Croatia, the former Yugoslav Republic of Macedonia and on Turkey |
| --- | --- |

—

Trends in quality of life: reports published on Croatia, the former Yugoslav Republic of Macedonia and on Turkey

| — | Report: Social cohesion and well-being in the EU |
| --- | --- |

—

Report: Social cohesion and well-being in the EU

| — | Report: Access to healthcare in times of crisis. |
| --- | --- |

—

Report: Access to healthcare in times of crisis.

Communication and sharing ideas and experience

| — | 1 01  760 downloads of reports from Eurofound website. 1 7 03  298 user visits. |
| --- | --- |

—

1 01  760 downloads of reports from Eurofound website. 1 7 03  298 user visits.

| — | 125 publications in PDF (786 linguistic versions). |
| --- | --- |

—

125 publications in PDF (786 linguistic versions).

| — | 328 EU policy documents quoting references to Eurofound findings and expertise. |
| --- | --- |

—

328 EU policy documents quoting references to Eurofound findings and expertise.

| — | 94 on-request contributions to events. |
| --- | --- |

—

94 on-request contributions to events.

---

(1)  The new allocation split follows the unified benchmarking exercise according to paragraph 29(3) of the Financial Regulation. This exercise was carried out by Eurofound for the first time in December 2014.

Source: Annex supplied by the Foundation.

---

THE FOUNDATION’S REPLY

| 11. | Eurofound has taken note of the Court’s comment on the high level of committed appropriations carried over to 2015 in title III. Eurofound appreciates the thorough analysis of the budget implementation and for mentioning the reasons for the carry-overs (multiannual projects implemented according to schedule and a project which was implemented earlier than planned). |
| --- | --- |

11.

Eurofound has taken note of the Court’s comment on the high level of committed appropriations carried over to 2015 in title III. Eurofound appreciates the thorough analysis of the budget implementation and for mentioning the reasons for the carry-overs (multiannual projects implemented according to schedule and a project which was implemented earlier than planned).

| 12. | The underpayment of several staff members following the change to the 2005 Staff Regulation has been resolved and the amounts owed to staff members were paid in June and July 2015. Eurofound would like to specify that the calculation of salaries is externalised by Eurofound to the European Commission’s PMO (Paymaster’s Office). |
| --- | --- |

12.

The underpayment of several staff members following the change to the 2005 Staff Regulation has been resolved and the amounts owed to staff members were paid in June and July 2015. Eurofound would like to specify that the calculation of salaries is externalised by Eurofound to the European Commission’s PMO (Paymaster’s Office).

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/315 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/315

---

REPORT

on the annual accounts of the European Union's Judicial Cooperation Unit for the financial year 2014, together with Eurojust’s reply

(2015/C 409/35)

INTRODUCTION

| 1. | The European Union’s Judicial Cooperation Unit (hereinafter ‘Eurojust’), which is located in The Hague, was set up by Council Decision 2002/187/JHA (1) with a view to stepping up the fight against serious organised crime. Its objective is to improve the coordination of cross-border investigations and prosecutions between the Member States of the European Union, and between Member States and non-Member States (2). |
| --- | --- |

1.

The European Union’s Judicial Cooperation Unit (hereinafter ‘Eurojust’), which is located in The Hague, was set up by Council Decision 2002/187/JHA (1) with a view to stepping up the fight against serious organised crime. Its objective is to improve the coordination of cross-border investigations and prosecutions between the Member States of the European Union, and between Member States and non-Member States (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of Eurojust’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of Eurojust’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of Eurojust, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of Eurojust, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of Eurojust and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of Eurojust's annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Administrative Director approves the annual accounts of Eurojust after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of Eurojust in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of Eurojust and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of Eurojust's annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Administrative Director approves the annual accounts of Eurojust after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of Eurojust in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of Eurojust are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of Eurojust are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Eurojust’s accounts as stipulated in Article 208 (4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Eurojust’s accounts as stipulated in Article 208 (4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, Eurojust’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, Eurojust’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | The financial impact of salary adjustments and of the increase in the correction coefficient of the previous and the current years, both decided by the budgetary authorities in April 2014, were not included in the initial budget for the year 2014. The shortfall in salary budget of some 1,8 million euro required temporary cut-backs on operational expenditure, mainly for data processing and information management projects, as well as substantial transfers from administrative and operating budget lines at the year-end. At the end of November 2014, the shortfall was partly balanced by an amended budget providing additional 1,2 million euro to the agency and commitments were made to catch up with the implementation of the projects. |
| --- | --- |

11.

The financial impact of salary adjustments and of the increase in the correction coefficient of the previous and the current years, both decided by the budgetary authorities in April 2014, were not included in the initial budget for the year 2014. The shortfall in salary budget of some 1,8 million euro required temporary cut-backs on operational expenditure, mainly for data processing and information management projects, as well as substantial transfers from administrative and operating budget lines at the year-end. At the end of November 2014, the shortfall was partly balanced by an amended budget providing additional 1,2 million euro to the agency and commitments were made to catch up with the implementation of the projects.

| 12. | The overall level of committed appropriations was high at 99 %. However, for title III (operating expenditure) the level of committed appropriations carried over to 2015 was high at 2,6 million euro, i.e. 35 % (2013: 2,3 million euro, i.e. 32 %). This mainly resulted from the temporary budget shortfall during the year where commitments could only be made late in the year (see paragraph 11) and from granting projects for ‘Joint Investigation Teams’ launched during the last months of 2014 for which payments were not due until 2015. |
| --- | --- |

12.

The overall level of committed appropriations was high at 99 %. However, for title III (operating expenditure) the level of committed appropriations carried over to 2015 was high at 2,6 million euro, i.e. 35 % (2013: 2,3 million euro, i.e. 32 %). This mainly resulted from the temporary budget shortfall during the year where commitments could only be made late in the year (see paragraph 11) and from granting projects for ‘Joint Investigation Teams’ launched during the last months of 2014 for which payments were not due until 2015.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 13. | An overview of the corrective actions taken in response to the Court's comments from the previous years is provided in Annex I. |
| --- | --- |

13.

An overview of the corrective actions taken in response to the Court's comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 63, 6.3.2002, p. 1.

1

(2)  Annex II summarises Eurojust’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

---

ANNEX I

Follow-up of previous years’ comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2011 | In the report for the financial year 2010, the Court noted that there was scope to reconsider the definition of respective roles and responsibilities between the Director and the College of Eurojust in order to avoid the overlap of responsibilities, currently resulting from the Founding Regulation. No corrective measures were taken in 2011. | Ongoing (New Eurojust Regulation under preparation) |
| 2013 | The level of committed appropriations for the different titles varied between 99 % and 98 % of total appropriations, indicating that legal commitments were made in a timely manner. However, the level of committed appropriations carried over to 2014 was high for title III (operating expenditure) at 2 3 41  825 euro (32 %). This was mainly the result of delays associated with the handover of internal software management to a new service provider at the year-end. Also, reimbursements of expenditure from grant schemes which were used to support ‘Joint Investigation Teams’ were only due in 2014. | N/A |
| 2013 | In 2013, the Agency made 49 budget transfers affecting 101 budget lines. This indicates weaknesses in budget planning and implementation. | Completed |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2011

In the report for the financial year 2010, the Court noted that there was scope to reconsider the definition of respective roles and responsibilities between the Director and the College of Eurojust in order to avoid the overlap of responsibilities, currently resulting from the Founding Regulation. No corrective measures were taken in 2011.

Ongoing (New Eurojust Regulation under preparation)

2013

The level of committed appropriations for the different titles varied between 99 % and 98 % of total appropriations, indicating that legal commitments were made in a timely manner. However, the level of committed appropriations carried over to 2014 was high for title III (operating expenditure) at 2 3 41  825 euro (32 %). This was mainly the result of delays associated with the handover of internal software management to a new service provider at the year-end. Also, reimbursements of expenditure from grant schemes which were used to support ‘Joint Investigation Teams’ were only due in 2014.

N/A

2013

In 2013, the Agency made 49 budget transfers affecting 101 budget lines. This indicates weaknesses in budget planning and implementation.

Completed

---

ANNEX II

European Union's Judicial Cooperation Unit (The Hague)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Article 85 of the Treaty on the Functioning of the European Union) | Eurojust’s mission is to support and strengthen coordination and cooperation between national authorities in the fight against serious cross-border crime affecting the European Union. |
| --- | --- |
| Competences of Eurojust


  (as defined in Articles 3, 5, 6 and 7 of Council Decision 2002/187/JHA, as amended by Decision 2003/659/JHA and Decision 2009/426/JHA) | Objectives


  Article 3 Eurojust Council Decision

  In the context of investigations and prosecutions, concerning two or more Member States, of criminal behaviour referred to in Article 4 in relation to serious crime, particularly when it is organised, the objectives of Eurojust shall be:






  (a) | to stimulate and improve the coordination, between the competent authorities of the Member States, of investigations and prosecutions in the Member States, taking into account any request emanating from a competent authority of a Member State and any information provided by any competent body by virtue of provisions adopted within the framework of the Treaties; |

Areas of Union competence deriving from the Treaty

(Article 85 of the Treaty on the Functioning of the European Union)

Eurojust’s mission is to support and strengthen coordination and cooperation between national authorities in the fight against serious cross-border crime affecting the European Union.

Competences of Eurojust

(as defined in Articles 3, 5, 6 and 7 of Council Decision 2002/187/JHA, as amended by Decision 2003/659/JHA and Decision 2009/426/JHA)

Objectives

Article 3 Eurojust Council Decision

In the context of investigations and prosecutions, concerning two or more Member States, of criminal behaviour referred to in Article 4 in relation to serious crime, particularly when it is organised, the objectives of Eurojust shall be:

(a)

to stimulate and improve the coordination, between the competent authorities of the Member States, of investigations and prosecutions in the Member States, taking into account any request emanating from a competent authority of a Member State and any information provided by any competent body by virtue of provisions adopted within the framework of the Treaties;

| (b) | to improve cooperation between the competent authorities of the Member States, in particular by facilitating the execution of requests for, and decisions on, judicial cooperation, including regarding instruments giving effects to the principle of mutual recognition; |
| --- | --- |

(b)

to improve cooperation between the competent authorities of the Member States, in particular by facilitating the execution of requests for, and decisions on, judicial cooperation, including regarding instruments giving effects to the principle of mutual recognition;

| (c) | to support otherwise the competent authorities of the Member States in order to render their investigations and prosecutions more effective. |
| --- | --- |

(c)

to support otherwise the competent authorities of the Member States in order to render their investigations and prosecutions more effective.

Tasks

Article 5 Eurojust Council Decision

| 1. | In order to accomplish its objectives, Eurojust shall fulfil its tasks:






  (a) | through one or more of the national members concerned in accordance with Article 6, or |
| --- | --- | --- |

1.

In order to accomplish its objectives, Eurojust shall fulfil its tasks:

(a)

through one or more of the national members concerned in accordance with Article 6, or

| (b) | as a College in accordance with Article 7:






  (i) | when so requested by one or more of the national members concerned by a case dealt with by Eurojust, or |
| --- | --- | --- |

(b)

as a College in accordance with Article 7:

(i)

when so requested by one or more of the national members concerned by a case dealt with by Eurojust, or

| (ii) | when the case involves investigations or prosecutions which have repercussions at Union level or which might affect Member States other than those directly concerned, or |
| --- | --- |

(ii)

when the case involves investigations or prosecutions which have repercussions at Union level or which might affect Member States other than those directly concerned, or

| (iii) | when a general question relating to the achievement of its objectives is involved, or |
| --- | --- |

(iii)

when a general question relating to the achievement of its objectives is involved, or

| (iv) | when otherwise provided for in this Decision. |
| --- | --- |

(iv)

when otherwise provided for in this Decision.

| 2. | When it fulfils its tasks, Eurojust shall indicate whether it is acting through one or more of the national members within the meaning of Article 6 or as a College within the meaning of Article 7. |
| --- | --- |

2.

When it fulfils its tasks, Eurojust shall indicate whether it is acting through one or more of the national members within the meaning of Article 6 or as a College within the meaning of Article 7.

Article 6 Eurojust Council Decision

| 1. | When Eurojust acts through its national members concerned, it:






  (a) | may ask the competent authorities of the Member States concerned, giving its reasons, to:






  (i) | undertake an investigation or prosecution of specific acts, |
| --- | --- | --- | --- |

1.

When Eurojust acts through its national members concerned, it:

(a)

may ask the competent authorities of the Member States concerned, giving its reasons, to:

(i)

undertake an investigation or prosecution of specific acts,

| (ii) | accept that one of them may be in a better position to undertake an investigation or to prosecute specific acts, |
| --- | --- |

(ii)

accept that one of them may be in a better position to undertake an investigation or to prosecute specific acts,

| (iii) | coordinate between the competent authorities of the Member States concerned, |
| --- | --- |

(iii)

coordinate between the competent authorities of the Member States concerned,

| (iv) | set up a joint investigation team in keeping with the relevant cooperation instruments, |
| --- | --- |

(iv)

set up a joint investigation team in keeping with the relevant cooperation instruments,

| (v) | provide it with any information that is necessary for it to carry out its tasks, |
| --- | --- |

(v)

provide it with any information that is necessary for it to carry out its tasks,

| (vi) | take special investigative measures, |
| --- | --- |

(vi)

take special investigative measures,

| (vii) | take any other measure justified for the investigation or prosecution; |
| --- | --- |

(vii)

take any other measure justified for the investigation or prosecution;

| (b) | shall ensure that the competent authorities of the Member States concerned inform each other on investigations and prosecutions of which it has been informed; |
| --- | --- |

(b)

shall ensure that the competent authorities of the Member States concerned inform each other on investigations and prosecutions of which it has been informed;

| (c) | shall assist the competent authorities of the Member States, at their request, in ensuring the best possible coordination of investigations and prosecutions; |
| --- | --- |

(c)

shall assist the competent authorities of the Member States, at their request, in ensuring the best possible coordination of investigations and prosecutions;

| (d) | shall give assistance in order to improve cooperation between the competent national authorities; |
| --- | --- |

(d)

shall give assistance in order to improve cooperation between the competent national authorities;

| (e) | shall cooperate and consult with the European Judicial Network, including making use of and contributing to the improvement of its documentary database; |
| --- | --- |

(e)

shall cooperate and consult with the European Judicial Network, including making use of and contributing to the improvement of its documentary database;

| (f) | shall, in the cases referred to in Article 3(2) and (3) and with the agreement of the College, assist investigations and prosecutions concerning the competent authorities of only one Member State. |
| --- | --- |

(f)

shall, in the cases referred to in Article 3(2) and (3) and with the agreement of the College, assist investigations and prosecutions concerning the competent authorities of only one Member State.

| 2. | The Member States shall ensure that competent national authorities respond without undue delay to requests made under this Article. |
| --- | --- |

2.

The Member States shall ensure that competent national authorities respond without undue delay to requests made under this Article.

Article 7 Eurojust Council Decision

| 1. | When Eurojust acts as a College, it:






  (a) | may in relation to the types of crime and the offences referred to in Article 4(1) ask the competent authorities of the Member States concerned, giving its reasons:






  (i) | to undertake an investigation or prosecution of specific acts, |
| --- | --- | --- | --- |

1.

When Eurojust acts as a College, it:

(a)

may in relation to the types of crime and the offences referred to in Article 4(1) ask the competent authorities of the Member States concerned, giving its reasons:

(i)

to undertake an investigation or prosecution of specific acts,

| (ii) | to accept that one of them may be in a better position to undertake an investigation or to prosecute specific acts, |
| --- | --- |

(ii)

to accept that one of them may be in a better position to undertake an investigation or to prosecute specific acts,

| (iii) | to coordinate between the competent authorities of the Member States concerned, |
| --- | --- |

(iii)

to coordinate between the competent authorities of the Member States concerned,

| (iv) | to set up a joint investigation team in keeping with the relevant cooperation instruments, |
| --- | --- |

(iv)

to set up a joint investigation team in keeping with the relevant cooperation instruments,

| (v) | to provide it with any information that is necessary for it to carry out its tasks; |
| --- | --- |

(v)

to provide it with any information that is necessary for it to carry out its tasks;

| (b) | shall ensure that the competent authorities of the Member States inform each other of investigations and prosecutions of which it has been informed and which have repercussions at Union level or which might affect Member States other than those directly concerned; |
| --- | --- |

(b)

shall ensure that the competent authorities of the Member States inform each other of investigations and prosecutions of which it has been informed and which have repercussions at Union level or which might affect Member States other than those directly concerned;

| (c) | shall assist the competent authorities of the Member States, at their request, in ensuring the best possible coordination of investigations and prosecutions; |
| --- | --- |

(c)

shall assist the competent authorities of the Member States, at their request, in ensuring the best possible coordination of investigations and prosecutions;

| (d) | shall give assistance in order to improve cooperation between the competent authorities of the Member States, in particular on the basis of Europol's analysis; |
| --- | --- |

(d)

shall give assistance in order to improve cooperation between the competent authorities of the Member States, in particular on the basis of Europol's analysis;

| (e) | shall cooperate and consult with the European Judicial Network, including making use of and contributing to the improvement of its documentary database; |
| --- | --- |

(e)

shall cooperate and consult with the European Judicial Network, including making use of and contributing to the improvement of its documentary database;

| (f) | may assist Europol, in particular by providing it with opinions based on analyses carried out by Europol; |
| --- | --- |

(f)

may assist Europol, in particular by providing it with opinions based on analyses carried out by Europol;

| (g) | may supply logistical support in the cases referred to in points (a), (c) and (d). Such logistical support may include assistance for translation, interpretation and the organisation of coordination meetings. |
| --- | --- |

(g)

may supply logistical support in the cases referred to in points (a), (c) and (d). Such logistical support may include assistance for translation, interpretation and the organisation of coordination meetings.

| 2. | Where two or more national members cannot agree on how to resolve a case of conflict of jurisdiction as regards the undertaking of investigations or prosecution pursuant to Article 6 and in particular Article 6(1)(c), the College shall be asked to issue a written non-binding opinion on the case, provided the matter could not be resolved through mutual agreement between the competent national authorities concerned. The opinion of the College shall be promptly forwarded to the Member States concerned. This paragraph is without prejudice to paragraph 1(a)(ii). |
| --- | --- |

2.

Where two or more national members cannot agree on how to resolve a case of conflict of jurisdiction as regards the undertaking of investigations or prosecution pursuant to Article 6 and in particular Article 6(1)(c), the College shall be asked to issue a written non-binding opinion on the case, provided the matter could not be resolved through mutual agreement between the competent national authorities concerned. The opinion of the College shall be promptly forwarded to the Member States concerned. This paragraph is without prejudice to paragraph 1(a)(ii).

| 3. | Notwithstanding the provisions contained in any instruments adopted by the European Union regarding judicial cooperation, a competent authority may report to Eurojust recurrent refusals or difficulties concerning the execution of requests for, and decisions on, judicial cooperation, including regarding instruments giving effect to the principle of mutual recognition, and request the College to issue a written non-binding opinion on the matter, provided it could not be resolved through mutual agreement between the competent national authorities or through the involvement of the national members concerned. The opinion of the College shall be promptly forwarded to the Member States concerned. |
| --- | --- |

3.

Notwithstanding the provisions contained in any instruments adopted by the European Union regarding judicial cooperation, a competent authority may report to Eurojust recurrent refusals or difficulties concerning the execution of requests for, and decisions on, judicial cooperation, including regarding instruments giving effect to the principle of mutual recognition, and request the College to issue a written non-binding opinion on the matter, provided it could not be resolved through mutual agreement between the competent national authorities or through the involvement of the national members concerned. The opinion of the College shall be promptly forwarded to the Member States concerned.

Governance

(Articles 2, 9, 23, 28, 29 and 36 of Eurojust Decision 2002/187/JHA; Article 3 of the Rules of Procedure of Eurojust)

College

The College is responsible for the organisation and operation of Eurojust. The College is composed of National Members who are seconded by each Member State in accordance with its legal system and who are prosecutors, judges or police officers of equivalent competence. The College elects its President from among the National Members.

Director

The Administrative Director is appointed by the College by 2/3 majority.

The Joint Supervisory Body

Supervises the processing of personal data.

External audit

European Court of Auditors.

Discharge authority

European Parliament acting on a Recommendation from the Council acting by qualified majority.

Resources made available to Eurojust in 2014 (2013)

Final Budget

33,9(32,4) million euro including assigned revenue

Post holders as at 31 December 2014

National Members: 28 (of which 2 based in Member States) (28, of which 2 based in Member States)

Deputy National Members: 21 (of which 11 based in Member States) (20, of which 11 based in Member States)

Assistants to National Members: 21 (of which 9 based in Member States) (21, of which 8 based in Member States)

Temporary staff: 199 (203)

Contract staff: 27 (27)

Seconded National Experts: 24 (14)

Products and services in 2014 (2013)

Number of coordination meetings: 196 (206)

Total number of cases: 1  804(1  576)

Drug trafficking: 283 (239)
   (1)

Illegal immigration: 32 (25)
   (1)

Trafficking in human beings: 71 (84)
   (1)

Fraud: 560 (449)
   (1)

Cybercrime: 42 (29)
   (1)

Terrorism: 14 (17)
   (1)

(Mobile) Organised crime: 128 (257)
   (1)

PIF crimes: 76 (31)
   (1)

Corruption: 55 (52)
   (1)

---

(1)  The crime list used for the classification of the cases reflects the Eurojust priority crime types in 2014.

Source: Annex supplied by Eurojust.

---

EUROJUST’S REPLY

| 11. | Eurojust agrees with the comment and will in future include in the budget the anticipated salary adjustments and increases of the correction coefficient, which are likely to be decided after the adoption of the budget. |
| --- | --- |

11.

Eurojust agrees with the comment and will in future include in the budget the anticipated salary adjustments and increases of the correction coefficient, which are likely to be decided after the adoption of the budget.

| 12. | Eurojust agrees with the comment. |
| --- | --- |

12.

Eurojust agrees with the comment.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/324 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/324

---

REPORT

on the annual accounts of the European Police Office for the financial year 2014 together with the Office’s reply

(2015/C 409/36)

INTRODUCTION

| 1. | The European Police Office (hereinafter ‘the Office’, aka ‘Europol’), which is located in The Hague, was established by Council Decision (2009/371/JHA) (1). The objective of the Office is to support and strengthen action by the Member States’ police authorities and other law enforcement services and their mutual cooperation in preventing and combating serious crime affecting two or more Member States, terrorism and forms of crime which affect a common interest covered by a Union policy (2). |
| --- | --- |

1.

The European Police Office (hereinafter ‘the Office’, aka ‘Europol’), which is located in The Hague, was established by Council Decision (2009/371/JHA) (1). The objective of the Office is to support and strengthen action by the Member States’ police authorities and other law enforcement services and their mutual cooperation in preventing and combating serious crime affecting two or more Member States, terrorism and forms of crime which affect a common interest covered by a Union policy (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Office’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Office’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Office, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Office, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Office and the legality and regularity of the underlying transactions (5).






  (a) | The management’s responsibilities in respect of the Office’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Office after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Office in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Office and the legality and regularity of the underlying transactions (5).

(a)

The management’s responsibilities in respect of the Office’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Office after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Office in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Office are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Office are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Office’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Office’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Office’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Office’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | Budget implementation rates improved significantly in 2014 and total carry-overs of committed appropriations decreased to 5,7 million euro, i.e. 6,7 % (2013: 11,6 %; 2012: 19,6 %). Carry-overs of committed appropriations were still relatively high for title II (administrative expenditure) at 1,9 million euro, i.e. 27 % (2013: 3,0 million euro, i.e. 41 %). They mainly related to maintenance and to modifications to Europol’s headquarters opened in 2011 (1,1 million euro). |
| --- | --- |

11.

Budget implementation rates improved significantly in 2014 and total carry-overs of committed appropriations decreased to 5,7 million euro, i.e. 6,7 % (2013: 11,6 %; 2012: 19,6 %). Carry-overs of committed appropriations were still relatively high for title II (administrative expenditure) at 1,9 million euro, i.e. 27 % (2013: 3,0 million euro, i.e. 41 %). They mainly related to maintenance and to modifications to Europol’s headquarters opened in 2011 (1,1 million euro).

| 12. | The cancellation rate of committed appropriations carried over from the previous year was high at 22 % (2013: 9 %). Cancellations were mainly related to delays in IT projects provided by external suppliers (mainly in the area of document and asset management and the exchange of police data). |
| --- | --- |

12.

The cancellation rate of committed appropriations carried over from the previous year was high at 22 % (2013: 9 %). Cancellations were mainly related to delays in IT projects provided by external suppliers (mainly in the area of document and asset management and the exchange of police data).

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 13. | An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I. |
| --- | --- |

13.

An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 121, 15.5.2009, p. 37.

1

(2)  Annex II summarises the Office’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

---

ANNEX I

Follow-up of previous years’ comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2011 | Exceptions and deviations were recorded for 7 % of 2011 payments. | Ongoing |
| 2013 | Although the Office has improved the preparation, execution and documentation of procurement procedures over the years, not all decisions taken in 2013 were based on sufficiently specific selection criteria, realistic price offers or in accordance with the established professional requirements. This affected the effectiveness of the procurement procedures. | Ongoing |
| 2013 | Budget implementation rates further improved in 2013 and total carry-overs of committed appropriations decreased to 9,4 million euro or 11,6 % (2012: 16,3 million euro or 19,6 %). However, carry-overs of committed appropriations were still high for title II (administrative expenditure) with 3,0 million euro or 41 % (2012: 4,2 million euro or 49 %). They mainly related to planned modifications of the building late in the year (1,8 million euro) and other administrative costs for which invoices had not been received at year end. | N/A |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2011

Exceptions and deviations were recorded for 7 % of 2011 payments.

Ongoing

2013

Although the Office has improved the preparation, execution and documentation of procurement procedures over the years, not all decisions taken in 2013 were based on sufficiently specific selection criteria, realistic price offers or in accordance with the established professional requirements. This affected the effectiveness of the procurement procedures.

Ongoing

2013

Budget implementation rates further improved in 2013 and total carry-overs of committed appropriations decreased to 9,4 million euro or 11,6 % (2012: 16,3 million euro or 19,6 %). However, carry-overs of committed appropriations were still high for title II (administrative expenditure) with 3,0 million euro or 41 % (2012: 4,2 million euro or 49 %). They mainly related to planned modifications of the building late in the year (1,8 million euro) and other administrative costs for which invoices had not been received at year end.

N/A

---

ANNEX II

European Police Office (The Hague)

Competences and Activities

| Areas of Union competence deriving from the Treaty


  (Article 88 of the Treaty on the Functioning of the European Union) | ‘Europol’s mission shall be to support and strengthen action by the Member States’ police authorities and other law enforcement services and their mutual cooperation in preventing and combating serious crime affecting two or more Member States, terrorism and forms of crime which affect a common interest covered by a Union policy’. |
| --- | --- |
| Competences of the Office


  (Council Decision 2009/371/JHA establishing the European Police Office (Europol) | Competence

  Europol’s competence shall cover organised crime, terrorism and other forms of serious crime affecting two or more Member States in such a way as to require a common approach by the Member States owing to the scale, significance and consequences of the offences.
  Europol’s competence shall also cover related criminal offences as defined in Article 4(3) ECD.

  Principal tasks







  — | To collect, store, process, analyse and exchange information and intelligence, |

Areas of Union competence deriving from the Treaty

(Article 88 of the Treaty on the Functioning of the European Union)

‘Europol’s mission shall be to support and strengthen action by the Member States’ police authorities and other law enforcement services and their mutual cooperation in preventing and combating serious crime affecting two or more Member States, terrorism and forms of crime which affect a common interest covered by a Union policy’.

Competences of the Office

(Council Decision 2009/371/JHA establishing the European Police Office (Europol)

Competence

Europol’s competence shall cover organised crime, terrorism and other forms of serious crime affecting two or more Member States in such a way as to require a common approach by the Member States owing to the scale, significance and consequences of the offences.

Europol’s competence shall also cover related criminal offences as defined in Article 4(3) ECD.

Principal tasks

—

To collect, store, process, analyse and exchange information and intelligence,

| — | to notify the competent authorities of the Member States without delay via the national unit referred to in Article 8 of information concerning them and of any connections identified between criminal offences, |
| --- | --- |

—

to notify the competent authorities of the Member States without delay via the national unit referred to in Article 8 of information concerning them and of any connections identified between criminal offences,

| — | to aid investigations in the Member States, in particular by forwarding all relevant information to the national units, |
| --- | --- |

—

to aid investigations in the Member States, in particular by forwarding all relevant information to the national units,

| — | to ask the competent authorities of the Member States concerned to initiate, conduct or coordinate investigations and to suggest the setting up of joint investigation teams in specific cases, |
| --- | --- |

—

to ask the competent authorities of the Member States concerned to initiate, conduct or coordinate investigations and to suggest the setting up of joint investigation teams in specific cases,

| — | to provide intelligence and analytical support to Member States in connection with major international events, |
| --- | --- |

—

to provide intelligence and analytical support to Member States in connection with major international events,

| — | to prepare threat assessments, strategic analyses and general situation reports relating to its objective, including organised crime threat assessments, |
| --- | --- |

—

to prepare threat assessments, strategic analyses and general situation reports relating to its objective, including organised crime threat assessments,

| — | to provide support to Member States in their tasks of gathering and analysing information from the internet in order to assist in the identification of criminal activities facilitated by or committed using the internet. |
| --- | --- |

—

to provide support to Member States in their tasks of gathering and analysing information from the internet in order to assist in the identification of criminal activities facilitated by or committed using the internet.

Additional tasks

| — | To develop specialist knowledge of the investigative procedures of the competent authorities of the Member States and to provide advice on investigations, |
| --- | --- |

—

To develop specialist knowledge of the investigative procedures of the competent authorities of the Member States and to provide advice on investigations,

| — | to provide strategic intelligence to assist and promote the efficient and effective use of the resources available at national and Union level for operational activities and the support of such activities. |
| --- | --- |

—

to provide strategic intelligence to assist and promote the efficient and effective use of the resources available at national and Union level for operational activities and the support of such activities.

Additionally, to assist Member States through support, advice and research in the following areas

| — | The training of members of their competent authorities, where appropriate in cooperation with the European Police College, |
| --- | --- |

—

The training of members of their competent authorities, where appropriate in cooperation with the European Police College,

| — | the organisation and equipment of those authorities by facilitating the provision of technical support between the Member States, |
| --- | --- |

—

the organisation and equipment of those authorities by facilitating the provision of technical support between the Member States,

| — | crime prevention methods, |
| --- | --- |

—

crime prevention methods,

| — | technical and forensic methods and analysis, and investigative procedures. |
| --- | --- |

—

technical and forensic methods and analysis, and investigative procedures.

Europol shall also act as the Central Office for combating euro counterfeiting in accordance with Council Decision 2005/511/JHA of 12 July 2005 on protecting the euro against counterfeiting, by designating Europol as the Central Office for combating euro counterfeiting.

Europol shall process and transfer financial messaging data in accordance with the Agreement between the European Union and the United States of America on the processing and transfer of Financial Messaging Data from the European Union to the United States for the purposes of the ‘Terrorist Finance Tracking Program’ (TFTP).

Europol shall continue efforts to establish the Prüm Helpdesk in order to support the daily application of the ‘Prüm Decisions’ in accordance with the Council conclusions of 13 December 2011 on intensifying the implementation of the ‘Prüm Decisions’.

Europol shall support the EU Policy Cycle for serious and organised crime and EMPACT (1) projects in line with the Council conclusions on the creation and implementation of an EU policy cycle for organised and serious international crime and the subsequent Council conclusions of 27 May 2011 on setting the EU’s priorities for the fight against organised crime between 2011 and 2013.

Europol shall host the European Cybercrime Centre (EC3) and act as the focal point in Europe’s fight against cybercrime in accordance with the Communication from the Commission to the Council and European Parliament COM(2012) 140 final of 28 March 2012‘Tackling crime in our Digital Age: Establishing a European Cybercrime Centre’.

Governance

Management Board

The Management Board shall be composed of one representative of each Member State and one representative of the Commission.

Director

| — | Is appointed by the Council, acting by qualified majority, from a list of at least three candidates presented by the Management Board, for a 4-year period (may be extended once for not more than 4 years). |
| --- | --- |

—

Is appointed by the Council, acting by qualified majority, from a list of at least three candidates presented by the Management Board, for a 4-year period (may be extended once for not more than 4 years).

| — | Is assisted by three Deputy Directors appointed for a 4-year period (extendable once). |
| --- | --- |

—

Is assisted by three Deputy Directors appointed for a 4-year period (extendable once).

| — | Leads Europol and is accountable to the Management Board in respect of the performance of his/her duties. |
| --- | --- |

—

Leads Europol and is accountable to the Management Board in respect of the performance of his/her duties.

| — | Is Europol’s legal representative. |
| --- | --- |

—

Is Europol’s legal representative.

External audit

European Court of Auditors

Internal audit

| — | European Commission’s Internal Audit Service (IAS), |
| --- | --- |

—

European Commission’s Internal Audit Service (IAS),

| — | Internal Audit Function (IAF). |
| --- | --- |

—

Internal Audit Function (IAF).

Data protection and safeguarding of personal rights

| — | Joint Supervisory Body (JSB), |
| --- | --- |

—

Joint Supervisory Body (JSB),

| — | Data Protection Officer (DPO). |
| --- | --- |

—

Data Protection Officer (DPO).

Discharge authority

European Parliament, taking into account a recommendation from the Council, acting by qualified majority.

Resources made available to the Office in 2014 (2013)

Final budget 2014

84,3(82,5) million euro

Staff in 2014

| — | Temporary staff: 450 (457) in establishment plan. Actual number in post on 31.12.2014 = 427 (426) excluding 13 TA posts that were not filled on 31.12.2014 but for which recruitment procedures were finalised and offer letters sent to selected candidates. At year end 9 of the 10 vacant posts had been identified as posts which would be cut as of January 2015. |
| --- | --- |

—

Temporary staff: 450 (457) in establishment plan. Actual number in post on 31.12.2014 = 427 (426) excluding 13 TA posts that were not filled on 31.12.2014 but for which recruitment procedures were finalised and offer letters sent to selected candidates. At year end 9 of the 10 vacant posts had been identified as posts which would be cut as of January 2015.

| — | Seconded National Experts: 31 (34) (actual year-end number) |
| --- | --- |

—

Seconded National Experts: 31 (34) (actual year-end number)

| — | Contract staff: 103 (94) (actual year-end number) |
| --- | --- |

—

Contract staff: 103 (94) (actual year-end number)

Products and services in 2014 (2013)

Europol as the principal EU support centre for law enforcement operations

Operational support to operations and Joint Investigation Teams (JITs) include: data processing, cross match reports, intelligence notifications, technical/forensic support and expertise, mobile office deployments, analysis reports, operational coordination at Europol HQ, operational meetings, financial assistance, etc. Europol increased the delivery of operational products and services both in quantity and quality in support of an increasing proportion of high profile and EMPACT-related operations.

| — | 34  472 cross-border cases supported. These included 13  693 cases initiated by the Euroregional Police Information and Cooperation Centre (EPICC) which started using SIENA in January 2014. Excluding the EPICC cases, 20  779 cases were supported, an increase of 13 % over 2013 (18  310). |
| --- | --- |

—

34  472 cross-border cases supported. These included 13  693 cases initiated by the Euroregional Police Information and Cooperation Centre (EPICC) which started using SIENA in January 2014. Excluding the EPICC cases, 20  779 cases were supported, an increase of 13 % over 2013 (18  310).

| — | 632 investigations in the Member States actively supported by Europol focusing on prioritised crime areas. |
| --- | --- |

—

632 investigations in the Member States actively supported by Europol focusing on prioritised crime areas.

| — | Europol coordinated and supported large scale intelligence-led operations involving joint actions across the EU targeting key crime hotspots and top targets and resulting in successful operational outcomes (e.g. Operation Archimedes, Airline Fraud Action Days). |
| --- | --- |

—

Europol coordinated and supported large scale intelligence-led operations involving joint actions across the EU targeting key crime hotspots and top targets and resulting in successful operational outcomes (e.g. Operation Archimedes, Airline Fraud Action Days).

| — | EC3 supported several cross-border investigations against cybercrime in close cooperation with Member States and external partners, including the private sector. On 1 September 2014 a pilot was initiated for the Joint Cybercrime Action Taskforce (J-CAT) at Europol HQ. The J-CAT was set up as a cooperation framework for Member States and operational cooperation partners to bring together cyber intelligence and proactively prioritise, prepare and launch cross-border investigations on cybercriminal acts. More than 15 operations supported by EC3 were initiated by J-CAT. |
| --- | --- |

—

EC3 supported several cross-border investigations against cybercrime in close cooperation with Member States and external partners, including the private sector. On 1 September 2014 a pilot was initiated for the Joint Cybercrime Action Taskforce (J-CAT) at Europol HQ. The J-CAT was set up as a cooperation framework for Member States and operational cooperation partners to bring together cyber intelligence and proactively prioritise, prepare and launch cross-border investigations on cybercriminal acts. More than 15 operations supported by EC3 were initiated by J-CAT.

| — | 29 euro counterfeiting investigations were financially supported by Europol. |
| --- | --- |

—

29 euro counterfeiting investigations were financially supported by Europol.

| — | Europol supported 33 Joint Investigation Teams (JITs) in 2014. Europol supported 22 JITs as a full participant based on a signed arrangement. All except one of the JITs supported by Europol were related to EMPACT priorities. |
| --- | --- |

—

Europol supported 33 Joint Investigation Teams (JITs) in 2014. Europol supported 22 JITs as a full participant based on a signed arrangement. All except one of the JITs supported by Europol were related to EMPACT priorities.

| — | Lead investigator(s) of operations in the Member States and Member States’ experts expressed a high level of satisfaction with the operational support provided by Europol. |
| --- | --- |

—

Lead investigator(s) of operations in the Member States and Member States’ experts expressed a high level of satisfaction with the operational support provided by Europol.

| — | 5  617 operational reports produced in 2014 compared to 2  250 in 2013 (incl. cross match reports, operational analysis reports, intelligence notifications and technical ad hoc analysis reports). |
| --- | --- |

—

5  617 operational reports produced in 2014 compared to 2  250 in 2013 (incl. cross match reports, operational analysis reports, intelligence notifications and technical ad hoc analysis reports).

| — | Europol financially supported 269 operational meetings and 54 EMPACT meetings. |
| --- | --- |

—

Europol financially supported 269 operational meetings and 54 EMPACT meetings.

| — | Europol fulfilled its role in the Implementation of TFTP Agreement Articles 4, 9 and 10 by processing all related US and MS requests and information leads. |
| --- | --- |

—

Europol fulfilled its role in the Implementation of TFTP Agreement Articles 4, 9 and 10 by processing all related US and MS requests and information leads.

| — | Customer satisfaction rate measured at 70 % (steady increase over the past years). |
| --- | --- |

—

Customer satisfaction rate measured at 70 % (steady increase over the past years).

Strategic analysis capability

Strategic products incl. threat assessments and situation reports

| — | 26 strategic reports on organised crime and 20 strategic reports on terrorism were produced, including the internet Organised Crime Threat Assessment (iOCTA), Methamphetamine threat assessment, EU Terrorism Situation and Trend Report (TE-SAT), Threat Assessment on the ISIL (2) terrorist movement and its impact on the EU, Situation Report on Travel for Terrorist Purposes (focus on Syria). |
| --- | --- |

—

26 strategic reports on organised crime and 20 strategic reports on terrorism were produced, including the internet Organised Crime Threat Assessment (iOCTA), Methamphetamine threat assessment, EU Terrorism Situation and Trend Report (TE-SAT), Threat Assessment on the ISIL (2) terrorist movement and its impact on the EU, Situation Report on Travel for Terrorist Purposes (focus on Syria).

| — | Europol disseminated 96 Early Warning Notifications to identify opportunities for follow-up action by the Member States (incl. Cyberbits, Terrorism Modus Operandi Monitor Bulletins, Intelligence Notifications and so called SCAN notices). |
| --- | --- |

—

Europol disseminated 96 Early Warning Notifications to identify opportunities for follow-up action by the Member States (incl. Cyberbits, Terrorism Modus Operandi Monitor Bulletins, Intelligence Notifications and so called SCAN notices).

Europol as the EU criminal information hub

Information management capabilities, Secure Information Exchange Network Application (SIENA), Europol Information System (EIS), Liaison Bureaux network.

| — | In total 6 05  245 operational messages were exchanged via SIENA between Europol, Member States and Third Parties. These included 65  691 messages exchanged by the Euroregional Police Information and Cooperation Centre (EPICC) which started using SIENA in January 2014. Excluding the EPICC SIENA exchange, 5 39  554 operational messages were exchanged, an 18 % increase compared to 2013 (4 56  598). |
| --- | --- |

—

In total 6 05  245 operational messages were exchanged via SIENA between Europol, Member States and Third Parties. These included 65  691 messages exchanged by the Euroregional Police Information and Cooperation Centre (EPICC) which started using SIENA in January 2014. Excluding the EPICC SIENA exchange, 5 39  554 operational messages were exchanged, an 18 % increase compared to 2013 (4 56  598).

| — | Europol accepted 50  285 (43  104) contributions, of which 47  157 (40  617) were to be processed, a 16 % increase compared to 2013. |
| --- | --- |

—

Europol accepted 50  285 (43  104) contributions, of which 47  157 (40  617) were to be processed, a 16 % increase compared to 2013.

| — | The EIS contained 2 36  606 (2 45  142) records at the end of 2014. The decrease in the EIS content at year end is related to the planned deletion of all records by NL linked to the development of a new data-loader. It is expected that this data will be re-inserted in the course of 2015. |
| --- | --- |

—

The EIS contained 2 36  606 (2 45  142) records at the end of 2014. The decrease in the EIS content at year end is related to the planned deletion of all records by NL linked to the development of a new data-loader. It is expected that this data will be re-inserted in the course of 2015.

| — | 619 (560) Cross Border Crime Checks (CBCCs) on Persons were triggered in the EIS. The number of hits (CBCCs) increased despite the decrease in the total number of records in the EIS, which may indicate an increase in the quality of the data shared via EIS. |
| --- | --- |

—

619 (560) Cross Border Crime Checks (CBCCs) on Persons were triggered in the EIS. The number of hits (CBCCs) increased despite the decrease in the total number of records in the EIS, which may indicate an increase in the quality of the data shared via EIS.

| — | By the end of 2014, 573 (452) Designated Competent Authorities (DCA), incl. national Asset Recovery Offices (RCOs),cybercrime units, Financial Intelligence Units (FIUs), regional platforms and third countries were linked to SIENA. |
| --- | --- |

—

By the end of 2014, 573 (452) Designated Competent Authorities (DCA), incl. national Asset Recovery Offices (RCOs),cybercrime units, Financial Intelligence Units (FIUs), regional platforms and third countries were linked to SIENA.

| — | A unique network of almost 200 liaison officers ensure a live link between Europol headquarters in The Hague and 28 Europol National Units (ENUs) in Member States. They facilitate the exchange of information and provide support and coordination for ongoing investigations. Europol also hosts liaison officers from 13 non-EU countries and organisations who work together with Europol on the basis of cooperation agreements. In addition, Europol has seconded two liaison officers to Washington (USA) and one to Interpol’s headquarters in Lyon (France). |
| --- | --- |

—

A unique network of almost 200 liaison officers ensure a live link between Europol headquarters in The Hague and 28 Europol National Units (ENUs) in Member States. They facilitate the exchange of information and provide support and coordination for ongoing investigations. Europol also hosts liaison officers from 13 non-EU countries and organisations who work together with Europol on the basis of cooperation agreements. In addition, Europol has seconded two liaison officers to Washington (USA) and one to Interpol’s headquarters in Lyon (France).

Europol as the EU centre for law enforcement expertise

Europol Platforms for Experts (EPE), Data exchange platforms and storage solutions, Knowledge products and services, Training, Conferences and awareness sessions:

| — | 33 expert areas covered by Europol Platform for Experts including 6  045 active accounts (32 platforms and 4  419 users at the end of 2013), |
| --- | --- |

—

33 expert areas covered by Europol Platform for Experts including 6  045 active accounts (32 platforms and 4  419 users at the end of 2013),

| — | Europol supported the delivery of various training courses and webinars (organised by Europol, CEPOL or MS), |
| --- | --- |

—

Europol supported the delivery of various training courses and webinars (organised by Europol, CEPOL or MS),

| — | the annual European Police Conference was organised at Europol headquarters. |
| --- | --- |

—

the annual European Police Conference was organised at Europol headquarters.

External relations

Europol cooperates with a number of EU partners, third countries and international organisations. The exchange of information with these partners takes place on the basis of cooperation agreements. Strategic agreements make it possible for the two parties involved to exchange all information with the exception of personal data, while operational agreements also allow the exchange of personal data.

| — | 19 strategic agreements and 14 operational agreements in place at the end of 2014 (18 non-EU countries, 12 EU bodies and agencies and three other international organisations, including Interpol). |
| --- | --- |

—

19 strategic agreements and 14 operational agreements in place at the end of 2014 (18 non-EU countries, 12 EU bodies and agencies and three other international organisations, including Interpol).

| — | In total, 11 operational cooperation partners and four strategic cooperation partners have direct access to SIENA. |
| --- | --- |

—

In total, 11 operational cooperation partners and four strategic cooperation partners have direct access to SIENA.

| — | At the end of 2014, 10 third parties with operational cooperation agreements were associated with at least one Focal Point. |
| --- | --- |

—

At the end of 2014, 10 third parties with operational cooperation agreements were associated with at least one Focal Point.

| — | Information exchange with external partners (10  651) increased by 23 % compared to 2013 (8  663). |
| --- | --- |

—

Information exchange with external partners (10  651) increased by 23 % compared to 2013 (8  663).

| — | Long term strategic partnerships with the private sector continued to be established. In 2014, EC3 concluded 17 Memoranda of Understanding (MoU) with the private sector (incl. Microsoft, McAfee, Cloud Security Alliance, EBF, Kaspersky, Symantec). |
| --- | --- |

—

Long term strategic partnerships with the private sector continued to be established. In 2014, EC3 concluded 17 Memoranda of Understanding (MoU) with the private sector (incl. Microsoft, McAfee, Cloud Security Alliance, EBF, Kaspersky, Symantec).

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(1)  European Multidisciplinary Platform Against Criminal Threats (EMPACT).

(2)  Islamic State of Iraq and the Levant (ISIL).

Source: Annex supplied by the Office.

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THE OFFICE’S REPLY

| 11. | Europol takes note of the ECA’s comment and will continue its efforts to ensure efficient and compliant budget implementation, especially concerning carry-forwards in relation to administrative expenditure. |
| --- | --- |

11.

Europol takes note of the ECA’s comment and will continue its efforts to ensure efficient and compliant budget implementation, especially concerning carry-forwards in relation to administrative expenditure.

| 12. | Europol acknowledges the ECA’s comment regarding the high level of cancellation rates of carry-forwards from the previous year. The delayed IT projects related to so called ‘turn-key’ solutions procured by Europol. The low budget implementation for these projects was mainly a result of the suppliers failing to deliver in line with the agreed planning. The delays did not affect operational business delivery as existing IT solutions continued to be in use for the relevant systems. It should be noted that compared with the previous financial year, Europol significantly reduced the carry-forwards in absolute figures. Accordingly, despite the delivery delay caused by external contractors, the actual nominal increase of unused carry-forwards was 0,9 million euro at the end of 2014 (compared with 2013). |
| --- | --- |

12.

Europol acknowledges the ECA’s comment regarding the high level of cancellation rates of carry-forwards from the previous year. The delayed IT projects related to so called ‘turn-key’ solutions procured by Europol. The low budget implementation for these projects was mainly a result of the suppliers failing to deliver in line with the agreed planning. The delays did not affect operational business delivery as existing IT solutions continued to be in use for the relevant systems. It should be noted that compared with the previous financial year, Europol significantly reduced the carry-forwards in absolute figures. Accordingly, despite the delivery delay caused by external contractors, the actual nominal increase of unused carry-forwards was 0,9 million euro at the end of 2014 (compared with 2013).

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| 9.12.2015 | EN | Official Journal of the European Union | C 409/334 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/334

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REPORT

on the annual accounts of the European Union Agency for Fundamental Rights for the financial year 2014, together with the Agency’s reply

(2015/C 409/37)

INTRODUCTION

| 1. | The European Union Fundamental Rights Agency (hereinafter ‘the Agency’, aka ‘FRA’), which is located in Vienna, was established by Council Regulation (EC) No 168/2007 (1). The objective of the Agency is to provide the relevant authorities of the Union and its Member States with assistance and expertise when implementing Union law relating to fundamental rights (2). |
| --- | --- |

1.

The European Union Fundamental Rights Agency (hereinafter ‘the Agency’, aka ‘FRA’), which is located in Vienna, was established by Council Regulation (EC) No 168/2007 (1). The objective of the Agency is to provide the relevant authorities of the Union and its Member States with assistance and expertise when implementing Union law relating to fundamental rights (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5).






  (a) | The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5).

(a)

The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | 2014 budget appropriations were fully committed. However, the level of committed appropriations carried over to 2015 was high for title II (administrative expenditure) at 5 51  466 euro, i.e. 25 % (2013: 5 79  429 euro, i.e. 27 %) and for title III (operating expenditure) at 5 8 48  956 euro, i.e. 75 % (2013: 5 6 25  444 euro, i.e. 69 %). |
| --- | --- |

11.

2014 budget appropriations were fully committed. However, the level of committed appropriations carried over to 2015 was high for title II (administrative expenditure) at 5 51  466 euro, i.e. 25 % (2013: 5 79  429 euro, i.e. 27 %) and for title III (operating expenditure) at 5 8 48  956 euro, i.e. 75 % (2013: 5 6 25  444 euro, i.e. 69 %).

| 12. | The amounts carried over under title II mainly relate to the planned purchase of IT goods and services for which payments were only due in 2015. The carry-overs under title III mainly reflect the multiannual nature of the Agency’s operational projects, where payments are made according to planned schedules. |
| --- | --- |

12.

The amounts carried over under title II mainly relate to the planned purchase of IT goods and services for which payments were only due in 2015. The carry-overs under title III mainly reflect the multiannual nature of the Agency’s operational projects, where payments are made according to planned schedules.

OTHER COMMENT

| 13. | In 2005 new EU Staff Regulations entered into force, including provisions that future remuneration of officials recruited before 1 May 2004 should not be less than under the previous EU Staff Regulations. The Court’s audit revealed that this was not complied with and, in the case of 10 of the 26 officials employed at that time, this led to a total underpayment of 45  892 euro for the period 2005 to 2014. The Agency will make the supplementary salary payments in due course. |
| --- | --- |

13.

In 2005 new EU Staff Regulations entered into force, including provisions that future remuneration of officials recruited before 1 May 2004 should not be less than under the previous EU Staff Regulations. The Court’s audit revealed that this was not complied with and, in the case of 10 of the 26 officials employed at that time, this led to a total underpayment of 45  892 euro for the period 2005 to 2014. The Agency will make the supplementary salary payments in due course.

FOLLOW-UP OF PREVIOUS YEAR’S COMMENTS

| 14. | An overview of the corrective actions taken in response to the Court’s comments from the previous year is provided in Annex I. |
| --- | --- |

14.

An overview of the corrective actions taken in response to the Court’s comments from the previous year is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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(1)  OJ L 53, 22.2.2007, p. 1.

1

(2)  Annex II summarises the Agency’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

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ANNEX I

Follow-up of previous year’s comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2013 | In 2013, the overall level of committed appropriations was 100 %, indicating that commitments were made in a timely manner. However the level of committed appropriations carried over to 2014 was high at 5 79  429 euro (27 %) for title II (administrative expenditure) and 5 6 25  444 euro (69 %) for title III (operating expenditure). | N/A |
| 2013 | The amounts carried over under title II mainly relate to the planned purchase of IT goods and services. The carry-overs under title III mainly reflect the multiannual nature of the Agency’s operational projects, where payments are made according to planned schedules. | N/A |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2013

In 2013, the overall level of committed appropriations was 100 %, indicating that commitments were made in a timely manner. However the level of committed appropriations carried over to 2014 was high at 5 79  429 euro (27 %) for title II (administrative expenditure) and 5 6 25  444 euro (69 %) for title III (operating expenditure).

N/A

2013

The amounts carried over under title II mainly relate to the planned purchase of IT goods and services. The carry-overs under title III mainly reflect the multiannual nature of the Agency’s operational projects, where payments are made according to planned schedules.

N/A

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ANNEX II

European Union Fundamental Rights Agency (Vienna)

Competences and Activities

| Areas of Union competence deriving from the Treaty | Collection of information







  — | The Commission may, within the limits and under conditions laid down by the Council acting by a simple majority in accordance with the provisions of the Treaties, collect any information and carry out any checks required for the performance of the tasks entrusted to it. (Article 337) |
| --- | --- | --- |

Areas of Union competence deriving from the Treaty

Collection of information

—

The Commission may, within the limits and under conditions laid down by the Council acting by a simple majority in accordance with the provisions of the Treaties, collect any information and carry out any checks required for the performance of the tasks entrusted to it. (Article 337)

Competences of the Agency

(Council Regulation (EC) No 168/2007)

Objectives

| — | To provide the relevant institutions, bodies, offices and agencies of the Union and its Member States when implementing Union law with assistance and expertise relating to fundamental rights in order to support them when they take measures or formulate courses of action within their respective spheres of competence to fully respect fundamental rights. |
| --- | --- |

—

To provide the relevant institutions, bodies, offices and agencies of the Union and its Member States when implementing Union law with assistance and expertise relating to fundamental rights in order to support them when they take measures or formulate courses of action within their respective spheres of competence to fully respect fundamental rights.

Tasks

| — | To collect, record, analyse and disseminate relevant, objective, reliable and comparable information and data, |
| --- | --- |

—

To collect, record, analyse and disseminate relevant, objective, reliable and comparable information and data,

| — | to develop methods and standards to improve the comparability, objectivity and reliability of data at European level, |
| --- | --- |

—

to develop methods and standards to improve the comparability, objectivity and reliability of data at European level,

| — | to carry out, cooperate with or encourage scientific research and surveys, preparatory studies and feasibility studies, |
| --- | --- |

—

to carry out, cooperate with or encourage scientific research and surveys, preparatory studies and feasibility studies,

| — | to formulate and publish conclusions and opinions on specific thematic topics, for the Union institutions and the Member States when implementing Union law, |
| --- | --- |

—

to formulate and publish conclusions and opinions on specific thematic topics, for the Union institutions and the Member States when implementing Union law,

| — | to publish an annual report on fundamental-rights issues covered by the areas of the Agency’s activity, |
| --- | --- |

—

to publish an annual report on fundamental-rights issues covered by the areas of the Agency’s activity,

| — | to publish thematic reports based on its analysis, research and surveys, |
| --- | --- |

—

to publish thematic reports based on its analysis, research and surveys,

| — | to publish an annual report on its activities, |
| --- | --- |

—

to publish an annual report on its activities,

| — | to develop a communication strategy and promote dialogue with civil society, in order to raise public awareness of fundamental rights and actively disseminate information about its work. |
| --- | --- |

—

to develop a communication strategy and promote dialogue with civil society, in order to raise public awareness of fundamental rights and actively disseminate information about its work.

Governance

Management Board

Composition

One independent person appointed by each Member State, one independent person appointed by the Council of Europe and two representatives of the Commission.

Duties

To adopt the budget, work programme and annual reports. To adopt the final budget and the establishment plan. To give an opinion on the final accounts.

Executive Board

Composition

| — | Chairperson of the Management Board. |
| --- | --- |

—

Chairperson of the Management Board.

| — | Vice-Chairperson of the Management Board. |
| --- | --- |

—

Vice-Chairperson of the Management Board.

| — | One representative of the Commission. |
| --- | --- |

—

One representative of the Commission.

| — | Two other elected members from the Management Board. |
| --- | --- |

—

Two other elected members from the Management Board.

| — | The person appointed by the Council of Europe in the Management Board may participate in the meetings of the Executive Board. |
| --- | --- |

—

The person appointed by the Council of Europe in the Management Board may participate in the meetings of the Executive Board.

Scientific Committee

Composition

| — | Eleven independent persons, highly qualified in the field of fundamental rights. |
| --- | --- |

—

Eleven independent persons, highly qualified in the field of fundamental rights.

| — | Appointed by the Management Board following a transparent call for applications and selection procedure. |
| --- | --- |

—

Appointed by the Management Board following a transparent call for applications and selection procedure.

Director

Appointed by the Management Board on a proposal from the Commission and after opinions of the European Parliament and the Council of the European Union (who will state their preference).

External audit

European Court of Auditors.

Internal audit

European Commission’s Internal Audit Service (IAS).

Discharge authority

European Parliament on a recommendation from the Council.

Resources made available to the Agency in 2014 (2013)

Final Budget

21,52(21,62) million euro of which the Union subsidy is 99 % (99 %)

Staff as at 31 December 2014

75 (78) posts in the establishment plan, of which occupied: 74 (75)

+

38 (38) other staff (contract staff, seconded national experts)

Total staff: 113 (116), undertaking the following tasks:

| — | operational: 72 (75) |
| --- | --- |

—

operational: 72 (75)

| — | administrative: 32 (33) |
| --- | --- |

—

administrative: 32 (33)

| — | mixed: 9 (8) |
| --- | --- |

—

mixed: 9 (8)

Products and services 2014 (2013)

FRANET

Number of contributions by the 28 contractors (national lots): 223 (403)

Number of contributions by the partner in charge of the EU International Analysis: 1 (1)

Number of contributions by the partner in charge of the Comparative Analysis: 1 (2)

Number of meetings: 3 (3) (1 with 11 participants, 1 with 9 participants and 1 with 56 participants)

Research Reports

Number of reports:: 23 (19) plus 96 (12) language versions

Online data visualisation: 5 (2) plus 2 (0) language versions

Number of meetings: 0 (1)

Annual reports: 2 (2) plus 3 (2) language versions

Annual report Summary: 1 (1) plus 1 (2) language versions

FRA opinions: 1 (2) plus 4 language versions

E-book FRA Annual report 2013: 0 (1) plus 0 (1) language versions

Factsheets: 2 (4) plus 21 (71) language versions

Non-Research Materials

Various FRA publications: 59 (20)

Posters: 53 (15)

Key Conferences and Events

Fundamental Rights Conference: 1 (1)

FRA Symposium: 0 (1)

Meeting of Fundamental Rights Platform: 1 (1)

Joint events with EU Presidencies 2 (1)

Cooperation with institutions and bodies at EU and Member State level

Member States: 89 (29)

Council of the EU: 25 (19)

European Commission: 22 (22)

European Parliament: 25 (15)

EU external action service: 1 (4)

EU Agencies and other bodies: 33 (23)

European Court of Justice: 2 (2)

Committee of the Regions: 1 (1)

European Economic and Social Committee: 1 (0)

European Ombudsman: 2 (2)

Fundamental Rights Platform: 3 (3)

Council of Europe: 32 (25)

OSCE: 4 (4)

United Nations: 9 (9)

Specialised Bodies (NHRIs and Equality Bodies): 12 (8)

Other Meetings and Round Tables: 10 (7)

Source: Annex supplied by the Agency.

---

THE AGENCY’S REPLY

| 11-12. | The Agency acknowledges the understanding from the Court on the well-monitored and justified carry-overs. The Agency would also like to stress the low level of cancellations it has every year (even if at this stage not yet known for 2014) of around 2 %, implying a final outturn higher than 99 %. We consider it as the best indicator of proper budget implementation. |
| --- | --- |

11-12.

The Agency acknowledges the understanding from the Court on the well-monitored and justified carry-overs. The Agency would also like to stress the low level of cancellations it has every year (even if at this stage not yet known for 2014) of around 2 %, implying a final outturn higher than 99 %. We consider it as the best indicator of proper budget implementation.

| 13. | Following the Court’s observation, the Agency has taken the necessary corrective measures and executed the supplementary salary payments. |
| --- | --- |

13.

Following the Court’s observation, the Agency has taken the necessary corrective measures and executed the supplementary salary payments.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/342 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/342

---

REPORT

on the annual accounts of the European Agency for the Management of Operational Cooperation at the External Borders of the Member States for the financial year 2014 together with the Agency’s reply

(2015/C 409/38)

INTRODUCTION

| 1. | The European Agency for the Management of Operational Cooperation at the External Borders of the Member States (hereinafter ‘the Agency’, aka ‘Frontex’), which is located in Warsaw, was created by Council Regulation (EC) No 2007/2004 (1). The Agency’s task is to coordinate the Member States’ activities in the field of the management of external borders (support for operational cooperation, technical and operational assistance, and risk analysis) (2). |
| --- | --- |

1.

The European Agency for the Management of Operational Cooperation at the External Borders of the Member States (hereinafter ‘the Agency’, aka ‘Frontex’), which is located in Warsaw, was created by Council Regulation (EC) No 2007/2004 (1). The Agency’s task is to coordinate the Member States’ activities in the field of the management of external borders (support for operational cooperation, technical and operational assistance, and risk analysis) (2).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5).






  (a) | The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5).

(a)

The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and Statement of Assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (8).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON THE LEGALITY AND REGULARITY OF TRANSACTIONS

| 11. | Considerable improvements were noted in both ex ante and ex post verifications of expenditure claimed by cooperating countries under grant agreements. However, documentation from cooperating countries supporting the expenditure claimed is not always sufficient. Moreover, no audit certificates were requested, although the rules of application of the EU’s Financial Regulation recommend this for grants above specific thresholds (9). Audit certificates would add further assurance on the legality and regularity of grant transactions. |
| --- | --- |

11.

Considerable improvements were noted in both ex ante and ex post verifications of expenditure claimed by cooperating countries under grant agreements. However, documentation from cooperating countries supporting the expenditure claimed is not always sufficient. Moreover, no audit certificates were requested, although the rules of application of the EU’s Financial Regulation recommend this for grants above specific thresholds (9). Audit certificates would add further assurance on the legality and regularity of grant transactions.

COMMENTS ON BUDGETARY MANAGEMENT

| 12. | The level of carry-overs for committed appropriations was high for title II (administrative expenditure) at 4,5 million euro, i.e. 36 % (2013: 2,4 million euro, i.e. 27 %) and title III (operational expenditure) at 28,4 million euro, i.e. 44 % (2013: 29,2 million euro, i.e. 47 %). For title II, the main reason is year-end purchases related to the move to the Agency’s new building in December 2014. For title III, high carry-overs mainly result from the multiannual nature of the Agency’s operations and the approval of an additional 4,2 million euro budget in October 2014. |
| --- | --- |

12.

The level of carry-overs for committed appropriations was high for title II (administrative expenditure) at 4,5 million euro, i.e. 36 % (2013: 2,4 million euro, i.e. 27 %) and title III (operational expenditure) at 28,4 million euro, i.e. 44 % (2013: 29,2 million euro, i.e. 47 %). For title II, the main reason is year-end purchases related to the move to the Agency’s new building in December 2014. For title III, high carry-overs mainly result from the multiannual nature of the Agency’s operations and the approval of an additional 4,2 million euro budget in October 2014.

OTHER COMMENTS

| 13. | The high and constantly increasing number of grant agreements and the magnitude of related expenditure to be verified and reimbursed by Frontex raise the question whether more efficient and cost-effective alternative funding mechanisms could be used. |
| --- | --- |

13.

The high and constantly increasing number of grant agreements and the magnitude of related expenditure to be verified and reimbursed by Frontex raise the question whether more efficient and cost-effective alternative funding mechanisms could be used.

| 14. | There is a need to refine the calculation of contributions from Schengen associated countries (Switzerland, Liechtenstein, Iceland and Norway) to better reflect the related legal provisions (10). For example, the calculation should be based on the final instead of the budgeted annual subsidy received from the Commission. |
| --- | --- |

14.

There is a need to refine the calculation of contributions from Schengen associated countries (Switzerland, Liechtenstein, Iceland and Norway) to better reflect the related legal provisions (10). For example, the calculation should be based on the final instead of the budgeted annual subsidy received from the Commission.

| 15. | Contributions to the Agency’s budget from the United Kingdom and Ireland (which are non-Schengen countries) have remained stable for many years despite the considerably extended range of activities in which they are involved. A review of their contributions is therefore overdue. |
| --- | --- |

15.

Contributions to the Agency’s budget from the United Kingdom and Ireland (which are non-Schengen countries) have remained stable for many years despite the considerably extended range of activities in which they are involved. A review of their contributions is therefore overdue.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 16. | An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I. |
| --- | --- |

16.

An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 349, 25.11.2004, p. 1.

1

(2)  Annex II summarises the Agency’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 107 of Regulation (EU) No 1271/2013.

7

(8)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

8

(9)  Delegated Regulation (EU) No 1268/2012 of the Commission (OJ L 362, 31.12.2012, p. 1).

9

(10)  Arrangement between the European Community of the one part, and the Swiss Confederation and the Principality of Liechtenstein, of the other part, on the modalities of the participation by those States in the European Agency for the Management of Operational Cooperation at the External Borders of the Member States of the European Union (OJ L 243, 16.9.2010, p. 4); Arrangement between the European Community and the Republic of Iceland and the Kingdom of Norway on the modalities of the participation by those States in the European Agency for the Management of Operational Cooperation at the External Borders of the Member States of the European Union (OJ L 188, 20.7.2007, p. 19).

10

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ANNEX I

Follow-up of previous years’ comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2011 | As in the previous year, the level of carry-overs is excessive and at odds with the budgetary principle of annuality. | N/A |
| 2011 | Within the total amount carried over, the Agency carried over global commitments of 5,1 million euro. The Agency’s Financial Regulation however does not provide a clear basis for such a carry-over. | Completed |
| 2011 | In 2011, the Agency financed grants for joint operations amounting to 74 million euro. In order to verify the expenditure claimed by the beneficiaries (Member States and Schengen Associated Countries), the Agency, although it performs reasonableness checks, does not usually request supporting documentation that would address the risk of ineligible expenditure. | Completed |
| 2012 | Weaknesses were still noted in the system for reconciling suppliers’ statements with the corresponding records at the Agency. | Ongoing |
| 2012 | The Agency’s 2012 budget amounted to 89,6 million euro of which 21,8 million euro (25 % of committed appropriations) were carried over to 2013. Carry-overs related to title III (operational expenditure) amounted to 19,6 million euro. Such a high level of carry-overs is excessive and at odds with the budgetary principle of annuality, although it is partly related to the operational, multiannual nature of the Agency’s activities. By the end of February 2013, 1,1 million euro of these carry-overs had been cancelled. | N/A |
| 2012 | The recruitment procedures examined showed significant shortcomings affecting transparency and the equal treatment of candidates: questions for written tests and interviews were set after the applications had been examined by the selection board; no threshold scores were set for admission to written tests and interviews and for being included in the list of suitable candidates; the Selection Board did not document all its meetings and decisions. | Ongoing |
| 2013 | Suppliers’ statements at year-end were reconciled with considerable difficulty. There is a need to monitor supplier balances more regularly and to analyse differences in a more timely manner. | Ongoing |
| 2013 | Some 32 million euro or 35 % of committed 2013 appropriations were carried over to 2014. Although the multiannual nature of the Agency’s operations and the heightened risk of unforeseen events represent a particular challenge in respect of annual budget planning and implementation, there is still scope for improved budget monitoring to help reduce the level of carry-overs. | N/A |
| 2013 | The carry-overs include global commitments of 5,2 million euro, which are the left-over balance of an 8,2 million euro additional subsidy made available by the budgetary authorities towards the end of 2013 to deal with unforeseen and urgent operational needs. Although the global commitment was made to cover the related operations in 2014, the Agency’s financial regulation does not provide a clear basis for such carry-overs. | Completed |
| 2013 | In 2013, 29 budgetary transfers amounting to 12,2 million euro were made. This is partly due to the fact that funds needed for operations had been transferred from other budget lines until the additional subsidies were made available. | N/A |
| 2013 | Frontex became operational in 2005 and has, to date, worked on the basis of correspondence and exchanges with the host Member State. However a comprehensive headquarters agreement between the Agency and the Member State has not been signed. Such an agreement would further promote transparency in respect of the conditions under which the Agency and its staff operate. | Ongoing |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2011

As in the previous year, the level of carry-overs is excessive and at odds with the budgetary principle of annuality.

N/A

2011

Within the total amount carried over, the Agency carried over global commitments of 5,1 million euro. The Agency’s Financial Regulation however does not provide a clear basis for such a carry-over.

Completed

2011

In 2011, the Agency financed grants for joint operations amounting to 74 million euro. In order to verify the expenditure claimed by the beneficiaries (Member States and Schengen Associated Countries), the Agency, although it performs reasonableness checks, does not usually request supporting documentation that would address the risk of ineligible expenditure.

Completed

2012

Weaknesses were still noted in the system for reconciling suppliers’ statements with the corresponding records at the Agency.

Ongoing

2012

The Agency’s 2012 budget amounted to 89,6 million euro of which 21,8 million euro (25 % of committed appropriations) were carried over to 2013. Carry-overs related to title III (operational expenditure) amounted to 19,6 million euro. Such a high level of carry-overs is excessive and at odds with the budgetary principle of annuality, although it is partly related to the operational, multiannual nature of the Agency’s activities. By the end of February 2013, 1,1 million euro of these carry-overs had been cancelled.

N/A

2012

The recruitment procedures examined showed significant shortcomings affecting transparency and the equal treatment of candidates: questions for written tests and interviews were set after the applications had been examined by the selection board; no threshold scores were set for admission to written tests and interviews and for being included in the list of suitable candidates; the Selection Board did not document all its meetings and decisions.

Ongoing

2013

Suppliers’ statements at year-end were reconciled with considerable difficulty. There is a need to monitor supplier balances more regularly and to analyse differences in a more timely manner.

Ongoing

2013

Some 32 million euro or 35 % of committed 2013 appropriations were carried over to 2014. Although the multiannual nature of the Agency’s operations and the heightened risk of unforeseen events represent a particular challenge in respect of annual budget planning and implementation, there is still scope for improved budget monitoring to help reduce the level of carry-overs.

N/A

2013

The carry-overs include global commitments of 5,2 million euro, which are the left-over balance of an 8,2 million euro additional subsidy made available by the budgetary authorities towards the end of 2013 to deal with unforeseen and urgent operational needs. Although the global commitment was made to cover the related operations in 2014, the Agency’s financial regulation does not provide a clear basis for such carry-overs.

Completed

2013

In 2013, 29 budgetary transfers amounting to 12,2 million euro were made. This is partly due to the fact that funds needed for operations had been transferred from other budget lines until the additional subsidies were made available.

N/A

2013

Frontex became operational in 2005 and has, to date, worked on the basis of correspondence and exchanges with the host Member State. However a comprehensive headquarters agreement between the Agency and the Member State has not been signed. Such an agreement would further promote transparency in respect of the conditions under which the Agency and its staff operate.

Ongoing

---

ANNEX II

European Agency for the Management of Operational Cooperation at the External Borders of the Member States (Warsaw)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Articles 74 and 77(2)(b) and (d) of the Treaty on the Functioning of the European Union) | Article 74: ‘The Council shall adopt measures to ensure administrative cooperation between the relevant departments of the Member States in the areas covered by this title, as well as between those departments and the Commission. (...)’
  Article 77(2): ‘(...) the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall adopt measures concerning:
  (...)






  (b) | the checks to which persons crossing external borders are subject; |
| --- | --- | --- |

Areas of Union competence deriving from the Treaty

(Articles 74 and 77(2)(b) and (d) of the Treaty on the Functioning of the European Union)

Article 74: ‘The Council shall adopt measures to ensure administrative cooperation between the relevant departments of the Member States in the areas covered by this title, as well as between those departments and the Commission. (...)’

Article 77(2): ‘(...) the European Parliament and the Council, acting in accordance with the ordinary legislative procedure, shall adopt measures concerning:

(...)

(b)

the checks to which persons crossing external borders are subject;

(...)

| (d) | any measure necessary for the gradual establishment of an integrated management system for external borders; |
| --- | --- |

(d)

any measure necessary for the gradual establishment of an integrated management system for external borders;

(...)’.

Competences of the Agency

(Council Regulation (EC) No 2007/2004, amended by Regulation (EC) No 863/2007 and Regulation (EU) No 1168/2011 of the European Parliament and of the Council)

The last amendment entered into force on 12.12.2011; the content of the table reflects the situation after this last amendment.

Objectives

Frontex was established with a view to improving the integrated management of the external borders of the Member States of the EU.

Main Tasks

| (a) | To coordinate operational cooperation between Member States in the field of management of external borders; |
| --- | --- |

(a)

To coordinate operational cooperation between Member States in the field of management of external borders;

| (b) | to assist Member States on training of national border guards and establish common training standards; |
| --- | --- |

(b)

to assist Member States on training of national border guards and establish common training standards;

| (c) | to carry out risk analyses, including the assessment of the capacity of Member States to face threats and pressures at the external borders; |
| --- | --- |

(c)

to carry out risk analyses, including the assessment of the capacity of Member States to face threats and pressures at the external borders;

| (d) | to participate in the development of research relevant for the control and surveillance of external borders; |
| --- | --- |

(d)

to participate in the development of research relevant for the control and surveillance of external borders;

| (e) | to assist Member States in circumstances requiring increased technical and operational assistance, especially those Member States facing specific and disproportionate pressures; |
| --- | --- |

(e)

to assist Member States in circumstances requiring increased technical and operational assistance, especially those Member States facing specific and disproportionate pressures;

| (f) | to provide Member States with the necessary support including, upon request, coordination or organisation of joint return operations; |
| --- | --- |

(f)

to provide Member States with the necessary support including, upon request, coordination or organisation of joint return operations;

| (g) | to set up European Border Guard Teams (EBGT) to be deployed during joint operations, pilot projects and rapid interventions; |
| --- | --- |

(g)

to set up European Border Guard Teams (EBGT) to be deployed during joint operations, pilot projects and rapid interventions;

| (h) | to develop and operate information systems for information exchange, including ICOnet; |
| --- | --- |

(h)

to develop and operate information systems for information exchange, including ICOnet;

| (i) | to provide necessary assistance to the development and operation of a European border surveillance system (EUROSUR). |
| --- | --- |

(i)

to provide necessary assistance to the development and operation of a European border surveillance system (EUROSUR).

Governance

Management Board

Composition

One representative of each Member State (MS) + two representatives of the Commission + one representative per Schengen Associated Country (SAC).

Tasks

| (a) | To appoint the Executive Director; |
| --- | --- |

(a)

To appoint the Executive Director;

| (b) | to adopt the general report of the Agency; |
| --- | --- |

(b)

to adopt the general report of the Agency;

| (c) | to adopt the Agency’s Programme of Work; |
| --- | --- |

(c)

to adopt the Agency’s Programme of Work;

| (d) | to establish procedures for taking decisions related to the operational tasks of the Agency; |
| --- | --- |

(d)

to establish procedures for taking decisions related to the operational tasks of the Agency;

| (e) | to carry out its functions relating to the Agency’s budget; |
| --- | --- |

(e)

to carry out its functions relating to the Agency’s budget;

| (f) | to exercise disciplinary authority over the (Deputy) Executive Director; |
| --- | --- |

(f)

to exercise disciplinary authority over the (Deputy) Executive Director;

| (g) | to establish its Rules of Procedure; |
| --- | --- |

(g)

to establish its Rules of Procedure;

| (h) | to establish the organisational structure of the Agency and adopt the Agency’s staff policy; |
| --- | --- |

(h)

to establish the organisational structure of the Agency and adopt the Agency’s staff policy;

| (i) | to adopt the Agency’s multiannual plan. |
| --- | --- |

(i)

to adopt the Agency’s multiannual plan.

Executive Director

Appointed by the Management Board on a proposal from the Commission.

External audit

European Court of Auditors.

Discharge authority

European Parliament acting on a recommendation of the Council.

Resources made available to the Agency in 2014 (2013)

Final Budget

97,9(93,95) million euro

Union subsidy 86,6(87,7) million euro

Staff as at 31 December 2014

Establishment plan

Temporary staff planned: 152 (153) — Temporary staff posts occupied: 149 (142)

Other posts

Contract staff planned: 87 (1)
  (87) — Contract staff posts occupied: 85 (1)
  (82)

Seconded National Experts planned: 78 (78) — Seconded National Experts posts occupied: 77 (76)
   (2)

Total staff posts: 317 (318) — of which occupied: 311 (300)

Assigned to the following tasks: operational 218 (227) — administrative 93 (91)

Products and services in 2014 (2013)

Risk Analysis Unit (RAU)
  produced 60 (79) strategic reports including 10 regular annual reports, 3 tailored reports, 14 quarterly reports with situational updates and analysis in MSs, and selected regions neighbouring the EU, 39 strategic monitoring reports; 456 (510) analytical products supporting the planning, implementation and evaluation of Joint Operations; 25 (81) reports/contributions of other types, including briefings for the Agency’s Management, the EU Commission and others; tested and launched a new monthly process of analytical reporting; published 7 (7) strategic reports for the general public via the Agency website. 4 (4) regular Frontex Risk Analysis Network meetings, 2 (5) meetings of the specialist network with MSs on EU Document Fraud, 2 (4) Tactical Risk Analysis meetings, 9 (10) regional expert meetings/conferences and 2 (1) regional technical workshops were organised. In line with the tasks of the Risk Analysis Unit within EUROSUR, in 2014 the following were undertaken, and communicated/consulted as appropriate with MSs within the framework of the Analysis Layer User Group which met 4 (5) times: Within the CPIP/ESP analysis layer: delivery of content (276 (317) products) and basic services, completion of the Catalogue of Analysis Layer Products and Services, update of the Eurosur Event Catalogue, finalisation of the impact levels methodology and its implementation to land and sea border sections, pilot deliveries of analysis tools (led by ICT, with RAU inputs).

Joint Operations Unit (JOU)
  organised 21 (19) joint operations, 11 (10) pilot projects and projects, 68 (8) conferences, workshops and annual meetings and 382 (64) operational meeting (preparatory/planning/evaluation meetings and workshops). Furthermore, during 45 (39) Frontex coordinated joint return operations 2  271(2  152) third-country nationals were returned. The total number of operational days accumulated in all joint operations amounted to 4  499(2  832); the number of operational man-days accumulated equals to 69  702(89  548).

Frontex Situation Centre


  (FSC)
  provided 2  452(2  226) situational reports, 97 (43) serious incident reports, 38 (44) flash news reports and 5 (10) mission awareness reports, while uploading over 20  000 (20  084) artefacts to the Eurosur system. 242 (237) Daily Newsletters were delivered to approx. 500 (500) subscribers and 1  063(795) media contributions were made to daily situational reports and operational briefings. The FSC, as a single point of contact, managed over 24  000(25  000) correspondence items; in the frame of Frontex-One-Stop-Shop (FOSS), the information exchange platform between Frontex and external partners, 7  171 (6  238) documents were uploaded and shared among over 5  000(4  500) users at the end of 2014. FSC received and validated around 35  000 (29  000) incidents through the Joint Operations Reporting Application (JORA) and provided JORA training to over 200 (200) officers from Frontex and MSs/SACs. In the frame of the Eurosur Fusion Services implementation, 29 service requests were received from Member States, covering vessel monitoring, tracking and detection, environmental information and optical imagery information and 4 service trials took place for testing newly developed services.

Pooled Resources Unit (PRU)
  organised 6 (9) events with the participation of 236 (252) attendees from the MSs. 284 (1  250) man-days were invested by stakeholders in the unit’s activities. The focus of attention for PRU in 2014 was the development of the European Border Guards Teams (EBGT) and Technical Equipment (TE) pools, developing the reporting capacity and creating a suitable software application to manage them and, in addition, further developing the Seconded Guest Officers mechanism. Attention was also given to the acquisition of aerial surveillance services for border control. In particular, PRU organised and managed the Annual Bilateral Talks between Frontex and the MSs, as well as the talks with third countries, in order to agree the national contributions to the pools and joint operational activities of Frontex in 2015. PRU implemented 5 (7) projects designed to improve the overall effectiveness of Frontex operations.

In the framework of 4 (3) activity areas comprising 5 projects and 12 other activities (17),
  Training Unit (TRU)
  organised 189 (205) training activities (courses, development meetings, etc.) with the participation of 2  600(3  253) attendees. A total of 11  936(12  460) man-days were invested by the stakeholders in training activities.

Under the first activity area the Consortium Agreement of the European Joint Master’s Programme in Strategic Border Management (EJMSBM) was signed by the Partners and the development of the Master’s Programme continued in order to launch the first iteration of the programme in September 2015. The Common Core Curriculum Interoperability Assessment Programme (CCC-IAP) was carried out with the participation of Member States and their border guard students.

EBGT profile trainings were organised under the second activity area. In addition to the already existing trainings, the development plans for two new profile trainings were drafted: Maritime Border Surveillance Officer and Land Border Surveillance Officer.

Within common standards and tools for specialised training of border guards and direct further trainings, for which the third activity area is dedicated, Frontex among other activities finalised the development and implementation of the European Course for Canine Instructors. The curriculum for the training for Schengen evaluators was revised and aligned with the requirements set by the new Schengen Evaluation Mechanism (SEM) and a first course following this curriculum was carried out.

Within the fourth activity area, dedicated to networking and IT related issues, a survey was carried out in order to identify the outlines of a new IT platform for Frontex training activities. The development and implementation of the new IT platform will start during the first quarter in 2015.

In the framework of 3 (8) projects the
  Research and Development Unit (RDU)
  organised 26 (40) meetings with the participation of 659 (950) attendees (participants from MSs, SACs, EU institutions, intergovernmental and international organisations, academies, research institutes and industry representatives). In total, 1  239(2  000) man-days were invested by the stakeholders in these activities. RDU continued its work for identifying and developing best practice guidelines in the area of Automated Border Control, Border Checks at land and sea border crossing points, the roll-out and implementation of the Visa Information System (VIS) by MS and land border surveillance. Throughout the year, efforts were also devoted to the development of a framework for building a passenger analysis capacity in MSs, as well as supporting DG HOME on the elaboration of the Smart Borders Study and eu-LISA on the definition of the Smart Borders Pilot.

In the area of border surveillance, RDU undertook activities to boost the MSs’ awareness concerning new developments in the field of sensors, platforms and advanced system solutions while also facilitating the deployment (try-out) of new technologies for border surveillance in MSs and in the context of Joint Operations coordinated by Frontex.

Also, RDU brought to the attention of its relevant stakeholders the ongoing and new border security research projects ensuring that the needs of the border management community are the subject of research and the projects’ results will best serve the requirements of border security. RDU contributed to the capacity building process in the field of border security, bringing to the attention of the Border Guard Authorities new and innovative approaches (e.g. Pre-Commercial Procurement instrument) that can be used by them to acquire research and development services, with the purpose of steering the development of new innovations towards their needs.

Partnership and cooperation with third countries:
  While no new working arrangements (WA) were concluded in 2014 (19) the cooperation with the partner third countries was intensified and tangible results have been achieved in the thematic and operational context. A cooperation plan between Frontex and the competent authorities in Turkey was signed, setting out concrete actions for implementation in the coming years. With regard to technical assistance, as defined under Article 14(5) of the amended Frontex Regulation, the Agency has taken forward several capacity building initiatives in the Eastern Partnership Region, in Northern Africa (Tunisia and Morocco) as well as in the Western Balkans and Turkey, covering areas of migration, border and security related matters.

Frontex successfully organised the 22nd International Border Police Conference (IBPC) with participation of chiefs and top executive-level border guards from 62 countries worldwide.

Cooperation with EU Bodies and international organisation team: delivered to the Commission a strategic contribution for the future of the JHA Area and renewal of the EU Internal Security Strategy. Also closely cooperated with the Commission in the implementation of the EU Internal Security Fund (ISF) supporting the preparation of the policy dialogues with the MSs, as well by delivering opinions on the draft (multiannual) national programmes.

Efforts were made for consolidating and deepening cooperation with partners in the field of border and migration management and fight against organised crime. A new Working Arrangement (WA) was concluded with the EEAS (11). Additionally, an agreement at working level was reached on a new and more robust WA with Europol allowing the processing and transmission of personal data however it will enter into force after the EDPS approval.

---

(1)  4 CAs from the Relex grant are not included.

(2)  Number of occupied posts (77) contain: 75 regular SNEs and 2 cost-free SNEs; 1 SNE post is still vacant.

Source: Annex supplied by the Agency.

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THE AGENCY’S REPLY

| 11. | The Agency welcomes the statement of the ECA with regard to the significant improvements noted in its ex ante and ex post verifications. With regard to the request for audit certificates, the Agency would like to inform the Court that such certificates were already made in 2010. Despite a briefing for Beneficiaries, the audit certificates were not issued by independent audit bodies and the delay in receiving the final claim was significantly extended. Bearing in mind the set-up of audit authorities under the External Border Fund and the Internal Security Fund, the Agency will explore the possibility for cooperation. |
| --- | --- |

11.

The Agency welcomes the statement of the ECA with regard to the significant improvements noted in its ex ante and ex post verifications. With regard to the request for audit certificates, the Agency would like to inform the Court that such certificates were already made in 2010. Despite a briefing for Beneficiaries, the audit certificates were not issued by independent audit bodies and the delay in receiving the final claim was significantly extended. Bearing in mind the set-up of audit authorities under the External Border Fund and the Internal Security Fund, the Agency will explore the possibility for cooperation.

| 12. | The Agency welcomes the understanding of the Court for those planned carry-overs. Particularly title III expenditure depends significantly from the timely submission of reimbursement claims for grants by the Member States; the delay between the final date of the deployment of an officer or aircraft/vessel to a Frontex coordinated joint operation and the submission of the claim ranges on average between 4 to 6 months. |
| --- | --- |

12.

The Agency welcomes the understanding of the Court for those planned carry-overs. Particularly title III expenditure depends significantly from the timely submission of reimbursement claims for grants by the Member States; the delay between the final date of the deployment of an officer or aircraft/vessel to a Frontex coordinated joint operation and the submission of the claim ranges on average between 4 to 6 months.

| 13. | The Agency shares fully the view of the Court that the grant mechanism is neither the appropriate nor the most efficient instrument to finance Frontex coordinated operations. Frontex’s mandate to coordinate activities of border guard authorities is difficult to implement using grants as financial instrument. According to Article 3(4) of the Founding Regulation, Frontex has to use grants for (co-)financing Frontex coordinated joint operations; the Agency will address this issue in the upcoming review of the Founding Regulation following the regular 5-year evaluation. |
| --- | --- |

13.

The Agency shares fully the view of the Court that the grant mechanism is neither the appropriate nor the most efficient instrument to finance Frontex coordinated operations. Frontex’s mandate to coordinate activities of border guard authorities is difficult to implement using grants as financial instrument. According to Article 3(4) of the Founding Regulation, Frontex has to use grants for (co-)financing Frontex coordinated joint operations; the Agency will address this issue in the upcoming review of the Founding Regulation following the regular 5-year evaluation.

| 14. | The Agency will review the methodology for calculating the contributions from the Schengen Associated Countries, while bearing that in the legal provision some wording such as ‘budgeted’ remains unclear. After this review, the methodology will be laid down in the proper legal format. |
| --- | --- |

14.

The Agency will review the methodology for calculating the contributions from the Schengen Associated Countries, while bearing that in the legal provision some wording such as ‘budgeted’ remains unclear. After this review, the methodology will be laid down in the proper legal format.

| 15. | The Agency welcomes the conclusion of the ECA; the Management Board Working Group on budget and accounts is working on it and will table to the Management Board a recommendation and way forward with regard to the contributions of the UK and Ireland. |
| --- | --- |

15.

The Agency welcomes the conclusion of the ECA; the Management Board Working Group on budget and accounts is working on it and will table to the Management Board a recommendation and way forward with regard to the contributions of the UK and Ireland.

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| 9.12.2015 | EN | Official Journal of the European Union | C 409/353 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/353

---

REPORT

on the annual accounts of the European GNSS Agency for the financial year 2014, together with the Agency’s reply

(2015/C 409/39)

INTRODUCTION

| 1. | The European GNSS (Global Navigation Satellite System) Agency (hereinafter ‘the Agency’, aka ‘GSA’), which was relocated from Brussels to Prague as of 1 September 2012 (1), was set up by Regulation (EU) No 912/2010 of the European Parliament and the Council (2), repealing Council Regulation (EC) No 1321/2004 (3) and amending Regulation (EC) No 683/2008 (4), to manage the public interests relating to the European GNSS programmes and to act as the regulatory agency for the programme during the deployment and operational phases of the Galileo Programme. Regulation (EC) No 683/2008 of the European Parliament and the Council reduced the responsibilities of the Agency to the control of the security of Galileo systems and to the preparation of their commercialisation (5). In addition, the Commission entrusted the exploitation of the European Geostationary Navigation Overlay Service (EGNOS) to the Agency through a delegation agreement. |
| --- | --- |

1.

The European GNSS (Global Navigation Satellite System) Agency (hereinafter ‘the Agency’, aka ‘GSA’), which was relocated from Brussels to Prague as of 1 September 2012 (1), was set up by Regulation (EU) No 912/2010 of the European Parliament and the Council (2), repealing Council Regulation (EC) No 1321/2004 (3) and amending Regulation (EC) No 683/2008 (4), to manage the public interests relating to the European GNSS programmes and to act as the regulatory agency for the programme during the deployment and operational phases of the Galileo Programme. Regulation (EC) No 683/2008 of the European Parliament and the Council reduced the responsibilities of the Agency to the control of the security of Galileo systems and to the preparation of their commercialisation (5). In addition, the Commission entrusted the exploitation of the European Geostationary Navigation Overlay Service (EGNOS) to the Agency through a delegation agreement.

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Agency, which comprise the financial statements (6) and the reports on the implementation of the budget (7) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Agency, which comprise the financial statements (6) and the reports on the implementation of the budget (7) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (8).






  (a) | The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (9); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (8).

(a)

The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (9); making accounting estimates that are reasonable in the circumstances. The Executive Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (10) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (10) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and statement of assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (11). |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. In preparing this report and statement of assurance, the Court considered the audit work of the independent external auditor performed on the Agency’s accounts as stipulated in Article 208(4) of the EU Financial Regulation (11).

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | The level of carry-overs for committed appropriations was high for title II, administrative expenditure, at 3,4 million euro, i.e. 54 % (2013: 1,8 million euro, i.e. 52 %). These carry-overs mainly concerned services provided to the Agency in 2014 for which invoices were not received until 2015, and a number of high value IT contracts signed at the end of 2014. These IT projects, originally planned for 2015, were started in 2014 to utilise funds released from savings on other budget lines. |
| --- | --- |

11.

The level of carry-overs for committed appropriations was high for title II, administrative expenditure, at 3,4 million euro, i.e. 54 % (2013: 1,8 million euro, i.e. 52 %). These carry-overs mainly concerned services provided to the Agency in 2014 for which invoices were not received until 2015, and a number of high value IT contracts signed at the end of 2014. These IT projects, originally planned for 2015, were started in 2014 to utilise funds released from savings on other budget lines.

OTHER COMMENTS

| 12. | In 2013 the Agency had awarded an 8-year (1 January 2014—31 December 2021) service contract for the exploitation of the European Geostationary Navigation Overlay Service (EGNOS) with a value of 436 million euro (initial contract) to a contractor. In 2014 following a direct negotiated procedure, GSA amended the initial contract for an amount of 6,3 million euro for the purchase and maintenance of 14 satellite signal receivers and 14 signal generators and some other equipment in relation to EGNOS. An arrangement between the contractor and its two subcontractors was set up, as under the initial contract, which led to an accumulation of overheads and profits. Out of the 6,3 million euro, only 3,2 million euro related to direct costs (materials, labour, transport and insurance, travel and subsistence). Overheads and other costs accounted for 1,4 million euro and profits and remuneration of (sub)contractors for 1,7 million euro. |
| --- | --- |

12.

In 2013 the Agency had awarded an 8-year (1 January 2014—31 December 2021) service contract for the exploitation of the European Geostationary Navigation Overlay Service (EGNOS) with a value of 436 million euro (initial contract) to a contractor. In 2014 following a direct negotiated procedure, GSA amended the initial contract for an amount of 6,3 million euro for the purchase and maintenance of 14 satellite signal receivers and 14 signal generators and some other equipment in relation to EGNOS. An arrangement between the contractor and its two subcontractors was set up, as under the initial contract, which led to an accumulation of overheads and profits. Out of the 6,3 million euro, only 3,2 million euro related to direct costs (materials, labour, transport and insurance, travel and subsistence). Overheads and other costs accounted for 1,4 million euro and profits and remuneration of (sub)contractors for 1,7 million euro.

| 13. | There is no insurance coverage for fixed tangible assets (net book value 1,0 million euro). |
| --- | --- |

13.

There is no insurance coverage for fixed tangible assets (net book value 1,0 million euro).

FOLLOW-UP OF PREVIOUS YEAR’S COMMENTS

| 14. | An overview of the corrective actions taken in response to the Court’s comments from the previous year is provided in Annex I. |
| --- | --- |

14.

An overview of the corrective actions taken in response to the Court’s comments from the previous year is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 15 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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(1)  Decision 2010/803/EU taken by common accord between the Representatives of the Governments of the Member States (OJ L 342, 28.12.2010, p. 15).

1

(2)  OJ L 276, 20.10.2010, p. 11.

2

(3)  OJ L 246, 20.7.2004, p. 1.

3

(4)  OJ L 196, 24.7.2008, p. 1.

4

(5)  Annex II summarises the Agency’s competences and activities. It is presented for information purposes.

5

Annex II

(6)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

6

(7)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

7

(8)  Articles 39 and 50 of Commission Delegated Regulation (EU) No 1271/2013 (OJ L 328, 7.12.2013, p. 42).

8

(9)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

9

(10)  Article 107 of Regulation (EU) No 1271/2013.

10

(11)  Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

11

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ANNEX I

Follow-up of previous year’s comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2013 | The Agency is in charge of organising and managing the exploitation of the European Geostationary Navigation Overlay Service (EGNOS) which is the first pan-European satellite navigation system. On the basis of a delegation agreement with the Commission, the Agency signed a contract for the exploitation of EGNOS for the 2014 to 2021 period for an amount of some 588 million euro. Although the competiveness of the procedure is not called into question, an eligibility criterion applied in the first phase of the procurement procedure excluding applications from consortia was not in accordance with the rules on implementation of the Financial Regulation (1)
   (2). | N/A |
| 2013 | The overall level of committed appropriations was close to 100 % for all titles. However, carry-overs of committed appropriations were high for title II (administrative expenditure) at 1,8 million euro (52 %). This is mainly due to specific contracts signed at year-end (0,9 million euro), following the late approval of an amending budget in September that provided additional funds to the Agency. Another 0,4 million euro relate to services rendered by suppliers but not invoiced in 2013. | N/A |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2013

The Agency is in charge of organising and managing the exploitation of the European Geostationary Navigation Overlay Service (EGNOS) which is the first pan-European satellite navigation system. On the basis of a delegation agreement with the Commission, the Agency signed a contract for the exploitation of EGNOS for the 2014 to 2021 period for an amount of some 588 million euro. Although the competiveness of the procedure is not called into question, an eligibility criterion applied in the first phase of the procurement procedure excluding applications from consortia was not in accordance with the rules on implementation of the Financial Regulation (1)
   (2).

N/A

2013

The overall level of committed appropriations was close to 100 % for all titles. However, carry-overs of committed appropriations were high for title II (administrative expenditure) at 1,8 million euro (52 %). This is mainly due to specific contracts signed at year-end (0,9 million euro), following the late approval of an amending budget in September that provided additional funds to the Agency. Another 0,4 million euro relate to services rendered by suppliers but not invoiced in 2013.

N/A

---

(1)  Article 116(6) of Commission Regulation (EC, Euratom) No 2342/2002 (OJ L 357, 31.12.2002, p. 1).

(2)  Article 121(5) of Commission Delegated Regulation (EU) No 1268/2012 (OJ L 362, 31.12.2012, p. 1).

---

ANNEX II

European GNSS Agency (Prague)

Competences and activities

| Areas of Union competence deriving from the Treaty | Competitiveness for growth and employment. |
| --- | --- |
| The Agency’s powers


  (Regulation (EU) No 512/2014 amending Regulation (EU) No 912/2010 of the European Parliament and of the Council) | Objectives







  — | To contribute to the achievement of fully operational European satellite navigation systems established under the EGNOS and Galileo programmes. |

Areas of Union competence deriving from the Treaty

Competitiveness for growth and employment.

The Agency’s powers

(Regulation (EU) No 512/2014 amending Regulation (EU) No 912/2010 of the European Parliament and of the Council)

Objectives

—

To contribute to the achievement of fully operational European satellite navigation systems established under the EGNOS and Galileo programmes.

Tasks

| — | To support the security accreditation of the programmes on behalf of the Security Accreditation Board, |
| --- | --- |

—

To support the security accreditation of the programmes on behalf of the Security Accreditation Board,

| — | to undertake the operations of the Galileo Security Monitoring Centre (GSMC), |
| --- | --- |

—

to undertake the operations of the Galileo Security Monitoring Centre (GSMC),

| — | to contribute to the preparation of the commercialisation of the systems, including the necessary market analysis, |
| --- | --- |

—

to contribute to the preparation of the commercialisation of the systems, including the necessary market analysis,

| — | to accomplish other tasks entrusted to it by the Commission through Delegation Agreements, in particular concerning the exploitation of EGNOS and Galileo and promoting applications and services in the satellite navigation market. |
| --- | --- |

—

to accomplish other tasks entrusted to it by the Commission through Delegation Agreements, in particular concerning the exploitation of EGNOS and Galileo and promoting applications and services in the satellite navigation market.

Governance

Administrative Board

Composition:

| — | one representative per Member State, |
| --- | --- |

—

one representative per Member State,

| — | four representatives from the Commission, |
| --- | --- |

—

four representatives from the Commission,

| — | one non-voting representative of the European Parliament, |
| --- | --- |

—

one non-voting representative of the European Parliament,

| — | one representative of the HR and ESA each to be invited as observers. |
| --- | --- |

—

one representative of the HR and ESA each to be invited as observers.

Tasks:

| — | appoints the Executive Director (ED), |
| --- | --- |

—

appoints the Executive Director (ED),

| — | exercises disciplinary authority over the ED, |
| --- | --- |

—

exercises disciplinary authority over the ED,

| — | adopts the multiannual work programme, |
| --- | --- |

—

adopts the multiannual work programme,

| — | adopts the annual work programme, |
| --- | --- |

—

adopts the annual work programme,

| — | performs budgetary functions, |
| --- | --- |

—

performs budgetary functions,

| — | oversees the operation of the Galileo Security Monitoring Centre, |
| --- | --- |

—

oversees the operation of the Galileo Security Monitoring Centre,

| — | adopts arrangements to implement Regulation (EC) No 1049/2001, |
| --- | --- |

—

adopts arrangements to implement Regulation (EC) No 1049/2001,

| — | approves the arrangements concerning the participation of third countries and international organisations, |
| --- | --- |

—

approves the arrangements concerning the participation of third countries and international organisations,

| — | adopts the technical procedures necessary to perform its tasks, |
| --- | --- |

—

adopts the technical procedures necessary to perform its tasks,

| — | adopts the special provisions necessary for implementing right of access to documents, |
| --- | --- |

—

adopts the special provisions necessary for implementing right of access to documents,

| — | adopts the annual report on the activities and prospects of the Agency, |
| --- | --- |

—

adopts the annual report on the activities and prospects of the Agency,

| — | ensures adequate follow-up to the findings and recommendations stemming from evaluations and audits, |
| --- | --- |

—

ensures adequate follow-up to the findings and recommendations stemming from evaluations and audits,

| — | is consulted by the ED on the Galileo Exploitation and EGNOS Exploitation Delegation Agreements, |
| --- | --- |

—

is consulted by the ED on the Galileo Exploitation and EGNOS Exploitation Delegation Agreements,

| — | approves the working arrangements between the Agency and ESA, |
| --- | --- |

—

approves the working arrangements between the Agency and ESA,

| — | approves an anti-fraud strategy, |
| --- | --- |

—

approves an anti-fraud strategy,

| — | approves the Agency’s organisational structures, |
| --- | --- |

—

approves the Agency’s organisational structures,

| — | adopts and publishes its rules of procedure. |
| --- | --- |

—

adopts and publishes its rules of procedure.

Executive Director

Appointed by the Administrative Board.

Security Accreditation Board

Composition:

| — | one representative per Member State, |
| --- | --- |

—

one representative per Member State,

| — | one representative from the Commission, |
| --- | --- |

—

one representative from the Commission,

| — | one representative from the HR, |
| --- | --- |

—

one representative from the HR,

| — | one representative of ESA to be invited as observer. |
| --- | --- |

—

one representative of ESA to be invited as observer.

Tasks:

To act as the security accreditation authority in relation to the European GNSS systems, i.e. inter alia it:

| — | elects a chairperson and deputy chairperson, |
| --- | --- |

—

elects a chairperson and deputy chairperson,

| — | has the power to dismiss the chairperson and deputy chairperson, |
| --- | --- |

—

has the power to dismiss the chairperson and deputy chairperson,

| — | prepares and approves that part of the multiannual work programme concerning security accreditation, and the financial and human resources needed to accomplish it, |
| --- | --- |

—

prepares and approves that part of the multiannual work programme concerning security accreditation, and the financial and human resources needed to accomplish it,

| — | prepares and approves that part of the annual work programme concerning security accreditation, and the financial and human resources needed to accomplish it, |
| --- | --- |

—

prepares and approves that part of the annual work programme concerning security accreditation, and the financial and human resources needed to accomplish it,

| — | prepares and approves that part of the annual report concerning security accreditation, and the financial and human resources needed to accomplish it, |
| --- | --- |

—

prepares and approves that part of the annual report concerning security accreditation, and the financial and human resources needed to accomplish it,

| — | defines and approves a security accreditation strategy, |
| --- | --- |

—

defines and approves a security accreditation strategy,

| — | takes security accreditation decisions, |
| --- | --- |

—

takes security accreditation decisions,

| — | examines and approves documentation relating to security accreditation, |
| --- | --- |

—

examines and approves documentation relating to security accreditation,

| — | advises the Commission in the elaboration of texts for acts concerning security of the systems and their operation, |
| --- | --- |

—

advises the Commission in the elaboration of texts for acts concerning security of the systems and their operation,

| — | examines and approves the security risk assessment and cooperates with the Commission to define risk mitigation measures, |
| --- | --- |

—

examines and approves the security risk assessment and cooperates with the Commission to define risk mitigation measures,

| — | checks the implementation of security measures in relation to security accreditation, |
| --- | --- |

—

checks the implementation of security measures in relation to security accreditation,

| — | endorses the selection of approved products and measures which protect against eavesdropping and of approved cryptographic products used to provide security, |
| --- | --- |

—

endorses the selection of approved products and measures which protect against eavesdropping and of approved cryptographic products used to provide security,

| — | approves, or participates in the joint approval of, the interconnection of the European GNSS systems with other systems, |
| --- | --- |

—

approves, or participates in the joint approval of, the interconnection of the European GNSS systems with other systems,

| — | agrees with the relevant Member States the template for access control, |
| --- | --- |

—

agrees with the relevant Member States the template for access control,

| — | informs the Commission of its risk assessment and provides advice to the Commission on residual risk treatment options, |
| --- | --- |

—

informs the Commission of its risk assessment and provides advice to the Commission on residual risk treatment options,

| — | assists, in close liaison with the Commission, the Council in the implementation of the Joint Action upon a specific request of the Council, |
| --- | --- |

—

assists, in close liaison with the Commission, the Council in the implementation of the Joint Action upon a specific request of the Council,

| — | carries out the consultations which are necessary to perform its tasks, |
| --- | --- |

—

carries out the consultations which are necessary to perform its tasks,

| — | adopts and publishes its rules of procedure. |
| --- | --- |

—

adopts and publishes its rules of procedure.

External audit

Court of Auditors.

Discharge Authority

Parliament, acting on a recommendation from the Council.

Resources made available to the Agency in 2014 (2013)

Final Budget

EU subsidy of 25,3(53,3) million euro, which is the operating subsidy from the Commission for titles I (staff-related costs), II (administrative) and III (core operational activity).

In addition, the GSA manages under delegation from the European Commission operational activities linked to the exploitation and commercialization of the EGNOS and Galileo systems. For this type of activity, the level of open commitments managed by the Agency by the end of 2014 was of 694,3(66,8) million euro. Payments managed linked to delegated activity amounted to 130,7(9,8) million euro in 2014.

Staff as at 31 December 2014

Authorised posts: 96 (77)

Posts occupied: 96 (59)

Other posts: 35 (35)

Total: 131 (94), assigned to the following duties:

Allocated to:

| — | operational tasks: 107 (43) |
| --- | --- |

—

operational tasks: 107 (43)

| — | administrative and support tasks: 24 (37) |
| --- | --- |

—

administrative and support tasks: 24 (37)

Products and services 2014

Security

Security (Security Accreditation of the systems and sites, Galileo System-specific Security requirements, Crypto Distribution Authority/Flight Key Cell activities).

Support to Public Regulated Service (PRS), including PRS Pilot Projects and procurement of pre-operational PRS receivers.

Galileo Security Monitoring Centre

Preparation of Galileo Security Monitoring Centre (GSMC).

Provision of the GSMC Nucleus.

Market development

Market analysis and publication of GNSS Market Reports.

Market readiness for the launch of Galileo early services.

Market development actions focused on receiver manufacturers to foster Galileo penetration in consumer and professional markets.

Implementation of adoption roadmaps for EGNOS in all priority markets with special focus on aviation and road transport.

Management of projects under the 7th Framework Programme for Research.

Maximisation of the projects’ results and achievement of strategic objectives.

Dissemination of the results of R & D.

EGNOS and Galileo Exploitation

Preparatory activities for Galileo exploitation,

EGNOS operations and services provision.

Operation of GNSS Service Centre helpdesk.

General Administration

Information and outreach including EGNOS market communications, PRS awareness-building and corporate communications activities.

Source: Annex supplied by the Agency.

---

THE AGENCY’S REPLY

| 11. | The commitment rate was close to 100 % for all titles indicating a timely signing of legal commitments. However, carry-overs of committed appropriations were high for title II (administrative expenditure) and reached around 3,4 million euro, i.e. 54 %, (2013: 1,8 million euro, i.e. 52 %). |
| --- | --- |

11.

The commitment rate was close to 100 % for all titles indicating a timely signing of legal commitments. However, carry-overs of committed appropriations were high for title II (administrative expenditure) and reached around 3,4 million euro, i.e. 54 %, (2013: 1,8 million euro, i.e. 52 %).

| 12. | The GSA confirms that ESSP industrial organisation may lead to accumulation of overheads and profits.
  However, this is in line with the 8-year EGNOS Service Provision contract (the ESP contract), which was awarded through a competitive tender to ESSP grouping — i.e. to industrial organisation with a freely established setup that was assessed to offer the best quality and at the best price offered (i.e. principle of economy) for the services procured. The difference between winner and runner-up in the final tender score was in the range of 10 million euro.
  The ESP contract type -direct single service contract- was chosen in order to secure service continuity requirement for Safety-of-Life (SoL) service based on qualified/certified system; yet, it functions effectively as a framework contract (FWC): main ESP contract representing the FWC + specific contract #1 (for continuous service provision) and all amendments being further specific contracts, fitting within the scope of FWC. Therefore the ESP amendment for 6,3 million euro for the purchase and maintenance of 14 satellite receivers and 14 signal generators cannot be seen as a standalone procurement and ensuing contract but it must be considered as an intrinsic and non-separable part of the ESP contract necessary to secure the maintenance of the system as qualified and the delivery of the SoL service complying with the mandatory certification. It follows that the freely chosen industrial setup of main ESP contract also had to be respected. |
| --- | --- |

12.

The GSA confirms that ESSP industrial organisation may lead to accumulation of overheads and profits.

However, this is in line with the 8-year EGNOS Service Provision contract (the ESP contract), which was awarded through a competitive tender to ESSP grouping — i.e. to industrial organisation with a freely established setup that was assessed to offer the best quality and at the best price offered (i.e. principle of economy) for the services procured. The difference between winner and runner-up in the final tender score was in the range of 10 million euro.

The ESP contract type -direct single service contract- was chosen in order to secure service continuity requirement for Safety-of-Life (SoL) service based on qualified/certified system; yet, it functions effectively as a framework contract (FWC): main ESP contract representing the FWC + specific contract #1 (for continuous service provision) and all amendments being further specific contracts, fitting within the scope of FWC. Therefore the ESP amendment for 6,3 million euro for the purchase and maintenance of 14 satellite receivers and 14 signal generators cannot be seen as a standalone procurement and ensuing contract but it must be considered as an intrinsic and non-separable part of the ESP contract necessary to secure the maintenance of the system as qualified and the delivery of the SoL service complying with the mandatory certification. It follows that the freely chosen industrial setup of main ESP contract also had to be respected.

| 13. | The Agency is currently analysing risks, value and criticality of each asset owned in order to conduct a first assessment of possible mitigation actions associated to risk of their ownership.
  On the basis of the outcome of such assessment the Agency is planning, on one hand, to approach the insurance market to have quotations of possible premium and, on the other hand, to assess the available budget to follow a self-insurance approach.
  The outcome of the abovementioned exercise will serve as a basis of a value for money judgement to decide whether to subscribe to an insurance. |
| --- | --- |

13.

The Agency is currently analysing risks, value and criticality of each asset owned in order to conduct a first assessment of possible mitigation actions associated to risk of their ownership.

On the basis of the outcome of such assessment the Agency is planning, on one hand, to approach the insurance market to have quotations of possible premium and, on the other hand, to assess the available budget to follow a self-insurance approach.

The outcome of the abovementioned exercise will serve as a basis of a value for money judgement to decide whether to subscribe to an insurance.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/362 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/362

---

REPORT

on the annual accounts of the Innovation and Networks Executive Agency for the financial year 2014 together with the Agency’s reply

(2015/C 409/40)

INTRODUCTION

| 1. | The Innovation and Networks Executive Agency (INEA — hereinafter ‘the Agency’), which is located in Brussels, was set up by Commission Decision 2013/801/EU (1) to replace and succeed the Trans-European Transport Network Executive Agency. The Agency was established for a period beginning on 1 January 2014 and ending on 31 December 2024 for the management of EU actions in relation to the Connecting Europe Facility, the Horizon 2020 Research and Innovation Funding Programme, the trans-European transport network (2) and the Marco Polo Programme. |
| --- | --- |

1.

The Innovation and Networks Executive Agency (INEA — hereinafter ‘the Agency’), which is located in Brussels, was set up by Commission Decision 2013/801/EU (1) to replace and succeed the Trans-European Transport Network Executive Agency. The Agency was established for a period beginning on 1 January 2014 and ending on 31 December 2024 for the management of EU actions in relation to the Connecting Europe Facility, the Horizon 2020 Research and Innovation Funding Programme, the trans-European transport network (2) and the Marco Polo Programme.

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts.

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON BUDGETARY MANAGEMENT

| 11. | The level of carry-overs for committed appropriations was high for title II at 0,8 million euro, i.e. 25 % (2013: 0,7 million euro/27 %) and title III at 0,4 million euro, i.e. 56 % (2013: 0,1 million euro/22 %). The main causes were the purchase of equipment for the additional office space rented to accommodate the Agency’s increased staff, IT contracts concluded as planned in the second half of 2014 but invoiced in 2015, and expenditure related to Service Level Agreements with the Commission for which invoices were not received until 2015. |
| --- | --- |

11.

The level of carry-overs for committed appropriations was high for title II at 0,8 million euro, i.e. 25 % (2013: 0,7 million euro/27 %) and title III at 0,4 million euro, i.e. 56 % (2013: 0,1 million euro/22 %). The main causes were the purchase of equipment for the additional office space rented to accommodate the Agency’s increased staff, IT contracts concluded as planned in the second half of 2014 but invoiced in 2015, and expenditure related to Service Level Agreements with the Commission for which invoices were not received until 2015.

FOLLOW-UP OF PREVIOUS YEAR’S COMMENTS

| 12. | An overview of the corrective actions taken in response to the Court’s comments from the previous year is provided in Annex I. |
| --- | --- |

12.

An overview of the corrective actions taken in response to the Court’s comments from the previous year is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 352, 24.12.2013, p. 65.

1

(2)  Annex II summarises the Agency’s competences and activities. It is presented for information purposes.

2

Annex II

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 62 and 68 in conjunction with Articles 53 and 58 of Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council (OJ L 298, 26.10.2012, p. 1).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 162 of Regulation (EU, Euratom) No 966/2012.

7

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ANNEX I

Follow-up of previous years’ comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2013 | The Agency does not perform satisfactory ex ante verifications on the charges invoiced by the building manager for its premises. Most of the underlying contracts, invoices and receipts were not at the Agency’s disposal. | Completed |
| 2013 | According to the Protocol on the privileges and immunities of the European Union (1) and the EU VAT Directive (2), the Agency is exempt from indirect taxes. However, by the end of 2013 it had paid but not claimed back 1 13  513 euro in VAT on premises charges for the period 2011 to 2013. | Completed |
| 2013 | While budget implementation was satisfactory for titles I and III, the rate of committed appropriations carried over was high for title II at 27 % (6 66  119 euro). These carry-overs mainly related to IT goods and services contracted and/or ordered at year-end which will be provided as planned in late 2013 or in 2014 (2 96  486 euro), and invoices for 2013 expenses not received by year-end (2 86  197 euro). | N/A |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2013

The Agency does not perform satisfactory ex ante verifications on the charges invoiced by the building manager for its premises. Most of the underlying contracts, invoices and receipts were not at the Agency’s disposal.

Completed

2013

According to the Protocol on the privileges and immunities of the European Union (1) and the EU VAT Directive (2), the Agency is exempt from indirect taxes. However, by the end of 2013 it had paid but not claimed back 1 13  513 euro in VAT on premises charges for the period 2011 to 2013.

Completed

2013

While budget implementation was satisfactory for titles I and III, the rate of committed appropriations carried over was high for title II at 27 % (6 66  119 euro). These carry-overs mainly related to IT goods and services contracted and/or ordered at year-end which will be provided as planned in late 2013 or in 2014 (2 96  486 euro), and invoices for 2013 expenses not received by year-end (2 86  197 euro).

N/A

---

(1)  Protocol (No 7) on the privileges and immunities of the European Union (OJ C 115, 9.5.2008, p. 266).

(2)  Council Directive 2006/112/EC (OJ L 347, 11.12.2006, p. 1).

---

ANNEX II

Innovation and Networks Executive Agency (Brussels)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Articles 26, 170, 171, 172, 174, 179, 180 of the Treaty on the Functioning of the European Union) | The Union shall adopt measures with the aim of establishing or ensuring the functioning of the internal market. The internal market shall comprise an area in which the free movement of goods, persons, services and capital is ensured. The Union shall also have the objective of strengthening its scientific and technological bases by achieving a European research area in which researchers, scientific knowledge and technology circulate freely, and encouraging it to become more competitive, including in its industry.
  In order to promote its overall harmonious development, the Union shall develop and pursue its actions leading to the strengthening of its economic, social and territorial cohesion.
  To help achieve these objectives, and to enable citizens in the Union, economic operators and regional and local communities to derive full benefit from the setting up of an area without internal frontiers, the Union shall contribute to the establishment and development of trans-European networks in the areas of transport, telecommunications and energy infrastructures. Action by the Union shall aim at promoting the interconnection and interoperability of national networks as well as access to them.
  In order to achieve these objectives, the Union shall establish a series of guidelines covering the objectives, priorities and broad lines of measures envisaged in the sphere of trans-European networks (TENs).
  The Union shall also encourage undertakings, including SMEs, research centres and universities, in their research and technological development activities of high quality; it shall support their efforts to cooperate with one another, aiming, notably, at permitting researchers to cooperate freely across borders and at enabling undertakings to exploit the internal market potential to the full, in particular through [...] the definition of common standards and the removal of legal and fiscal obstacles to that cooperation. |
| --- | --- |
| Competences of the Agency


  Commission Decision 2013/801/EU of 23 December 2013 establishing the Innovation and Networks Executive Agency


  Decision C(2013) 9235 of 23 December 2013 delegating powers to the Innovation and Networks Executive Agency | Objectives

  Council Regulation (EC) No 58/2003 empowers the Commission to establish executive agencies to carry out tasks related to Union programmes. Under the new Decision C(2013) 9235 delegating powers to INEA the Agency manages the legacy of the TEN-T and Marco Polo programmes and the three sectors of the Connecting Europe Facility (transport, energy and telecommunication) promoting growth, jobs and competitiveness through targeted infrastructure investment at European level. It also manages parts of the Horizon 2020 programme in the research areas ‘Smart, green and integrated transport’ and ‘Secure, clean and efficient energy’ to foster growth by supporting research and innovation.
  INEA was therefore set up to manage Union action in the fields of the CEF and Horizon 2020 on the basis of the Financial Regulation and its Rules of Application, the TEN-T Regulation, the Marco Polo Regulation, the CEF Regulation, the TEN-T and TEN-E Guidelines and the Horizon 2020 Regulations, and to continue to manage the TEN-T and Marco Polo Programmes. It is now under the supervision of its parent DGs — DG MOVE, DG ENER, DG CNECT and DG RTD — which retain responsibility for the respective policy issues.
  INEA is responsible for managing the technical and financial implementation of these programmes by following the entire project lifecycle. In its day-to-day work it aims to improve the effectiveness and flexibility of implementation at a lower cost while simultaneously mobilising a high level of expertise by recruiting more specialised staff. It also works to strengthen the links with key stakeholders, improve the coordination of funds with other EU instruments, raise the profile and benefits of EU funding and provide support/feedback to the Commission. |
| Governance | Steering Committee

  The Agency’s activities are supervised by a Steering Committee comprising five members (one from each of the parent DGs and one from DG HR) and four observers appointed by the European Commission. The Committee adopts the Agency’s organisation chart and its annual work programme after approval by the Commission, as well as the Agency’s administrative budget, annual activity report and annual accounts.

  Director

  Appointed by the European Commission, the Director manages the Agency together with the Steering Committee, sets up management and internal control systems adapted to the tasks entrusted to the Agency, and prepares the reports to be presented to the Commission.

  Internal audit

  European Commission’s Internal Audit Service (IAS) and the Agency’s Internal Audit Capability (IAC).

  External audit

  European Court of Auditors.

  Discharge authority

  European Parliament acting on a recommendation from the Council. With respect to the Agency’s implementation of its administrative budget, the discharge decision is addressed to the Director. The Commission remains accountable for the implementation of the operational budget delegated by the Commission to the Agency. |
| Resources available to the Agency in 2014 | Operational budget 2014

  A total of 3  059 million euro in commitment appropriations was transferred to INEA for the management of the two Framework Programmes under the Multiannual Financial Framework for 2014-2020, namely the CEF (2  692 million euro) and Horizon 2020 (367 million euro).
  The total value of payments made by the Agency in 2014 was 606 million euro, of which 590 million euro was paid for the TEN-T Programme and 16 million euro for the completion of the Marco Polo Programme.
  INEA implements the Commission’s operational budget under a delegation decision.

  Administrative budget 2014

  13,4 million euro in the form of a 100 % EU subsidy, which the Agency implements autonomously.

  Staff as at 31 December 2014

  Temporary staff: 49 posts listed in the establishment plan, of which 44 were occupied.
  Contract staff: 113 posts planned, of which 107 were occupied.
  Total staff: 162 (151 occupied).
  Assigned to:






  (a) | operational activities: 121 (113 occupied) |

Areas of Union competence deriving from the Treaty

(Articles 26, 170, 171, 172, 174, 179, 180 of the Treaty on the Functioning of the European Union)

The Union shall adopt measures with the aim of establishing or ensuring the functioning of the internal market. The internal market shall comprise an area in which the free movement of goods, persons, services and capital is ensured. The Union shall also have the objective of strengthening its scientific and technological bases by achieving a European research area in which researchers, scientific knowledge and technology circulate freely, and encouraging it to become more competitive, including in its industry.

In order to promote its overall harmonious development, the Union shall develop and pursue its actions leading to the strengthening of its economic, social and territorial cohesion.

To help achieve these objectives, and to enable citizens in the Union, economic operators and regional and local communities to derive full benefit from the setting up of an area without internal frontiers, the Union shall contribute to the establishment and development of trans-European networks in the areas of transport, telecommunications and energy infrastructures. Action by the Union shall aim at promoting the interconnection and interoperability of national networks as well as access to them.

In order to achieve these objectives, the Union shall establish a series of guidelines covering the objectives, priorities and broad lines of measures envisaged in the sphere of trans-European networks (TENs).

The Union shall also encourage undertakings, including SMEs, research centres and universities, in their research and technological development activities of high quality; it shall support their efforts to cooperate with one another, aiming, notably, at permitting researchers to cooperate freely across borders and at enabling undertakings to exploit the internal market potential to the full, in particular through [...] the definition of common standards and the removal of legal and fiscal obstacles to that cooperation.

Competences of the Agency

Commission Decision 2013/801/EU of 23 December 2013 establishing the Innovation and Networks Executive Agency

Decision C(2013) 9235 of 23 December 2013 delegating powers to the Innovation and Networks Executive Agency

Objectives

Council Regulation (EC) No 58/2003 empowers the Commission to establish executive agencies to carry out tasks related to Union programmes. Under the new Decision C(2013) 9235 delegating powers to INEA the Agency manages the legacy of the TEN-T and Marco Polo programmes and the three sectors of the Connecting Europe Facility (transport, energy and telecommunication) promoting growth, jobs and competitiveness through targeted infrastructure investment at European level. It also manages parts of the Horizon 2020 programme in the research areas ‘Smart, green and integrated transport’ and ‘Secure, clean and efficient energy’ to foster growth by supporting research and innovation.

INEA was therefore set up to manage Union action in the fields of the CEF and Horizon 2020 on the basis of the Financial Regulation and its Rules of Application, the TEN-T Regulation, the Marco Polo Regulation, the CEF Regulation, the TEN-T and TEN-E Guidelines and the Horizon 2020 Regulations, and to continue to manage the TEN-T and Marco Polo Programmes. It is now under the supervision of its parent DGs — DG MOVE, DG ENER, DG CNECT and DG RTD — which retain responsibility for the respective policy issues.

INEA is responsible for managing the technical and financial implementation of these programmes by following the entire project lifecycle. In its day-to-day work it aims to improve the effectiveness and flexibility of implementation at a lower cost while simultaneously mobilising a high level of expertise by recruiting more specialised staff. It also works to strengthen the links with key stakeholders, improve the coordination of funds with other EU instruments, raise the profile and benefits of EU funding and provide support/feedback to the Commission.

Governance

Steering Committee

The Agency’s activities are supervised by a Steering Committee comprising five members (one from each of the parent DGs and one from DG HR) and four observers appointed by the European Commission. The Committee adopts the Agency’s organisation chart and its annual work programme after approval by the Commission, as well as the Agency’s administrative budget, annual activity report and annual accounts.

Director

Appointed by the European Commission, the Director manages the Agency together with the Steering Committee, sets up management and internal control systems adapted to the tasks entrusted to the Agency, and prepares the reports to be presented to the Commission.

Internal audit

European Commission’s Internal Audit Service (IAS) and the Agency’s Internal Audit Capability (IAC).

External audit

European Court of Auditors.

Discharge authority

European Parliament acting on a recommendation from the Council. With respect to the Agency’s implementation of its administrative budget, the discharge decision is addressed to the Director. The Commission remains accountable for the implementation of the operational budget delegated by the Commission to the Agency.

Resources available to the Agency in 2014

Operational budget 2014

A total of 3  059 million euro in commitment appropriations was transferred to INEA for the management of the two Framework Programmes under the Multiannual Financial Framework for 2014-2020, namely the CEF (2  692 million euro) and Horizon 2020 (367 million euro).

The total value of payments made by the Agency in 2014 was 606 million euro, of which 590 million euro was paid for the TEN-T Programme and 16 million euro for the completion of the Marco Polo Programme.

INEA implements the Commission’s operational budget under a delegation decision.

Administrative budget 2014

13,4 million euro in the form of a 100 % EU subsidy, which the Agency implements autonomously.

Staff as at 31 December 2014

Temporary staff: 49 posts listed in the establishment plan, of which 44 were occupied.

Contract staff: 113 posts planned, of which 107 were occupied.

Total staff: 162 (151 occupied).

Assigned to:

(a)

operational activities: 121 (113 occupied)

| (b) | administrative activities: 41 (38 occupied) |
| --- | --- |

(b)

administrative activities: 41 (38 occupied)

Products and services 2014

As well as the legacy of the TEN-T Programme, INEA took over the management of the Marco Polo II Programme from another executive agency (EASME) in February 2014. During the second half of 2014, INEA also gradually took over the newly delegated activities for the Connecting Europe Facility (for Transport and Energy) as well as for societal challenges 3 (Secure, clean and efficient energy) and 4 (Smart, green and integrated transport) under Horizon 2020. Handover of the delegated activities for the Connecting Europe Facility for Telecommunications was to take place at the end of January 2015.

TEN-T Programme 2007-2013

The proposals submitted under the 2013 annual and multiannual calls for proposals were evaluated and 106 proposals for 320,7 million euro were selected for funding. Subsequently, 104 new financing decisions were adopted (two decisions were cancelled before adoption). At the end of 2014, INEA was managing 439 ongoing projects. One ongoing action from the TEN-T Programme for 2000-2006 also remained open. INEA made full use of payment appropriations, with an average net time to pay of 17 days.

Marco Polo II Programme

Following the evaluation of the 2013 Marco Polo call for proposals by EASME and the subsequent handover of the programme, INEA prepared and signed 26 new grant agreements. At the end of 2014, 80 projects were still ongoing. INEA made full use of payment appropriations, with an average net time to pay of 27 days.

Connecting Europe Facility — Transport

In close cooperation with DG MOVE, INEA prepared the 2014 multiannual and annual calls for proposals for total funding of 11 billion euro and 930 million euro respectively (the calls were published in September 2014, with a proposal deadline in February 2015).

Connecting Europe Facility — Energy

In close cooperation with DG ENER, INEA prepared the 2014 multiannual call for proposals for total funding of 750 million euro (call closure in August 2014). Subsequently, the proposals received under this call were evaluated and 34 proposals for 647,3 million euro were selected for funding. The Agency is now preparing the corresponding grant agreements.

Connecting Europe Facility — Telecommunications

Arrangements for the handover were agreed in close cooperation with DG CNECT. By the end of January 2015, INEA was to take over the preparation of grant agreements following the 2014 Safer internet call, the launch of the 2014 e-Identification call and the preparation of other calls to be launched in 2015.

Horizon 2020 — Energy

INEA supported the parent DGs in the evaluation of three H2020 — Energy calls for proposals and the corresponding sub-calls. Following finalisation of the ranking lists, 28 proposals were transferred to the Agency and the grant agreement preparation phase was successfully finalised within the 8-month deadline.

Horizon 2020 — Transport

INEA supported the parent DGs during the evaluation phase of the H2020 — Transport open calls for proposals. Handover of these calls was to take place at the start of the grant agreement preparation phase in early 2015. In addition, the grant agreement preparation phase was successfully finalised for one proposal handed over to INEA in August. Three projects under the Blue Growth call were transferred in November; the preparation of grant agreements for these projects is now ongoing under the Agency’s responsibility.

Source: Annex supplied by the Agency.

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THE AGENCY’S REPLY

| 11. | The Agency confirms that the carry-overs are mainly related to the three types of expenditure to which the Court refers. These are expenditures that could either not be invoiced in 2014 as they relate to services provided until the end of the year, or could not be postponed until 2015; therefore, the carry-overs related to these expenditures are fully justified. |
| --- | --- |

11.

The Agency confirms that the carry-overs are mainly related to the three types of expenditure to which the Court refers. These are expenditures that could either not be invoiced in 2014 as they relate to services provided until the end of the year, or could not be postponed until 2015; therefore, the carry-overs related to these expenditures are fully justified.

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| 9.12.2015 | EN | Official Journal of the European Union | C 409/371 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/371

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REPORT

on the annual accounts of the Office for Harmonization in the Internal Market for the financial year 2014, together with the Office’s reply

(2015/C 409/41)

INTRODUCTION

| 1. | The Office for Harmonization in the Internal Market (hereinafter ‘the Office’, aka ‘OHIM’), which is located in Alicante, was established by Council Regulation (EC) No 40/94 (1), which was repealed and replaced by Regulation (EC) No 207/2009 (2). The Office’s task is to implement the Union legislation on trade marks and designs, which gives undertakings uniform protection throughout the entire area of the European Union (3). |
| --- | --- |

1.

The Office for Harmonization in the Internal Market (hereinafter ‘the Office’, aka ‘OHIM’), which is located in Alicante, was established by Council Regulation (EC) No 40/94 (1), which was repealed and replaced by Regulation (EC) No 207/2009 (2). The Office’s task is to implement the Union legislation on trade marks and designs, which gives undertakings uniform protection throughout the entire area of the European Union (3).

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Office’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Office’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Office, which comprise the financial statements (4) and the reports on the implementation of the budget (5) for the financial year ended 31 December 2014; and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Office, which comprise the financial statements (4) and the reports on the implementation of the budget (5) for the financial year ended 31 December 2014; and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Office and the legality and regularity of the underlying transactions (6).






  (a) | The management’s responsibilities in respect of the Office’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (7); making accounting estimates that are reasonable in the circumstances. The President approves the annual accounts of the Office after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Office in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Office and the legality and regularity of the underlying transactions (6).

(a)

The management’s responsibilities in respect of the Office’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (7); making accounting estimates that are reasonable in the circumstances. The President approves the annual accounts of the Office after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Office in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the Budget Committee of the Office with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions (8). The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Office are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the Budget Committee of the Office with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions (8). The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Office are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts.

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Office’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Office’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

| 10. | The comments which follow do not call the Court’s opinions into question. |
| --- | --- |

10.

The comments which follow do not call the Court’s opinions into question.

COMMENTS ON INTERNAL CONTROLS

| 11. | In its 2013 Report on the annual accounts of the Office the Court questioned the amount spent on stand-by allowances (0,40 million euro). Such payments were higher in 2014 (0,44 million euro). In November 2014 the Office revised its policy and reduced the number of roles entitled to stand-by duty allowances from 25 to 17, the financial effect of which will be seen from 2015. However, the system is poorly controlled and staff on sick leave, missions abroad or on holiday (9) have been paid allowances. Nine staff members received more than 11  000 euro each in stand-by allowances, seven of whom are managers. |
| --- | --- |

11.

In its 2013 Report on the annual accounts of the Office the Court questioned the amount spent on stand-by allowances (0,40 million euro). Such payments were higher in 2014 (0,44 million euro). In November 2014 the Office revised its policy and reduced the number of roles entitled to stand-by duty allowances from 25 to 17, the financial effect of which will be seen from 2015. However, the system is poorly controlled and staff on sick leave, missions abroad or on holiday (9) have been paid allowances. Nine staff members received more than 11  000 euro each in stand-by allowances, seven of whom are managers.

COMMENTS ON BUDGETARY MANAGEMENT

| 12. | The amount of cancelled carry-overs from previous years decreased from 6,0 million euro (16 %) in 2013 to 5,1 million (13 %) in 2014. In both years this was mainly due to lower than estimated costs to be reimbursed under cooperation agreements with Member States’ National Offices (3,2 million euro in 2014 and 3,8 million euro in 2013), which indicates the need to obtain more accurate information from National Offices at year-end on the actual cost incurred. The level of committed 2014 appropriations for the different titles varied between 94 % and 97 % of total appropriations, indicating that legal commitments were made in a timely manner. The level of committed appropriations carried over to 2015 was high for title III at 14,1 million euro, i.e. 38 % (2013: 13,3 million euro, i.e. 38 %). It was mainly related to cooperation agreements with National Offices, for which cost claims were not due to be submitted by the National Offices until 2015, and the usual order of translation services in the last 2 months of 2014, which were only due for payment in 2015. |
| --- | --- |

12.

The amount of cancelled carry-overs from previous years decreased from 6,0 million euro (16 %) in 2013 to 5,1 million (13 %) in 2014. In both years this was mainly due to lower than estimated costs to be reimbursed under cooperation agreements with Member States’ National Offices (3,2 million euro in 2014 and 3,8 million euro in 2013), which indicates the need to obtain more accurate information from National Offices at year-end on the actual cost incurred. The level of committed 2014 appropriations for the different titles varied between 94 % and 97 % of total appropriations, indicating that legal commitments were made in a timely manner. The level of committed appropriations carried over to 2015 was high for title III at 14,1 million euro, i.e. 38 % (2013: 13,3 million euro, i.e. 38 %). It was mainly related to cooperation agreements with National Offices, for which cost claims were not due to be submitted by the National Offices until 2015, and the usual order of translation services in the last 2 months of 2014, which were only due for payment in 2015.

OTHER COMMENTS

| 13. | In 2004 new EU Staff Regulations entered into force, including provisions that future remunerations of officials recruited before May 2004 should not be less than under the previous EU Staff Regulations. The Court’s audit revealed that this was not complied with and, in the case of 4 of the 648 staff members employed at that time, this led to a total underpayment of 96  998 euro for the period 2005 to 2014. The amount is not material and does not put the reliability of the Office’s accounts into question. The Office decided to make the supplementary salary payments in due course. |
| --- | --- |

13.

In 2004 new EU Staff Regulations entered into force, including provisions that future remunerations of officials recruited before May 2004 should not be less than under the previous EU Staff Regulations. The Court’s audit revealed that this was not complied with and, in the case of 4 of the 648 staff members employed at that time, this led to a total underpayment of 96  998 euro for the period 2005 to 2014. The amount is not material and does not put the reliability of the Office’s accounts into question. The Office decided to make the supplementary salary payments in due course.

FOLLOW-UP OF PREVIOUS YEARS’ COMMENTS

| 14. | An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I. |
| --- | --- |

14.

An overview of the corrective actions taken in response to the Court’s comments from the previous years is provided in Annex I.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 15 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

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(1)  OJ L 11, 14.1.1994, p. 1.

1

(2)  OJ L 78, 24.3.2009, p. 1.

2

(3)  Annex II summarises the Office’s competences and activities. It is presented for information purposes.

3

Annex II

(4)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

4

(5)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

5

(6)  Articles 38 and 43 of Regulation No CB-3-09 of the Budget Committee of the Office for Harmonization in the Internal Market.

6

(7)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

7

(8)  Articles 91 to 95 of Regulation No CB-3-09 of the Budget Committee of the Office for Harmonization in the Internal Market.

8

(9)  According to the Office’s policy, staff on stand-by duty must be available within a range of 2 hours’ drive by car from the office, which however was not checked.

9

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ANNEX I

Follow-up of previous years’ comments

| Year | Court's comment | Status of corrective action
  (Completed/Ongoing/Outstanding/N/A) |
| --- | --- | --- |
| 2011 | Cash held by the Office as at 31 December 2011 totalled 520 million euro (495 million euro in 2010). Following the treasury policy approved by the Budget Committee in 2010 the cash was held in 9 banks in 5 Member States. | Completed
  However the Court notes the still high level of cash. |
| 2013 | The amount of cancelled carry-overs from previous years increased from 4,2 million euro (13 %) in 2012 to 6,0 million (16 %) in 2013. In both years this was mainly due to lower than estimated costs to be reimbursed under cooperation agreements with Member States’ National Offices (1,9 million euro in 2012 and 3,8 million euro in 2013), which indicates the need to obtain more accurate information from National Offices at year-end on the actual cost incurred. | Outstanding |
| 2013 | The level of committed 2013 appropriations for the different titles varied between 98 % and 89 % of total appropriations, indicating that legal commitments were made in a timely manner. The level of committed appropriations carried over to 2014 was high for title II (administrative expenditure) at 23,9 million euro (28 %) and title III at 13,3 million euro (38 %). For title II this resulted from multiannual contracts mainly related to the construction of the new building and IT developments and services/supplies ordered, as planned, at the end of 2013 which were only due for payment in 2014. For title III, it was mainly related to cooperation agreements with National Offices for which cost claims were not due to be submitted by National Offices until 2014, and the usual order of translation services in the last months of 2013, which were only due for payment in 2014. | N/A |
| 2013 | The Office has a Business Continuity and Crisis Management Plan in place which stipulates that some 25 roles have to be covered permanently by employees on stand-by duty. Although budget appropriations for stand-by duty allowances are approved annually by the Office’s Budget Committee, the amount paid in 2013 (4 02  458 euro) considerably exceeds such allowances paid by other agencies which need to ensure permanent service. | Ongoing |

Year

Court's comment

Status of corrective action

(Completed/Ongoing/Outstanding/N/A)

2011

Cash held by the Office as at 31 December 2011 totalled 520 million euro (495 million euro in 2010). Following the treasury policy approved by the Budget Committee in 2010 the cash was held in 9 banks in 5 Member States.

Completed

However the Court notes the still high level of cash.

2013

The amount of cancelled carry-overs from previous years increased from 4,2 million euro (13 %) in 2012 to 6,0 million (16 %) in 2013. In both years this was mainly due to lower than estimated costs to be reimbursed under cooperation agreements with Member States’ National Offices (1,9 million euro in 2012 and 3,8 million euro in 2013), which indicates the need to obtain more accurate information from National Offices at year-end on the actual cost incurred.

Outstanding

2013

The level of committed 2013 appropriations for the different titles varied between 98 % and 89 % of total appropriations, indicating that legal commitments were made in a timely manner. The level of committed appropriations carried over to 2014 was high for title II (administrative expenditure) at 23,9 million euro (28 %) and title III at 13,3 million euro (38 %). For title II this resulted from multiannual contracts mainly related to the construction of the new building and IT developments and services/supplies ordered, as planned, at the end of 2013 which were only due for payment in 2014. For title III, it was mainly related to cooperation agreements with National Offices for which cost claims were not due to be submitted by National Offices until 2014, and the usual order of translation services in the last months of 2013, which were only due for payment in 2014.

N/A

2013

The Office has a Business Continuity and Crisis Management Plan in place which stipulates that some 25 roles have to be covered permanently by employees on stand-by duty. Although budget appropriations for stand-by duty allowances are approved annually by the Office’s Budget Committee, the amount paid in 2013 (4 02  458 euro) considerably exceeds such allowances paid by other agencies which need to ensure permanent service.

Ongoing

---

ANNEX II

Office for Harmonization in the Internal Market (Alicante)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Articles 36 and 56 of the Treaty on the Functioning of the European Union) | Free movement of goods

  [...] prohibitions or restrictions [...] justified on grounds of [...] the protection of industrial and commercial property [shall not] constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.
  [...] restrictions on freedom to provide services within the Union shall be prohibited in respect of nationals of Member States who are established in a Member State other than that of the person for whom the services are intended. [...] |
| --- | --- |
| Competences of the Office


  (Council Regulation (EC) No 207/2009)


  (Regulation EU No 386/2012 of the European Parliament and of the Council) | Objectives

  To implement the Union legislation on trade marks and designs, which gives undertakings the right to uniform protection throughout the entire area of the European Union.
  To promote discussion, research, training, communication, the creation of advanced IT support tools and the spread of best practice on intellectual property (IP) matters.

  Tasks







  — | To receive and enter applications for registration, |

Areas of Union competence deriving from the Treaty

(Articles 36 and 56 of the Treaty on the Functioning of the European Union)

Free movement of goods

[...] prohibitions or restrictions [...] justified on grounds of [...] the protection of industrial and commercial property [shall not] constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.

[...] restrictions on freedom to provide services within the Union shall be prohibited in respect of nationals of Member States who are established in a Member State other than that of the person for whom the services are intended. [...]

Competences of the Office

(Council Regulation (EC) No 207/2009)

(Regulation EU No 386/2012 of the European Parliament and of the Council)

Objectives

To implement the Union legislation on trade marks and designs, which gives undertakings the right to uniform protection throughout the entire area of the European Union.

To promote discussion, research, training, communication, the creation of advanced IT support tools and the spread of best practice on intellectual property (IP) matters.

Tasks

—

To receive and enter applications for registration,

| — | to examine the conditions for entry in the Register and compatibility with Union legislation, |
| --- | --- |

—

to examine the conditions for entry in the Register and compatibility with Union legislation,

| — | to search at the industrial property offices of the Member States for any pre-existing national trade marks, |
| --- | --- |

—

to search at the industrial property offices of the Member States for any pre-existing national trade marks,

| — | to publish applications, |
| --- | --- |

—

to publish applications,

| — | to examine any opposition by third parties, |
| --- | --- |

—

to examine any opposition by third parties,

| — | to register or reject applications, |
| --- | --- |

—

to register or reject applications,

| — | to examine applications for revocation or invalidity, |
| --- | --- |

—

to examine applications for revocation or invalidity,

| — | to handle appeals against decisions, |
| --- | --- |

—

to handle appeals against decisions,

| — | to improve understanding of the value of intellectual property, |
| --- | --- |

—

to improve understanding of the value of intellectual property,

| — | to improve understanding of the scope and impact of infringements of intellectual property rights, |
| --- | --- |

—

to improve understanding of the scope and impact of infringements of intellectual property rights,

| — | to enhance knowledge of best public and private sector practices to protect intellectual property rights, |
| --- | --- |

—

to enhance knowledge of best public and private sector practices to protect intellectual property rights,

| — | to assist in raising citizens’ awareness of the impact of infringements of intellectual property rights, |
| --- | --- |

—

to assist in raising citizens’ awareness of the impact of infringements of intellectual property rights,

| — | to enhance the expertise of persons involved in the enforcement of intellectual property rights, |
| --- | --- |

—

to enhance the expertise of persons involved in the enforcement of intellectual property rights,

| — | to enhance knowledge of technical tools to prevent and tackle infringements of intellectual property rights, including tracking and tracing systems which help to distinguish genuine products from counterfeit ones, |
| --- | --- |

—

to enhance knowledge of technical tools to prevent and tackle infringements of intellectual property rights, including tracking and tracing systems which help to distinguish genuine products from counterfeit ones,

| — | to provide mechanisms which help to improve the online exchange, between Member States’ authorities working in the field of intellectual property rights, of information relating to the enforcement of such rights, and fostering cooperation with and between those authorities, |
| --- | --- |

—

to provide mechanisms which help to improve the online exchange, between Member States’ authorities working in the field of intellectual property rights, of information relating to the enforcement of such rights, and fostering cooperation with and between those authorities,

| — | to work in consultation with Member States, to foster international cooperation with intellectual property offices in third countries so as to build strategies and develop techniques, skills and tools for the enforcement of intellectual property rights. |
| --- | --- |

—

to work in consultation with Member States, to foster international cooperation with intellectual property offices in third countries so as to build strategies and develop techniques, skills and tools for the enforcement of intellectual property rights.

Governance

Administrative Board

Composition

| — | One representative from each Member State and one representative from the Commission, and their alternates. |
| --- | --- |

—

One representative from each Member State and one representative from the Commission, and their alternates.

Task

| — | To advise the President on matters for which the Office is responsible. |
| --- | --- |

—

To advise the President on matters for which the Office is responsible.

| — | To prepare lists of candidates (Article 125) for President, Vice-Presidents and chairmen and members of the Boards of Appeal. |
| --- | --- |

—

To prepare lists of candidates (Article 125) for President, Vice-Presidents and chairmen and members of the Boards of Appeal.

President of the Office

| — | Appointed by the Council from a list of at most three candidates which has been prepared by the Administrative Board. |
| --- | --- |

—

Appointed by the Council from a list of at most three candidates which has been prepared by the Administrative Board.

Budget Committee

Composition

| — | One representative of each Member State and one representative of the Commission and their alternates. |
| --- | --- |

—

One representative of each Member State and one representative of the Commission and their alternates.

Task

| — | To adopt the budget and the financial regulation, grant discharge to the President and determine the cost of search reports. |
| --- | --- |

—

To adopt the budget and the financial regulation, grant discharge to the President and determine the cost of search reports.

Decisions related to the applications

Decisions are taken by:

| (a) | the Examiners; |
| --- | --- |

(a)

the Examiners;

| (b) | the Opposition Divisions; |
| --- | --- |

(b)

the Opposition Divisions;

| (c) | the Administration of Trade Marks and Legal Division; |
| --- | --- |

(c)

the Administration of Trade Marks and Legal Division;

| (d) | the Cancellation Divisions; |
| --- | --- |

(d)

the Cancellation Divisions;

| (e) | the Boards of Appeal. |
| --- | --- |

(e)

the Boards of Appeal.

External audit

European Court of Auditors.

Discharge authority

The Office’s Budget Committee.

Resources made available to the Office in 2014 (1)
  (2013)
   (2)

Budget

420 (418) million euro.

Staff at 31 December 2014

844 (861) posts in the establishment plan; posts occupied: 721 (731) + 157 (171) other staff (auxiliary contracts, seconded national experts, local and employment agency staff, special advisers)

Total staff: 878 (902)

Products and services supplied 2014 (1)
  (2013)
   (2)

Trade marks

Number of applications: 1 17  455(1 14  270)

Number of registrations: 1 03  777(98  073)

Cases of opposition: 15  660(17  015)

Appeals to the Boards of Appeal: 3  284(2  602)

Appeals pending: 2  833(2  361)

Designs

Designs received: 97  671(96  702)

Designs registered: 85  430(84  021)

---

(1)  2014 figures are subject to minor adjustments for statistical reasons.

(2)  2013 figures adjusted.

Source: Annex supplied by the Office.

---

THE OFFICE’S REPLY

| 11. | In November 2014 the Office reduced the number of roles of standby duties in relation to its Business Continuity Plan (BCP) from 25 to 17 as a consequence of the yearly review of its processes and policies. Due to the late introduction of this change the financial impact could only be noted in 2015 (from 4 02  458 euro paid in 2013 to 3 10  000 euro budgeted in 2015). The increase in 2014 is due to the inclusion of two additional roles considered necessary in the BCP scheme, maintained after the reduction to 17 roles.
  The Office is further revising its policy in order to see whether there is room to reduce the roles even further while respecting the specificities of the Office. It should be mentioned that even though the Court of Auditors makes reference to other institutions and agencies, there are important differences as the Office provides its clients with a 24/7 service and is highly dependent on its internet website.
  With regard to controls, the stand-by-duty system integrates the performance of random controls over the staff members’ concerned by means of ‘test calls’ on a monthly basis. The system is manually programmed to make the test calls and is designed to produce a report on the results that it has registered. Subsequently, before the Office proceeds with the payment of the stand-by duty allowance, the IT Department informs the HR Department, also on a monthly basis, of the staff members that are entitled to receive the allowance.
  Furthermore, also during the test calls, the system is programmed to ask the staff member on stand-by duty to introduce the number of minutes it would take to arrive at the Office at the moment of the call.
  Regarding holidays, sick leaves and missions: the BCP is also foreseen when staff are on holidays, for example when the Office closes in December. Additionally, even if on holiday, staff members on BCP know that they must be within a maximum of 2 hours’ distance from the Office. Therefore, provided that this condition is fulfilled, the staff can be on BCP. The Office is however, gradually reinforcing its controls in relation to the standby duties of the BCP. |
| --- | --- |

11.

In November 2014 the Office reduced the number of roles of standby duties in relation to its Business Continuity Plan (BCP) from 25 to 17 as a consequence of the yearly review of its processes and policies. Due to the late introduction of this change the financial impact could only be noted in 2015 (from 4 02  458 euro paid in 2013 to 3 10  000 euro budgeted in 2015). The increase in 2014 is due to the inclusion of two additional roles considered necessary in the BCP scheme, maintained after the reduction to 17 roles.

The Office is further revising its policy in order to see whether there is room to reduce the roles even further while respecting the specificities of the Office. It should be mentioned that even though the Court of Auditors makes reference to other institutions and agencies, there are important differences as the Office provides its clients with a 24/7 service and is highly dependent on its internet website.

With regard to controls, the stand-by-duty system integrates the performance of random controls over the staff members’ concerned by means of ‘test calls’ on a monthly basis. The system is manually programmed to make the test calls and is designed to produce a report on the results that it has registered. Subsequently, before the Office proceeds with the payment of the stand-by duty allowance, the IT Department informs the HR Department, also on a monthly basis, of the staff members that are entitled to receive the allowance.

Furthermore, also during the test calls, the system is programmed to ask the staff member on stand-by duty to introduce the number of minutes it would take to arrive at the Office at the moment of the call.

Regarding holidays, sick leaves and missions: the BCP is also foreseen when staff are on holidays, for example when the Office closes in December. Additionally, even if on holiday, staff members on BCP know that they must be within a maximum of 2 hours’ distance from the Office. Therefore, provided that this condition is fulfilled, the staff can be on BCP. The Office is however, gradually reinforcing its controls in relation to the standby duties of the BCP.

| 12. | As already mentioned by the Court of Auditors, in 2014, the Office improved its cancellation rate of carry-overs with a reduction from 16 % to 13 %. The Office is currently working with the National Offices in order to reduce the cancelled carryovers through interim execution reports (these were increased from 10 to 18 in 2014) and midyear reviews. Additional measures will be looked into in relation to the new Cooperation agreements for the coming year. With regard to the high level of carryovers the Office is putting in place measures in order to reduce these further. |
| --- | --- |

12.

As already mentioned by the Court of Auditors, in 2014, the Office improved its cancellation rate of carry-overs with a reduction from 16 % to 13 %. The Office is currently working with the National Offices in order to reduce the cancelled carryovers through interim execution reports (these were increased from 10 to 18 in 2014) and midyear reviews. Additional measures will be looked into in relation to the new Cooperation agreements for the coming year. With regard to the high level of carryovers the Office is putting in place measures in order to reduce these further.

| 13. | As is the case for the other Agencies, the Office paid based on the calculations and information coming from the Paymaster Office (PMO) at the Commission. The Office intends to carry out the corresponding regularisations/payments in 2015 and has explained the issue in a note to the annual accounts. The Office understands that this is an issue detected by the Court of Auditors across agencies, however, the impact on the Office accounts is not significant. |
| --- | --- |

13.

As is the case for the other Agencies, the Office paid based on the calculations and information coming from the Paymaster Office (PMO) at the Commission. The Office intends to carry out the corresponding regularisations/payments in 2015 and has explained the issue in a note to the annual accounts. The Office understands that this is an issue detected by the Court of Auditors across agencies, however, the impact on the Office accounts is not significant.

---

| 9.12.2015 | EN | Official Journal of the European Union | C 409/379 |
| --- | --- | --- | --- |

9.12.2015

EN

Official Journal of the European Union

C 409/379

---

REPORT

on the annual accounts of the Research Executive Agency for the financial year 2014 together with the Agency’s reply

(2015/C 409/42)

INTRODUCTION

| 1. | The Research Executive Agency (hereinafter ‘the Agency’, aka ‘REA’), which is located in Brussels, was set up by Commission Decision 2008/46/EC (1). The Agency was established for a limited period beginning on 1 January 2008 and ending on 31 December 2017 with the aim of managing specific Union activities in the field of research (2). On 15 June 2009 the Agency was officially granted its administrative and operational autonomy by the European Commission. |
| --- | --- |

1.

The Research Executive Agency (hereinafter ‘the Agency’, aka ‘REA’), which is located in Brussels, was set up by Commission Decision 2008/46/EC (1). The Agency was established for a limited period beginning on 1 January 2008 and ending on 31 December 2017 with the aim of managing specific Union activities in the field of research (2). On 15 June 2009 the Agency was officially granted its administrative and operational autonomy by the European Commission.

INFORMATION IN SUPPORT OF THE STATEMENT OF ASSURANCE

| 2. | The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations. |
| --- | --- |

2.

The audit approach taken by the Court comprises analytical audit procedures, direct testing of transactions and an assessment of key controls of the Agency’s supervisory and control systems. This is supplemented by evidence provided by the work of other auditors (where relevant) and an analysis of management representations.

| STATEMENT OF ASSURANCE









  3. | Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:






  (a) | the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and |
| --- | --- | --- |

STATEMENT OF ASSURANCE

3.

Pursuant to the provisions of Article 287 of the Treaty on the Functioning of the European Union (TFEU), the Court has audited:

(a)

the annual accounts of the Agency, which comprise the financial statements (3) and the reports on the implementation of the budget (4) for the financial year ended 31 December 2014, and

| (b) | the legality and regularity of the transactions underlying those accounts. |
| --- | --- |

(b)

the legality and regularity of the transactions underlying those accounts.

The management’s responsibility

| 4. | The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):






  (a) | The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects. |
| --- | --- | --- |

4.

The management is responsible for the preparation and fair presentation of the annual accounts of the Agency and the legality and regularity of the underlying transactions (5):

(a)

The management’s responsibilities in respect of the Agency’s annual accounts include designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies on the basis of the accounting rules adopted by the Commission’s accounting officer (6); making accounting estimates that are reasonable in the circumstances. The Director approves the annual accounts of the Agency after its accounting officer has prepared them on the basis of all available information and established a note to accompany the accounts in which he declares, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the Agency in all material respects.

| (b) | The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. |
| --- | --- |

(b)

The management’s responsibilities in respect of the legality and regularity of the underlying transactions and compliance with the principle of sound financial management consist of designing, implementing and maintaining an effective and efficient internal control system comprising adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used.

The auditor’s responsibility

| 5. | The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

5.

The Court’s responsibility is, on the basis of its audit, to provide the European Parliament and the Council (7) with a statement of assurance as to the reliability of the annual accounts and the legality and regularity of the underlying transactions. The Court conducts its audit in accordance with the IFAC International Standards on Auditing and Codes of Ethics and the INTOSAI International Standards of Supreme Audit Institutions. These standards require the Court to plan and perform the audit to obtain reasonable assurance as to whether the annual accounts of the Agency are free from material misstatement and the transactions underlying them are legal and regular.

| 6. | The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts. |
| --- | --- |

6.

The audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the accounts and the legality and regularity of the underlying transactions. The procedures selected depend on the auditor’s judgement, which is based on an assessment of the risks of material misstatement of the accounts and material non-compliance by the underlying transactions with the requirements in the legal framework of the European Union, whether due to fraud or error. In assessing these risks, the auditor considers any internal controls relevant to the preparation and fair presentation of the accounts, as well as the supervisory and control systems that are implemented to ensure the legality and regularity of underlying transactions, and designs audit procedures that are appropriate in the circumstances. The audit also entails evaluating the appropriateness of accounting policies, the reasonableness of accounting estimates and the overall presentation of the accounts.

| 7. | The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance. |
| --- | --- |

7.

The Court considers that the audit evidence obtained is sufficient and appropriate to provide a basis for its statement of assurance.

Opinion on the reliability of the accounts

| 8. | In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer. |
| --- | --- |

8.

In the Court’s opinion, the Agency’s annual accounts present fairly, in all material respects, its financial position as at 31 December 2014 and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of its Financial Regulation and the accounting rules adopted by the Commission’s accounting officer.

Opinion on the legality and regularity of the transactions underlying the accounts

| 9. | In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects. |
| --- | --- |

9.

In the Court’s opinion, the transactions underlying the annual accounts for the year ended 31 December 2014 are legal and regular in all material respects.

This Report was adopted by Chamber IV, headed by Mr Milan Martin CVIKL, Member of the Court of Auditors, in Luxembourg at its meeting of 8 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA

President

---

(1)  OJ L 11, 15.1.2008, p. 9.

1

(2)  The Annex summarises the Agency’s competences and activities. It is presented for information purposes.

2

Annex

(3)  These include the balance sheet and the statement of financial performance, the cash flow table, the statement of changes in net assets and a summary of the significant accounting policies and other explanatory notes.

3

(4)  These comprise the budgetary outturn account and the annex to the budgetary outturn account.

4

(5)  Articles 62 and 68 in conjunction with Articles 53 and 58 of Regulation (EU, Euratom) No 966/2012 (OJ L 298, 26.10.2012, p. 1).

5

(6)  The accounting rules adopted by the Commission’s accounting officer are derived from the International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, where relevant, the International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board.

6

(7)  Article 162 of Regulation (EU, Euratom) No 966/2012.

7

---

ANNEX I

Research Executive Agency (Brussels)

Competences and activities

| Areas of Union competence deriving from the Treaty


  (Articles 179 and 180 of the TFEU) | Collection of information

  The Union shall have the objective of strengthening its scientific and technological bases by achieving a European research area in which researchers, scientific knowledge and technology circulate freely, and encouraging it to become more competitive, including in its industry.
  For this purpose the Union shall encourage undertakings, including SMEs, research centres and universities in their research and technological development activities of high quality; it shall support their efforts to cooperate with one another, aiming, notably, at permitting researchers to cooperate freely across borders and at enabling undertakings to exploit the internal market potential to the full, in particular through [...] the definition of common standards and the removal of legal and fiscal obstacles to that cooperation. [...]
  In pursuing these objectives, the Union shall carry out the following activities, complementing the activities carried out in the Member States:






  — | implementation of research, technological development and demonstration programmes, by promoting cooperation with and between undertakings, research centres and universities, |
| --- | --- | --- |

Areas of Union competence deriving from the Treaty

(Articles 179 and 180 of the TFEU)

Collection of information

The Union shall have the objective of strengthening its scientific and technological bases by achieving a European research area in which researchers, scientific knowledge and technology circulate freely, and encouraging it to become more competitive, including in its industry.

For this purpose the Union shall encourage undertakings, including SMEs, research centres and universities in their research and technological development activities of high quality; it shall support their efforts to cooperate with one another, aiming, notably, at permitting researchers to cooperate freely across borders and at enabling undertakings to exploit the internal market potential to the full, in particular through [...] the definition of common standards and the removal of legal and fiscal obstacles to that cooperation. [...]

In pursuing these objectives, the Union shall carry out the following activities, complementing the activities carried out in the Member States:

—

implementation of research, technological development and demonstration programmes, by promoting cooperation with and between undertakings, research centres and universities,

| — | promotion of cooperation in the field of Union research, technological development and demonstration with third countries and international organisations, |
| --- | --- |

—

promotion of cooperation in the field of Union research, technological development and demonstration with third countries and international organisations,

| — | dissemination and optimisation of the results of activities in Union research, technological development and demonstration, |
| --- | --- |

—

dissemination and optimisation of the results of activities in Union research, technological development and demonstration,

| — | stimulation of the training and mobility of researchers in the Union. |
| --- | --- |

—

stimulation of the training and mobility of researchers in the Union.

Competences of the Agency

(Commission Implementing Decision 2013/778/EU)

Objectives

The REA assists the Commission in achieving the objectives of the Research Framework Programmes and the EU strategies to foster growth by supporting research and innovation by implementing parts of the Horizon 2020 and FP7 Framework Programmes. It delivers efficient and effective services to the research community by ensuring a smooth implementation of its part of the EU funding for research and innovation and by providing support services to all the Commission research services and participants in the Framework Programmes. By maintaining close contacts with beneficiaries and by providing a high visibility of the European Union, the REA acts as a promoter of the European Research Area and EU research policies.

Under the new mandate of the REA (adopted by the Commission in December 2013), the REA manages the ‘legacy’ of the FP7 projects from the previous mandate (Marie Curie actions, SME actions and Space and Security Research) plus a large number of actions under the new Horizon 2020 Framework Programme (Marie Skłodowska-Curie actions, Future and Emerging Technologies (FET open), Space Research, Societal Challenges 2 & 6 & 7, Spreading Excellence & Widening Participation and Science with and for Society). Regarding support services, the REA provides an extended list of services under the new mandate and serves additional clients.

Tasks

With regard to the management of projects, the Agency concludes and manages grant agreements, involving the following operations:

| — | preparation and publication of calls for proposals, |
| --- | --- |

—

preparation and publication of calls for proposals,

| — | evaluation of proposals, |
| --- | --- |

—

evaluation of proposals,

| — | preparation and signature of grant agreements, |
| --- | --- |

—

preparation and signature of grant agreements,

| — | monitoring the implementation of projects including acceptance of reports and other deliverables, |
| --- | --- |

—

monitoring the implementation of projects including acceptance of reports and other deliverables,

| — | payments, recoveries, and application of sanctions within the meaning of Article 114(4) of the general Financial Regulation, notably when errors in declared costs have been identified following ex-post audits at the level of the final beneficiaries, |
| --- | --- |

—

payments, recoveries, and application of sanctions within the meaning of Article 114(4) of the general Financial Regulation, notably when errors in declared costs have been identified following ex-post audits at the level of the final beneficiaries,

| — | ex-post publicity and dissemination of results. |
| --- | --- |

—

ex-post publicity and dissemination of results.

With regard to Support Services, the Agency performs the following tasks:

| — | administrative support for call publication, management of the electronic reception of proposals and support for remote and on-site evaluations; |
| --- | --- |

—

administrative support for call publication, management of the electronic reception of proposals and support for remote and on-site evaluations;

| — | contracting and payment of all H2020 expert evaluators (except European Research Council experts) and of expert monitors used by the REA; |
| --- | --- |

—

contracting and payment of all H2020 expert evaluators (except European Research Council experts) and of expert monitors used by the REA;

| — | management of the H2020 participants database (Unique Registration Facility — URF), including support for financial capacity checks on selected beneficiaries, which is also used for other EU programmes (Research Fund for Coal and Steel, COSME, Erasmus+, Creative Europe, Citizenship and programmes in the field of health and consumers); |
| --- | --- |

—

management of the H2020 participants database (Unique Registration Facility — URF), including support for financial capacity checks on selected beneficiaries, which is also used for other EU programmes (Research Fund for Coal and Steel, COSME, Erasmus+, Creative Europe, Citizenship and programmes in the field of health and consumers);

| — | management of the Research Enquiry Service/Horizon 2020 Helpdesk. |
| --- | --- |

—

management of the Research Enquiry Service/Horizon 2020 Helpdesk.

Governance

Steering Committee

Comprises five members and one observer appointed by the European Commission. It adopts the Agency’s organisation chart and its Annual Work Programme after approval by the Commission. In addition, it adopts the administrative budget of the Agency as well as the Annual Activity Report and the Agency’s annual accounts.

Director

Appointed by the Commission, the Director manages the Agency together with the Steering Committee, implements the administrative budget, sets up management and internal control systems adapted to the tasks entrusted to the Agency and prepares the reports to be presented to the Commission.

External audit

European Court of Auditors.

Discharge authority

European Parliament acting on a recommendation from the Council. With respect to the Agency’s implementation of its administrative budget, the discharge decision is addressed to the Director. For the implementation of the operational budget delegated by the Commission to the Agency, the Commission remains accountable.

Resources made available to the Agency in 2014 (2013)

Operational Budget 2014

1  557,8(1  759,2) million euro of commitment appropriations and 1  057,4 (1  443,6) million euro of payment appropriations. The Agency implements the Commission’s operational budget under a delegation decision of the Commission.

Administrative Budget 2014

51,5 (46,8) million euro. The Agency implements the administrative budget autonomously.

Staff at 31 December 2014

Establishment plan posts: 145 (140) of which 139 (138) occupied

Contract staff: 435 (418) staff planned of which 409 (407) were in place as of 31 December 2014.

Total staff in place: 548 (545) undertaking the following tasks:

| — | programme implementation: 365 (366) |
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programme implementation: 365 (366)

| — | Horizon 2020 support services: 99 (96) |
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Horizon 2020 support services: 99 (96)

| — | management and administrative functions: 84 (83) |
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management and administrative functions: 84 (83)

Products and services 2014 (2013)

In addition to the legacy of FP7 and the continuation of the management of H2020 Marie Skłodowska-Curie actions and Space and Security Research from 1 January 2014 onwards, the REA has gradually taken over the newly delegated activities during the second half of 2014: agricultural research and food safety (Societal Challenge 2), research in the field of innovative, inclusive and reflective societies (Societal Challenge 6), new parts of Societal Challenge 7 (IT Security Research) and the ‘FET open’ action from the Excellent Science part of H2020.

For Part I — Excellent Science of the H2020 programme, seven calls were closed in 2014 and three evaluations completed. 246 new grant agreements were signed.

For Part II — Industrial Leadership of the H2020 programme, six calls were closed in 2014 and six evaluations completed. 36 new grant agreements were signed.

For Part III — Societal Challenges 2, 6 and 7 of the H2020 programme, eleven calls were closed in 2014 and six evaluations completed. Seven new grant agreements were signed.

For all projects managed under H2020, 159 prefinancing payments were made in 2014 and one interim payment.

For the management of the legacy of the FP7 People Programme, 2  379(3  787) payments were made (interim/final payments, excluding payments for expert evaluators). At the end of 2014, the Agency managed a total of 5  745(6  090) projects under this programme.

For the management of the legacy of FP7 SME actions under the Capacities Programme, 390 (577) payments made (interim/final payments, excluding payments for expert evaluators). At the end of 2014, the Agency was managing a total of 565 (691) projects under this scheme.

For the management of the legacy of FP7 Space and Security themes under the Cooperation Programme, 193 (294) payments made (interim/final payments, excluding payments to expert evaluators). At the end of 2014, the Agency was managing a total of 324 (348) projects under these themes.

As regards the Horizon 2020 support services, the results obtained for 2014 are as follows:

| — | 64 (194) call publications supported; |
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64 (194) call publications supported;

| — | 42  874(25  214) proposals received through the electronic proposal submission tool; |
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42  874(25  214) proposals received through the electronic proposal submission tool;

| — | 11  399(4  323) expert evaluators contracted and 10  585(5  055) expert payments made (note that the 2013 figures relate to programmes managed by the Agency only where in 2014 the Agency managed nearly all expert evaluators for H2020); |
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11  399(4  323) expert evaluators contracted and 10  585(5  055) expert payments made (note that the 2013 figures relate to programmes managed by the Agency only where in 2014 the Agency managed nearly all expert evaluators for H2020);

| — | 5  923(4  524) validations of participants completed; |
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5  923(4  524) validations of participants completed;

| — | 13  052(4  488) replies sent following questions to the Research Enquiry Service. |
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13  052(4  488) replies sent following questions to the Research Enquiry Service.

Source: Annex supplied by the Agency.

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THE AGENCY’S REPLY

The agency has taken note of the Court’s report.

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