# Official Journal C 348/2012

| | ISSN 1977-091X
  doi:10.3000/1977091X.C_2012.348.eng |
| --- | --- |
| Official Journal
  of the European Union | C 348 |
| | |
| English edition | Information and Notices | Volume 5514 November 2012 |

ISSN 1977-091X

doi:10.3000/1977091X.C_2012.348.eng

Official Journal

of the European Union

C 348

English edition

Information and Notices

Volume 5514 November 2012

---

| Notice No | Contents | page |
| --- | --- | --- |
| | IV   Notices |
| | NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES |
| | European Commission |
| 2012/C 348/01 | Consolidated annual accounts of the European Union — Financial year 2011 | 1 |
| 2012/C 348/02 | The Court’s Statement of assurance provided to the European Parliament and the Council — independent auditor’s report | 130 |

Notice No

Contents

page

IV   Notices

NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES

European Commission

2012/C 348/01

Consolidated annual accounts of the European Union — Financial year 2011

1

2012/C 348/02

The Court’s Statement of assurance provided to the European Parliament and the Council — independent auditor’s report

130

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

EN

---

IV Notices

NOTICES FROM EUROPEAN UNION INSTITUTIONS, BODIES, OFFICES AND AGENCIES

European Commission

| 14.11.2012 | EN | Official Journal of the European Union | C 348/1 |
| --- | --- | --- | --- |

14.11.2012

EN

Official Journal of the European Union

C 348/1

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CONSOLIDATED ANNUAL ACCOUNTS OF THE EUROPEAN UNION — FINANCIAL YEAR 2011

2012/C 348/01

CONTENTS

Note accompanying the consolidated accounts

| PART I: | Consolidated financial statements and explanatory notes |
| --- | --- |

PART I:

Balance Sheet

Economic Outturn Account

Cashflow Table

Statement of changes in Net Assets

Notes to the financial statements

| PART II: | Consolidated reports on implementation of the budget and explanatory notes |
| --- | --- |

PART II:

Consolidated reports on implementation of the budget

Explanatory notes to the consolidated reports on implementation of the budget

NOTE ACCOMPANYING THE CONSOLIDATED ACCOUNTS

The consolidated annual accounts of the European Union for the year 2011 have been prepared on the basis of the information presented by the institutions and bodies under Article 129.2 of the Financial Regulation applicable to the general budget of the European Union. I hereby declare that they were prepared in accordance with Title VII of this Financial Regulation and with the accounting principles, rules and methods set out in the notes to the financial statements.

I have obtained from the accounting officers of these institutions and bodies, who certified its reliability, all the information necessary for the production of the accounts that show the European Union's assets and liabilities and the budgetary implementation.

I hereby certify that based on this information, and on such checks as I deemed necessary to sign off the accounts of the European Commission, I have a reasonable assurance that the accounts present a true and fair view of the financial position of the European Union in all material aspects.

(signed)

Philippe TAVERNE

Accounting Officer of the Commission

18 July 2012

PART I

Consolidated financial statements and explanatory notes
   (1)

Consolidated financial statements and explanatory notes

1

CONTENTS

CONTENTS

Balance Sheet

Economic Outturn Account

Cashflow Table

Statement of Changes in Net Assets

Notes to the Financial Statements:

| 1. | Significant accounting policies |
| --- | --- |

1.

| 2. | Notes to the Balance Sheet |
| --- | --- |

2.

| 3. | Notes to the Economic Outturn Account |
| --- | --- |

3.

| 4. | Notes to the Cashflow table |
| --- | --- |

4.

| 5. | Contingent Assets & Liabilities and other disclosures |
| --- | --- |

5.

| 6. | Financial corrections and recoveries |
| --- | --- |

6.

| 7. | Borrowing and lending activities of the EU |
| --- | --- |

7.

| 8. | Financial risk management |
| --- | --- |

8.

| 9. | Related party disclosures |
| --- | --- |

9.

| 10. | Events after the balance sheet date |
| --- | --- |

10.

| 11. | Scope of consolidation |
| --- | --- |

11.

BALANCE SHEET

BALANCE SHEET

| EUR millions |
| --- |
| | Note | 31.12.2011 | 31.12.2010 |
| NON-CURRENT ASSETS: |
| Intangible assets | 2.1 | 149 | 108 |
| Property, plant and equipment | 2.2 | 5 071 | 4 813 |
| Long-term investments: | | | |
| Investments accounted for using the equity method | 2.3 | 374 | 492 |
| Financial assets: Available for sale assets | 2.4 | 2 272 | 2 063 |
| Financial assets: Long-term loans | 2.5 | 41 400 | 11 640 |
| Long-term receivables & recoverables | 2.6 | 289 | 40 |
| Long-term pre-financing | 2.7 | 44 723 | 44 118 |
| | | 94 278 | 63 274 |
| CURRENT ASSETS: |
| Inventories | 2.8 | 94 | 91 |
| Short-term investments: | | | |
| Financial assets: Available for sale assets | 2.9 | 3 619 | 2 331 |
| Short-term receivables & recoverables: | | | |
| Financial assets: Short-term loans | 2.10 | 102 | 2 170 |
| Other receivables & recoverables | 2.11 | 9 477 | 11 331 |
| Short-term pre-financing | 2.12 | 11 007 | 10 078 |
| Cash and cash equivalents | 2.13 | 18 935 | 22 063 |
| | | 43 234 | 48 064 |
| TOTAL ASSETS | | 137 512 | 111 338 |
| NON-CURRENT LIABILITIES: |
| Pension & other employee benefits | 2.14 | (34 835) | (37 172) |
| Long-term provisions | 2.15 | (1 495) | (1 317) |
| Long-term financial liabilities | 2.16 | (41 179) | (11 445) |
| Other long-term liabilities | 2.17 | (2 059) | (2 104) |
| | | (79 568) | (52 038) |
| CURRENT LIABILITIES: |
| Short-term provisions | 2.18 | (270) | (214) |
| Short-term financial liabilities | 2.19 | (51) | (2 004) |
| Payables | 2.20 | (91 473) | (84 529) |
| | | (91 794) | (86 747) |
| TOTAL LIABILITIES | | (171 362) | (138 785) |
| NET ASSETS | | (33 850) | (27 447) |
| Reserves | 2.21 | 3 608 | 3 484 |
| Amounts to be called from Member States (2) | 2.22 | (37 458) | (30 931) |
| NET ASSETS | | (33 850) | (27 447) |

EUR millions

Note

31.12.2011

31.12.2010

NON-CURRENT ASSETS:

Intangible assets

2.1

2.1

149

108

Property, plant and equipment

2.2

2.2

5 071

4 813

Long-term investments:

Investments accounted for using the equity method

Investments accounted for using the equity method

2.3

2.3

374

492

Financial assets: Available for sale assets

Financial assets: Available for sale assets

2.4

2.4

2 272

2 063

Financial assets: Long-term loans

2.5

2.5

41 400

11 640

Long-term receivables & recoverables

2.6

2.6

289

40

Long-term pre-financing

2.7

2.7

44 723

44 118

94 278

63 274

CURRENT ASSETS:

Inventories

2.8

2.8

94

91

Short-term investments:

Financial assets: Available for sale assets

Financial assets: Available for sale assets

2.9

2.9

3 619

2 331

Short-term receivables & recoverables:

Financial assets: Short-term loans

Financial assets: Short-term loans

2.10

2.10

102

2 170

Other receivables & recoverables

Other receivables & recoverables

2.11

2.11

9 477

11 331

Short-term pre-financing

2.12

2.12

11 007

10 078

Cash and cash equivalents

2.13

2.13

18 935

22 063

43 234

48 064

TOTAL ASSETS

137 512

111 338

NON-CURRENT LIABILITIES:

Pension & other employee benefits

2.14

2.14

(34 835)

(37 172)

Long-term provisions

2.15

2.15

(1 495)

(1 317)

Long-term financial liabilities

2.16

2.16

(41 179)

(11 445)

Other long-term liabilities

2.17

2.17

(2 059)

(2 104)

(79 568)

(52 038)

CURRENT LIABILITIES:

Short-term provisions

2.18

2.18

(270)

(214)

Short-term financial liabilities

2.19

2.19

(51)

(2 004)

Payables

2.20

2.20

(91 473)

(84 529)

(91 794)

(86 747)

TOTAL LIABILITIES

(171 362)

(138 785)

NET ASSETS

(33 850)

33 850

(27 447)

27 447

Reserves

2.21

2.21

3 608

3 484

Amounts to be called from Member States (2)

2

2.22

2.22

(37 458)

(30 931)

NET ASSETS

NET ASSETS

(33 850)

(33 850)

(27 447)

(27 447)

ECONOMIC OUTTURN ACCOUNT

ECONOMIC OUTTURN ACCOUNT

| EUR millions |
| --- |
| | Note | 2011 | 2010 |
| OPERATING REVENUE |
| Own resource and contributions revenue | 3.1 | 124 677 | 122 328 |
| Other operating revenue | 3.2 | 5 376 | 8 188 |
| | | 130 053 | 130 516 |
| OPERATING EXPENSES |
| Administrative expenses | 3.3 | (8 976) | (8 614) |
| Operating expenses | 3.4 | (123 778) | (103 764) |
| | | (132 754) | (112 378) |
| (DEFICIT)/SURPLUS FROM OPERATING ACTIVITIES | | (2 701) | 18 138 |
| Financial revenue | 3.5 | 1 491 | 1 178 |
| Financial expenses | 3.6 | (1 355) | (661) |
| Movement in pension & other employee benefits liability | | 1 212 | (1 003) |
| Share of net deficit of joint ventures & associates | 3.7 | (436) | (420) |
| ECONOMIC OUTTURN FOR THE YEAR | | (1 789) | 17 232 |

EUR millions

Note

2011

2010

OPERATING REVENUE

Own resource and contributions revenue

3.1

3.1

124 677

122 328

Other operating revenue

3.2

3.2

5 376

8 188

130 053

130 516

OPERATING EXPENSES

Administrative expenses

3.3

3.3

(8 976)

(8 614)

Operating expenses

3.4

3.4

(123 778)

(103 764)

(132 754)

(112 378)

(DEFICIT)/SURPLUS FROM OPERATING ACTIVITIES

(2 701)

(2 701)

18 138

18 138

Financial revenue

3.5

3.5

1 491

1 178

Financial expenses

3.6

3.6

(1 355)

(661)

Movement in pension & other employee benefits liability

1 212

(1 003)

Share of net deficit of joint ventures & associates

3.7

3.7

(436)

(420)

ECONOMIC OUTTURN FOR THE YEAR

ECONOMIC OUTTURN FOR THE YEAR

(1 789)

(1 789)

17 232

17 232

CASHFLOW TABLE

CASHFLOW TABLE

| EUR millions |
| --- |
| | Note | 2011 | 2010 |
| Economic outturn for the year | | (1 789) | 17 232 |
| Operating activities | 4.2 | | |
| Amortisation | | 33 | 28 |
| Depreciation | | 361 | 358 |
| (Increase)/decrease in long-term loans | | (29 760) | (876) |
| (Increase)/decrease in long-term pre-financing | | (605) | (2 574) |
| (Increase)/decrease in long-term receivables & recoverables | | (249) | 15 |
| (Increase)/decrease in inventories | | (3) | (14) |
| (Increase)/decrease in short-term pre-financing | | (929) | (642) |
| (Increase)/decrease in short-term receivables & recoverables | | 3 922 | (4 543) |
| Increase/(decrease) in long-term provisions | | 178 | (152) |
| Increase/(decrease) in long-term financial liabilities | | 29 734 | 886 |
| Increase/(decrease) in other long-term liabilities | | (45) | (74) |
| Increase/(decrease) in short-term provisions | | 56 | 1 |
| Increase/(decrease) in short-term financial liabilities | | (1 953) | 1 964 |
| Increase/(decrease) in payables | | 6 944 | (9 355) |
| Prior year budgetary surplus taken as non cash revenue | | (4 539) | (2 254) |
| Other non-cash movements | | (75) | (149) |
| Increase/(decrease) in pension & employee benefits liability | | (2 337) | (70) |
| Investing activities | 4.3 | | |
| (Increase)/decrease in intangible assets and property, plant and equipment | | (693) | (374) |
| (Increase)/decrease in long-term investments | | (91) | (176) |
| (Increase)/decrease in short-term investments | | (1 288) | (540) |
| NET CASHFLOW | | (3 128) | (1 309) |
| Net increase/(decrease) in cash and cash equivalents | | (3 128) | (1 309) |
| Cash and cash equivalents at the beginning of the year | 2.13 | 22 063 | 23 372 |
| Cash and cash equivalents at year-end | 2.13 | 18 935 | 22 063 |

EUR millions

Note

2011

2010

Economic outturn for the year

Economic outturn for the year

(1 789)

(1 789)

17 232

17 232

Operating activities

Operating activities

4.2

4.2

Amortisation

33

28

Depreciation

361

358

(Increase)/decrease in long-term loans

(29 760)

(876)

(Increase)/decrease in long-term pre-financing

(605)

(2 574)

(Increase)/decrease in long-term receivables & recoverables

(249)

15

(Increase)/decrease in inventories

(3)

(14)

(Increase)/decrease in short-term pre-financing

(929)

(642)

(Increase)/decrease in short-term receivables & recoverables

3 922

(4 543)

Increase/(decrease) in long-term provisions

178

(152)

Increase/(decrease) in long-term financial liabilities

29 734

886

Increase/(decrease) in other long-term liabilities

(45)

(74)

Increase/(decrease) in short-term provisions

56

1

Increase/(decrease) in short-term financial liabilities

(1 953)

1 964

Increase/(decrease) in payables

6 944

(9 355)

Prior year budgetary surplus taken as non cash revenue

(4 539)

(2 254)

Other non-cash movements

(75)

(149)

Increase/(decrease) in pension & employee benefits liability

Increase/(decrease) in pension & employee benefits liability

(2 337)

(70)

Investing activities

Investing activities

4.3

4.3

(Increase)/decrease in intangible assets and property, plant and equipment

(693)

(374)

(Increase)/decrease in long-term investments

(91)

(176)

(Increase)/decrease in short-term investments

(1 288)

(540)

NET CASHFLOW

NET CASHFLOW

(3 128)

(3 128)

(1 309)

(1 309)

Net increase/(decrease) in cash and cash equivalents

(3 128)

(1 309)

Cash and cash equivalents at the beginning of the year

2.13

2.13

22 063

23 372

Cash and cash equivalents at year-end

2.13

2.13

18 935

22 063

STATEMENT OF CHANGES IN NET ASSETS

STATEMENT OF CHANGES IN NET ASSETS

| EUR millions |
| --- |
| | Reserves
  (A) | Amounts to be called from Member States
  (B) | Net Assets = (A) + (B) |
| Fair value reserve | Other reserves | Accumulated Surplus/(Deficit) | Economic outturn of the year |
| BALANCE AS AT 31 DECEMBER 2009 | 69 | 3 254 | (52 488) | 6 887 | (42 278) |
| Movement in Guarantee Fund reserve | | 273 | (273) | | 0 |
| Fair value movements | (130) | | | | (130) |
| Other | | 4 | (21) | | (17) |
| Allocation of the economic outturn 2009 | | 14 | 6 873 | (6 887) | 0 |
| Budget result 2009 credited to Member States | | | (2 254) | | (2 254) |
| Economic outturn for the year | | | | 17 232 | 17 232 |
| BALANCE AS AT 31 DECEMBER 2010 | (61) | 3 545 | (48 163) | 17 232 | (27 447) |
| Movement in Guarantee Fund reserve | | 165 | (165) | | 0 |
| Fair value movements | (47) | | | | (47) |
| Other | | 2 | (30) | | (28) |
| Allocation of the economic outturn 2010 | | 4 | 17 228 | (17 232) | 0 |
| Budget result 2010 credited to Member States | | | (4 539) | | (4 539) |
| Economic outturn for the year | | | | (1 789) | (1 789) |
| BALANCE AS AT 31 DECEMBER 2011 | (108) | 3 716 | (35 669) | (1 789) | (33 850) |

EUR millions

Reserves

(A)

Amounts to be called from Member States

(B)

Net Assets = (A) + (B)

Fair value reserve

Other reserves

Accumulated Surplus/(Deficit)

Economic outturn of the year

BALANCE AS AT 31 DECEMBER 2009

BALANCE AS AT 31 DECEMBER 2009

69

69

3 254

3 254

(52 488)

(52 488)

6 887

6 887

(42 278)

(42 278)

Movement in Guarantee Fund reserve

273

(273)

0

Fair value movements

(130)

(130)

Other

4

(21)

(17)

Allocation of the economic outturn 2009

14

6 873

(6 887)

0

Budget result 2009 credited to Member States

(2 254)

(2 254)

Economic outturn for the year

17 232

17 232

BALANCE AS AT 31 DECEMBER 2010

BALANCE AS AT 31 DECEMBER 2010

(61)

(61)

3 545

3 545

(48 163)

(48 163)

17 232

17 232

(27 447)

(27 447)

Movement in Guarantee Fund reserve

165

(165)

0

Fair value movements

(47)

(47)

Other

2

(30)

(28)

Allocation of the economic outturn 2010

4

17 228

(17 232)

0

Budget result 2010 credited to Member States

(4 539)

(4 539)

Economic outturn for the year

(1 789)

(1 789)

BALANCE AS AT 31 DECEMBER 2011

BALANCE AS AT 31 DECEMBER 2011

(108)

(108)

3 716

3 716

(35 669)

(35 669)

(1 789)

(1 789)

(33 850)

(33 850)

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

1.   SIGNIFICANT ACCOUNTING POLICIES

1.1   LEGAL BASIS AND ACCOUNTING RULES

LEGAL BASIS AND ACCOUNTING RULES

The accounts of the European Union are kept in accordance with Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 (OJ L 248 of 16.9.2002), on the Financial Regulation applicable to the general budget of the European Union and Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of this Financial Regulation.

In accordance with article 133 of the Financial Regulation, the European Union prepares its financial statements on the basis of accrual-based accounting rules that are derived from International Public Sector Accounting Standards (IPSAS) or by default, International Financial Reporting Standards (IFRS). These accounting rules, adopted by the Accounting Officer of the Commission, have to be applied by all the institutions and EU bodies falling within the scope of consolidation in order to establish a uniform set of rules for accounting, valuation and presentation of the accounts with a view to harmonising the process for drawing up the financial statements and consolidation. The accounts are kept in Euro on the basis of the calendar year.

1.2   ACCOUNTING PRINCIPLES

ACCOUNTING PRINCIPLES

The objective of the financial statements is to provide information about the financial position, performance and cashflows of an entity that is useful to a wide range of users. For the EU as a public sector entity, the objectives are more specifically to provide information useful for decision making, and to demonstrate the accountability of the entity for the resources entrusted to it. It is with these goals in mind that the present document has been drawn up.

The overall considerations (or accounting principles) to be followed when preparing the financial statements are laid down in EU accounting rule 2 and are the same as those described in IPSAS 1, that is: fair presentation, accrual basis, going concern, consistency of presentation, aggregation, offsetting and comparative information.

Preparation of the financial statements in accordance with the above mentioned rules and principles requires management to make estimates that affect the reported amounts of certain items in the balance sheet and economic outturn account, as well as the disclosures of contingent assets and liabilities.

1.3   CONSOLIDATION

CONSOLIDATION

Scope of consolidation

Scope of consolidation

The consolidated financial statements of the EU comprise all significant controlled entities (institutions and agencies), associates and joint ventures, this being 50 controlled entities, 5 joint ventures and 4 associates. The complete list of consolidated entities can be found in note 11.1. In comparison with 2010, the scope of consolidation has been extended by 7 controlled entities (one institution, 6 agencies). The impact of the additions on the consolidated financial statements is not material.

11.1

Controlled entities

Controlled entities

The decision to include an entity in the scope of consolidation is based on the control concept. Controlled entities are all entities over which the European Union has, directly or indirectly, the power to govern the financial and operating policies so as to be able to benefit from these entities' activities. This power must be presently exercisable. Controlled entities are fully consolidated. The consolidation begins at the first date on which control exists, and ends when such control no longer exists.

The most common indicators of control within the European Union are: creation of the entity through founding treaties or secondary legislation, financing of the entity from the general budget, the existence of voting rights in the governing bodies, audit by the European Court of Auditors and discharge by the European Parliament. It is clear that an assessment for each entity needs to be made in order to decide whether one or all of the criteria listed above are sufficient to trigger control.

Under this approach, the EU's institutions (except the ECB) and agencies (excluding the agencies of the former 2nd pillar) are considered as under the exclusive control of the EU and are therefore included in the consolidation scope. Furthermore the European Coal and Steel Community in Liquidation (ECSC) is also considered as a controlled entity.

All material inter-company transactions and balances between EU controlled entities are eliminated, while unrealised gains and losses on inter-entity transactions are not material and have therefore not been eliminated.

Joint ventures

Joint ventures

A joint venture is a contractual arrangement whereby the European Union and one or more parties (the ‘venturers’) undertake an economic activity which is subject to joint control. Joint control is the contractually agreed sharing of control, directly or indirectly, over an activity embodying service potential.

Participations in joint ventures are accounted for using the equity method initially recognised at cost. The European Union's interest in the results of its jointly controlled entities is recognised in the economic outturn account, and its interest in the movements in reserves is recognised in the reserves. The initial cost plus all movements (further contributions, share of results and reserve movements, impairments, and dividends) give the book value of the joint venture in the accounts at the balance sheet date.

Unrealised gains and losses on transactions between the European Union and its jointly controlled entities are not material and have therefore not been eliminated. The accounting policies of joint ventures may differ from those adopted by the European Union for like transactions and events in similar circumstances.

Associates

Associates

Associates are entities over which the European Union has, directly or indirectly, significant influence but not control. It is presumed that significant influence is given if the European Union holds directly or indirectly 20 % or more of the voting rights.

Participations in associates are accounted for using the equity method, initially recognised at cost. The European Union's share of its associates' results is recognised in the economic outturn account, and its share of movements in reserves is recognised in the reserves. The initial cost plus all movements (further contributions, share of results and reserve movements, impairments, and dividends) give the book value of the associate in the accounts at the balance sheet date. Distributions received from an associate reduce the carrying amount of the asset. Unrealised gains and losses on transactions between the European Union and its associates are not material and have therefore not been eliminated.

The accounting policies of associates may differ from those adopted by the European Union for like transactions and events in similar circumstances. In cases where the European Union holds 20 % or more of an investment capital fund, it does not seek to exert significant influence. Such funds are therefore treated as financial instruments categorised as available-for-sale and the equity method is not applied.

Non-consolidated entities the funds of which are managed by the Commission

Non-consolidated entities the funds of which are managed by the Commission

The funds of the Sickness Insurance Scheme for staff of the European Union, the European Development Fund and the Participant's Guarantee Fund are managed by the Commission on their behalf, however since these entities are not controlled by the European Union they are therefore not consolidated in its accounts – see note 11.2 for further details on the amounts concerned.

11.2

1.4   BASIS OF PREPARATION

BASIS OF PREPARATION

1.4.1   
  Currency and basis for conversion

Currency and basis for conversion

Functional and reporting currency

Functional and reporting currency

The financial statements are presented in millions of euros, the euro being the European Union's functional and reporting currency.

Transactions and balances

Transactions and balances

Foreign currency transactions are translated into euros using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the economic outturn account.

Different conversion methods apply to property, plant and equipment and intangible assets, which retain their value in euros at the rate that applied at the date when they were purchased.

Year-end balances of monetary assets and liabilities denominated in foreign currencies are converted into euros on the basis of the exchange rates applying on 31 December:

EURO Exchange Rates

EURO Exchange Rates

| Currency | 31.12.2011 | 31.12.2010 |
| --- | --- | --- |
| BGN | 1,9558 | 1,9558 |
| CZK | 25,7870 | 25,0610 |
| DKK | 7,4342 | 7,4535 |
| EEK | N/A | 15,6466 |
| GBP | 0,8353 | 0,8607 |
| HUF | 314,5800 | 277,9500 |
| LVL | 0,6995 | 0,7094 |
| LTL | 3,4528 | 3,4528 |
| PLN | 4,4580 | 3,9750 |
| RON | 4,3233 | 4,2620 |
| SEK | 8,9120 | 8,9655 |
| CHF | 1,2156 | 1,2504 |
| JPY | 100,2000 | 108,6500 |
| USD | 1,2939 | 1,3362 |

Currency

31.12.2011

31.12.2010

BGN

1,9558

1,9558

CZK

25,7870

25,0610

DKK

7,4342

7,4535

EEK

N/A

15,6466

GBP

0,8353

0,8607

HUF

314,5800

277,9500

LVL

0,6995

0,7094

LTL

3,4528

3,4528

PLN

4,4580

3,9750

RON

4,3233

4,2620

SEK

8,9120

8,9655

CHF

1,2156

1,2504

JPY

100,2000

108,6500

USD

1,2939

1,3362

Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-for-sale that relate to a translation difference are recognised in the economic outturn account. Translation differences on non-monetary financial assets and liabilities held at fair value through profit or loss are recognised in the economic outturn account. Translation differences on non-monetary financial assets classified as available-for-sale are included in the fair value reserve.

1.4.2   
  Use of estimates

Use of estimates

In accordance with IPSAS and generally accepted accounting principles, the financial statements necessarily include amounts based on estimates and assumptions by management based on the most reliable information available. Significant estimates include, but are not limited to, amounts for employee benefit liabilities, provisions, financial risk on inventories and accounts receivables, accrued income and charges, contingent assets and liabilities, and degree of impairment of intangible assets and property, plant and equipment. Actual results could differ from those estimates. Changes in estimates are reflected in the period in which they become known.

1.5   BALANCE SHEET

BALANCE SHEET

1.5.1   
  Intangible assets

Intangible assets

Acquired computer software licences are stated at historical cost less accumulated amortisation and impairment losses. The assets are amortised on a straight-line basis over their estimated useful lives. Internally developed intangible assets are capitalised when the relevant criteria of the EU accounting rules are met. The costs capitalisable include all directly attributable costs necessary to create, produce, and prepare the asset to be capable of operating in the manner intended by management. Costs associated with research activities, non-capitalisable development costs and maintenance costs are recognised as expenses as incurred.

1.5.2   
  Property, plant and equipment

Property, plant and equipment

All property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition or construction of the asset.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits or service potential associated with the item will flow to the European Union and its cost can be measured reliably. Repairs and maintenance costs are charged to the economic outturn account during the financial period in which they are incurred. As the European Union does not borrow money to fund the acquisition of property, plant and equipment, there are no borrowing costs related to such purchases.

Land and works of art are not depreciated as they are deemed to have an indefinite useful life. Assets under construction are not depreciated as these assets are not yet available for use. Depreciation on other assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:

Depreciation rates

Depreciation rates

| Type of asset | Straight line depreciation rate |
| --- | --- |
| Buildings | 4 % |
| Plant, machinery and equipment | 10 % to 25 % |
| Furniture | 10 % to 25 % |
| Fixtures and fittings | 10 % to 33 % |
| Vehicles | 25 % |
| Computer hardware | 25 % |
| Other tangible assets | 10 % to 33 % |

Type of asset

Straight line depreciation rate

Buildings

4 %

Plant, machinery and equipment

10 % to 25 %

Furniture

10 % to 25 %

Fixtures and fittings

10 % to 33 %

Vehicles

25 %

Computer hardware

25 %

Other tangible assets

10 % to 33 %

Gains or losses on disposals are determined by comparing proceeds less selling expenses with the carrying amount of the disposed asset and are included in the economic outturn account.

Leases

Leases

Leases of tangible assets, where the European Union has substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The rental obligations, net of finance charges, are included in other liabilities (long and short-term.) The interest element of the finance cost is charged to the economic outturn account over the lease period so as to produce a constant periodic interest rate on the remaining balance of the liability for each period. The assets held under finance leases are depreciated over the shorter of the assets' useful life and the lease term.

Leases where the lessor retains a significant portion of the risks and rewards inherent to ownership are classified as operating leases. Payments made under operating leases are charged to the economic outturn account on a straight-line basis over the period of the lease.

1.5.3   
  Impairment of non-financial assets

Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use.

Intangible assets and property, plant and equipment residual values and useful lives are reviewed, and adjusted if appropriate, at least once per year. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. If the reasons for impairments recognised in previous years no longer apply, the impairment losses are reversed accordingly.

1.5.4   
  Investments

Investments

Participations in Associates and Joint Ventures

Participations in Associates and Joint Ventures

Participations in associates and joint ventures are accounted for using the equity method. The costs of equity are adjusted to reflect the share of increases or reductions in net assets of the associates and joint ventures that are attributable to the European Union after initial recognition if there are indications of impairment and written down to the lower recoverable amount if necessary. The recoverable amount is determined as described under 1.5.3. If the reason for impairment ceases to apply at a later date, the impairment loss is reversed to the carrying amount that would have been determined had no impairment loss been recognised.

1.5.3

Investments in Venture Capital Funds

Investments in Venture Capital Funds

Classification and measurement

Classification and measurement

Investments in Venture Capital Funds are classified as available-for-sale assets (see 1.5.5) and accordingly, are carried at fair value with gains and losses arising from changes in the fair value (including translation differences) recognised in the fair value reserve.

1.5.5

Fair value considerations

Fair value considerations

Since they do not have a quoted market price in an active market, investments in Venture Capital Funds are valued on a line-by-line basis at the lower of cost or attributable net asset value (‘NAV’). Unrealised gains resulting from the fair value measurement are recognised through reserves and unrealised losses are assessed for impairment so as to determine whether they are recognised as impairment losses in the economic outturn account or as changes in the fair value reserve.

1.5.5   
  Financial assets

Financial assets

Classification

Classification

The European Union classifies their financial assets in the following categories: financial assets at fair value through profit or loss; loans and receivables; held-to-maturity investments; and available-for-sale financial assets. The classification of the financial instruments is determined at initial recognition and re-evaluated at each balance sheet date.

(i)   Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss

A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by the European Union. Derivatives are also categorised in this category. Assets in this category are classified as current assets if they are expected to be realised within 12 months of the balance sheet date.

(ii)   Loans and receivables

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the EU provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in non-current assets, except for maturities within 12 months of the balance sheet date.

(iii)   Held-to-maturity investments

Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the European Union has the positive intention and ability to hold to maturity. During this financial year, the European Union did not hold any investments in this category.

(iv)   Available-for-sale financial assets

Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are classified as either current or non-current assets, depending on the time period in which the EU intends to dispose of them. Investments in unconsolidated entities and other equity investments (e.g. Risk Capital Operations) that are not accounted for using the equity method are also classified as available-for sale-financial assets.

Initial recognition and measurement

Initial recognition and measurement

Purchases and sales of financial assets at fair value through profit or loss, held-to-maturity and available-for-sale are recognised on trade-date – the date on which the European Union commits to purchase or sell the asset. Loans are recognised when cash is advanced to the borrowers. Financial instruments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or losses are initially recognised at fair value and transaction costs are expensed in the economic outturn account.

The fair value of a financial asset on initial recognition is normally the transaction price (i.e. the fair value of the consideration received). However, when a long-term loan that carries no interest or an interest below market conditions is granted, its fair value can be estimated as the present value of all future cash receipts discounted using the prevailing market rate of interest for a similar instrument with a similar credit rating.

Loans granted on borrowed funds are measured at their nominal amount, which is considered to be the fair value of the loan. The reasoning for this is as follows:

| — | The ‘market environment’ for EU lending is very specific and different from the capital market used to issue commercial or government bonds. As lenders in these markets have the opportunity to choose alternative investments, the opportunity possibility is factored into market prices. However, this opportunity for alternative investments does not exist for the EU which is not allowed to invest money on the capital markets; it only borrows funds for the purpose of lending at the same rate. This means that there is no alternative lending or investment option available to the EU for the sums borrowed. Thus, there is no opportunity cost and therefore no basis of comparison with market rates. In fact, the EU lending operation itself represents the market. Essentially, since the opportunity cost ‘option’ is not applicable, the market price does not fairly reflect the substance of the EU lending transactions. Therefore, it is not appropriate to determine the fair value of EU lending with reference to commercial or government bonds. |
| --- | --- |

—

The ‘market environment’ for EU lending is very specific and different from the capital market used to issue commercial or government bonds. As lenders in these markets have the opportunity to choose alternative investments, the opportunity possibility is factored into market prices. However, this opportunity for alternative investments does not exist for the EU which is not allowed to invest money on the capital markets; it only borrows funds for the purpose of lending at the same rate. This means that there is no alternative lending or investment option available to the EU for the sums borrowed. Thus, there is no opportunity cost and therefore no basis of comparison with market rates. In fact, the EU lending operation itself represents the market. Essentially, since the opportunity cost ‘option’ is not applicable, the market price does not fairly reflect the substance of the EU lending transactions. Therefore, it is not appropriate to determine the fair value of EU lending with reference to commercial or government bonds.

| — | Furthermore as there is no active market or similar transactions to compare with, the interest rate to be used by the European Union for fair valuing its lending operations under EFSM, BOP and other such loans, should be the interest rate charged. |
| --- | --- |

—

Furthermore as there is no active market or similar transactions to compare with, the interest rate to be used by the European Union for fair valuing its lending operations under EFSM, BOP and other such loans, should be the interest rate charged.

| — | In addition, for these loans, there are compensating effects between loans and borrowings due to their back-to-back character. Thus, the effective interest for the loan equals the effective interest rate for the related borrowings. The transaction costs incurred by the EU and then recharged to the beneficiary of the loan are directly recognised in the economic outturn account. |
| --- | --- |

—

In addition, for these loans, there are compensating effects between loans and borrowings due to their back-to-back character. Thus, the effective interest for the loan equals the effective interest rate for the related borrowings. The transaction costs incurred by the EU and then recharged to the beneficiary of the loan are directly recognised in the economic outturn account.

Financial instruments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the European Union has transferred substantially all risks and rewards of ownership.

Subsequent measurement

Subsequent measurement

| (i) | Financial assets at fair value through profit or loss are subsequently carried at fair value. Gains and losses arising from changes in the fair value of the ‘financial instruments at fair value through profit or loss’ category are included in the economic outturn account in the period in which they arise. |
| --- | --- |

(i)

Financial assets at fair value through profit or loss are subsequently carried at fair value. Gains and losses arising from changes in the fair value of the ‘financial instruments at fair value through profit or loss’ category are included in the economic outturn account in the period in which they arise.

| (ii) | Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. In the case of loans granted on borrowed funds, the same effective interest rate is applied to both the loans and borrowings since these loans have the characteristics of ‘back-to-back operations’ and the differences between the loan and the borrowing conditions and amounts are not material. The transaction costs incurred by the EU and then recharged to the beneficiary of the loan are directly recognised in the economic outturn account. |
| --- | --- |

(ii)

Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. In the case of loans granted on borrowed funds, the same effective interest rate is applied to both the loans and borrowings since these loans have the characteristics of ‘back-to-back operations’ and the differences between the loan and the borrowing conditions and amounts are not material. The transaction costs incurred by the EU and then recharged to the beneficiary of the loan are directly recognised in the economic outturn account.

| (iii) | Held to maturity – the EU currently holds no held to maturity investments. |
| --- | --- |

(iii)

Held to maturity – the EU currently holds no held to maturity investments.

| (iv) | Available-for-sale financial assets are subsequently carried at fair value. Gains and losses arising from changes in the fair value of available-for-sale assets are recognised in the fair value reserve. When assets classified as available-for-sale are sold or impaired, the cumulative fair value adjustments previously recognised in the fair value reserve are recognised in the economic outturn account. Interest on available-for-sale financial assets calculated using the effective interest method is recognised in the economic outturn account. Dividends on available-for-sale equity instruments are recognised when the EU's right to receive payment is established.
  The fair values of quoted investments in active markets are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the European Union establishes a fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants.
  In cases where the fair value of investments in equity instruments that do not have quoted market price in an active market cannot be reliably measured, these investments are valued at cost less impairment losses. |
| --- | --- |

(iv)

Available-for-sale financial assets are subsequently carried at fair value. Gains and losses arising from changes in the fair value of available-for-sale assets are recognised in the fair value reserve. When assets classified as available-for-sale are sold or impaired, the cumulative fair value adjustments previously recognised in the fair value reserve are recognised in the economic outturn account. Interest on available-for-sale financial assets calculated using the effective interest method is recognised in the economic outturn account. Dividends on available-for-sale equity instruments are recognised when the EU's right to receive payment is established.

The fair values of quoted investments in active markets are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the European Union establishes a fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants.

In cases where the fair value of investments in equity instruments that do not have quoted market price in an active market cannot be reliably measured, these investments are valued at cost less impairment losses.

Impairment of financial assets

Impairment of financial assets

The European Union assesses at each balance sheet date whether there is objective evidence that a financial asset is impaired. A financial asset is impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset and that loss event (or events) has an impact on the estimated future cash flows of the financial asset that can be reliably estimated.

(a)   Assets carried at amortised cost

Assets carried at amortised cost

If there is objective evidence that an impairment loss on loans and receivables or held-to-maturity investments carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the economic outturn account. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. The calculation of the present value of the estimated future cash flows of a collateralised financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through the economic outturn account.

(b)   Assets carried at fair value

Assets carried at fair value

In the case of equity investments classified as available-for-sale, a significant or permanent (prolonged) decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the economic outturn account – is removed from reserves and recognised in the economic outturn account. Impairment losses recognised in the economic outturn account on equity instruments are not reversed through the economic outturn account. If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised, the impairment loss is reversed through the economic outturn account.

1.5.6   
  Inventories

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method. The cost of finished goods and work in progress comprises raw materials, direct labour, other directly attributable costs and related production overheads (based on normal operating capacity). Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses. When inventories are held for distribution at no charge or for a nominal charge, they are measured at the lower of cost and current replacement cost. Current replacement cost is the cost the European Union would incur to acquire the asset on the reporting date.

1.5.7   
  Pre-financing amounts

Pre-financing amounts

Pre-financing is a payment intended to provide the beneficiary with a cash advance, i.e. a float. It may be split into a number of payments over a period defined in the particular pre-financing agreement. The float or advance is repaid or used for the purpose for which it was provided during the period defined in the agreement. If the beneficiary does not incur eligible expenditures, he has the obligation to return the pre-financing advance to the European Union. The amount of the pre-financing is reduced (wholly or partially) by the acceptance of eligible costs and amounts returned, and this amount is recognised as an expense.

At year-end, outstanding pre-financing amounts are valued at the original amount(s) paid less: amounts returned, eligible amounts expensed, estimated eligible amounts not yet cleared at year-end, and value reductions.

Interest on pre-financing is recognised as it is earned in accordance with the provisions of the relevant agreement. An estimate of the accrued interest revenue, based on the most reliable information, is made at the year-end and included in the balance sheet.

1.5.8   
  Receivables

Receivables

Receivables are carried at original amount less write-down for impairment. A write-down for impairment of receivables is established when there is objective evidence that the European Union will not be able to collect all amounts due according to the original terms of receivables. The amount of the write-down is the difference between the asset’s carrying amount and the recoverable amount,. The amount of the write-down is recognised in the economic outturn account. A general write-down, based on past experience, is also made for outstanding recovery orders not already subject to a specific write-down. See note 1.5.14 below concerning the treatment of accrued income at year-end.

1.5.14

1.5.9   
  Cash and cash equivalents

Cash and cash equivalents

Cash and cash equivalents are financial instruments and defined as current assets. They include cash at hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less.

1.5.10   
  Employee benefits

Employee benefits

Pension obligations

Pension obligations

The European Union operates defined benefit pension plans. Whilst staff contribute from their salaries one third of the expected cost of these benefits, the liability is not funded. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date. The defined benefit obligation is calculated by actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of government bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised immediately in the economic outturn account. Past-service costs are recognised immediately in economic outturn account, unless the changes to the pension plan are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are amortised on a straight-line basis over the vesting period.

Post-employment sickness benefits

Post-employment sickness benefits

The European Union provides health benefits to its employees through the reimbursement of medical expenses. A separate fund has been created for the day-to-day administration. Both current employees, pensioners, widowers and their beneficiaries benefit from the system. The benefits granted to the ‘inactives’ (pensioners, orphans, etc.) are classified as ‘Post-Employment Employee Benefits’. Given the nature of these benefits, an actuarial calculation is required. The liability in the balance sheet is determined on a similar basis as that for the pension obligations (see above).

1.5.11   
  Provisions

Provisions

Provisions are recognised when the European Union has a present legal or constructive obligation towards third parties as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are not recognised for future operating losses. The amount of the provision is the best estimate of the expenditures expected to be required to settle the present obligation at the reporting date. Where the provision involves a large number of items, the obligation is estimated by weighting all possible outcomes by their associated probabilities (‘expected value’ method).

1.5.12   
  Financial liabilities

Financial liabilities

Financial liabilities are classified as financial liabilities at fair value through profit or loss or as financial liabilities carried at amortised cost (borrowings). Borrowings are composed of borrowings from credit institutions and debts evidenced by certificates. They are recognised initially at fair value, being their issue proceeds (fair value of consideration received) net of transaction costs incurred, then subsequently carried at amortised cost using the effective interest method; any difference between proceeds, net of transaction costs, and the redemption value is recognised in the economic outturn account over the period of the borrowings using the effective interest method.

They are classified as non-current liabilities, except for maturities less than 12 months after the balance sheet date. In the case of loans granted on borrowed funds, the effective interest method may not be applied to loans and borrowings, based on materiality considerations. The transaction costs incurred by the European Union and then recharged to the beneficiary of the loan are directly recognised in the economic outturn account.

Financial liabilities categorised at fair value through profit or loss include derivatives when their fair value is negative. They follow the same accounting treatment as financial assets at fair value through profit or loss, see note 1.5.5.

1.5.5.

1.5.13   
  Payables

Payables

A significant amount of the payables of the EU are not related to the purchase of goods or services – instead they are unpaid cost claims from beneficiaries of grants or other EU funding. They are recorded as payables for the requested amount when the cost claim is received. Upon verification and acceptance of the eligible costs, the payables are valued at the accepted and eligible amount.

Payables arising from the purchase of goods and services are recognised at invoice reception for the original amount and corresponding expenses are entered in the accounts when the supplies or services are delivered and accepted by the European Union.

1.5.14   
  Accrued and deferred income and charges

Accrued and deferred income and charges

According to the European Union accounting rules, transactions and events are recognised in the financial statements in the period to which they relate. At the end of the accounting period, accrued expenses are recognised based on an estimated amount of the transfer obligation of the period. The calculation of accrued expenses is done in accordance with detailed operational and practical guidelines issued by the Commission which aim at ensuring that the financial statements reflect a true and fair view.

Revenue is also accounted for in the period to which it relates. At year-end, if an invoice is not yet issued but the service has been rendered, the supplies have been delivered by the EU or a contractual agreement exists (i.e. by reference to a treaty), an accrued income will be recognised in the financial statements.

In addition, at year-end, if an invoice is issued but the services have not yet been rendered or the goods supplied have not yet been delivered, the revenue will be deferred and recognised in the subsequent accounting period.

1.6   ECONOMIC OUTTURN ACCOUNT

ECONOMIC OUTTURN ACCOUNT

1.6.1   
  Revenue

Revenue

Non-exchange revenue

Non-exchange revenue

This makes up the vast majority of the EU's revenue and includes mainly direct and indirect taxes and own resource amounts. In addition to taxes the European Union may also receive payments from other parties, such as duties, fines and donations.

GNI based resources and VAT resources

GNI based resources and VAT resources

Revenue is recognised for the period for which the European Commission sends out a call for funds to the Member States claiming their contribution. They are measured at their ‘called amount’. As VAT and GNI resources are based on estimates of the data for the budgetary year concerned, they may be revised as changes occur until the final data are issued by the Member States. The effect of a change in estimate is included when determining the net surplus or deficit for the period in which the change occurred.

Traditional own resources

Traditional own resources

Receivables and related revenues are recognised when the relevant monthly A statements (including duties collected and amounts due that are guaranteed and not contested) are received from the Member States. At the reporting date, revenue collected by the Member States for the period but not yet paid to the European Commission is estimated and recognised as accrued revenue. The quarterly B statements (including duties neither collected nor guaranteed, as well as guaranteed amounts that have been contested by the debtor) received from the Member States are recognised as revenue less the collection costs to which they are entitled (25 %). In addition, a value reduction is recognised for the amount of the estimated recovery gap in the economic outturn account.

Fines

Fines

Revenue from fines is recognised when the EU's decision imposing a fine has been taken and it is officially notified to the addressee. If there are doubts about the undertaking's solvency, a value reduction on the entitlement is recognised. After the decision to impose a fine, the debtors have two months from the date of notification:

| — | either to accept the decision, in which case they must pay the fine within the time limit laid down and the amount is definitively collected by the EU; |
| --- | --- |

—

either to accept the decision, in which case they must pay the fine within the time limit laid down and the amount is definitively collected by the EU;

| — | or not to accept the decision, in which case they lodge an appeal under EU law. |
| --- | --- |

—

or not to accept the decision, in which case they lodge an appeal under EU law.

However, even if appealed, the principal of the fine must be paid within the time limit of three months laid down as the appeal does not have suspensory effect (Article 278 of the EU Treaty) or, under certain circumstances and subject to the agreement of the Commission's Accounting Officer, it may present a bank guarantee for the amount instead.

If the undertaking appeals against the decision, and has already provisionally paid the fine, the amount is disclosed as a contingent liability. However, since an appeal against an EU decision by the addressee does not have suspensory effect, the cash received is used to clear the receivable. If a guarantee is received instead of payment, the fine remains as a receivable. If it appears probable that the General Court may not rule in favour of the EU, a provision is recognised to cover this risk. If a guarantee had been given instead, then the receivable outstanding is written-down as required. The accumulated interest received by the European Commission on the bank accounts where received payments are deposited is recognised as revenue, and any contingent liability is increased accordingly.

Exchange revenue

Exchange revenue

Revenue from the sale of goods and services is recognised when the significant risk and rewards of ownership of the goods are transferred to the purchaser. Revenue associated with a transaction involving the provision of services is recognised by reference to the stage of completion of the transaction at the reporting date.

Interest income and expense

Interest income and expense

Interest income and expense are recognised in the economic outturn account using the effective interest method. This is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. When calculating the effective interest rate, the European Union estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but do not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

Dividend income

Dividend income

Dividend income is recognised when the right to receive payment is established.

1.6.2   
  Expenditure

Expenditure

Exchange expenses arising from the purchase of goods and services are recognised when the supplies are delivered and accepted by the European Union. They are valued at original invoice cost. Non-exchange expenses are specific to the EU and account for the majority of its expenditure. They relate to transfers to beneficiaries and can be of three types: entitlements, transfers under agreement and discretionary grants, contributions and donations.

Transfers are recognised as expenses in the period during which the events giving rise to the transfer occurred, as long as the nature of the transfer is allowed by regulation (Financial Regulation, Staff Regulations, or other regulation) or a contract has been signed authorising the transfer; any eligibility criteria have been met by the beneficiary; and a reasonable estimate of the amount can be made.

When a request for payment or cost claim is received and meets the recognition criteria, it is recognised as an expense for the eligible amount. At year-end, incurred eligible expenses due to the beneficiaries but not yet reported are estimated and recorded as accrued expenses.

1.7   CONTINGENT ASSETS AND LIABILITIES

CONTINGENT ASSETS AND LIABILITIES

1.7.1   
  Contingent assets

Contingent assets

A contingent asset is a possible asset that arises from past events and of which the existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the European Union. A contingent asset is disclosed when an inflow of economic benefits or service potential is probable.

1.7.2   
  Contingent liabilities

Contingent liabilities

A contingent liability is a possible obligation that arises from past events and of which the existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the European Union; or a present obligation that arises from past events but is not recognised because: it is not probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation or, in the rare circumstances where the amount of the obligation cannot be measured with sufficient reliability.

2.   NOTES TO THE BALANCE SHEET

NON CURRENT ASSETS

NON CURRENT ASSETS

2.1   INTANGIBLE ASSETS

INTANGIBLE ASSETS

| EUR millions |
| --- |
| | Amount |
| Gross carrying amount at 31 December 2010 | 236 |
| Additions | 80 |
| Disposals | (13) |
| Other changes | (2) |
| Gross carrying amount at 31 December 2011 | 301 |
| Accumulated amortisation at 31 December 2010 | (128) |
| Amortisation charge for the year | (33) |
| Disposals | 8 |
| Other changes | 1 |
| Accumulated amortisation at 31 December 2011 | (152) |
| Net carrying amount at 31 December 2011 | 149 |
| Net carrying amount at 31 December 2010 | 108 |

EUR millions

Amount

Gross carrying amount at 31 December 2010

236

Additions

80

Disposals

(13)

Other changes

(2)

Gross carrying amount at 31 December 2011

Gross carrying amount at 31 December 2011

301

301

Accumulated amortisation at 31 December 2010

(128)

Amortisation charge for the year

(33)

Disposals

8

Other changes

1

Accumulated amortisation at 31 December 2011

Accumulated amortisation at 31 December 2011

(152)

(152)

Net carrying amount at 31 December 2011

Net carrying amount at 31 December 2011

149

149

Net carrying amount at 31 December 2010

Net carrying amount at 31 December 2010

108

108

The above amounts relate primarily to computer software.

2.2   PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

Included under assets under construction at 31 December 2011 are EUR 219 million of assets relating to the Galileo project, the EU's Global Navigation Satellite System, being built with the assistance of the European Space Agency (ESA). When completed, the system will comprise 30 satellites, 2 control centres and 16 ground stations. The amount on the balance sheet reflects the costs incurred by the Commission on this project since 22 October 2011, the date on which the first two satellites of the system were successfully launched. Prior to this date, and as explained in previous annual accounts, the Commission considered the project to be in a research phase, thus in accordance with the EU accounting rules all costs incurred were expensed. Since the beginning of the project and until the end of the current financial perspective, the In-Orbit Validation phase and the first part of the Full Operational Capability phase have a planned cost to the EU of EUR 3 788 million. For the next financial perspective, a further EUR 5 500 million is foreseen to be spent on; fully deploying the system, exploiting it, delivering Galileo services until 2020 and preparing the next generation of the constellation, and this will be entirely financed by the EU budget. An amount of EUR 268 million has been recognised as research expenses during the period.

The next two satellites are due to be launched in autumn 2012 and once the subsequent testing on these is complete, this will end the In-Orbit Validation (‘IOV’) phase of the project. This phase had been jointly funded by the EU and ESA and according to the grant agreement concluded between the two parties, ESA shall make an official transfer of the constructed assets to the EU. This legal transfer will require the ESA Council's agreement, noting that all except two Member States of ESA (Norway and Switzerland), are also EU Member States. At this time, the Commission has no reason to believe that such a transfer would be blocked by member(s) of ESA.

| EUR millions |
| --- |
| | Land and buildings | Plant and equipment | Furniture and vehicles | Computer hardware | Other tangible assets | Finance leases | Assets under construction | TOTAL |
| Gross carrying amount at previous year-end | 4 027 | 492 | 226 | 483 | 214 | 2 663 | 335 | 8 440 |
| Additions | 89 | 37 | 19 | 112 | 22 | 28 | 335 | 642 |
| Disposals | 0 | (11) | (19) | (44) | (12) | (6) | 0 | (92) |
| Transfers between asset categories | 22 | 1 | 0 | 4 | 0 | (2) | (24) | 1 |
| Other changes | (20) | 9 | 3 | 2 | 4 | 2 | (1) | (1) |
| Gross carrying amount at year-end | 4 118 | 528 | 229 | 557 | 228 | 2 685 | 645 | 8 990 |
| Accumulated depreciation at previous year-end | (1 868) | (382) | (167) | (378) | (124) | (708) | | (3 627) |
| Depreciation charge for the year | (132) | (47) | (14) | (63) | (22) | (95) | | (373) |
| Depreciation written back | 1 | 0 | 0 | 4 | 0 | 7 | | 12 |
| Disposals | 0 | 11 | 16 | 44 | 11 | 0 | | 82 |
| Transfers between asset categories | 0 | 0 | 0 | (2) | 0 | 1 | | (1) |
| Other changes | 0 | (7) | (1) | (1) | (2) | (1) | | (12) |
| Accumulated depreciation at year-end | (1 999) | (425) | (166) | (396) | (137) | (796) | | (3 919) |
| Net carrying amount at 31 december 2011 | 2 119 | 103 | 63 | 161 | 91 | 1 889 | 645 | 5 071 |
| Net carrying amount at 31 december 2010 | 2 159 | 110 | 59 | 105 | 90 | 1 955 | 335 | 4 813 |

EUR millions

Land and buildings

Plant and equipment

Furniture and vehicles

Computer hardware

Other tangible assets

Finance leases

Assets under construction

TOTAL

Gross carrying amount at previous year-end

4 027

492

226

483

214

2 663

335

8 440

Additions

89

37

19

112

22

28

335

642

Disposals

0

(11)

(19)

(44)

(12)

(6)

0

(92)

Transfers between asset categories

22

1

0

4

0

(2)

(24)

1

Other changes

(20)

9

3

2

4

2

(1)

(1)

Gross carrying amount at year-end

Gross carrying amount at year-end

4 118

4 118

528

528

229

229

557

557

228

228

2 685

2 685

645

645

8 990

8 990

Accumulated depreciation at previous year-end

(1 868)

(382)

(167)

(378)

(124)

(708)

(3 627)

Depreciation charge for the year

(132)

(47)

(14)

(63)

(22)

(95)

(373)

Depreciation written back

1

0

0

4

0

7

12

Disposals

0

11

16

44

11

0

82

Transfers between asset categories

0

0

0

(2)

0

1

(1)

Other changes

0

(7)

(1)

(1)

(2)

(1)

(12)

Accumulated depreciation at year-end

Accumulated depreciation at year-end

(1 999)

(1 999)

(425)

(425)

(166)

(166)

(396)

(396)

(137)

(137)

(796)

(796)

(3 919)

(3 919)

Net carrying amount at 31 december 2011

Net carrying amount at 31 december 2011

2 119

2 119

103

103

63

63

161

161

91

91

1 889

1 889

645

645

5 071

5 071

Net carrying amount at 31 december 2010

Net carrying amount at 31 december 2010

2 159

110

59

105

90

1 955

335

4 813

Charges still to be paid in respect of finance leases and similar entitlements are shown in long-term and short-term liabilities in the balance sheet (see notes 2.17 and 2.20.1). They break down as follows:

2.17

2.20.1

FINANCE LEASES

FINANCE LEASES

| EUR millions |
| --- |
| Description | Cumulative charges
  (A) | Future amounts to be paid | Total Value
  A + B | Subsequent expenditure on assets
  (C) | Asset value
  A + B + C | Depreciation
  (E) | Net carrying amount = A + B+ C + E |
| < 1 year | > 1 year | > 5 years | Total Liability (B) |
| Land and buildings | 931 | 59 | 280 | 1 315 | 1 654 | 2 585 | 62 | 2 647 | (771) | 1 876 |
| Other tangible assets | 23 | 7 | 7 | 1 | 15 | 38 | 0 | 38 | (25) | 13 |
| Total at 31.12.2011 | 954 | 66 | 287 | 1 316 | 1 669 | 2 623 | 62 | 2 685 | (796) | 1 889 |
| Total at 31.12.2010 | 865 | 65 | 282 | 1 390 | 1 737 | 2 602 | 61 | 2 663 | (708) | 1 955 |

EUR millions

Description

Cumulative charges

(A)

Future amounts to be paid

Total Value

A + B

Subsequent expenditure on assets

(C)

Asset value

A + B + C

Depreciation

(E)

Net carrying amount = A + B+ C + E

< 1 year

> 1 year

> 5 years

Total Liability (B)

Land and buildings

931

59

280

1 315

1 654

2 585

62

2 647

(771)

1 876

1 876

Other tangible assets

23

7

7

1

15

38

0

38

(25)

13

13

Total at 31.12.2011

954

66

287

1 316

1 669

2 623

62

2 685

(796)

1 889

Total at 31.12.2010

865

65

282

1 390

1 737

2 602

61

2 663

(708)

1 955

2.3   INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

| EUR millions |
| --- |
| | Note | 31.12.2011 | 31.12.2010 |
| Participations in Joint Ventures | 2.3.1 | 62 | 138 |
| Participations in Associates | 2.3.2 | 312 | 354 |
| Total Investments | | 374 | 492 |

EUR millions

Note

31.12.2011

31.12.2010

Participations in Joint Ventures

2.3.1

2.3.1

62

138

Participations in Associates

2.3.2

2.3.2

312

354

Total Investments

374

492

2.3.1   
  Participations in joint ventures

Participations in joint ventures

| EUR millions |
| --- |
| | GJU | SESAR | ITER | IMI | FCH | Total |
| Amount at 31.12.2010 | 0 | 11 | 12 | 78 | 37 | 138 |
| Contributions | 0 | 18 | 92 | 19 | 59 | 188 |
| Share of net result | 0 | (29) | (104) | (72) | (59) | (264) |
| Amount at 31.12.2011 | 0 | 0 | 0 | 25 | 37 | 62 |

EUR millions

GJU

SESAR

ITER

IMI

FCH

Total

Amount at 31.12.2010

0

11

12

78

37

138

Contributions

0

18

92

19

59

188

Share of net result

0

(29)

(104)

(72)

(59)

(264)

Amount at 31.12.2011

Amount at 31.12.2011

0

0

0

0

0

0

25

25

37

37

62

62

Participations in joint ventures are accounted for using the equity method. The following carrying amounts are attributable to the EU based on its percentage of participation in joint ventures:

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| Non-current assets | 211 | 176 |
| Current assets | 123 | 165 |
| Non-current liabilities | 0 | 0 |
| Current liabilities | (314) | (208) |
| Revenue | 8 | 7 |
| Expenses | (379) | (247) |

EUR millions

31.12.2011

31.12.2010

Non-current assets

211

176

Current assets

123

165

Non-current liabilities

0

0

Current liabilities

(314)

(208)

Revenue

8

7

Expenses

(379)

(247)

Galileo Joint Undertaking (GJU) in liquidation

Galileo Joint Undertaking (GJU) in liquidation

The Galileo Joint Undertaking (GJU) was put into liquidation at the end of 2006 and the process is still ongoing. As the entity was inactive and still undergoing liquidation in 2011, there were no revenues or expenditures incurred.

SESAR Joint Undertaking

SESAR Joint Undertaking

The aim of this Joint Undertaking is to ensure the modernisation of the European air traffic management system and the rapid implementation of the European air traffic management Master Plan by coordinating and concentrating all relevant research and development efforts in the EU. At 31 December 2011, the Commission held 59,37 % of the ownership participation in SESAR. The total (indicative) Commission contribution foreseen for SESAR (from 2007 to 2013) is EUR 700 million. The unrecognised share of losses for the period and cumulatively is EUR 102 million.

ITER International Fusion Energy Organisation (ITER)

ITER International Fusion Energy Organisation (ITER)

ITER involves the European Union and China, India, Russia, South Korea, Japan and USA. ITER was created to; manage the ITER facilities, to encourage the exploitation of the ITER facilities, to promote public understanding and acceptance of fusion energy, and to undertake any other activities that are necessary to achieve its purpose. The EU (Euratom) contribution to ITER International is given through the Fusion for Energy Agency, including also the contributions from Member States and from Switzerland. The total contribution is legally considered as a Euratom contribution to ITER since the Member States and Switzerland do not have ownership interests in ITER. As the EU legally holds the participation in the joint venture ITER International, the Commission must recognise the participation in its accounts. At 31 December 2011, the Commission held 47 % of the ownership participation in ITER. The total (indicative) Euratom contribution foreseen for ITER (from 2007 to 2041) is EUR 7 649 million. The unrecognised share of losses for the period and cumulatively is EUR 4 million.

Joint Technology Initiatives

Joint Technology Initiatives

Public private partnerships in the form of Joint Technology Initiatives, which were implemented through Joint Undertakings within the meaning of Article 171 of the Treaty, have been created in order to implement the objectives of the Lisbon Growth and Jobs Agenda. IMI and FCH are included under this heading but three others, ARTEMIS, Clean Sky and ENIAC, although legally referred to as joint undertakings, from an accounting perspective must be considered as associates (and so included as such in note 2.3.2) because the Commission has a significant influence, not joint control, over them.

2.3.2

IMI Joint Technology Initiative on Innovative Medicines

IMI Joint Technology Initiative on Innovative Medicines

The IMI Joint Undertaking supports pre-competitive pharmaceutical research and development in the Member States and associated countries, aiming at increasing the research investment in the biopharmaceutical sector and promotes the involvement of small and medium-sized enterprises (SME) in its activities. At 31 December 2011, the Commission held 96,51 % of the ownership participation in IMI. The maximum indicative contribution of the Commission shall amount to EUR 1 billion up to 31.12.2017.

FCH Fuel Cells and Hydrogen Joint Undertaking

FCH Fuel Cells and Hydrogen Joint Undertaking

The objective of the FCH Joint Undertaking is to combine resources from the public and private sectors to strengthen research activities with a view to increasing the overall efficiency of European research efforts and accelerate the development and deployment of fuel cell and hydrogen technologies. At 31 December 2011, the Commission held 89,32 % of the ownership participation in FCH. The maximum indicative contribution of the EU shall amount to EUR 470 million up to 31.12.2017.

2.3.2   
  Participations in Associates

Participations in Associates

| EUR millions |
| --- |
| | EIF | ARTEMIS | Clean Sky | ENIAC | Total |
| Amount at 31/12/2010 | 305 | 14 | 14 | 21 | 354 |
| Contributions | 0 | 11 | 117 | 14 | 142 |
| Share of net surplus/(deficit) | (3) | (25) | (131) | (15) | (174) |
| Other equity movements | (10) | 0 | 0 | 0 | (10) |
| Amount at 31/12/2011 | 292 | 0 | 0 | 20 | 312 |

EUR millions

EIF

ARTEMIS

Clean Sky

ENIAC

Total

Amount at 31/12/2010

305

14

14

21

354

Contributions

0

11

117

14

142

Share of net surplus/(deficit)

(3)

(25)

(131)

(15)

(174)

Other equity movements

(10)

0

0

0

(10)

Amount at 31/12/2011

Amount at 31/12/2011

292

292

0

0

0

0

20

20

312

312

Participations in associates are accounted for using the equity method. The following carrying amounts are attributable to the EU based on its percentage of participation in associates:

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| Assets | 460 | 447 |
| Liabilities | (162) | (93) |
| Revenue | 28 | 25 |
| Surplus/(Deficit) | (167) | (180) |

EUR millions

31.12.2011

31.12.2010

Assets

460

447

Liabilities

(162)

(93)

Revenue

28

25

Surplus/(Deficit)

(167)

(180)

European Investment Fund (EIF)

European Investment Fund (EIF)

The European Investment Fund (EIF) is the European Union's financial institution specialising in providing risk capital and guarantees to SMEs. The Commission has paid in 20 %, the balance being uncalled corresponding to an amount of EUR 720 million.

| EUR millions |
| --- |
| EIF | Total EIF capital | Commission subscription |
| Total Share Capital | 3 000 | 900 |
| Paid-in | (600) | (180) |
| Uncalled | 2 400 | 720 |

EUR millions

EIF

Total EIF capital

Commission subscription

Total Share Capital

3 000

900

Paid-in

(600)

(180)

Uncalled

2 400

720

ARTEMIS Joint Undertaking

ARTEMIS Joint Undertaking

This entity was created to implement a Joint Technology Initiative with the private sector on Embedded Computing Systems. The maximum indicative contribution of the Commission shall amount to EUR 420 million. The unrecognised share of losses for the period and cumulatively is EUR 3 million.

Clean Sky Joint Undertaking

Clean Sky Joint Undertaking

The aim of this entity is to accelerate the development, validation and demonstration of clean air transport technologies in the EU and in particular to create a radically innovative Air Transport System with the target of reducing the environmental impact of air transport. The maximum indicative contribution of the Commission shall amount to EUR 800 million. The unrecognised share of losses for the period and cumulatively is EUR 5 million.

ENIAC Joint Undertaking

ENIAC Joint Undertaking

The aim of ENIAC is to define a commonly agreed research agenda in the field of nano-electronics in order to set research priorities for the development and adoption of key competences in that area. These objectives will be pursued by pooling resources from the public and private sectors to support R&D activities in the form of projects. The total commitment of the EU shall amount to EUR 450 million. At 31 December 2011, the Commission held 96,77 % of the ownership participation in ENIAC.

2.4   FINANCIAL ASSETS: AVAILABLE FOR SALE ASSETS

FINANCIAL ASSETS: AVAILABLE FOR SALE ASSETS

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| Guarantee Fund | 1 475 | 1 346 |
| European Bank for Reconstruction and Development | 188 | 188 |
| Risk Capital Operations | 134 | 137 |
| ETF Start up | 234 | 199 |
| European Fund for South East Europe | 111 | 102 |
| Green for Growth Fund | 69 | 20 |
| GEEREF | 38 | 56 |
| Progress Microfinance Facility | 18 | 14 |
| Other investments | 5 | 1 |
| Total | 2 272 | 2 063 |

EUR millions

31.12.2011

31.12.2010

Guarantee Fund

1 475

1 346

European Bank for Reconstruction and Development

188

188

Risk Capital Operations

134

137

ETF Start up

234

199

European Fund for South East Europe

111

102

Green for Growth Fund

69

20

GEEREF

38

56

Progress Microfinance Facility

18

14

Other investments

5

1

Total

2 272

2 063

2.4.1   
  Guarantee Fund

Guarantee Fund

Net assets of the Guarantee Fund
   (3)

Net assets of the Guarantee Fund

3

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| Available-for-sale assets | 1 174 | 1 154 |
| Cash and cash equivalents | 302 | 193 |
| Total assets | 1 476 | 1 347 |
| Total liabilities | (1) | (1) |
| Net assets | 1 475 | 1 346 |

EUR millions

31.12.2011

31.12.2010

Available-for-sale assets

1 174

1 154

Cash and cash equivalents

302

193

Total assets

Total assets

1 476

1 347

Total liabilities

Total liabilities

(1)

(1)

Net assets

Net assets

1 475

1 475

1 346

1 346

The Guarantee Fund for external actions covers loans guaranteed by the EU as a result of a Council Decision, in particular European Investment Bank (EIB) lending operations outside the EU and loans under macro-financial assistance (MFA) and Euratom loans outside the EU. It is a long-term instrument to cover any defaulting loans guaranteed by the EU and can therefore be seen as a long-term investment. This is evidenced by the fact that nearly 83 % of the available-for-sale assets have a maturity of between 1 and 10 years. The Fund is endowed by payments from the general budget of the EU equivalent to 9 % of the capital value of the operations, the proceeds from interest on investments made from the Fund's assets, and sums recovered from defaulting debtors for whom the Fund has had to activate its guarantee. Any yearly surplus arising shall be paid back as revenue for the EU budget.

The EU is required to include a guarantee reserve to cover loans to third countries. This reserve is intended to cover the requirements of the Guarantee Fund and, where necessary, activated guarantees exceeding the amount available in the Fund, so that these amounts may be charged to the budget. This reserve corresponds to the target amount of 9 % of the loans outstanding at year-end.

2.4.2   
  Other long-term available-for-sale assets

Other long-term available-for-sale assets

These are investments and participations purchased to help beneficiaries develop their business activities.

European Bank for Reconstruction and Development (EBRD)

European Bank for Reconstruction and Development (EBRD)

As the EBRD is not quoted on any stock exchange and in view of the contractual restrictions included in the EBRD’s articles of incorporation relating, amongst others, to the sale of participating interests, capped at acquisition cost and only authorised to existing shareholders, the Commission's shareholding is valued at cost less any write-down for impairment.

| EUR millions |
| --- |
| EBRD | Total EBRD capital | Commission subscription |
| Total Share Capital | 28 380 | 900 |
| Paid-in | (6 199) | (188) |
| Uncalled | 22 181 | 712 |

EUR millions

EBRD

Total EBRD capital

Commission subscription

Total Share Capital

28 380

900

Paid-in

(6 199)

(188)

Uncalled

22 181

712

Under Risk Capital Operations amounts are granted to financial intermediaries to finance equity investments. They are managed by European Investment Bank and financed under the European Neighbourhood Policy.

Risk Capital Operations

ETF start up covers the Growth & Employment programme, the MAP programme, the CIP programme and the Technology Transfer Pilot Project, under the trusteeship of the EIF, supporting the creation and financing of start-up SMEs by investing in suitable specialised venture capital funds. At year-end, a further EUR 126 million relating to ETF Start up and SME Finance Facility had been committed to, but not yet been drawn down by the other parties.

ETF start up

The European Fund for South East Europe, an investment company with variable share capital (SICAV) is also included under this heading. The overall objective of EFSE is to foster economic development and prosperity in South East Europe through the sustainable provision of additional development finance via local financial intermediaries.

European Fund for South East Europe

The overall objective of the Green for Growth Fund (former Southeast Europe Energy Efficient Fund) is to enhance energy efficiency and fostering renewable energies in South East Europe through the provision of dedicated financing to businesses and households via partnering with financial institutions and direct finance. GEEREF is an innovative fund providing global risk capital through private investment for energy efficiency and renewable energy projects in developing countries and economies in transition.

Green for Growth Fund

GEEREF

2.5   FINANCIAL ASSETS: LONG-TERM LOANS

FINANCIAL ASSETS: LONG-TERM LOANS

| EUR millions |
| --- |
| | Note | 31.12.2011 | 31.12.2010 |
| Loans granted from the EU budget & ECSC | 2.5.1 | 170 | 162 |
| Loans granted from borrowed funds | 2.5.2 | 41 230 | 11 478 |
| Total | 41 400 | 11 640 |

EUR millions

Note

31.12.2011

31.12.2010

Loans granted from the EU budget & ECSC

2.5.1

2.5.1

170

162

Loans granted from borrowed funds

2.5.2

2.5.2

41 230

11 478

Total

41 400

11 640

2.5.1   
  Loans granted from the European Union budget & the ECSC in Liquidation

Loans granted from the European Union budget & the ECSC in Liquidation

| EUR millions |
| --- |
| | Loans with special conditions | ECSC housing loans | Total |
| Total at 31.12.2010 | 140 | 22 | 162 |
| New loans | 31 | 0 | 31 |
| Repayments | (17) | (5) | (22) |
| Exchange differences | (4) | — | (4) |
| Changes in carrying amount | 1 | 2 | 3 |
| Total at 31.12.2011 | 151 | 19 | 170 |

EUR millions

Loans with special conditions

ECSC housing loans

Total

Total at 31.12.2010

140

22

162

New loans

31

0

31

Repayments

(17)

(5)

(22)

Exchange differences

(4)

—

(4)

Changes in carrying amount

1

2

3

Total at 31.12.2011

151

19

170

Loans with special conditions are granted at preferential rates as part of co-operation with non-member countries. All amounts fall due more than 12 months after year-end. The effective interest rates on these loans vary between 7,73 % and 14,507 %.

2.5.2   
  Loans granted from borrowed funds

Loans granted from borrowed funds

| EUR millions |
| --- |
| | MFA | Euratom | BOP | EFSM | ECSC in Liquidation | Total |
| Total at 31.12.2010 | 503 | 469 | 12 246 | — | 264 | 13 482 |
| New loans | 126 | — | 1 350 | 28 000 | — | 29 476 |
| Repayments | (36) | (20) | (2 000) | — | — | (2 056) |
| Exchange differences | — | — | — | — | 6 | 6 |
| Changes in carrying amount | 2 | 2 | 29 | 344 | (4) | 373 |
| Total at 31.12.2011 | 595 | 451 | 11 625 | 28 344 | 266 | 41 281 |
| Amount due < 1 year | 5 | — | — | — | 46 | 51 |
| Amount due > 1 year | 590 | 451 | 11 625 | 28 344 | 220 | 41 230 |

EUR millions

MFA

Euratom

BOP

EFSM

ECSC in Liquidation

Total

Total at 31.12.2010

503

469

12 246

—

264

13 482

New loans

126

—

1 350

28 000

—

29 476

Repayments

(36)

(20)

(2 000)

—

—

(2 056)

Exchange differences

—

—

—

—

6

6

Changes in carrying amount

2

2

29

344

(4)

373

Total at 31.12.2011

595

451

11 625

28 344

266

41 281

Amount due < 1 year

Amount due < 1 year

5

5

—

—

—

—

—

—

46

46

51

51

Amount due > 1 year

Amount due > 1 year

590

590

451

451

11 625

11 625

28 344

28 344

220

220

41 230

41 230

The large increase in these amounts is due to the EFSM loans disbursed during 2011 and is mirrored by an increase in the EU's borrowings (see note 2.16). For more information on borrowing and lending activities, see note 7.

2.16

7

2.6   LONG-TERM RECEIVABLES & RECOVERABLES

LONG-TERM RECEIVABLES & RECOVERABLES

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| Member States | 268 | 14 |
| ECSC staff loans | 7 | 9 |
| Guarantees and deposits | 11 | 14 |
| Other | 3 | 3 |
| Total | 289 | 40 |

EUR millions

31.12.2011

31.12.2010

Member States

268

14

ECSC staff loans

7

9

Guarantees and deposits

11

14

Other

3

3

Total

289

40

Of the above receivables, EUR 273 million (2010: EUR 14 million) relate to non-exchange transactions. The large increase in long-term receivables from Member States concerns EAGF and rural development non-executed clearance of accounts decisions. These amounts are to be recovered in several instalments during 2012 and 2013, in the context of financial assistance granted to certain Member States. Amounts to be recovered in 2013 are included in the above table while amounts to be recovered in 2012 are included under short-term receivables (see note 2.11.1 below).

2.11.1

2.7   LONG-TERM PRE-FINANCING

LONG-TERM PRE-FINANCING

| EUR millions |
| --- |
| | Note | 31.12.2011 | 31.12.2010 |
| Pre-financing | 2.7.1 | 40 625 | 40 298 |
| Prepaid expenditure | 2.7.2 | 4 098 | 3 820 |
| Total long-term pre-financing | 44 723 | 44 118 |

EUR millions

Note

31.12.2011

31.12.2010

Pre-financing

2.7.1

2.7.1

40 625

40 298

Prepaid expenditure

2.7.2

2.7.2

4 098

3 820

Total long-term pre-financing

44 723

44 118

2.7.1   
  Pre-financing

Pre-financing

The timing of the recoverability or utilisation of the pre-financing governs whether it is disclosed as current or long-term pre-financing asset. The utilisation is defined by the project's underlying agreement. All repayments or utilisation due before twelve months of the reporting date is disclosed as short–term pre-financing and therefore as current assets, the balance is long-term.

Guarantees received in respect of pre-financing:

Guarantees received in respect of pre-financing:

These are guarantees that the European Commission in certain cases requests from beneficiaries when paying out advance payments (pre-financing). There are two values to disclose for this type of guarantee, the ‘nominal’ and the ‘on-going’ values. For the ‘nominal’ value, the generating event is linked to the existence of the guarantee. For the ‘on-going’ value, the guarantee’s generating event is the pre-financing payment and/or subsequent clearings. At 31 December 2011 the ‘nominal’ value of guarantees received in respect of pre-financing amounted to EUR 1 330 million while the "on-going" value of those guarantees was EUR 1 083 million (2010: EUR 1 227 million and EUR 1 059 million respectively).

Certain pre-financing amounts paid out under the 7th Research Framework Programme for research and technological development (FP7) are effectively covered by a Participants Guarantee Fund (PGF) – the amount of pre-financing paid out in 2011 totalled EUR 3.3 billion (2010: EUR 3.2 billion). This fund is a separate entity from the European Union and is not consolidated in these accounts – note 11.2.3.

11.2.3

LONG-TERM PRE-FINANCING

LONG-TERM PRE-FINANCING

| EUR millions |
| --- |
| Management type | 31.12.2011 | 31.12.2010 |
| Direct centralised management | 1 219 | 1 695 |
| Indirect centralised management | 774 | 620 |
| Decentralised management | 697 | 441 |
| Shared management | 37 249 | 37 055 |
| Joint management | 686 | 487 |
| Total Long-Term Pre-financing | 40 625 | 40 298 |

EUR millions

Management type

31.12.2011

31.12.2010

Direct centralised management

1 219

1 695

Indirect centralised management

774

620

Decentralised management

697

441

Shared management

37 249

37 055

Joint management

686

487

Total Long-Term Pre-financing

40 625

40 298

The most significant long-term pre-financing amounts relate to Structural Actions for the 2007-2013 programming period: the regional development fund (ERDF), the social fund (ESF), the agricultural fund for rural development (EAFRD), the cohesion fund (CF) and the fisheries fund. As many of these projects are long-term in nature, it is necessary that the related advances are available for more than one year. Thus these pre-financing amounts are shown as long-term assets.

Pre-financing represents a large portion of the EU's total assets, and thus receives proper and regular attention. It should be noted that the level of pre-financing amounts in the various programmes must be sufficient to ensure the necessary float for the beneficiary to start the project, while also safeguarding the financial interests of the EU and taking into consideration legal, operational and cost-effectiveness constraints. All these elements have been given due consideration by the Commission in an effort to improve the follow-up of pre-financing.

A closer look at the evolution of pre-financing reveals an accelerated increase in the years 2007 to 2009, which coincides with the early years of the 2007-2013 programming period. That period witnessed the starting of new programmes and actions, and the subsequent support from the Commission in the form of pre-financing payments. The year 2011 marks a first decrease in the level of pre-financing, a trend which confirms that the increase witnessed in the early years of the 2007-2013 Financial Framework is a normal development linked to the spending profile of multiannual programmes. In fact in 2011, total pre-financing has decreased by 1,5 % or EUR 743 million compared to 2010, an evolution related mainly to short-term shared management amounts (see note 2.12.1). This decrease is however offset by an increase in prepaid expenditure, due to the recognition of new assets regarding aid scheme advance amounts reimbursed by Commission to the Member States (see below).

2.12.1

2.7.2   
  Prepaid expenditure

Prepaid expenditure

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| Financial Engineering Instruments | 3 378 | 3 820 |
| Aid schemes | 720 | — |
| Total | 4 098 | 3 820 |

EUR millions

31.12.2011

31.12.2010

Financial Engineering Instruments

3 378

3 820

Aid schemes

720

—

Total

4 098

3 820

Under the framework of the cohesion and rural development programmes 2007-2013, payments can be made from the EU Budget to Member States so as to contribute to Financial Engineering Instruments (be it in the form of loans, guarantees or equity investments) set up and managed under the responsibility of the Member State. Monies that are unused by these instruments at year-end are the property of the EU (as with standard pre-financing) and are thus treated as an asset on the Commission balance sheet. However, the basic legal acts do not oblige the Member States to provide periodic reports to the Commission on the use made of these advances, and in some cases not even identify them in the statements of expenditure submitted to the Commission. Thus, and on the basis of information received from Member States on the utilisation of funds, an estimation is made at each year-end of the value of this asset.

In parallel with the inclusion of FEIs on its balance sheet in 2010, the Commission also analysed similar schemes where advances are paid to Member States. It requested information from Member States on their utilisation of advances received from various aid schemes (state aid, market measures of EAGF) and contributions from the European Globalisation Adjustment Fund. However, at year-end 2010 sufficient information was not available from Member States to allow the Commission to make a reliable estimate of the open amounts at 31 December 2010. Information now indicates that these amounts would not have been material. Following continued work throughout 2011, the Commission is now in a position to better estimate these open advances based on information collected from Member States, therefore an asset is now included on the Commission balance sheet at 31 December 2011, split between long-term (EUR 720 million above) and short term (EUR 1 792 million, see note 2.12.2), depending on when the advances are expected to be used. The recognition of this asset has the counterparty of reducing the 2011 expenditure by the same amount.

2.12.2

CURRENT ASSETS

CURRENT ASSETS

2.8   INVENTORIES

INVENTORIES

| EUR millions |
| --- |
| Description | 31.12.2011 | 31.12.2010 |
| Scientific materials | 78 | 71 |
| Other | 16 | 20 |
| Total | 94 | 91 |

EUR millions

Description

31.12.2011

31.12.2010

Scientific materials

78

71

Other

16

20

Total

94

91

2.9   FINANCIAL ASSETS: AVAILABLE FOR SALE ASSETS

FINANCIAL ASSETS: AVAILABLE FOR SALE ASSETS

Available-for-sale financial assets are purchased for their investment return or yield, or held to establish a particular asset structure or a secondary source of liquidity and may therefore be sold in response to needs for liquidity or changes in interest rates.

AVAILABLE FOR SALE ASSETS

AVAILABLE FOR SALE ASSETS

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| ECSC in Liquidation | 1 463 | 1 283 |
| BUFI investments | 1 358 | 515 |
| Risk Sharing Finance Facility | 547 | 419 |
| Loan Guarantee Instrument for TEN-T projects | 97 | 111 |
| European Chemicals Agency | 151 | — |
| Other | 3 | 3 |
| Total | 3 619 | 2 331 |

EUR millions

31.12.2011

31.12.2010

ECSC in Liquidation

1 463

1 283

BUFI investments

1 358

515

Risk Sharing Finance Facility

547

419

Loan Guarantee Instrument for TEN-T projects

97

111

European Chemicals Agency

151

—

Other

3

3

Total

3 619

2 331

Regarding the ECSC in liquidation amounts, all AFS investments are debt securities denominated in EUR and quoted in an active market. At 31 December 2011 debt securities (expressed at their fair value) reaching final maturity in the course of 2012 amount to EUR 481 million (2010: EUR 294 million).

While there have been acquisitions in both the Risk Sharing Finance Facility and the Loan Guarantee Instrument for TEN-T Projects (see also note 5.1.2), the large increase from the previous year is due mainly to the increased amount of provisionally cashed fines in a specifically created fund managed by DG ECFIN (BUFI). Prior to 2010, these amounts would have been held in specific bank accounts – see note 2.13.2, restricted cash.

5.1.2

2.13.2

2.10   FINANCIAL ASSETS: SHORT-TERM LOANS

FINANCIAL ASSETS: SHORT-TERM LOANS

These amounts represent mainly loans with remaining final maturities less than 12 months after the balance sheet date (see note 2.5.2 above for more details). Last year there was an amount of EUR 2 billion included here relating to a BOP loan to Hungary which was repaid in December 2011. Also included under this heading are term deposits of EUR 51 million, primarily relating to the European External Action Service and the Translation Centre for the Bodies of the European Union.

2.5.2

2.11   OTHER RECEIVABLES & RECOVERABLES

OTHER RECEIVABLES & RECOVERABLES

| EUR millions |
| --- |
| | Note | 31.12.2011 | 31.12.2010 |
| Current receivables | 2.11.1 | 6 189 | 6 786 |
| Sundry receivables | — | 21 | 20 |
| Accrued income and deferred charges | 2.11.2 | 3 267 | 4 525 |
| Total | 9 477 | 11 331 |

EUR millions

Note

31.12.2011

31.12.2010

Current receivables

2.11.1

2.11.1

6 189

6 786

Sundry receivables

—

21

20

Accrued income and deferred charges

2.11.2

2.11.2

3 267

4 525

Total

9 477

11 331

The total above contains an estimated EUR 8 955 million (2010: EUR 11 009 million) relating to non-exchange transactions.

2.11.1   
  Current receivables

Current receivables

| EUR millions |
| --- |
| Account Group | At 31.12.2011 | At 31.12.2010 |
| Gross amount | Write down | Net Value | Gross amount | Write down | Net Value |
| Customers | 379 | (94) | 285 | 207 | (79) | 128 |
| Fines | 3 369 | (244) | 3 125 | 4 584 | (406) | 4 178 |
| Member States | 4 243 | (1 550) | 2 693 | 4 011 | (1 625) | 2 386 |
| Others | 89 | (3) | 86 | 96 | (2) | 94 |
| Total | 8 080 | (1 891) | 6 189 | 8 898 | (2 112) | 6 786 |

EUR millions

Account Group

At 31.12.2011

At 31.12.2010

Gross amount

Write down

Net Value

Gross amount

Write down

Net Value

Customers

379

(94)

285

207

(79)

128

Fines

3 369

(244)

3 125

4 584

(406)

4 178

Member States

4 243

(1 550)

2 693

4 011

(1 625)

2 386

Others

89

(3)

86

96

(2)

94

Total

8 080

(1 891)

6 189

8 898

(2 112)

6 786

Customers

Customers

These are recovery orders entered in the accounts at year-end as established entitlements to be recovered and not already included under other headings on the assets side of the balance sheet.

Fines

Fines

This concerns amounts to be recovered relating to fines issued by the Commission. Guarantees totalling EUR 3 012 million had been received for the fines outstanding at 31 December 2011 (2010: EUR 2 585 million) in respect of these receivables. It should be noted that EUR 209 million of the receivables were due for payment after 31 December 2011.

Receivables from Member States

Receivables from Member States

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| EAGF and Rural Development receivables |
| EAGF | 1 439 | 1 130 |
| EAFRD | 23 | — |
| TRDI | 37 | 19 |
| SAPARD | 142 | 146 |
| Write-down | (771) | (814) |
| Total | 870 | 481 |
| VAT paid and recoverable | 41 | 46 |
| Own resources |
| Established in the A account | 29 | 81 |
| Established in the separate account | 1 263 | 1 285 |
| Write-down | (779) | (811) |
| Other | 114 | 391 |
| Total | 627 | 946 |
| Other receivables from Member States |
| Pre-financing recovery expected | 963 | 561 |
| Other | 192 | 352 |
| Total | 1 155 | 913 |
| Total | 2 693 | 2 386 |

EUR millions

31.12.2011

31.12.2010

EAGF and Rural Development receivables

EAGF and Rural Development receivables

EAGF

1 439

1 130

EAFRD

23

—

TRDI

37

19

SAPARD

142

146

Write-down

(771)

(814)

Total

870

481

VAT paid and recoverable

VAT paid and recoverable

41

41

46

46

Own resources

Own resources

Established in the A account

29

81

Established in the separate account

1 263

1 285

Write-down

(779)

(811)

Other

114

391

Total

627

946

Other receivables from Member States

Other receivables from Member States

Pre-financing recovery expected

963

561

Other

192

352

Total

1 155

913

Total

2 693

2 386

EAGF and Rural Development receivables

EAGF and Rural Development receivables

This item primarily covers the amounts owed by beneficiaries of EAGF at 31 December, as declared and certified by the Member States at 15 October. An estimation is made for the receivables arising after this declaration and up to 31 December. The Commission also estimates a write-down for the amounts owed by beneficiaries that are unlikely to be recovered. The fact that such an adjustment is made does not mean that the Commission is waiving future recovery of these amounts. A deduction of 20 % is also included in the adjustment, and corresponds to what Member States are allowed to retain to cover administrative costs.

Own resources receivables

Own resources receivables

It should be noted that Member States are entitled to withhold 25 % of traditional own resources as collection costs, thus the above figures are shown net of this deduction. Based on the estimations sent by Member States, a write-down has been deducted from receivables from Member States. However, this does not mean that the Commission is waiving recovery of the amounts covered by this value adjustment.

2.11.2   
  Accrued income and deferred charges

Accrued income and deferred charges

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| Accrued income | 2 952 | 3 445 |
| Deferred charges | 296 | 1 061 |
| Other | 19 | 19 |
| Total | 3 267 | 4 525 |

EUR millions

31.12.2011

31.12.2010

Accrued income

2 952

3 445

Deferred charges

296

1 061

Other

19

19

Total

3 267

4 525

The main amount under this heading is accrued income:

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| Own resources | 2 644 | 2 657 |
| Agricultural assigned revenue Nov & Dec | 111 | 72 |
| EAGF: non-executed conformity correction decisions | — | 520 |
| Cohesion, Regional & Rural Development Funds: financial corrections | 16 | 43 |
| Other accrued income | 181 | 153 |
| Total accrued income | 2 952 | 3 445 |

EUR millions

31.12.2011

31.12.2010

Own resources

2 644

2 657

Agricultural assigned revenue Nov & Dec

111

72

EAGF: non-executed conformity correction decisions

—

520

Cohesion, Regional & Rural Development Funds: financial corrections

16

43

Other accrued income

181

153

Total accrued income

2 952

3 445

The large decrease in deferred charges is mainly due to an improvement in the accounting treatment of the funds transferred by the Member States into Financial Engineering Instruments which were yet to be declared to or reimbursed by the Commission at year-end. These amounts are now deducted from the accrued charges to which they relate.

Other accrued income is primarily late interest income, bank interest and interest on pre-financing.

2.12   SHORT-TERM PRE-FINANCING

SHORT-TERM PRE-FINANCING

| EUR millions |
| --- |
| | Note | 31.12.2011 | 31.12.2010 |
| Pre-financing | 2.12.1 | 8 089 | 9 123 |
| Prepaid expenditure | 2.12.2 | 2 918 | 955 |
| Total short-term pre-financing | 11 007 | 10 078 |

EUR millions

Note

31.12.2011

31.12.2010

Pre-financing

2.12.1

2.12.1

8 089

9 123

Prepaid expenditure

2.12.2

2.12.2

2 918

955

Total short-term pre-financing

11 007

10 078

2.12.1   
  Pre-financing

Pre-financing

| EUR millions |
| --- |
| Management type | 31.12.2011 | 31.12.2010 |
| Direct centralised management | 3 048 | 3 038 |
| Indirect centralised management | 3 037 | 2 368 |
| Decentralised management | 330 | 536 |
| Shared management | 761 | 2 177 |
| Joint management | 803 | 894 |
| Implemented by other Institutions & Agencies | 110 | 110 |
| Total Short-Term Pre-financing | 8 089 | 9 123 |

EUR millions

Management type

31.12.2011

31.12.2010

Direct centralised management

3 048

3 038

Indirect centralised management

3 037

2 368

Decentralised management

330

536

Shared management

761

2 177

Joint management

803

894

Implemented by other Institutions & Agencies

110

110

Total Short-Term Pre-financing

8 089

9 123

The decrease in short-term pre-financing under shared management is due to the significant advancement in the closure process of the programming period 2000-2006 (mostly rural development fund, regional development fund and cohesion fund). Although pre-financing instalments were paid in 2011 for new projects (programmes related to the period 2007-2013), they were classified under long-term assets as explained in note 2.7.

2.7

2.12.2   
  Prepaid expenditure

Prepaid expenditure

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| Financial Engineering Instruments | 1 126 | 955 |
| Aid Schemes | 1 792 | — |
| Total | 2 918 | 955 |

EUR millions

31.12.2011

31.12.2010

Financial Engineering Instruments

1 126

955

Aid Schemes

1 792

—

Total

2 918

955

As explained under note 2.7.2, these amounts relate to payments made to Member States under the framework of the cohesion and rural develoment programmes 2007-2013, so as to reimburse amounts paid in advance to beneficiaries, but which have not yet been used at year-end. The above amounts are expected to be used during 2012.

2.7.2

2.13   CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| Unrestricted cash: |
| Accounts with Treasuries & Central Banks | 7 450 | 10 123 |
| Current accounts | 1 099 | 1 150 |
| Imprest accounts | 43 | 39 |
| Transfers (cash in transit) | (5) | 1 |
| Short-term deposits and other cash equivalents | 2 028 | 1 670 |
| Total | 10 615 | 12 983 |
| Restricted cash | 8 320 | 9 080 |
| Total | 18 935 | 22 063 |

EUR millions

31.12.2011

31.12.2010

Unrestricted cash:

Unrestricted cash

Accounts with Treasuries & Central Banks

7 450

10 123

Current accounts

1 099

1 150

Imprest accounts

43

39

Transfers (cash in transit)

(5)

1

Short-term deposits and other cash equivalents

2 028

1 670

Total

10 615

12 983

Restricted cash

Restricted cash

8 320

8 320

9 080

9 080

Total

18 935

22 063

2.13.1   
  Unrestricted cash

Unrestricted cash

Unrestricted cash covers all the funds which the Commission keeps in its accounts in each Member State and EFTA country (treasury or central bank), as well as in current accounts, imprest accounts, short-term bank deposits and petty cash.

Amounts shown as short-term deposits relate primarily to monies managed by fiduciaries on behalf of the Commission for the purpose of implementing particular programmes funded by the EU budget. At year-end, EUR 118 million had been committed to, but not yet been drawn down by the other parties.

2.13.2   
  Restricted cash

Restricted cash

Restricted cash refers to amounts received in connection with fines issued by the Commission for which the case is still open. These are kept in specific deposit accounts that are not used for any other activities. In case an appeal has been lodged or where it is unknown if an appeal will be made by the other party the underlying amount is shown as contingent liability in note 5.2.

5.2

NON CURRENT LIABILITIES

NON CURRENT LIABILITIES

2.14   PENSION AND OTHER EMPLOYEE BENEFITS

PENSION AND OTHER EMPLOYEE BENEFITS

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| Pensions – Staff | 30 617 | 32 801 |
| Pensions – others | 777 | 840 |
| Joint Sickness Insurance Scheme | 3 441 | 3 531 |
| Total | 34 835 | 37 172 |

EUR millions

31.12.2011

31.12.2010

Pensions – Staff

30 617

32 801

Pensions – others

777

840

Joint Sickness Insurance Scheme

3 441

3 531

Total

34 835

37 172

2.14.1   
  Pensions – Staff

Pensions – Staff

In accordance with Article 83 of the Staff Regulations, the payment of the benefits provided for in the staff pension scheme (PSEO: Pension Scheme of European Officials) constitutes a charge to the EU's budget. The scheme is not funded, but the Member States guarantee the payment of these benefits collectively according to the scale fixed for the financing of this expenditure. In addition, officials contribute one third to the long-term financing of this scheme via a compulsory contribution.

The liabilities of the pension scheme were assessed on the basis of the number of staff and retired staff at 31 December 2011 and on the rules of the Staff Regulations applicable at this date. This valuation was carried out in accordance with the methodology of IPSAS 25 (and therefore also EU accounting rule 12). The method used to calculate this liability is the projected unit credit method. The main actuarial assumptions available at the valuation date and used on the valuation were as follows:

| Actuarial Assumptions | 31.12.2011 | 31.12.2010 |
| --- | --- | --- |
| Nominal discount rate | 4,9 % | 4,6 % |
| Expected inflation rate | 1,8 % | 2,1 % |
| Real discount rate | 3,0 % | 2,4 % |
| Probability of marriage: Man/Woman | 84 %/38 % | 84 %/38 % |
| General Salary Growth/pension revaluation | 0 % | 0 % |
| 2008 International Civil Servants Life Table | Yes | Yes |

Actuarial Assumptions

31.12.2011

31.12.2010

Nominal discount rate

4,9 %

4,6 %

Expected inflation rate

1,8 %

2,1 %

Real discount rate

3,0 %

2,4 %

Probability of marriage: Man/Woman

84 %/38 %

84 %/38 %

General Salary Growth/pension revaluation

0 %

0 %

2008 International Civil Servants Life Table

Yes

Yes

The significant decrease in the pension liability is explained by the sizeable increase in the discount rate applied, resulting in a large actuarial gain for the year.

Movement in Gross Employee Benefits liability

Movement in Gross Employee Benefits liability

| EUR millions |
| --- |
| | Staff pension liability | Sickness Insurance |
| Gross Liability at previous year-end | 36 639 | 3 791 |
| Service/normal cost | 1 255 | 169 |
| Interest cost | 1 716 | 180 |
| Benefits paid | (1 187) | (112) |
| Actuarial gains | (4 226) | (317) |
| Change due to newcomers | 36 | 0 |
| Gross Liability at year-end | 34 233 | 3 711 |
| Pension co-efficient liability | 834 | N/A |
| Deduction of taxes on pensions | (4 450) | N/A |
| Plan assets | 0 | (270) |
| Net liability at year-end | 30 617 | 3 441 |

EUR millions

Staff pension liability

Sickness Insurance

Gross Liability at previous year-end

36 639

3 791

Service/normal cost

1 255

169

Interest cost

1 716

180

Benefits paid

(1 187)

(112)

Actuarial gains

(4 226)

(317)

Change due to newcomers

36

0

Gross Liability at year-end

34 233

3 711

Pension co-efficient liability

834

N/A

Deduction of taxes on pensions

(4 450)

N/A

Plan assets

0

(270)

Net liability at year-end

Net liability at year-end

30 617

30 617

3 441

3 441

2.14.2   
  Pensions – Others

Pensions – Others

This refers to the liability relating to the pension obligation towards Members and former Members of the Commission, the Court of Justice (and General Court) and the Court of Auditors, the Secretaries General of the Council, the Ombudsman, the European Data Protection Supervisor, and the European Union Civil Service Tribunal. Also included under this heading is a liability relating to the pensions of Members of the European Parliament.

2.14.3   
  Joint Sickness Insurance Scheme

Joint Sickness Insurance Scheme

A valuation is also made for the estimated liability that the EU has regarding its contributions to the Joint Sickness Insurance Scheme in relation to its retired staff. The gross liability has been valued at EUR 3 711 million and plan assets of EUR 270 million are deducted from the gross liability to arrive at the net amount. The discount rate and the general salary growth used in the calculation are the same as those used in the staff pension valuation.

2.15   LONG-TERM PROVISIONS

LONG-TERM PROVISIONS

| EUR millions |
| --- |
| | Amount at 31.12.2010 | Additional provisions | Unused amounts reversed | Amounts used | Transfer to short-term | Change in estimation | Amount at 31.12.2011 |
| Legal cases | 306 | 95 | (29) | (4) | 0 | 0 | 368 |
| Nuclear site dismantling | 905 | 0 | 0 | (8) | (29) | 137 | 1 005 |
| Financial | 86 | 41 | 0 | 0 | (30) | 3 | 100 |
| Other | 20 | 4 | (2) | 0 | 0 | 0 | 22 |
| Total | 1 317 | 140 | (31) | (12) | (59) | 140 | 1 495 |

EUR millions

Amount at 31.12.2010

Additional provisions

Unused amounts reversed

Amounts used

Transfer to short-term

Change in estimation

Amount at 31.12.2011

Legal cases

306

95

(29)

(4)

0

0

368

Nuclear site dismantling

905

0

0

(8)

(29)

137

1 005

Financial

86

41

0

0

(30)

3

100

Other

20

4

(2)

0

0

0

22

Total

1 317

140

(31)

(12)

(59)

140

1 495

Legal cases

Legal cases

This is the estimate of amounts that will probably have to be paid out more than 12 months after the year-end in relation to a number of ongoing legal cases. The largest portion concerns court cases pending at year-end in relation to financial corrections for EAGF expenditure and other court cases concerning agricultural expenditure.

Nuclear site dismantlement

Nuclear site dismantlement

In 2008 a consortium of independent experts made an update of their 2003 study into the estimated costs of the decommissioning of the JRC nuclear facilities and waste management programme. Their revised estimate of EUR 1 222 million (previously EUR 1 145 million) is taken as the basis for the provision to be included in the financial statements. In accordance with the EU accounting rules, this estimate is indexed for inflation and then discounted to its net present value (using the Euro zero-coupon swap curve). In view of the estimated duration of this programme (around 20 years), it should be pointed out that there is some uncertainty about this estimate, and the final cost could be different from the amounts currently entered.

Financial provisions

Financial provisions

These concern provisions which represent the estimated losses that will be incurred in relation to the guarantees given under the SME Guarantee Facility 1998, the SME Guarantee Facility 2001 and the SME Guarantee Facility 2007 under CIP and the European Progress Microfinance Facility (Guarantee), where the European Investment Fund (EIF) is empowered to issue guarantees in its own name but on behalf of and at the risk of the Commission. The financial risk linked to the drawn and undrawn guarantees is, however, capped. Long-term financial provisions are discounted to their net present value (using the Euro Swap annual rate).

2.16   LONG-TERM FINANCIAL LIABILITIES

LONG-TERM FINANCIAL LIABILITIES

| EUR millions |
| --- |
| | Note | 31.12.2011 | 31.12.2010 |
| Long-term borrowings | 2.16.1 | 41 200 | 11 445 |
| Elimination Guarantee Fund (4) | 2.4.1 | (21) | — |
| Total | 41 179 | 11 445 |

EUR millions

Note

31.12.2011

31.12.2010

Long-term borrowings

2.16.1

2.16.1

41 200

11 445

Elimination Guarantee Fund (4)

4

2.4.1

2.4.1

(21)

—

Total

41 179

11 445

2.16.1   
  Long-term borrowings

Long-term borrowings

| EUR millions |
| --- |
| | MFA | Euratom | BOP | EFSM | ECSC in Liquidation | Total |
| Total at 31.12.2010 | 503 | 469 | 12 246 | 0 | 231 | 13 449 |
| New borrowings | 126 | 0 | 1 350 | 28 000 | 0 | 29 476 |
| Repayments | (36) | (20) | (2 000) | 0 | 0 | (2 056) |
| Exchange differences | 0 | 0 | 0 | 0 | 6 | 6 |
| Changes in carrying amount | 2 | 2 | 29 | 344 | (1) | 376 |
| Total at 31.12.2011 | 595 | 451 | 11 625 | 28 344 | 236 | 41 251 |
| Amount due < 1 year | 5 | 0 | 0 | 0 | 46 | 51 |
| Amount due > 1 year | 590 | 451 | 11 625 | 28 344 | 190 | 41 200 |

EUR millions

MFA

Euratom

BOP

EFSM

ECSC in Liquidation

Total

Total at 31.12.2010

503

469

12 246

0

231

13 449

New borrowings

126

0

1 350

28 000

0

29 476

Repayments

(36)

(20)

(2 000)

0

0

(2 056)

Exchange differences

0

0

0

0

6

6

Changes in carrying amount

2

2

29

344

(1)

376

Total at 31.12.2011

595

451

11 625

28 344

236

41 251

Amount due < 1 year

Amount due < 1 year

5

5

0

0

0

0

0

0

46

46

51

51

Amount due > 1 year

Amount due > 1 year

590

590

451

451

11 625

11 625

28 344

28 344

190

190

41 200

41 200

This heading includes borrowings due by the European Union maturing in over one year. Borrowings include debts evidenced by certificates amounting to EUR 41 011 million (2010: EUR 13 211 million). The changes in carrying amount correspond to the change in accrued interests. For more information on borrowing and lending activities, see note 7.

7

2.17   OTHER LONG-TERM LIABILITIES

OTHER LONG-TERM LIABILITIES

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| Finance Leasing debts | 1 603 | 1 672 |
| Buildings paid for in instalments | 367 | 382 |
| Other | 89 | 50 |
| Total | 2 059 | 2 104 |

EUR millions

31.12.2011

31.12.2010

Finance Leasing debts

1 603

1 672

Buildings paid for in instalments

367

382

Other

89

50

Total

2 059

2 104

CURRENT LIABILITIES

CURRENT LIABILITIES

2.18   SHORT-TERM PROVISIONS

SHORT-TERM PROVISIONS

| EUR millions |
| --- |
| | Amount at 31.12.2010 | Additional provisions | Unused amounts reversed | Amounts used | Transfers from long term | Change in estimation | Amount at 31.12.2011 |
| Legal cases | 29 | 11 | (18) | (5) | 0 | 0 | 17 |
| Nuclear site dismantlement | 21 | 0 | 0 | (21) | 29 | 0 | 29 |
| Financial | 140 | 27 | (2) | (33) | 30 | 3 | 165 |
| Other | 24 | 56 | (1) | (20) | 0 | 0 | 59 |
| Total | 214 | 94 | (21) | (79) | 59 | 3 | 270 |

EUR millions

Amount at 31.12.2010

Additional provisions

Unused amounts reversed

Amounts used

Transfers from long term

Change in estimation

Amount at 31.12.2011

Legal cases

29

11

(18)

(5)

0

0

17

Nuclear site dismantlement

21

0

0

(21)

29

0

29

Financial

140

27

(2)

(33)

30

3

165

Other

24

56

(1)

(20)

0

0

59

Total

214

94

(21)

(79)

59

3

270

This heading includes the portion of provisions which fall due for payment in less than one year's time.

2.19   SHORT-TERM FINANCIAL LIABILITIES

SHORT-TERM FINANCIAL LIABILITIES

This heading relates to borrowings (see note 2.16) that mature during the 12 months following the balance sheet date.

2.16

2.20   PAYABLES

PAYABLES

| EUR millions |
| --- |
| | Note | 31.12.2011 | 31.12.2010 |
| Current portion of long-term liabilities | 2.20.1 | 81 | 78 |
| Current payables | 2.20.2 | 22 211 | 17 615 |
| Sundry payables | — | 100 | 97 |
| Accrued charges and deferred income | 2.20.3 | 69 081 | 66 739 |
| Total | 91 473 | 84 529 |

EUR millions

Note

31.12.2011

31.12.2010

Current portion of long-term liabilities

2.20.1

2.20.1

81

78

Current payables

2.20.2

2.20.2

22 211

17 615

Sundry payables

—

100

97

Accrued charges and deferred income

2.20.3

2.20.3

69 081

66 739

Total

91 473

84 529

2.20.1   
  Current portion of long-term liabilities

Current portion of long-term liabilities

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| Finance leasing liabilities | 66 | 65 |
| Other | 15 | 13 |
| Total | 81 | 78 |

EUR millions

31.12.2011

31.12.2010

Finance leasing liabilities

66

65

Other

15

13

Total

81

78

2.20.2   
  Current payables

Current payables

| EUR millions |
| --- |
| Type | 31.12.2011 | 31.12.2010 |
| Member States | 22 200 | 17 035 |
| Suppliers and other | 1 511 | 1 292 |
| Estimated non-eligible amounts and pending pre-payments | (1 500) | (712) |
| Total | 22 211 | 17 615 |

EUR millions

Type

31.12.2011

31.12.2010

Member States

22 200

17 035

Suppliers and other

1 511

1 292

Estimated non-eligible amounts and pending pre-payments

(1 500)

(712)

Total

22 211

17 615

Current payables include cost statements received by the Commission under the framework of the grant activities. They are credited for the amount being claimed from the moment the demand is received. If the counterpart is a Member State, they are classified as such. It is the same procedure for invoices and credit notes received under procurement activities. The cost claims concerned have been taken into account for the year-end cut off procedures. Following these cut off entries, estimated eligible amounts have therefore been recorded in the accounts as expenses, while the remaining part is disclosed as ‘Estimated non-eligible amounts and pending prepayments’ (see below). In order not to overestimate assets and liabilities, it was decided to present the net amount under current liabilities.

Member States

Member States

The primary amounts here relate to unpaid cost claims for Structural Fund actions (EUR 5.8 billion for ESF and EUR 14 billion for ERDF and CF).

Suppliers and other

Suppliers and other

Included under this heading are amounts owed following grant and procurement activities, as well as amounts payable to public bodies and non-consolidated entities (e.g. the EDF).

Estimated non-eligible amounts and pending prepayments

Estimated non-eligible amounts and pending prepayments

Payables are reduced by that part of the requests for reimbursement received, but not yet checked, that was considered to be ineligible. The largest amounts concern the Structural Actions DGs. Payables are also reduced by the part of requests for reimbursement received corresponding to prepaid expenditure still to pay at year end (EUR 1 billion).

2.20.3   
  Accrued charges and deferred income

Accrued charges and deferred income

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| Accrued charges | 68 577 | 66 326 |
| Deferred income | 490 | 407 |
| Amounts related to consolidated entities | 14 | 6 |
| Total | 69 081 | 66 739 |

EUR millions

31.12.2011

31.12.2010

Accrued charges

68 577

66 326

Deferred income

490

407

Amounts related to consolidated entities

14

6

Total

69 081

66 739

The split of accrued charges is as follows:

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| Agriculture and Rural Development: |
| EAGF: Expenses 16/10 to 31/12 | 33 774 | 33 015 |
| EAGF: Direct Aid | 10 701 | 10 703 |
| EAGF: Sugar restructuring | 224 | 400 |
| EAGF: Other | 23 | (303) |
| EAFRD | 12 127 | 10 792 |
| Total | 56 849 | 54 607 |
| Structural Actions: |
| EFF | 56 | 116 |
| ERDF & Cohesion Fund | 4 791 | 4 894 |
| ISPA | 172 | 74 |
| ESF | 1 687 | 2 182 |
| Total | 6 706 | 7 266 |
| Other accrued charges: |
| R&D | 1 157 | 1 267 |
| Other | 3 865 | 3 186 |
| Total | 5 022 | 4 453 |
| Total accrued charges | 68 577 | 66 326 |

EUR millions

31.12.2011

31.12.2010

Agriculture and Rural Development:

Agriculture and Rural Development:

EAGF: Expenses 16/10 to 31/12

33 774

33 015

EAGF: Direct Aid

10 701

10 703

EAGF: Sugar restructuring

224

400

EAGF: Other

23

(303)

EAFRD

12 127

10 792

Total

56 849

54 607

Structural Actions:

Structural Actions:

EFF

56

116

ERDF & Cohesion Fund

4 791

4 894

ISPA

172

74

ESF

1 687

2 182

Total

6 706

7 266

Other accrued charges:

Other accrued charges:

R&D

1 157

1 267

Other

3 865

3 186

Total

5 022

4 453

Total accrued charges

68 577

66 326

The large amount of deferred income at 31 December 2011 is due to the advance payment of own resources contributions by two Member States in 2011.

NET ASSETS & RESERVES

NET ASSETS & RESERVES

2.21   RESERVES

RESERVES

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| Fair value reserve | (108) | (61) |
| Other reserves: |
| Guarantee Fund | 1 911 | 1 746 |
| Revaluation reserve | 57 | 57 |
| Other | 1 748 | 1 742 |
| Total | 3 716 | 3 545 |
| Total | 3 608 | 3 484 |

EUR millions

31.12.2011

31.12.2010

Fair value reserve

(108)

(108)

(61)

(61)

Other reserves:

Guarantee Fund

1 911

1 746

Revaluation reserve

57

57

Other

1 748

1 742

Total

3 716

3 545

Total

3 608

3 484

2.21.1   
  Fair value reserve

Fair value reserve

In accordance with the accounting rules, the adjustment to fair value of available-for-sale assets is accounted for through the fair value reserve. In 2011 a net EUR 24 million of accumulated fair value decreases have been taken out of the fair value reserve and recognised in the economic outturn account relating to available-for-sale assets.

Included in the fair value reserve at year-end is EUR 87 million of decreases in fair value relating to Greek government bonds held by the EU (nominal value EUR 129 million). However, it should be noted that these bonds were exchanged in early 2012 for new bonds, with similar terms but not falling under the scope of the Private Sector Involvement (PSI) debt restructuring. The result was that all amounts due for repayment on 20 March 2012 (EUR 39 million) and 18 May (EUR 15,7 million) were repaid in full and on schedule. Please see note 1.5.5 for further details on the fair value accounting of financial assets.

1.5.5

2.21.2   
  Other reserves

Other reserves

Guarantee Fund

Guarantee Fund

See also note 2.4.1 concerning the operation of the Guarantee Fund. This reserve reflects the 9 % target amount of the outstanding amounts guaranteed by the Fund that is required to be kept as assets.

2.4.1

Revaluation reserve

Revaluation reserve

This reserve comprises the revaluation of certain Commission land and buildings made prior to 2005.

Other reserve

Other reserve

The amount relates primarily to the ECSC in liquidation reserve for the assets of the Research Fund for Coal and Steel. This reserve was created in the context of the winding-up of the ECSC.

2.22   AMOUNTS TO BE CALLED FROM MEMBER STATES

AMOUNTS TO BE CALLED FROM MEMBER STATES

| EUR millions |
| --- |
| | Amount |
| Amounts to be called from Member States at 31 December 2010 | 30 931 |
| Return of 2010 budget surplus to Member States | 4 539 |
| Movement in Guarantee Fund reserve | 165 |
| Other reserve movements | 34 |
| Economic outturn (surplus) for the year | 1 789 |
| Total amounts to be called from Members States at 31 December 2011 | 37 458 |
| Split between: |
| Employee benefits | 34 835 |
| Other amounts | 2 623 |

EUR millions

Amount

Amounts to be called from Member States at 31 December 2010

30 931

30 931

Return of 2010 budget surplus to Member States

4 539

Movement in Guarantee Fund reserve

165

Other reserve movements

34

Economic outturn (surplus) for the year

1 789

Total amounts to be called from Members States at 31 December 2011

37 458

Split between:

Split between:

Employee benefits

34 835

Other amounts

2 623

This amount represents that part of the expenses already incurred by the Commission up to 31 December 2011 that must be funded by future budgets. Many expenses are recognised under accrual accounting rules in the year N although they may be actually paid in year N+1 and funded using the budget of year N+1. The inclusion in the accounts of these liabilities coupled with the fact that the corresponding amounts are financed from future budgets, results in liabilities greatly exceeding assets at the year-end. The most significant amounts to be highlighted are the EAGF activities. The majority of the amounts to be called are in fact paid by the Member States in less than 12 months after the end of the financial year in question as part of the budget of the following year.

It is essentially only the employee benefits obligations of the Commission towards its staff which are paid out over a longer period, noting that the funding of the pension payments by the annual budgets is guaranteed by the Member States. For information purposes only, an estimate of the split of future employee benefit payments is given below:

| EUR millions |
| --- |
| | Amount |
| Short-term: amounts to be paid in 2012 | 1 335 |
| Long-term: amounts to be paid after 2012 | 33 500 |
| Total employee benefits liability at 31.12.2011 | 34 835 |

EUR millions

Amount

Short-term: amounts to be paid in 2012

1 335

Long-term: amounts to be paid after 2012

33 500

Total employee benefits liability at 31.12.2011

34 835

It should also be noted that the above has no effect on the budget outturn – budget revenue should always equal or exceed budget expenditure and any excess of revenue is returned to Member States.

3.   NOTES TO THE ECONOMIC OUTTURN ACCOUNT

3.1   OWN RESOURCE AND CONTRIBUTIONS REVENUE

OWN RESOURCE AND CONTRIBUTIONS REVENUE

| EUR millions |
| --- |
| | Note | 2011 | 2010 |
| Own resource revenue: | 3.1.1 | | |
| GNI resources | | 88 442 | 91 178 |
| VAT resources | | 14 763 | 12 517 |
| Traditional own resources: | | | |
| Custom duties | | 16 528 | 16 065 |
| Sugar levies | | 161 | 150 |
| Total traditional own resources | | 16 689 | 16 215 |
| Budgetary adjustments | 3.1.2 | 4 533 | 2 135 |
| Contributions of third countries (incl. EFTA countries) | | 250 | 283 |
| Total | | 124 677 | 122 328 |

EUR millions

Note

2011

2010

Own resource revenue:

3.1.1

3.1.1

GNI resources

88 442

91 178

VAT resources

14 763

12 517

Traditional own resources:

Custom duties

16 528

16 528

16 065

16 065

Sugar levies

161

161

150

150

Total traditional own resources

16 689

16 215

Budgetary adjustments

3.1.2

3.1.2

4 533

2 135

Contributions of third countries (incl. EFTA countries)

250

283

Total

124 677

122 328

3.1.1   
  Own resource revenue

Own resource revenue

Own resources is the primary element of the EU’s operating revenue. Thus the bulk of expenditure is financed by own resources as other revenue represents only a minor part of the total financing. There are three categories of own resources: traditional own resources, the VAT-based resource and the GNI-based resource. Traditional own resources comprise sugar levies and customs duties. A correction mechanism in respect of budgetary imbalances (UK Rebate) as well as a gross reduction in the annual GNI-based contribution of Netherlands and Sweden are also part of the own resources system. Member States retain, by way of collection costs, 25 % of traditional own resources, and the above amounts are shown net of this deduction.

It should be noted that inspections carried out by the Commission and audits performed by the Court of Auditors have highlighted some deficiencies in the Belgian clearance and accounting systems, impacting the reliability of amounts transferred to the EU budget under Traditional Own Resources (TOR). A refund of EUR 169 million (gross, EUR 126 million net) claimed by Belgium is currently pending, awaiting the result of further audits and controls on the correctness of the amounts of Belgian TOR credited to the Commission's account.

3.1.2   
  Budgetary adjustments

Budgetary adjustments

The budgetary adjustments include the budget surplus from 2010 (EUR 4 539 million) which is indirectly refunded to Member States by deduction of the amounts of own resources they have to transfer to the EU in the following year – thus it is a revenue for 2011.

3.2   OTHER OPERATING REVENUE

OTHER OPERATING REVENUE

| EUR millions |
| --- |
| | Note | 2011 | 2010 |
| Fines | 3.2.1 | 868 | 3 077 |
| Agricultural levies | 3.2.2 | 65 | 25 |
| Recovery of expenses: | 3.2.3 | | |
| Direct centralised management | | 76 | 49 |
| Indirect centralised management | | 17 | 11 |
| Decentralised management | | 106 | 71 |
| Joint management | | 3 | — |
| Shared management | | 845 | 1 776 |
| Total | | 1 047 | 1 907 |
| Revenue from administrative operations: | 3.2.4 | | |
| Staff | | 1 141 | 1 073 |
| Property, plant and equipment related revenue | | 94 | 13 |
| Other administrative revenue | | 119 | 121 |
| Total | | 1 354 | 1 207 |
| Miscellaneous operating revenue: | 3.2.5 | | |
| Adjustments/provisions | | 59 | 157 |
| Exchange gains | | 476 | 460 |
| Other | | 1 507 | 1 355 |
| Total | | 2 042 | 1 972 |
| Total | | 5 376 | 8 188 |

EUR millions

Note

2011

2010

Fines

3.2.1

3.2.1

868

3 077

Agricultural levies

3.2.2

3.2.2

65

25

Recovery of expenses:

3.2.3

3.2.3

Direct centralised management

76

49

Indirect centralised management

17

11

Decentralised management

106

71

Joint management

3

—

Shared management

845

1 776

Total

1 047

1 907

Revenue from administrative operations:

3.2.4

3.2.4

Staff

1 141

1 073

Property, plant and equipment related revenue

94

13

Other administrative revenue

119

121

Total

1 354

1 207

Miscellaneous operating revenue:

3.2.5

3.2.5

Adjustments/provisions

59

157

Exchange gains

476

460

Other

1 507

1 355

Total

2 042

1 972

Total

5 376

8 188

3.2.1   
  Fines

Fines

These revenues relate to fines imposed by the Commission for infringement of competition rules. Receivables and related revenues are recognised when the Commission decision imposing a fine has been taken and it is officially notified to the addressee.

3.2.2   
  Agricultural levies

Agricultural levies

These amounts concern primarily milk levies which are a market management tool aimed at penalising milk producers who exceed their reference quantities. As it is not linked to prior payments by the Commission, it is in practice considered as revenue for a specific purpose.

3.2.3   
  Recovery of expenses

Recovery of expenses

This heading represents the recovery orders issued by the Commission and the deduction from subsequent payments recorded in the Commission's accounting system, to recover expenditures previously paid out from the general budget, based on controls, closed audits or eligibility analysis, together with recovery orders issued by Member States to beneficiaries of EAGF expenditure. It also includes the variation of accrued income estimations from the previous year-end to the current. It does not, however, show the full extent of the recovery of EU expenditure, particularly for the significant spending areas of Structural Actions where specific mechanisms are in place to ensure the return of ineligible monies, most of which do not involve the issuance of a recovery order. Recoveries of pre-financing amounts are also not included as revenue, in accordance with the EU accounting rules.

The main amount, EUR 845 million, relates to shared management and is made up mainly of EUR 721 million concerning the European Agricultural Guarantee Fund (EAGF) and EUR 109 million for Structural Actions.

(a)   Agriculture: EAGF

Agriculture: EAGF

In the framework of the European Agricultural Guarantee Fund (EAGF), amounts accounted for as revenue of the year under this heading are EUR 721 million, made up as follows:

| — | conformity corrections decided during the year, EUR 686 million; |
| --- | --- |

—

conformity corrections decided during the year, EUR 686 million;

| — | fraud and irregularities EUR 35 million: being reimbursements declared by Member States and recovered during the year of EUR 174 million minus the decrease in the outstanding amounts declared by Member States to be recovered at year-end concerning fraud and irregularities of EUR 139 million (EUR 991 million at year-end 2011 compared to EUR 1 130 million at year-end 2010) – see also note 2.11.1. |
| --- | --- |

—

fraud and irregularities EUR 35 million: being reimbursements declared by Member States and recovered during the year of EUR 174 million minus the decrease in the outstanding amounts declared by Member States to be recovered at year-end concerning fraud and irregularities of EUR 139 million (EUR 991 million at year-end 2011 compared to EUR 1 130 million at year-end 2010) – see also note 2.11.1.

2.11.1

(b)   Structural Actions

Structural Actions

The recovery of expenditure under the Structural actions included under this heading amounted to EUR 109 million (2010: EUR 279 million). The main amounts in this sub-heading include recovery orders issued by the Commission to recover undue expenditure made in previous years for an amount of EUR 127 million, the variation (increase) of the accrued income at year-end for EUR 28 million (offset by a correction of EUR 46 million).

Recovery orders are issued only in the following cases:

| — | formal financial correction decisions by the Commission following the detection of irregular expenditure in the amounts claimed by Member States |
| --- | --- |

—

formal financial correction decisions by the Commission following the detection of irregular expenditure in the amounts claimed by Member States

| — | adjustments at closure of a programme leading to a reduction in the EU contribution where a Member State has not declared sufficient eligible expenditure to justify the total pre-financing and interim payments already made; such operations may be without a formal Commission decision if accepted by the Member State; |
| --- | --- |

—

adjustments at closure of a programme leading to a reduction in the EU contribution where a Member State has not declared sufficient eligible expenditure to justify the total pre-financing and interim payments already made; such operations may be without a formal Commission decision if accepted by the Member State;

| — | repayment of amounts recovered after closure following the conclusion of legal proceedings which were pending at the time of closure. |
| --- | --- |

—

repayment of amounts recovered after closure following the conclusion of legal proceedings which were pending at the time of closure.

Other recovery orders issued under Structural Actions concern the recovery of pre-financing. These amounts are not shown as revenue, but credited to the pre-financing heading on the balance sheet.

3.2.4   
  Revenue from administrative operations

Revenue from administrative operations

This revenue arises from deductions from staff salaries and is made up primarily of two amounts – staff pension contributions and taxes on income.

3.2.5   
  Miscellaneous operating revenue

Miscellaneous operating revenue

An amount of EUR 535 million (2010: EUR 430 million) relates to amounts received from accession countries. Exchange gains, except on financial activities dealt with in note 3.5 below, are also included under this heading. These arise from the everyday activities and related transactions made in currencies other than the Euro, as well as the year-end revaluation required to prepare the accounts. They contain both realised and unrealised gains. There was a net exchange gain for the year of EUR 94 million (2010: EUR 23 million).

3.5

3.3   ADMINISTRATIVE EXPENSES

ADMINISTRATIVE EXPENSES

| EUR millions |
| --- |
| | 2011 | 2010 |
| Staff expenses | 5 416 | 5 171 |
| Depreciation and impairment | 412 | 384 |
| Other administrative expenses | 3 148 | 3 059 |
| Total | 8 976 | 8 614 |

EUR millions

2011

2010

Staff expenses

5 416

5 171

Depreciation and impairment

412

384

Other administrative expenses

3 148

3 059

Total

8 976

8 614

Included under this heading are expenses of EUR 358 million relating to operating leases – amounts committed to be paid during the remaining term of these lease contracts are as follows:

| EUR millions |
| --- |
| Description | Future amounts to be paid |
| < 1 year | 1 - 5 years | > 5 years | Total |
| Buildings | 318 | 1 203 | 790 | 2 311 |
| IT materials and other equipment | 22 | 35 | 1 | 58 |
| Total | 340 | 1 238 | 791 | 2 369 |

EUR millions

Description

Future amounts to be paid

< 1 year

1 - 5 years

> 5 years

Total

Buildings

318

1 203

790

2 311

IT materials and other equipment

22

35

1

58

Total

340

1 238

791

2 369

3.4   OPERATING EXPENSES

OPERATING EXPENSES

| EUR millions |
| --- |
| | Note | 2011 | 2010 |
| Primary operating expenses: | 3.4.1 | | |
| Direct centralised management | | 10 356 | 10 123 |
| Indirect centralised management | | 4 119 | 4 045 |
| Decentralised management | | 766 | 933 |
| Shared management | | 104 067 | 85 432 |
| Joint management | | 1 714 | 1 868 |
| Total | | 121 022 | 102 401 |
| Other operating expenses: | 3.4.2 | | |
| Adjustments/provisions | | 251 | 68 |
| Exchange losses | | 382 | 439 |
| Other | | 2 123 | 856 |
| Total | | 2 756 | 1 363 |
| Total | | 123 778 | 103 764 |

EUR millions

Note

2011

2010

Primary operating expenses:

Primary operating expenses:

3.4.1

3.4.1

Direct centralised management

10 356

10 123

Indirect centralised management

4 119

4 045

Decentralised management

766

933

Shared management

104 067

85 432

Joint management

1 714

1 868

Total

121 022

102 401

Other operating expenses:

Other operating expenses:

3.4.2

3.4.2

Adjustments/provisions

251

68

Exchange losses

382

439

Other

2 123

856

Total

2 756

1 363

Total

123 778

103 764

The significant increase in operating expenses is due to shared management where the increased activities related to the 2007-2013 programming period, resulted in an increased recognition of expenditure in 2011. The main variations are noted in areas of cohesion and regional development (EUR 19 billion). Given the relatively stable nature of operating revenue, this large increase in operating expenditure has resulted in an operating deficit in 2011 of EUR 2.7 billion.

3.4.1   
  Primary operating expenses

Primary operating expenses

The European Commission's operating expenditure covers the various headings of the financial framework and takes different forms, depending on how the money is paid out and managed. The majority of the expenditure falls under the heading ‘Shared Management’ involving the delegation of tasks to Member States, covering such areas as EAGF spending and actions financed through the different Structural Actions (the regional development fund, the social fund, the agricultural fund for rural development, the cohesion fund and the fisheries fund).

3.4.2   
  Other operating expenses

Other operating expenses

Exchange losses, except on financial activities dealt with in note 3.6 below, occur on the everyday activities and related transactions made in currencies other than the Euro, as well as the year-end revaluation required to prepare the accounts – they are both realised and unrealised.

3.6

Research and Development costs

Research and Development costs

| EUR millions |
| --- |
| | 2011 | 2010 |
| Research costs | 327 | 295 |
| Non-capitalised development costs | 145 | 157 |
| Recognised as an expense | 472 | 452 |

EUR millions

2011

2010

Research costs

327

295

Non-capitalised development costs

145

157

Recognised as an expense

Recognised as an expense

472

472

452

452

3.5   FINANCIAL REVENUE

FINANCIAL REVENUE

| EUR millions |
| --- |
| | 2011 | 2010 |
| Dividend income | 5 | 1 |
| Interest income: |
| On pre-financing | 40 | 42 |
| On late payments | 89 | 382 |
| On available for sale assets | 113 | 100 |
| On loans | 921 | 394 |
| On cash & cash equivalents | 132 | 110 |
| Other | 5 | 2 |
| Total | 1 300 | 1 030 |
| Other financial income: |
| Realised gain on sale of financial assets | 3 | 11 |
| Other | 178 | 83 |
| Total | 181 | 94 |
| Present value adjustments | 1 | 1 |
| Exchange gains | 4 | 52 |
| Total | 1 491 | 1 178 |

EUR millions

2011

2010

Dividend income

Dividend income

5

5

1

1

Interest income:

Interest income:

On pre-financing

40

42

On late payments

89

382

On available for sale assets

113

100

On loans

921

394

On cash & cash equivalents

132

110

Other

5

2

Total

1 300

1 030

Other financial income:

Other financial income:

Realised gain on sale of financial assets

3

11

Other

178

83

Total

181

94

Present value adjustments

Present value adjustments

1

1

1

1

Exchange gains

Exchange gains

4

4

52

52

Total

1 491

1 178

3.6   FINANCIAL EXPENSES

FINANCIAL EXPENSES

| EUR millions |
| --- |
| | 2011 | 2010 |
| Interest expenses: |
| Leasing | 91 | 93 |
| On borrowings | 903 | 380 |
| Other | 30 | 23 |
| Total | 1 024 | 496 |
| Other financial expenses: |
| Adjustments to financial provisions | 74 | 60 |
| Financial charges on budgetary instruments | 47 | 55 |
| Impairment losses on AFS financial assets | 12 | 5 |
| Realised loss on sale of financial assets | 5 | 1 |
| Other | 144 | 42 |
| Total | 282 | 163 |
| Exchange losses | 49 | 2 |
| Total | 1 355 | 661 |

EUR millions

2011

2010

Interest expenses:

Interest expenses:

Leasing

91

93

On borrowings

903

380

Other

30

23

Total

1 024

496

Other financial expenses:

Other financial expenses:

Adjustments to financial provisions

74

60

Financial charges on budgetary instruments

47

55

Impairment losses on AFS financial assets

12

5

Realised loss on sale of financial assets

5

1

Other

144

42

Total

282

163

Exchange losses

Exchange losses

49

49

2

2

Total

1 355

661

3.7   SHARE OF NET DEFICIT OF JOINT VENTURES & ASSOCIATES

SHARE OF NET DEFICIT OF JOINT VENTURES & ASSOCIATES

In accordance with the equity method of accounting, the Commission includes in its economic outturn account its share of the net deficit of its joint ventures and associates (see also notes 2.3.1 & 2.3.2).

2.3.1

2.3.2

3.8   REVENUE FROM NON-EXCHANGE TRANSACTIONS

REVENUE FROM NON-EXCHANGE TRANSACTIONS

In 2011 EUR 130 391 million (2010: EUR 129 597 million) revenue from non-exchange transactions have been recognised in the economic outturn account.

3.9   SEGMENT REPORTING

SEGMENT REPORTING

The segment report gives the split of the operating revenues and expenses by policy area, based on the Activity Based Budget structure, within the Commission. These policy areas can be grouped under three larger headings – Activities within the European Union, Activities outside the European Union and Services & other.

‘Activities within the European Union’ is the largest of these headings as it covers the many policy areas within the European Union. ‘Activities outside the European Union’ concerns the policies operated outside the EU, such as trade and aid. ‘Services & other’ are the internal and horizontal activities necessary for the functioning of the EU Institutions and bodies. Note that the information relating to Agencies is included under the relevant policy area. Note also that own resources and contributions are not split amongst the various activities as these are calculated, collected and managed by central Commission services.

| EUR millions |
| --- |
| | Activities within the EU | Activities outside the EU | Services & Other | ECSC in Liquidation | Other Institutions | Consolidation eliminations | Total |
| Fines | 868 | 0 | 0 | 0 | 0 | 0 | 868 |
| Agricultural levies | 65 | 0 | 0 | 0 | 0 | 0 | 65 |
| Recovery of expenses | 906 | 138 | 3 | 0 | 2 | (2) | 1 047 |
| Revenue from administrative operations | 142 | 2 | 993 | 0 | 664 | (447) | 1 354 |
| Miscellaneous operating revenue | 2 502 | 98 | 580 | 7 | 132 | (1 277) | 2 042 |
| OTHER OPERATING REVENUE | 4 483 | 238 | 1 576 | 7 | 798 | (1 726) | 5 376 |
| Administrative expenses: |
| Staff expenses | (2 171) | (325) | (1 250) | 0 | (1 702) | 32 | (5 416) |
| Intangible assets & PPE related expenses | (109) | (1) | (121) | 0 | (181) | 0 | (412) |
| Other administrative expenses | (955) | (286) | (858) | 0 | (1 624) | 575 | (3 148) |
| | (3 235) | (612) | (2 229) | 0 | (3 507) | 607 | (8 976) |
| Operating expenses: |
| Direct centralised management | (7 338) | (3 681) | (179) | 0 | 0 | 842 | (10 356) |
| Indirect centralised management | (3 423) | (682) | (32) | 0 | 0 | 18 | (4 119) |
| Decentralised management | (210) | (556) | 0 | 0 | 0 | 0 | (766) |
| Shared management | (103 988) | (80) | 1 | 0 | 0 | 0 | (104 067) |
| Joint management | (169) | (1 545) | 0 | 0 | 0 | 0 | (1 714) |
| Other operating expenses | (2 420) | (134) | (399) | (52) | (10) | 259 | (2 756) |
| | (117 548) | (6 678) | (609) | (52) | (10) | 1 119 | (123 778) |
| TOTAL OPERATING EXPENSES | (120 783) | (7 290) | (2 838) | (52) | (3 517) | 1 726 | (132 754) |
| Net operating expenses | (116 300) | (7 052) | (1 262) | (45) | (2 719) | 0 | (127 378) |
| Own resource and contributions revenue | 124 677 |
| Deficit from operating activities | (2 701) |
| Net financial revenue | 136 |
| Movement in pension & other employee benefits liability | 1 212 |
| Share of associates/joint ventures deficit | (436) |
| Economic outturn for the year | (1 789) |

EUR millions

Activities within the EU

Activities outside the EU

Services & Other

ECSC in Liquidation

Other Institutions

Consolidation eliminations

Total

Fines

868

0

0

0

0

0

868

Agricultural levies

65

0

0

0

0

0

65

Recovery of expenses

906

138

3

0

2

(2)

1 047

Revenue from administrative operations

142

2

993

0

664

(447)

1 354

Miscellaneous operating revenue

2 502

98

580

7

132

(1 277)

2 042

OTHER OPERATING REVENUE

4 483

4 483

238

238

1 576

1 576

7

7

798

798

(1 726)

(1 726)

5 376

5 376

Administrative expenses:

Administrative expenses:

Staff expenses

(2 171)

(325)

(1 250)

0

(1 702)

32

(5 416)

Intangible assets & PPE related expenses

(109)

(1)

(121)

0

(181)

0

(412)

Other administrative expenses

(955)

(286)

(858)

0

(1 624)

575

(3 148)

(3 235)

(612)

(2 229)

0

(3 507)

607

(8 976)

Operating expenses:

Operating expenses:

Direct centralised management

(7 338)

(3 681)

(179)

0

0

842

(10 356)

Indirect centralised management

(3 423)

(682)

(32)

0

0

18

(4 119)

Decentralised management

(210)

(556)

0

0

0

0

(766)

Shared management

(103 988)

(80)

1

0

0

0

(104 067)

Joint management

(169)

(1 545)

0

0

0

0

(1 714)

Other operating expenses

(2 420)

(134)

(399)

(52)

(10)

259

(2 756)

(117 548)

(6 678)

(609)

(52)

(10)

1 119

(123 778)

TOTAL OPERATING EXPENSES

(120 783)

(7 290)

(2 838)

(52)

(3 517)

1 726

(132 754)

Net operating expenses

Net operating expenses

(116 300)

(116 300)

(7 052)

(7 052)

(1 262)

(1 262)

(45)

(45)

(2 719)

(2 719)

0

0

(127 378)

(127 378)

Own resource and contributions revenue

124 677

Deficit from operating activities

Deficit from operating activities

(2 701)

(2 701)

Net financial revenue

136

Movement in pension & other employee benefits liability

1 212

Share of associates/joint ventures deficit

(436)

Economic outturn for the year

Economic outturn for the year

(1 789)

(1 789)

SEGMENT REPORTING – ACTIVITIES WITHIN THE EU

SEGMENT REPORTING – ACTIVITIES WITHIN THE EU

| EUR millions |
| --- |
| | Economic & Financial | Enterprise & Industry | Competition | Employment | Agriculture | Transport & Energy | Environment | Research | Information Society |
| Other operating revenue: |
| Fines | 0 | 7 | 858 | 0 | 0 | 0 | 0 | 0 | 0 |
| Agricultural levies | 0 | 0 | 0 | 0 | 65 | 0 | 0 | 0 | 0 |
| Recovery of expenses | 0 | 4 | 0 | 23 | 807 | 7 | 1 | 5 | 24 |
| Revenue from admin operations | 0 | 14 | 0 | 0 | 0 | 12 | 0 | 39 | 0 |
| Miscellaneous operating revenue | 4 | 54 | 161 | 41 | 121 | 207 | 40 | 723 | 9 |
| OTHER OPERATING REVENUE | 4 | 79 | 1 019 | 64 | 993 | 226 | 41 | 767 | 33 |
| Administrative expenses: | (66) | (199) | (89) | (110) | (127) | (374) | (119) | (402) | (133) |
| Staff expenses | (60) | (143) | (83) | (84) | (106) | (255) | (86) | (231) | (107) |
| Intangible assets & PPE expenses | 0 | (16) | 0 | (1) | 0 | (13) | (1) | (4) | 0 |
| Other administrative expenses | (6) | (40) | (6) | (25) | (21) | (106) | (32) | (167) | (26) |
| Operating expenses: | (66) | (1 116) | (1 492) | (11 044) | (57 063) | (1 427) | (256) | (4 207) | (1 251) |
| Centralised direct management | (66) | (665) | 0 | (148) | (30) | (802) | (239) | (2 739) | (1 230) |
| Centralised indirect management | 0 | (313) | 0 | (2) | 0 | (501) | (1) | (1 369) | (14) |
| Decentralised management | 0 | 0 | 0 | (29) | (5) | 0 | 0 | 0 | 0 |
| Shared management | 0 | 0 | 0 | (10 841) | (56 883) | 0 | 0 | 0 | 0 |
| Joint management | 0 | (94) | 0 | (6) | 0 | (68) | 0 | 0 | 0 |
| Other operating expenses | 0 | (44) | (1 492) | (18) | (145) | (56) | (16) | (99) | (7) |
| TOTAL OPERATING EXPENSES | (132) | (1 315) | (1 581) | (11 154) | (57 190) | (1 801) | (375) | (4 609) | (1 384) |
| Net operating expenses | (128) | (1 236) | (562) | (11 090) | (56 197) | (1 575) | (334) | (3 842) | (1 351) |
| | Joint Research Centre | Fisheries | Internal Market | Regional Policy | Taxation & Customs | Education & Culture | Health & Consumer protection | Justice, Freedom & Security | Total Activities within the EU |
| Other operating revenue: |
| Fines | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 3 | 868 |
| Agricultural levies | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 65 |
| Recovery of expenses | 0 | 5 | 0 | 15 | 0 | 7 | 7 | 1 | 906 |
| Revenue from admin operations | 40 | 0 | 1 | 0 | 0 | 1 | 9 | 26 | 142 |
| Miscellaneous operating revenue | 70 | 10 | 206 | (2) | 1 | 232 | 359 | 266 | 2 502 |
| OTHER OPERATING REVENUE | 110 | 15 | 207 | 13 | 1 | 240 | 375 | 296 | 4 483 |
| Administrative expenses: | (346) | (60) | (196) | (81) | (94) | (204) | (347) | (288) | (3 235) |
| Staff expenses | (245) | (39) | (134) | (65) | (42) | (107) | (223) | (161) | (2 171) |
| Intangible assets & PPE expenses | (26) | 0 | (7) | 0 | (2) | (1) | (26) | (12) | (109) |
| Other administrative expenses | (75) | (21) | (55) | (16) | (50) | (96) | (98) | (115) | (955) |
| Operating expenses: | (194) | (764) | (59) | (35 821) | (15) | (1 447) | (631) | (695) | (117 548) |
| Centralised direct management | (57) | (246) | (24) | (45) | (15) | (163) | (440) | (429) | (7 338) |
| Centralised indirect management | 0 | 0 | 0 | 0 | 0 | (1 174) | (49) | 0 | (3 423) |
| Decentralised management | 0 | 0 | 0 | (176) | 0 | 0 | 0 | 0 | (210) |
| Shared management | 0 | (514) | 0 | (35 600) | 0 | 0 | 0 | (150) | (103 988) |
| Joint management | 0 | 0 | 0 | 0 | 0 | (1) | 0 | 0 | (169) |
| Other operating expenses | (137) | (4) | (35) | 0 | 0 | (109) | (142) | (116) | (2 420) |
| TOTAL OPERATING EXPENSES | (540) | (824) | (255) | (35 902) | (109) | (1 651) | (978) | (983) | (120 783) |
| Net operating expenses | (430) | (809) | (48) | (35 889) | (108) | (1 411) | (603) | (687) | (116 300) |

EUR millions

Economic & Financial

Enterprise & Industry

Competition

Employment

Agriculture

Transport & Energy

Environment

Research

Information Society

Other operating revenue:

Fines

0

7

858

0

0

0

0

0

0

Agricultural levies

0

0

0

0

65

0

0

0

0

Recovery of expenses

0

4

0

23

807

7

1

5

24

Revenue from admin operations

0

14

0

0

0

12

0

39

0

Miscellaneous operating revenue

4

54

161

41

121

207

40

723

9

OTHER OPERATING REVENUE

4

79

1 019

64

993

226

41

767

33

Administrative expenses:

Administrative expenses:

(66)

(66)

(199)

(199)

(89)

(89)

(110)

(110)

(127)

(127)

(374)

(374)

(119)

(119)

(402)

(402)

(133)

(133)

Staff expenses

(60)

(143)

(83)

(84)

(106)

(255)

(86)

(231)

(107)

Intangible assets & PPE expenses

0

(16)

0

(1)

0

(13)

(1)

(4)

0

Other administrative expenses

(6)

(40)

(6)

(25)

(21)

(106)

(32)

(167)

(26)

Operating expenses:

Operating expenses:

(66)

(66)

(1 116)

(1 116)

(1 492)

(1 492)

(11 044)

(11 044)

(57 063)

(57 063)

(1 427)

(1 427)

(256)

(256)

(4 207)

(4 207)

(1 251)

(1 251)

Centralised direct management

(66)

(665)

0

(148)

(30)

(802)

(239)

(2 739)

(1 230)

Centralised indirect management

0

(313)

0

(2)

0

(501)

(1)

(1 369)

(14)

Decentralised management

0

0

0

(29)

(5)

0

0

0

0

Shared management

0

0

0

(10 841)

(56 883)

0

0

0

0

Joint management

0

(94)

0

(6)

0

(68)

0

0

0

Other operating expenses

0

(44)

(1 492)

(18)

(145)

(56)

(16)

(99)

(7)

TOTAL OPERATING EXPENSES

(132)

(1 315)

(1 581)

(11 154)

(57 190)

(1 801)

(375)

(4 609)

(1 384)

Net operating expenses

Net operating expenses

(128)

(128)

(1 236)

(1 236)

(562)

(562)

(11 090)

(11 090)

(56 197)

(56 197)

(1 575)

(1 575)

(334)

(334)

(3 842)

(3 842)

(1 351)

(1 351)

Joint Research Centre

Fisheries

Internal Market

Regional Policy

Taxation & Customs

Education & Culture

Health & Consumer protection

Justice, Freedom & Security

Total Activities within the EU

Other operating revenue:

Fines

0

0

0

0

0

0

0

3

868

Agricultural levies

0

0

0

0

0

0

0

0

65

Recovery of expenses

0

5

0

15

0

7

7

1

906

Revenue from admin operations

40

0

1

0

0

1

9

26

142

Miscellaneous operating revenue

70

10

206

(2)

1

232

359

266

2 502

OTHER OPERATING REVENUE

110

15

207

13

1

240

375

296

4 483

Administrative expenses:

Administrative expenses:

(346)

(346)

(60)

(60)

(196)

(196)

(81)

(81)

(94)

(94)

(204)

(204)

(347)

(347)

(288)

(288)

(3 235)

(3 235)

Staff expenses

(245)

(39)

(134)

(65)

(42)

(107)

(223)

(161)

(2 171)

Intangible assets & PPE expenses

(26)

0

(7)

0

(2)

(1)

(26)

(12)

(109)

Other administrative expenses

(75)

(21)

(55)

(16)

(50)

(96)

(98)

(115)

(955)

Operating expenses:

Operating expenses:

(194)

(194)

(764)

(764)

(59)

(59)

(35 821)

(35 821)

(15)

(15)

(1 447)

(1 447)

(631)

(631)

(695)

(695)

(117 548)

(117 548)

Centralised direct management

(57)

(246)

(24)

(45)

(15)

(163)

(440)

(429)

(7 338)

Centralised indirect management

0

0

0

0

0

(1 174)

(49)

0

(3 423)

Decentralised management

0

0

0

(176)

0

0

0

0

(210)

Shared management

0

(514)

0

(35 600)

0

0

0

(150)

(103 988)

Joint management

0

0

0

0

0

(1)

0

0

(169)

Other operating expenses

(137)

(4)

(35)

0

0

(109)

(142)

(116)

(2 420)

TOTAL OPERATING EXPENSES

(540)

(824)

(255)

(35 902)

(109)

(1 651)

(978)

(983)

(120 783)

Net operating expenses

Net operating expenses

(430)

(430)

(809)

(809)

(48)

(48)

(35 889)

(35 889)

(108)

(108)

(1 411)

(1 411)

(603)

(603)

(687)

(687)

(116 300)

(116 300)

SEGMENT REPORTING – ACTIVITIES OUTSIDE THE EU

SEGMENT REPORTING – ACTIVITIES OUTSIDE THE EU

| EUR millions |
| --- |
| | External Relations | Trade | Development | Enlargement | Humanitarian Aid | Total Activities outside the EU |
| Other operating revenue: |
| Recovery of expenses | 20 | 0 | 9 | 106 | 3 | 138 |
| Revenue from admin operations | 2 | 0 | 0 | 0 | 0 | 2 |
| Miscellaneous operating revenue | 10 | 0 | 90 | (1) | (1) | 98 |
| OTHER OPERATING REVENUE | 32 | 0 | 99 | 105 | 2 | 238 |
| Administrative expenses: | (99) | (71) | (331) | (78) | (33) | (612) |
| Staff expenses | (23) | (65) | (167) | (47) | (23) | (325) |
| Intangible assets & PPE expenses | (1) | 0 | 0 | 0 | 0 | (1) |
| Other administrative expenses | (75) | (6) | (164) | (31) | (10) | (286) |
| Operating expenses: | (3 381) | (8) | (1 217) | (958) | (1 114) | (6 678) |
| Direct centralised management | (1 699) | (5) | (833) | (547) | (597) | (3 681) |
| Indirect centralised management | (627) | 0 | (18) | (37) | 0 | (682) |
| Decentralised management | (209) | 0 | (37) | (310) | 0 | (556) |
| Shared management | (80) | 0 | 0 | 0 | 0 | (80) |
| Joint management | (638) | (3) | (326) | (63) | (515) | (1 545) |
| Other operating expenses | (128) | 0 | (3) | (1) | (2) | (134) |
| TOTAL OPERATING EXPENSES | (3 480) | (79) | (1 548) | (1 036) | (1 147) | (7 290) |
| Net operating expenses | (3 448) | (79) | (1 449) | (931) | (1 145) | (7 052) |

EUR millions

External Relations

Trade

Development

Enlargement

Humanitarian Aid

Total Activities outside the EU

Other operating revenue:

Recovery of expenses

20

0

9

106

3

138

Revenue from admin operations

2

0

0

0

0

2

Miscellaneous operating revenue

10

0

90

(1)

(1)

98

OTHER OPERATING REVENUE

32

0

99

105

2

238

Administrative expenses:

Administrative expenses:

(99)

(99)

(71)

(71)

(331)

(331)

(78)

(78)

(33)

(33)

(612)

(612)

Staff expenses

(23)

(65)

(167)

(47)

(23)

(325)

Intangible assets & PPE expenses

(1)

0

0

0

0

(1)

Other administrative expenses

(75)

(6)

(164)

(31)

(10)

(286)

Operating expenses:

Operating expenses:

(3 381)

(3 381)

(8)

(8)

(1 217)

(1 217)

(958)

(958)

(1 114)

(1 114)

(6 678)

(6 678)

Direct centralised management

(1 699)

(5)

(833)

(547)

(597)

(3 681)

Indirect centralised management

(627)

0

(18)

(37)

0

(682)

Decentralised management

(209)

0

(37)

(310)

0

(556)

Shared management

(80)

0

0

0

0

(80)

Joint management

(638)

(3)

(326)

(63)

(515)

(1 545)

Other operating expenses

(128)

0

(3)

(1)

(2)

(134)

TOTAL OPERATING EXPENSES

(3 480)

(79)

(1 548)

(1 036)

(1 147)

(7 290)

Net operating expenses

Net operating expenses

(3 448)

(3 448)

(79)

(79)

(1 449)

(1 449)

(931)

(931)

(1 145)

(1 145)

(7 052)

(7 052)

SEGMENT REPORTING – SERVICES & OTHER

SEGMENT REPORTING – SERVICES & OTHER

| EUR millions |
| --- |
| | Press & Communication | Anti-Fraud Office | Co-ordination | Personnel & Admin | Eurostat | Budget | Audit | Languages | Other | Total Services & Other |
| Other operating revenue: |
| Recovery of expenses | 1 | 0 | 0 | 1 | 0 | 0 | 0 | 1 | 0 | 3 |
| Revenue from admin operations | 0 | 7 | 0 | 835 | 0 | 52 | 0 | 99 | 0 | 993 |
| Miscellaneous operating revenue | (1) | 8 | 1 | 30 | 0 | 35 | 0 | 43 | 464 | 580 |
| OTHER OPERATING REVENUE | 0 | 15 | 1 | 866 | 0 | 87 | 0 | 143 | 464 | 1 576 |
| Administrative expenses: | (121) | (57) | (188) | (1 299) | (86) | (58) | (11) | (444) | 35 | (2 229) |
| Staff expenses | (79) | (44) | (159) | (526) | (70) | (44) | (10) | (353) | 35 | (1 250) |
| Intangible assets & PPE expenses | (2) | (1) | 0 | (114) | 0 | (1) | 0 | (3) | 0 | (121) |
| Other administrative expenses | (40) | (12) | (29) | (659) | (16) | (13) | (1) | (88) | 0 | (858) |
| Operating expenses: | (134) | (13) | (1) | (24) | (41) | (2) | 0 | (16) | (378) | (609) |
| Direct centralised management | (102) | (13) | 0 | (19) | (41) | (3) | 0 | (1) | 0 | (179) |
| Indirect centralised management | (32) | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (32) |
| Shared management | 0 | 0 | 0 | 0 | 0 | 1 | 0 | 0 | 0 | 1 |
| Other operating expenses | 0 | 0 | (1) | (5) | 0 | 0 | 0 | (15) | (378) | (399) |
| TOTAL OPERATING EXPENSES | (255) | (70) | (189) | (1 323) | (127) | (60) | (11) | (460) | (343) | (2 838) |
| Net operating expenses | (255) | (55) | (188) | (457) | (127) | 27 | (11) | (317) | 121 | (1 262) |

EUR millions

Press & Communication

Anti-Fraud Office

Co-ordination

Personnel & Admin

Eurostat

Budget

Audit

Languages

Other

Total Services & Other

Other operating revenue:

Recovery of expenses

1

0

0

1

0

0

0

1

0

3

Revenue from admin operations

0

7

0

835

0

52

0

99

0

993

Miscellaneous operating revenue

(1)

8

1

30

0

35

0

43

464

580

OTHER OPERATING REVENUE

0

15

1

866

0

87

0

143

464

1 576

Administrative expenses:

Administrative expenses:

(121)

(121)

(57)

(57)

(188)

(188)

(1 299)

(1 299)

(86)

(86)

(58)

(58)

(11)

(11)

(444)

(444)

35

35

(2 229)

(2 229)

Staff expenses

(79)

(44)

(159)

(526)

(70)

(44)

(10)

(353)

35

(1 250)

Intangible assets & PPE expenses

(2)

(1)

0

(114)

0

(1)

0

(3)

0

(121)

Other administrative expenses

(40)

(12)

(29)

(659)

(16)

(13)

(1)

(88)

0

(858)

Operating expenses:

Operating expenses:

(134)

(134)

(13)

(13)

(1)

(1)

(24)

(24)

(41)

(41)

(2)

(2)

0

0

(16)

(16)

(378)

(378)

(609)

(609)

Direct centralised management

(102)

(13)

0

(19)

(41)

(3)

0

(1)

0

(179)

Indirect centralised management

(32)

0

0

0

0

0

0

0

0

(32)

Shared management

0

0

0

0

0

1

0

0

0

1

Other operating expenses

0

0

(1)

(5)

0

0

0

(15)

(378)

(399)

TOTAL OPERATING EXPENSES

(255)

(70)

(189)

(1 323)

(127)

(60)

(11)

(460)

(343)

(2 838)

Net operating expenses

Net operating expenses

(255)

(255)

(55)

(55)

(188)

(188)

(457)

(457)

(127)

(127)

27

27

(11)

(11)

(317)

(317)

121

121

(1 262)

(1 262)

4.   NOTES TO THE CASHFLOW TABLE

4.1   PURPOSE AND PREPARATION OF THE CASHFLOW TABLE

PURPOSE AND PREPARATION OF THE CASHFLOW TABLE

Cash flow information is used to provide a basis for assessing the ability of the EU to generate cash and cash equivalents, and its needs to utilise those cash flows.

The cashflow table is prepared using the indirect method. This means that the net surplus or deficit for the financial year is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments, and items of revenue or expense associated with investing cash flows.

Cash flows arising from transactions in a foreign currency are recorded in the European Union’s reporting currency (Euro), by applying to the foreign currency amount the exchange rate between the euro and the foreign currency at the date of the cash flow.

The cashflow table presented reports cash flows during the period classified by operating and investing activities (the EU does not have financing activities).

4.2   OPERATING ACTIVITIES

OPERATING ACTIVITIES

Operating activities are the activities of the EU that are not investing activities. These are the majority of the activities performed. Loans granted to beneficiaries (and the related borrowings, when applicable) are not considered as investing (or financing) activities as they are part of the general objectives and thus daily operations of the EU. Operating activities also include investments such as EIF, EBRD and venture capital funds. Indeed, the objective of these activities is to participate in the achievement of policy targeted outcomes.

4.3   INVESTING ACTIVITIES

INVESTING ACTIVITIES

Investing activities are the acquisition and disposal of intangible assets and property, plant and equipment and of other investments which are not included in cash equivalents. Investing activities do not include loans granted to beneficiaries. The objective is to show the real investments made by the EU.

5.   CONTINGENT ASSETS & LIABILITIES AND OTHER DISCLOSURES

CONTINGENT ASSETS

CONTINGENT ASSETS

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| Guarantees received: |
| Performance guarantees | 300 | 301 |
| Other guarantees | 34 | 30 |
| Other contingent assets | 19 | 8 |
| Total Contingent Assets | 353 | 339 |

EUR millions

31.12.2011

31.12.2010

Guarantees received:

Performance guarantees

300

301

Other guarantees

34

30

Other contingent assets

19

8

Total Contingent Assets

353

339

Performance guarantees are requested to ensure that beneficiaries of EU funding meet the obligations of their contracts with the EU.

CONTINGENT LIABILITIES

CONTINGENT LIABILITIES

| EUR millions |
| --- |
| | Note | 31.12.2011 | 31.12.2010 |
| Guarantees given | 5,1 | 24 394 | 22 171 |
| Fines – appeals to the Court of Justice | 5,2 | 8 951 | 9 627 |
| EAGF, rural development, pre-accession – court judgements pending | 5,3 | 2 345 | 1 772 |
| Cohesion policy – court judgements pending | 5,4 | 318 | — |
| Amounts relating to legal cases and other disputes | 5,5 | 251 | 458 |
| Other contingent liabilities | | 2 | 4 |
| Total Contingent Liabilities | | 36 261 | 34 032 |
| All contingent liabilities would be financed, should they fall due, by the EU budget in the years to come. |

EUR millions

Note

31.12.2011

31.12.2010

Guarantees given

5,1

5,1

24 394

22 171

Fines – appeals to the Court of Justice

5,2

5,2

8 951

9 627

EAGF, rural development, pre-accession – court judgements pending

5,3

5,3

2 345

1 772

Cohesion policy – court judgements pending

5,4

5,4

318

—

Amounts relating to legal cases and other disputes

5,5

5,5

251

458

Other contingent liabilities

2

4

Total Contingent Liabilities

36 261

34 032

All contingent liabilities would be financed, should they fall due, by the EU budget in the years to come.

All contingent liabilities would be financed, should they fall due, by the EU budget in the years to come

5.1   GUARANTEES GIVEN

GUARANTEES GIVEN

5.1.1   
  On loans granted by the European Investment Bank (EIB) from its own resources

On loans granted by the European Investment Bank (EIB) from its own resources

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| 65 % guarantee | 20 362 | 18 217 |
| 70 % guarantee | 1 992 | 2 281 |
| 75 % guarantee | 534 | 695 |
| 100 % guarantee | 724 | 789 |
| Total | 23 612 | 21 982 |

EUR millions

31.12.2011

31.12.2010

65 % guarantee

20 362

18 217

70 % guarantee

1 992

2 281

75 % guarantee

534

695

100 % guarantee

724

789

Total

23 612

21 982

The EU budget guarantees loans signed and granted by the EIB from its own resources to third countries at 31 December 2011 (including loans granted to Member States before accession). However, the EU’s guarantee is limited to a percentage of the ceiling of the credit lines authorised: 65 %, 70 %, 75 % or 100 %. Where the ceiling is not reached, the EU guarantee covers the full amount. At 31 December 2011 the amount outstanding totalled EUR 23 612 million and this, therefore, is the maximum exposure faced by the EU. At 31 December 2011, about 83 % of EIB lending operations (sovereign and sub-sovereign lending operations) are covered by a comprehensive guarantee, while on the remaining operations the EIB benefits from a political risk coverage only.

5.1.2   
  Other guarantees given

Other guarantees given

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| Risk Sharing Finance Facility (RSFF) | 726 | 161 |
| Loan Guarantee Instrument for Ten-T Projects (LGTT) | 39 | 11 |
| MEDA: Moroccan guarantees | 17 | 17 |
| Total | 782 | 189 |

EUR millions

31.12.2011

31.12.2010

Risk Sharing Finance Facility (RSFF)

726

161

Loan Guarantee Instrument for Ten-T Projects (LGTT)

39

11

MEDA: Moroccan guarantees

17

17

Total

782

189

Risk Sharing Finance Facility (RSFF)

Risk Sharing Finance Facility (RSFF)

Under Risk Sharing Finance Facility (RSFF), the Commission's contribution is used to provision financial risk for loans and guarantees given by the EIB to eligible research projects. In total, a Commission budget of up to EUR 1 billion is foreseen for the period 2007 to 2013, of which up to EUR 800 million are from the ‘Cooperation’ and up to EUR 200 million from the ‘Capacities’ specific programmes. The EIB has committed itself to provide the same amount.

At 31 December 2011 the Commission had contributed EUR 776 million to the RSFF. This has been invested by the EIB in bonds (fair value of EUR 547 million at 31 December 2011) and term deposits (EUR 240 million). The amount included as a contingent liability above, EUR 726 million, represents the estimated maximum loss at 31 December 2011 that the Commission would suffer in case of defaults on loans or guarantees given by the EIB within the framework of the RSFF. It should be noted that the Commission's overall risk is limited to the amount it contributes to the Facility.

Loan Guarantee Instrument for Ten-T Projects (LGTT)

Loan Guarantee Instrument for Ten-T Projects (LGTT)

The Loan Guarantee Instrument for Ten-T Projects (LGTT) issues guarantees so as to mitigate revenue risk in the early years of TEN-Transport projects. Specifically the guarantee would fully cover stand-by credit lines, which would only be drawn upon in cases where project cash flows are insufficient to service senior debt. The instrument is a joint financial product of the Commission and the EIB and the TEN-T regulation has earmarked EUR 500 million from the EU budget to be allocated during the period 2007-2013. The EIB will allocate another EUR 500 million, so in total the amount available will be EUR 1 billion to the instrument.

At 31 December 2011 the Commission had contributed EUR 155 million to the LGTT. This has been invested by the EIB in bonds (fair value of EUR 97 million at 31 December 2011) and term deposits (EUR 57 million). At end 2011, EUR 519 million of loans have been signed and are thus covered by the guarantee. The amount included as a contingent liability, EUR 39 million, represents the estimated maximum loss at 31 December 2011 that the Commission would suffer in case of defaults on loans given by the EIB within the framework of the LGTT operations. This represents 7,5 % of the total amounts guaranteed. It should be noted that the Commission's overall risk is limited to the amount it contributes to the Instrument.

The assets of the RSFF and LGTT instruments are included on the Commission's balance sheet as short-term Available-for-sale assets (see note 2.9) and cash (note 2.13).

2.9

2.13

MEDA

MEDA

As part of the MEDA programme, the Commission created a guarantee mechanism through a specific Fund, which will benefit two Moroccan organisations, namely the Caisse Centrale de Garantie and the Fonds Dar Ad-Damane. As at 31 December 2011, EUR 17 million fell under the Commission guarantee.

5.2   FINES

FINES

These amounts concern fines imposed by the Commission for infringement of competition rules that have been provisionally paid and where either an appeal has been lodged or where it is unknown if an appeal will be made. The contingent liability will be maintained until a decision by the Court of Justice on the case is final. Interest earned on provisional payments is included in the economic result for the year and also as a contingent liability to reflect the uncertainty of the Commission’s title to these amounts.

5.3   COURT JUDGEMENTS PENDING: EAGF, RURAL DEVELOPMENT AND PRE-ACCESSION

COURT JUDGEMENTS PENDING: EAGF, RURAL DEVELOPMENT AND PRE-ACCESSION

These are contingent liabilities towards the Member States connected with the EAGF conformity decisions, rural development and pre-accession financial corrections pending judgement of the Court of Justice. The determination of the final amount of the liability and the year in which the effect of successful appeals will be charged to the budget will depend on the length of the procedure before the Court.

5.4   COHESION ACTIONS – LEGAL CASES PENDING

COHESION ACTIONS – LEGAL CASES PENDING

These are contingent liabilities towards the Member States in conjunction with actions under cohesion policy awaiting the oral hearing date or pending judgement of the Court of Justice.

5.5   AMOUNTS RELATED TO LEGAL CASES AND OTHER DISPUTES

AMOUNTS RELATED TO LEGAL CASES AND OTHER DISPUTES

This heading relates to actions for damages currently being brought against the Commission, other legal disputes and the estimated legal costs. It should be noted that in an action for damages under Article 288 EC the applicant must demonstrate a sufficiently serious breach by the institution of a rule of law intended to confer rights on individuals, real harm suffered by the applicant, and a direct causal link between the unlawful act and the harm.

OTHER SIGNIFICANT DISCLOSURES

OTHER SIGNIFICANT DISCLOSURES

COMMITMENTS AGAINST APPROPRIATIONS NOT YET CONSUMED

COMMITMENTS AGAINST APPROPRIATIONS NOT YET CONSUMED

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| Commitments against appropriations not yet consumed | 165 236 | 155 642 |

EUR millions

31.12.2011

31.12.2010

Commitments against appropriations not yet consumed

165 236

155 642

The budgetary RAL (‘Reste à Liquider’) is an amount representing the open commitments for which payments and/or de-commitments have not yet been made. This is the normal consequence of the existence of multi-annual programmes. At 31 December 2011 the budgetary RAL totalled EUR 207 443 million. The amount disclosed above is this budgetary RAL less related amounts that have been included as expenses in the 2011 economic outturn account.

SIGNIFICANT LEGAL COMMITMENTS

SIGNIFICANT LEGAL COMMITMENTS

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| Structural Operations | 142 916 | 210 638 |
| Protocol with Mediterranean countries | 264 | 263 |
| Fisheries agreements | 37 | 130 |
| Galileo programme | 320 | 513 |
| GMES programme | 400 | 390 |
| TEN-T | 3 416 | 3 530 |
| Other contractual commitments | 4 493 | 3 920 |
| Total | 151 846 | 219 384 |

EUR millions

31.12.2011

31.12.2010

Structural Operations

142 916

210 638

Protocol with Mediterranean countries

264

263

Fisheries agreements

37

130

Galileo programme

320

513

GMES programme

400

390

TEN-T

3 416

3 530

Other contractual commitments

4 493

3 920

Total

151 846

219 384

These commitments originated because the Commission decided to enter into long-term legal commitments in respect of amounts that were not yet covered by commitment appropriations in the budget. This can relate to multi-annual programmes such as Structural Actions or amounts that the European Commission is committed to pay in the future under administrative contracts existing at the balance sheet date (e.g. relating to the provision of services such as security, cleaning, etc, but also contractual commitments concerning specific projects such as building works).

Structural Actions

Structural Actions

The table below shows a comparison between the legal commitments for which budget commitments have not yet been made and the maximum commitments in relation to the amounts foreseen in the financial framework 2007-2013.

| EUR millions |
| --- |
| | Financial perspective amounts 2007-2013
  (A) | Legal commitments concluded
  (B) | Budget commitments 2007-2011
  (C) | Legal commitments less budget commitments
  (= B – C) | Maximum commitment
  (= A – C) |
| Cohesion policy funds | 347 550 | 347 542 | 240 438 | 107 104 | 107 112 |
| Natural Resources | 100 549 | 100 545 | 69 818 | 30 727 | 30 731 |
| Instrument for Pre-Accession Assistance | 11 259 | 8 162 | 6 186 | 1 976 | 5 073 |
| Total | 459 358 | 456 249 | 316 442 | 139 807 | 142 916 |

EUR millions

Financial perspective amounts 2007-2013

(A)

Legal commitments concluded

(B)

Budget commitments 2007-2011

(C)

Legal commitments less budget commitments

(= B – C)

Maximum commitment

(= A – C)

Cohesion policy funds

347 550

347 542

240 438

107 104

107 112

Natural Resources

100 549

100 545

69 818

30 727

30 731

Instrument for Pre-Accession Assistance

11 259

8 162

6 186

1 976

5 073

Total

459 358

456 249

316 442

139 807

142 916

Protocols with Mediterranean countries

Protocols with Mediterranean countries

These commitments relate to financial protocols with Mediterranean non-member countries. The amount included here is the difference between the total amount of the protocols signed and the amount of the budget commitments entered in the accounts. These protocols are international treaties that cannot be wound up without the agreement of both parties, although the winding-up process is on-going.

Fisheries agreements

Fisheries agreements

These are commitments entered into with third countries for operations under international fisheries agreements.

Galileo programme

Galileo programme

These are amounts are committed to the Galileo programme developing a European Global Navigation Satellite System – see also note 2.2.

2.2

GMES programme

GMES programme

The Commission has entered into a contract with the ESA for the period from 2008 to 2013 for the implementation of the space component of Global Monitoring for Environment and Security (GMES). The total indicative amount for that period is EUR 728 million.

TEN-T commitments

TEN-T commitments

This amount relates to grants in the field of the trans-European transport network (TEN-T) for the period 2007 - 2013. The programme applies to projects identified for the development of a trans-European transport network to support both infrastructure projects and research and innovation projects to foster the integration of new technologies and innovative processes on the deployment of new transport infrastructure. The total indicative amount for this programme is EUR 8 013 million.

Other contractual commitments

Other contractual commitments

The amounts included under this disclosure correspond to amounts committed to be paid during the term of the contracts. The largest amount included here is EUR 2 572 million relating to procurement arrangements of the Fusion for Energy Agency in the context of ITER project. The next most significant amount is EUR 438 million relating to building contracts of the Parliament.

6.   FINANCIAL CORRECTIONS AND RECOVERIES

6.1   INTRODUCTION

INTRODUCTION

This note provides an overview of the correction of errors and irregularities detected, in particular in that part of the EU budget that is implemented under the shared management mode (i.e. some 80 % of the total budget). Under shared management, the Commission relies on Member States for the implementation of EU programmes i.e. the EU contribution is paid to the Member States, generally to a specific paying agency, which is then responsible for the payments made to beneficiaries. As a result, Member States are the primary responsible for the prevention, detection and correction of errors and irregularities committed by the beneficiaries, while the European Commission ensures an overall supervisory role (i.e. verifying the effective functioning of Member States' management and control systems).

This note only covers financial corrections and recoveries effected at EU level. The corrections effected by Member States following their own audits are not recorded in the Commission's accounting system because Member States can reuse, in most cases, these amounts for other eligible expenditure. Member States are however requested to provide the Commission with updated information on withdrawals, recoveries and pending recoveries of Structural Funds, and to separately identify EU corrections in the reporting related to the 2007-2013 period to avoid an overlap risk. This information is however not disclosed below for reliability reasons since doubts remain as to the quality and completeness of data submitted by some Member States and/or for some programmes, as identified in the preliminary findings of EU audits on recoveries carried out in Member States.

6.1.1   
  Financial corrections

Financial corrections

Financial corrections are the main tool used for the correction of errors and irregularities in the context of shared management. Financial corrections are made by the European Commission so as to exclude from EU funding expenditure that is not in accordance with applicable rules and regulations. Financial corrections may also be applied following the detection of serious deficiencies in the management and control systems of Member States. The final objective of this correction mechanism is to ensure that all expenditure declared by the Member State (i.e. on the basis of which the EU contribution is paid) is legal and regular. The issuance of a recovery order by the Commission to recover amounts unduly paid is just one of the means of implementation of financing corrections.

The processing of financial corrections follows these three main steps:

| (1) | Financial corrections
  in progress:
  The estimate of this amount is established as follows:






  — | Under Agriculture and Rural Development, the amount of financial corrections in progress is based on an estimate of the amount of expenditure which is likely to be excluded from EU financing by future conformity decisions. Since EAGF corrections are decided per financial year of expense, it is possible to calculate the average of financial corrections per financial year closed, and to extrapolate this percentage to more recent financial years for which controls are still ongoing. The reliability of this method is continuously assessed by comparing the estimate amount with the results of the conformity audits completed in the years concerned. |
| --- | --- | --- |

(1)

Financial corrections
  in progress:

Financial corrections

in progress

The estimate of this amount is established as follows:

—

Under Agriculture and Rural Development, the amount of financial corrections in progress is based on an estimate of the amount of expenditure which is likely to be excluded from EU financing by future conformity decisions. Since EAGF corrections are decided per financial year of expense, it is possible to calculate the average of financial corrections per financial year closed, and to extrapolate this percentage to more recent financial years for which controls are still ongoing. The reliability of this method is continuously assessed by comparing the estimate amount with the results of the conformity audits completed in the years concerned.

Agriculture and Rural Development

| — | Under Cohesion Policy, the amount disclosed under financial corrections in progress is based on audit findings of the Commission and those of the Court of Auditors or OLAF, all of which are followed up by the relevant Directorate General through on-going contradictory procedures with the concerned Member States. This is a best and prudent estimate, taking into account the state of play of the follow up of the audits and the issuance of final position letters or pre-suspension letters at 31 December 2011. This amount will certainly be subject to change following the contradictory procedures, under which Member States are given the opportunity to present further evidence to support their claims. |
| --- | --- |

—

Under Cohesion Policy, the amount disclosed under financial corrections in progress is based on audit findings of the Commission and those of the Court of Auditors or OLAF, all of which are followed up by the relevant Directorate General through on-going contradictory procedures with the concerned Member States. This is a best and prudent estimate, taking into account the state of play of the follow up of the audits and the issuance of final position letters or pre-suspension letters at 31 December 2011. This amount will certainly be subject to change following the contradictory procedures, under which Member States are given the opportunity to present further evidence to support their claims.

Cohesion Policy

in progress

| (2) | Financial correction
  decided/confirmed:
  The amount of the financial correction is established with certainty and is definitive, either ‘decided’ through a Commission decision, or ‘confirmed’ (i.e. accepted) by the Member State. In the area of Agriculture and Rural Development for the 2007-2013 period, the EAGF (i.e. European Agricultural Guarantee Fund) and the EAFRD (i.e. European Agricultural Fund for Rural Development) have replaced the EAGGF (i.e. European Agricultural Guidance and Guarantee Fund 2000-2006). Financial corrections' decisions are mainly launched as a result of the verification of the expenditure declared by the Member States that is subject to following clearance of accounts procedures:






  — | An annual financial clearance decision is adopted by the Commission to formally accept the paying agencies' annual accounts on the basis of management verifications and certifications, which also includes a financial clearance decision for non-respect of payment deadlines. As a result financial corrections may be established for payments that do not respect legal or regulatory deadlines; |
| --- | --- | --- |

(2)

Financial correction
  decided/confirmed:

Financial correction

decided/confirmed

The amount of the financial correction is established with certainty and is definitive, either ‘decided’ through a Commission decision, or ‘confirmed’ (i.e. accepted) by the Member State. In the area of Agriculture and Rural Development for the 2007-2013 period, the EAGF (i.e. European Agricultural Guarantee Fund) and the EAFRD (i.e. European Agricultural Fund for Rural Development) have replaced the EAGGF (i.e. European Agricultural Guidance and Guarantee Fund 2000-2006). Financial corrections' decisions are mainly launched as a result of the verification of the expenditure declared by the Member States that is subject to following clearance of accounts procedures:

decided

confirmed

Agriculture and Rural Development

—

An annual financial clearance decision is adopted by the Commission to formally accept the paying agencies' annual accounts on the basis of management verifications and certifications, which also includes a financial clearance decision for non-respect of payment deadlines. As a result financial corrections may be established for payments that do not respect legal or regulatory deadlines;

| — | A multi-annual conformity clearance decision is adopted by the Commission on the conformity of the expenditure declared by Member States with applicable EU rules and regulations. |
| --- | --- |

—

A multi-annual conformity clearance decision is adopted by the Commission on the conformity of the expenditure declared by Member States with applicable EU rules and regulations.

In the area of Cohesion Policy, financial corrections decided/confirmed are the result of EU controls and audits by the Commission, the European Court of Auditors or OLAF.

Cohesion Policy

| (3) | Financial corrections
  implemented:
  In the case of the EAGF, financial corrections are always implemented by deduction in the monthly declarations. For Rural Development financial corrections are implemented by the issue of recovery orders.
  Financial corrections under Cohesion Policy are implemented as follows:






  (a) | if the Member State disagrees with the correction required or proposed by the Commission, following a formal contradictory procedure with the Member State that includes the suspension of payments to the programme; in this case, the Commission has three months from the date of a formal hearing with the Member State (six months for 2007-2013 programmes) to adopt a formal financial correction decision and issue a recovery order to obtain repayment from the Member State. These cases lead to a net reduction of the EU contribution to the specific operational programme affected by the financial correction (no possibility for the Member State to re-use the corrected amount for other eligible operations); |
| --- | --- | --- |

(3)

Financial corrections
  implemented:

Financial corrections

implemented

In the case of the EAGF, financial corrections are always implemented by deduction in the monthly declarations. For Rural Development financial corrections are implemented by the issue of recovery orders.

EAGF

implemented

Rural Development

Financial corrections under Cohesion Policy are implemented as follows:

Cohesion Policy

implemented

(a)

if the Member State disagrees with the correction required or proposed by the Commission, following a formal contradictory procedure with the Member State that includes the suspension of payments to the programme; in this case, the Commission has three months from the date of a formal hearing with the Member State (six months for 2007-2013 programmes) to adopt a formal financial correction decision and issue a recovery order to obtain repayment from the Member State. These cases lead to a net reduction of the EU contribution to the specific operational programme affected by the financial correction (no possibility for the Member State to re-use the corrected amount for other eligible operations);

recovery order

| (b) | if the correction is accepted, the Member State deducts (withdraws) this amount from a subsequent payment claim to the Commission, before recovery proceedings are completed at national level (withdrawal), or once the recovery proceedings are completed at national levels and amounts are effectively recovered from the beneficiary (recovery at national level); in both cases (withdrawal or recovery at national level deducted by the Member State from a subsequent payment claim), the replacement of irregular expenditure by other eligible expenditure is allowed by the applicable regulations and can be re-used for other eligible operations, which have incurred regular expenditure. In these cases there is no impact in the Commission's accounts, as the level of EU funding to a specific programme is not reduced. The EU's financial interests are thus protected against irregularities and fraud. The validation of the recovery order or of the payment request, depending on the case, by the authorising officer in the accounting system is a necessary step to establish the implementation of financial corrections. In the case of a recovery order, implementation is recognised at issue and before the cashing since recovery orders concerning financial corrections are issued against Member States, and are always paid before or at due date, or compensated with subsequent payments. |
| --- | --- |

(b)

if the correction is accepted, the Member State deducts (withdraws) this amount from a subsequent payment claim to the Commission, before recovery proceedings are completed at national level (withdrawal), or once the recovery proceedings are completed at national levels and amounts are effectively recovered from the beneficiary (recovery at national level); in both cases (withdrawal or recovery at national level deducted by the Member State from a subsequent payment claim), the replacement of irregular expenditure by other eligible expenditure is allowed by the applicable regulations and can be re-used for other eligible operations, which have incurred regular expenditure. In these cases there is no impact in the Commission's accounts, as the level of EU funding to a specific programme is not reduced. The EU's financial interests are thus protected against irregularities and fraud. The validation of the recovery order or of the payment request, depending on the case, by the authorising officer in the accounting system is a necessary step to establish the implementation of financial corrections. In the case of a recovery order, implementation is recognised at issue and before the cashing since recovery orders concerning financial corrections are issued against Member States, and are always paid before or at due date, or compensated with subsequent payments.

withdrawal)

recovery at national level

| (c) | At programme closure when no re-use of the funds is possible by the Member State, the amount of the financial correction is either deducted from the final cost claim submitted by the Member State or decommitted by the Commission. |
| --- | --- |

(c)

At programme closure when no re-use of the funds is possible by the Member State, the amount of the financial correction is either deducted from the final cost claim submitted by the Member State or decommitted by the Commission.

deducted

decommitted

6.1.2   
  Recoveries

Recoveries

Recovery of amounts is a means of implementing financial corrections that merit a separate disclosure given that it concerns actual return of cash to the budget (or offsetting).

In accordance with the Financial Regulation, recovery orders should be established by the authorising officer for amounts unduly paid. Recoveries are then implemented by direct bank transfer from the debtor (e.g. Member State) or by offsetting from other amounts that the Commission owes to the Member State. The Financial Regulation foresees additional procedures to ensure the collection of recovery orders overdue, which are the object of a specific follow up by the Accounting Officer of the Commission.

In the area of Agriculture, Member States are obliged to identify errors and irregularities and to recover amounts unduly paid in accordance with national rules and procedures. For the EAGF, amounts recovered from the beneficiaries are credited to the Commission, after deduction applied by Member States of 20 % (on average), who book them as revenue in the economic outturn account. For EAFRD, recoveries are deducted from the next payment claim before it is sent to the Commission's services, and therefore the relevant amount can be reused for the programme. If a Member State does not pursue the recovery or is not diligent in its actions, the Commission may decide to intervene and to impose a financial correction on the Member State concerned.

Agriculture

In the area of Cohesion Policy, Member States (and not the Commission) are primarily responsible for recovering, from beneficiaries, amounts unduly paid increased, where applicable, by late payment interest. The amounts recovered by the Member States are not disclosed in this note, which only presents the recoveries established by the Commission. For the 2007-2013 period, Member States are legally required to provide the Commission with clear and structured data on amounts withdrawn from co-financing before the national recovery process is finalised and the amounts effectively recovered from beneficiaries at national level.

Cohesion Policy

6.1.3   
  Suspensions and interruptions of payments

Suspensions and interruptions of payments

In accordance with sector legislation the Commission may also:

| — | interrupt the payment deadline for a maximum period of 6 months for 2007-13 programmes if:






  (a) | There is evidence to suggest a significant deficiency in the functioning of the management and control systems of the Member State concerned; |
| --- | --- | --- |

—

interrupt the payment deadline for a maximum period of 6 months for 2007-13 programmes if:

interrupt

(a)

There is evidence to suggest a significant deficiency in the functioning of the management and control systems of the Member State concerned;

| (b) | The Commission services have to carry out additional verifications following information that expenditure in a certified statement of expenditure is linked to a serious irregularity which has not been corrected. |
| --- | --- |

(b)

The Commission services have to carry out additional verifications following information that expenditure in a certified statement of expenditure is linked to a serious irregularity which has not been corrected.

| — | suspend all or part of an interim payment to a Member State for both 2000-06 and 2007-13 programmes in the following three cases:






  (a) | There is evidence of serious deficiency in the management and control system of the programme and the Member State has not taken the necessary corrective measures; or |
| --- | --- | --- |

—

suspend all or part of an interim payment to a Member State for both 2000-06 and 2007-13 programmes in the following three cases:

suspend

(a)

There is evidence of serious deficiency in the management and control system of the programme and the Member State has not taken the necessary corrective measures; or

| (b) | Expenditure in a certified statement of expenditure is linked to a serious irregularity which has not been corrected; or |
| --- | --- |

(b)

Expenditure in a certified statement of expenditure is linked to a serious irregularity which has not been corrected; or

| (c) | Serious breach by a Member State of its management and control obligations. |
| --- | --- |

(c)

Serious breach by a Member State of its management and control obligations.

Where the required measures are not taken by the Member State, the Commission may impose a financial correction.

6.1.4   
  Other management types

Other management types

Concerning the part of the EU budget that is managed under the direct management mode, expenditure that is not in accordance with applicable rules and regulations is either the subject of a recovery order established by the Commission or deducted from the subsequent cost statement. If the deduction is directly made by the beneficiary in the cost statement, the information cannot be registered in the Commission's accounting system. The recovery of amounts unduly paid under the decentralised and indirect centralised management modes is the responsibility of Member States, third countries or agencies. The joint management mode applies also corrective tools that are defined in the agreements concluded with international organisations.

Note that all figures are rounded into millions of Euros. It should be noted that due to the rounding of figures, some financial figures in the tables may not add up. Amounts shown as 0 represent figures of less than EUR 500 000. Amounts that equal to zero are shown as a dash (-).

6.2   SUMMARY TABLES

SUMMARY TABLES

Financial corrections and recoveries decided/confirmed in 2011

Financial corrections and recoveries decided/confirmed in 2011

| EUR millions |
| --- |
| | Note | 2011 | 2010 |
| Financial corrections: |
| Agriculture and Rural Development | 6.3.1 | 733 | 1 128 |
| Cohesion Policy | 6.4.1 | 673 | 925 |
| Other | 6,5 | 0 | 0 |
| Subtotal Financial corrections | | 1 406 | 2 053 |
| Recoveries: |
| Agriculture and Rural Development | 6.3.1 | 335 | 292 |
| Cohesion Policy | 6.4.4 | 50 | 24 |
| Other | 6,5 | 377 | 301 |
| Subtotal Recoveries | | 762 | 617 |
| Total decided/confirmed in 2011 | 2 168 | 2 670 |

EUR millions

Note

2011

2010

Financial corrections:

Financial corrections:

Agriculture and Rural Development

6.3.1

6.3.1

733

1 128

Cohesion Policy

6.4.1

6.4.1

673

925

Other

6,5

6,5

0

0

Subtotal Financial corrections

1 406

2 053

Recoveries:

Recoveries

Agriculture and Rural Development

6.3.1

6.3.1

335

292

Cohesion Policy

6.4.4

6.4.4

50

24

Other

6,5

6,5

377

301

Subtotal Recoveries

762

617

Total decided/confirmed in 2011

2 168

2 670

Financial corrections and recoveries implemented in 2011

Financial corrections and recoveries implemented in 2011

| EUR millions |
| --- |
| | Note | 2011 | 2010 |
| Financial corrections: |
| Agriculture and Rural Development | 6.3.2 | 483 | 814 |
| Cohesion Policy | 6.4.2 | 624 | 737 |
| Other | 6,5 | 0 | 0 |
| Subtotal Financial corrections | | 1 107 | 1 551 |
| Recoveries: |
| Agriculture and Rural Development | 6.3.2 | 339 | 286 |
| Cohesion Policy | 6.4.4 | 48 | 25 |
| Other | 6,5 | 346 | 274 |
| Subtotal Recoveries | | 733 | 585 |
| Total implemented in 2011 | 1 840 | 2 136 |

EUR millions

Note

2011

2010

Financial corrections:

Financial corrections:

Agriculture and Rural Development

6.3.2

6.3.2

483

814

Cohesion Policy

6.4.2

6.4.2

624

737

Other

6,5

6,5

0

0

Subtotal Financial corrections

1 107

1 551

Recoveries:

Recoveries

Agriculture and Rural Development

6.3.2

6.3.2

339

286

Cohesion Policy

6.4.4

6.4.4

48

25

Other

6,5

6,5

346

274

Subtotal Recoveries

733

585

Total implemented in 2011

1 840

2 136

6.3   FINANCIAL CORRECTIONS AND RECOVERIES UNDER AGRICULTURE AND RURAL DEVELOPMENT

FINANCIAL CORRECTIONS AND RECOVERIES UNDER AGRICULTURE AND RURAL DEVELOPMENT

6.3.1   
  Financial corrections and recoveries decided in 2011

Financial corrections and recoveries decided in 2011

| EUR millions |
| --- |
| | 2011 | 2010 |
| EAGF: |
| Financial clearance and non-respected payment deadlines | (63) | 33 |
| Conformity clearance | 728 | 1 022 |
| Rural Development: |
| TRDI 2000-2006 | 3 | 49 |
| SAPARD 2000-2006 | 6 | 3 |
| EAFRD 2007-2013 | 58 | 20 |
| Subtotal financial corrections | 733 | 1 128 |
| EAGF: |
| EAGF - irregularities | 174 | 178 |
| Rural Development: |
| TRDI - recoveries | 8 | 10 |
| SAPARD - recoveries | 30 | 5 |
| EAFRD - irregularities | 123 | 98 |
| Subtotal recoveries | 335 | 292 |
| Total | 1 068 | 1 420 |

EUR millions

2011

2010

EAGF:

EAGF:

Financial clearance and non-respected payment deadlines

(63)

33

Conformity clearance

728

1 022

Rural Development:

Rural Development:

TRDI 2000-2006

3

49

SAPARD 2000-2006

6

3

EAFRD 2007-2013

58

20

Subtotal financial corrections

733

1 128

EAGF:

EAGF:

EAGF - irregularities

174

178

Rural Development:

Rural Development:

TRDI - recoveries

8

10

SAPARD - recoveries

30

5

EAFRD - irregularities

123

98

Subtotal recoveries

335

292

Total

1 068

1 420

A breakdown of the EAGF amounts per Member State is disclosed in Annex 1.

All the above amounts are included in the economic outturn account of the Commission.

The decrease in conformity clearance procedures in 2011 follows a previous increase between 2009 and 2010. The 2010 figure was exceptionally high as procedures decided in the year included a large non-executed clearance procedure of EUR 471 million which was adopted before the year-end, and executed in 2011. The amounts of procedures decided for 2011 now reach comparable levels of 2009 and before.

The negative financial clearance amount of EUR 63 million represents amounts paid out to certain Member States (mainly Italy and the United Kingdom) that exceeded amounts to be recovered for the year.

It should be noted that amounts reported for Rural Development in financial corrections decided/confirmed, as well as financial corrections implemented below, also include recoveries of irregularities for EUR 0.2 million in 2011 (2010: EUR 3 million). These amounts represent sums collected by the European Commission following the recovery of undue payments effected by Member States.

6.3.2   
  Financial corrections and recoveries implemented in 2011

Financial corrections and recoveries implemented in 2011

| EUR millions |
| --- |
| | 2011 | 2010 |
| EAGF: |
| Financial clearance and non-respected payment deadlines | (63) | 33 |
| Conformity clearance | 506 | 728 |
| Rural Development: |
| TRDI 2000-2006 | 3 | 49 |
| SAPARD 2000-2006 | 6 | 3 |
| EAFRD 2007-2013 | 31 | 0 |
| Subtotal financial corrections | 483 | 814 |
| EAGF: |
| EAGF - irregularities | 178 | 172 |
| Rural Development: |
| TRDI - recoveries | 8 | 10 |
| SAPARD - recoveries | 30 | 5 |
| EAFRD - irregularities | 123 | 98 |
| Subtotal recoveries | 339 | 286 |
| Total | 822 | 1 101 |

EUR millions

2011

2010

EAGF:

EAGF:

Financial clearance and non-respected payment deadlines

(63)

33

Conformity clearance

506

728

Rural Development:

Rural Development:

TRDI 2000-2006

3

49

SAPARD 2000-2006

6

3

EAFRD 2007-2013

31

0

Subtotal financial corrections

483

814

EAGF:

EAGF:

EAGF - irregularities

178

172

Rural Development:

Rural Development:

TRDI - recoveries

8

10

SAPARD - recoveries

30

5

EAFRD - irregularities

123

98

Subtotal recoveries

339

286

Total

822

1 101

A breakdown of the EAGF amounts per Member State is disclosed in Annex 2.

6.3.3   
  Financial corrections – cumulative figures

Financial corrections – cumulative figures

EAGF financial corrections decided – cumulative figures 1999 - 2011

EAGF financial corrections decided – cumulative figures 1999 - 2011

| EUR millions |
| --- |
| | As at end 2011 | As at end 2010 |
| EAGF Clearance of accounts procedures | 7 717 | 7 035 |

EUR millions

As at end 2011

As at end 2010

EAGF Clearance of accounts procedures

EAGF Clearance of accounts procedures

7 717

7 035

A breakdown of the cumulated EAGF clearance amount per Member State is disclosed in Annex 3.

The cumulated figures for 2011 correspond to amounts under conformity clearance decisions No 1 to No 36 taken up to 15 October 2011, being the end of EAGF financial year. The amounts decided in the calendar year 2011 correspond to EUR 728 million (see note 6.3.1), and they include EUR 682 million as the amount decided in the financial year 2011, which corresponds to the variation between cumulated figures at end 2011 and cumulated figures at end 2010 of the above table.

6.3.1

It should be noted that all conformity clearance decisions have been formally taken by means of a Commission decision while financial clearance decisions usually take a longer time to proceed and will impact the coming years.

Rural Development corrections decided – cumulative figure 2000 - 2011

Rural Development corrections decided – cumulative figure 2000 - 2011

| EUR millions |
| --- |
| | As at end 2011 | As at end 2010 |
| Rural Development financial corrections: |
| TRDI 2000-2006 | 64 | 61 |
| SAPARD 2000-2006 | 24 | 17 |
| EAFRD 2007-2013 | 79 | 21 |
| Total | 167 | 98 |

EUR millions

As at end 2011

As at end 2010

Rural Development financial corrections:

Rural Development financial corrections:

TRDI 2000-2006

64

61

SAPARD 2000-2006

24

17

EAFRD 2007-2013

79

21

Total

167

98

6.3.4   
  Financial corrections and recoveries in progress

Financial corrections and recoveries in progress

Financial corrections in progress

Financial corrections in progress

| EUR millions |
| --- |
| | Financial corrections in progress as at 31.12.2010 | New financial corrections in progress in 2011 | Financial corrections decided in 2011 | Adjustments on financial corrections decided or in progress as at 31.12.2010 | Financial corrections in progress as at 31.12.2011 |
| EAGF: |
| EAGF - future conformity and financial decisions | 2 288 | 573 | (665) | 8 | 2 204 |
| Rural Development: |
| TRDI 2000-2006 | 7 | 29 | (3) | 1 | 34 |
| SAPARD 2000-2006 | 68 | 36 | (6) | (20) | 77 |
| EAFRD 2007-2013 | 123 | 179 | (58) | 261 | 505 |
| Total financial corrections in progress | 2 486 | 818 | (732) | 250 | 2 821 |

EUR millions

Financial corrections in progress as at 31.12.2010

New financial corrections in progress in 2011

Financial corrections decided in 2011

Adjustments on financial corrections decided or in progress as at 31.12.2010

Financial corrections in progress as at 31.12.2011

EAGF:

EAGF:

EAGF - future conformity and financial decisions

2 288

573

(665)

8

2 204

Rural Development:

Rural Development:

TRDI 2000-2006

7

29

(3)

1

34

SAPARD 2000-2006

68

36

(6)

(20)

77

EAFRD 2007-2013

123

179

(58)

261

505

Total financial corrections in progress

2 486

818

(732)

250

2 821

The amount of EAGF financial corrections in progress at end 2011 shows the consolidation of the estimation method for future conformity decisions.

SAPARD and TRDI programmes are in the closure phase which explains the decrease in the amount of financial corrections in progress.

Concerning EAFRD, the increase is mainly explained by a change in the estimation method. Until last year, the extrapolation method used was based on historical data, i.e. real cases opened for EAGF 2000-06. This estimation was then compared to the level of real cases opened for the first years of the EAFRD programmes. However last year this method proved to give lower amounts than those actually constituted by cases opened. Therefore the extrapolation method has been adapted and aligned to that of EAGF since both funds actually share the same clearance process. The amounts reported in progress give now a more realistic view on future financial corrections.

Recoveries in progress

Recoveries in progress

| EUR millions |
| --- |
| | Recoveries in progress as at 31.12.2010 | New recoveries in progress in 2011 | Recoveries decided in 2011 | Adjustments on recoveries decided or in progress as at 31.12.2010 | Recoveries in progress as at 31.12.2011 |
| EAGF: |
| EAGF - irregularities | 323 | 199 | (174) | (95) | 253 |
| Rural Development: |
| TRDI 2000-2006 | 7 | 6 | (8) | 7 | 12 |
| SAPARD 2000-2006 | 94 | 6 | (30) | (19) | 50 |
| EAFRD 2007-2013 | 22 | 65 | (123) | 81 | 45 |
| Total recoveries in progress | 446 | 275 | (335) | (26) | 360 |

EUR millions

Recoveries in progress as at 31.12.2010

New recoveries in progress in 2011

Recoveries decided in 2011

Adjustments on recoveries decided or in progress as at 31.12.2010

Recoveries in progress as at 31.12.2011

EAGF:

EAGF:

EAGF - irregularities

323

199

(174)

(95)

253

Rural Development:

Rural Development:

TRDI 2000-2006

7

6

(8)

7

12

SAPARD 2000-2006

94

6

(30)

(19)

50

EAFRD 2007-2013

22

65

(123)

81

45

Total recoveries in progress

446

275

(335)

(26)

360

6.4   FINANCIAL CORRECTIONS AND RECOVERIES UNDER COHESION POLICY

FINANCIAL CORRECTIONS AND RECOVERIES UNDER COHESION POLICY

6.4.1   
  Financial corrections decided/confirmed in 2011

Financial corrections decided/confirmed in 2011

Financial corrections decided/confirmed in 2011 by programming period

Financial corrections decided/confirmed in 2011 by programming period

| EUR millions |
| --- |
| | 2011 | 2010 |
| Cohesion policy (EU work) |
| — | 1994-1999 programmes |

EUR millions

2011

2010

Cohesion policy (EU work)

Cohesion policy (EU work)

—

1994-1999 programmes

13

136

| — | 2000-2006 programmes |
| --- | --- |

—

2000-2006 programmes

440

788

| — | 2007-2013 programmes |
| --- | --- |

—

2007-2013 programmes

220

2

Total

673

925

A breakdown of these amounts per Member State is disclosed in Annex 4.

Concerning the programming period 1994-99, very few financial corrections were reported in 2011 as the vast majority of programmes are closed. This figure will continue to decrease in the future. For the programming period 2000-06, financial corrections are reported and confirmed during the closure process which is ongoing. However audits continue to be conducted even on closed programmes. The increase in the amount of financial corrections decided/confirmed for the reporting period 2007-13 compared to last year is expected to continue in the coming years, as a result of current audits on the spot.

Financial corrections decided/confirmed in 2011 and their implementation in 2011

Financial corrections decided/confirmed in 2011 and their implementation in 2011

| EUR millions |
| --- |
| | ERDF | CF | ESF | FIFG/EFF (5) | EAGGF Guidance | Total |
| Financial Corrections 1994-1999: |
| Implemented by decommitment/deduction at closure | 6 | — | — | — | — | 6 |
| Implemented by recovery order | 2 | — | 1 | 0 | 1 | 4 |
| Not yet implemented | 3 | — | — | — | — | 3 |
| Subtotal 1994-1999 period | 11 | — | 1 | 0 | 1 | 13 |
| Financial Corrections 2000-2006: |
| Implemented by decommitment/deduction at closure | 217 | 72 | 8 | 0 | 0 | 297 |
| Implemented by Member States | (10) | 4 | — | — | — | (6) |
| Implemented by recovery order | 5 | 3 | — | — | 0 | 8 |
| Not yet implemented | 199 | (62) | 0 | 3 | — | 140 |
| Subtotal 2000-2006 period | 411 | 17 | 9 | 3 | 0 | 440 |
| Financial Corrections 2007-2013: |
| Implemented by decommitment/deduction at closure | — | — | — | — | — | 0 |
| Implemented by Member States | 2 | — | 158 | — | — | 160 |
| Implemented by recovery order | — | — | — | — | — | 0 |
| Not yet implemented | 0 | — | 59 | — | — | 59 |
| Subtotal 2007-2013 period | 3 | — | 218 | — | — | 220 |
| Total financial corrections decided/confirmed in 2011 | 424 | 17 | 227 | 3 | 1 | 673 |
| Total financial corrections decided/confirmed in 2010 | 494 | 258 | 49 | 91 | 33 | 925 |

EUR millions

ERDF

CF

ESF

FIFG/EFF (5)

5

EAGGF Guidance

Total

Financial Corrections 1994-1999:

Implemented by decommitment/deduction at closure

6

—

—

—

—

6

Implemented by recovery order

2

—

1

0

1

4

Not yet implemented

3

—

—

—

—

3

Subtotal 1994-1999 period

11

—

1

0

1

13

Financial Corrections 2000-2006:

Implemented by decommitment/deduction at closure

217

72

8

0

0

297

Implemented by Member States

(10)

4

—

—

—

(6)

Implemented by recovery order

5

3

—

—

0

8

Not yet implemented

199

(62)

0

3

—

140

Subtotal 2000-2006 period

411

17

9

3

0

440

Financial Corrections 2007-2013:

Implemented by decommitment/deduction at closure

—

—

—

—

—

0

Implemented by Member States

2

—

158

—

—

160

Implemented by recovery order

—

—

—

—

—

0

Not yet implemented

0

—

59

—

—

59

Subtotal 2007-2013 period

3

—

218

—

—

220

Total financial corrections decided/confirmed in 2011

424

17

227

3

1

673

Total financial corrections decided/confirmed in 2010

494

258

49

91

33

925

Out of the total amount of EUR 673 million confirmed in 2011, EUR 233 million include amounts confirmed in previous years but not reported before, as well as adjustments on previously reported amounts. This is due, on one hand, to the extra-accounting nature of the file management of financial corrections, which makes it possible that new cases be reported at a later stage, and on the other hand, to cases where the final amount of a financial correction imposed during the operational programme is only known at closure.

The amount of financial corrections decided/confirmed in the year and implemented by issuance of a recovery order by the Commission (i.e. cash reimbursed to the Commission) is EUR 12 million, EUR 4 million for the 1994-99 period, and EUR 8 million for the 2000-06 period (2010: EUR 158 million). It should be noted that implementation by means of a recovery order represents only a limited amount of total financial corrections (i.e. less than 3 % of the amount implemented in 2011) since the applicable sectoral legislation foresees the possibility for Member States to accept the financial correction proposed by the Commission and then to replace the irregular expenditure by a regular one during programme implementation (but at closure it is no longer possible for the Member State to submit other expenditure to replace the irregular one) - thus meaning that no recovery order needs to be issued by the Commission. Recovery orders are only issued by the Commission in the cases where the Member State refuses the financial correction and the Commission needs to take a formal correction decision, or possibly at the stage of programme closure when the financial correction imposed by the Commission is higher than the amount claimed by the Member State.

For ERDF, the amounts of correction for 2011 continue to concern mainly the 2000-2006 programmes, with the on-going closure: following the analysis of winding up declarations, corrections based on the extrapolation to each programme of residual risks calculated by programme have been confirmed in 2011, and corrections will continue in 2012. Financial corrections at closure imply a net reduction of the EU funding (i.e. reduction of the final amounts to be paid, or recovery of amount if the final amount to be paid is less than the correction).

Concerning the ESF, most of the amount of financial corrections decided/confirmed in 2011 relate to the 2007-13 programming period due to the growing number of audits completed as the implementation of the programmes increases. For the programming period 2000-06 the replacement of an irregular expenditure by a regular one by the Member State is no longer possible, however, progammes being in closure phase, the Member States indicated in the closure documents whether the financial corrections have been deducted, and these amounts are reported in the above table. Financial corrections decided/confirmed for the programming period 1994-99 relate to either financial corrections following a Commission decision or to the identification by the Member State of irregularities after the closure of the operational programme that the Commission recovers by issuance of a recovery order.

Regarding FIFG/EFF, the amount of EUR 3 million of financial corrections decided/confirmed concerns both the closure process on certain programmes, and the conclusion of audits on others.

Concerning EAGGF-Guidance, not all programmes are closed. Financial corrections will continue to be reported in 2012 and 2013, even if the amounts at stake are very limited.

It should be noted that amounts reported in the above tables for EAGGF Guidance Fund also include recoveries of irregularities for EUR 2 million in 2011 (2010: EUR 3 million). These amounts represent sums collected by the European Commission by means of a Commission Decision, following the recovery of undue payment effected by the Member State.

6.4.2   
  Financial corrections implemented in 2011

Financial corrections implemented in 2011

Financial corrections implemented in 2011 by programming period

Financial corrections implemented in 2011 by programming period

| EUR millions |
| --- |
| | 2011 | 2010 |
| Cohesion policy (EU work) |
| — | 1994-1999 programmes |

EUR millions

2011

2010

Cohesion policy (EU work)

Cohesion policy (EU work)

—

1994-1999 programmes

32

476

| — | 2000-2006 programmes |
| --- | --- |

—

2000-2006 programmes

432

259

| — | 2007-2013 programmes |
| --- | --- |

—

2007-2013 programmes

160

2

Total

624

737

A breakdown of these amounts per Member State is disclosed in Annex 5.

It should be noted that the above amounts, in particular for the programming period 2000-06, do not include the totality of financial corrections reported by the Member States in final payment claims received by the Commission in 2010, which are in the process of being validated. At this stage, the financial correction is implemented by the Member State who certifies the deduction of the financial correction amount from the final payment claim amount. However, in the context of programme closure, the validation of the claim by the authorising officer in the accounting system is subject to longer regulatory deadlines before it can be fully processed and payments be made by the Commission. Payments claims received before the year-end 2010 and not yet authorised at end 2011 include financial corrections however as these payment claims will only be processed in 2012 and following years, the amount of implemented financial corrections will be reported after verification of all closure documents and full validation of the related financial transactions. The corrections for the current programming period 2007-13 should increase further in the coming years as a result of the current controls on the spot.

Financial corrections implemented in 2011 (decided/confirmed in 2011 and in previous years)

Financial corrections implemented in 2011 (decided/confirmed in 2011 and in previous years)

| EUR millions |
| --- |
| | ERDF | CF | ESF | FIFG/EFF | EAGGF Guidance | Total 2010 |
| Financial Corrections 1994-1999 period: |
| Confirmed in 2011 | 8 | — | 1 | 0 | 1 | 10 |
| Confirmed previous years | 22 | — | 0 | — | 0 | 22 |
| Subtotal 1994-1999 period | 30 | — | 1 | 0 | 1 | 32 |
| Financial Corrections 2000-2006: |
| Confirmed in 2011 | 211 | 79 | 0 | 0 | 0 | 291 |
| Confirmed previous years | 175 | 35 | 19 | (90) | — | 140 |
| Subtotal 2000-2006 period | 387 | 115 | 19 | (90) | 0 | 432 |
| Financial Corrections 2007-2013: |
| Confirmed in 2011 | 2 | — | 157 | — | — | 160 |
| Confirmed previous years | 0 | — | 1 | — | — | 1 |
| Subtotal 2007-2013 period | 2 | — | 158 | — | — | 161 |
| Total financial corrections implemented in 2011 | 419 | 115 | 178 | (90) | 1 | 624 |
| Total financial corrections implemented in 2010 | 542 | 21 | 42 | 90 | 41 | 737 |

EUR millions

ERDF

CF

ESF

FIFG/EFF

EAGGF Guidance

Total 2010

Financial Corrections 1994-1999 period:

Confirmed in 2011

8

—

1

0

1

10

Confirmed previous years

22

—

0

—

0

22

Subtotal 1994-1999 period

30

—

1

0

1

32

Financial Corrections 2000-2006:

Confirmed in 2011

211

79

0

0

0

291

Confirmed previous years

175

35

19

(90)

—

140

Subtotal 2000-2006 period

387

115

19

(90)

0

432

Financial Corrections 2007-2013:

Confirmed in 2011

2

—

157

—

—

160

Confirmed previous years

0

—

1

—

—

1

Subtotal 2007-2013 period

2

—

158

—

—

161

Total financial corrections implemented in 2011

419

115

178

(90)

1

624

Total financial corrections implemented in 2010

542

21

42

90

41

737

Out of the amount of EUR 624 million reported as financial correction implemented in 2011, EUR 212 million include amounts implemented in previous years but not reported before, as well as adjustments on previously-reported amounts, for the same reasons explained in note 6.4.1.

6.4.1

Financial corrections implemented in 2011 (by implementation type)

Financial corrections implemented in 2011 (by implementation type)

| EUR millions |
| --- |
| | ERDF | CF | ESF | FIFG/EFF | EAGGF Guidance | TOTAL |
| Financial Corrections 1994-99: |
| Implemented by decommitment/deduction at closure | 23 | — | — | — | — | 23 |
| Implemented by recovery order | 7 | — | 1 | 0 | 1 | 9 |
| Subtotal 1994-1999 period | 30 | — | 1 | 0 | 1 | 32 |
| Financial Corrections 2000-2006: |
| Implemented by decommitment/deduction at closure | 237 | 94 | 19 | 0 | 0 | 351 |
| Implemented by Member States | 142 | 17 | — | (90) | — | 69 |
| Implemented by recovery order | 8 | 4 | — | — | 0 | 12 |
| Subtotal 2000-2006 period | 387 | 115 | 19 | (90) | 0 | 432 |
| Financial Corrections 2007-2013: |
| Implemented by decommitment/deduction at closure | — | — | — | — | — | 0 |
| Implemented by Member States | 2 | — | 158 | — | — | 160 |
| Implemented by recovery order | — | — | — | — | — | 0 |
| Subtotal 2007-2013 period | 2 | — | 158 | — | — | 160 |
| Total financial corrections implemented in 2011 | 419 | 115 | 178 | (90) | 1 | 624 |
| Total financial corrections implemented in 2010 | 542 | 21 | 42 | 90 | 41 | 737 |

EUR millions

ERDF

CF

ESF

FIFG/EFF

EAGGF Guidance

TOTAL

Financial Corrections 1994-99:

Implemented by decommitment/deduction at closure

23

—

—

—

—

23

Implemented by recovery order

7

—

1

0

1

9

Subtotal 1994-1999 period

30

—

1

0

1

32

Financial Corrections 2000-2006:

Implemented by decommitment/deduction at closure

237

94

19

0

0

351

Implemented by Member States

142

17

—

(90)

—

69

Implemented by recovery order

8

4

—

—

0

12

Subtotal 2000-2006 period

387

115

19

(90)

0

432

Financial Corrections 2007-2013:

Implemented by decommitment/deduction at closure

—

—

—

—

—

0

Implemented by Member States

2

—

158

—

—

160

Implemented by recovery order

—

—

—

—

—

0

Subtotal 2007-2013 period

2

—

158

—

—

160

Total financial corrections implemented in 2011

419

115

178

(90)

1

624

Total financial corrections implemented in 2010

542

21

42

90

41

737

The amount of financial corrections implemented in the year by issuance of a recovery order by the Commission (i.e. cash reimbursed to the Commission) is EUR 21 million, EUR 9 million for the 1994-99 period, and EUR 12 million for the 2000-06 period (2010: EUR 158 million). For reasons given above in note 6.3.1, implementation by means of a recovery order represent only a very limited amount of financial corrections (i.e. 3 % of the amount implemented in 2011).

6.3.1

Concerning ERDF, it should be noted that since final payment claims introduced in September 2010 are still under an authorising process, they have not been taken into account in the above implementation figures, thus the relatively lower implementation rates of 65 % and 78 % for the ERDF and for the Cohesion Fund respectively. Almost all amounts to be implemented stem from the on-going closure of 2000-06 programmes: EUR 2,1 billion (out of an oustanding total of EUR 2,2 billion) are included in ERDF/Cohesion Fund final payment claims received but will be reported as implemented only when the final payment will be authorised in the upcoming months.

Concerning the ESF, all the financial corrections implemented by the issuance of a recovery order relate to the programming period 1994-99 since programmes are closed. For the period 2000-06 the corrections are either identified by the Member State in the closure documents or identified by the Commission who then requests the Member State to confirm that those amounts should be deducted at closure. Therefore no recovery orders are issued. It should be noted that a high number of programmes are still under analysis, consequently the amount of financial corrections implemented at closure will increase in the coming years following the current closure process (analysis of closure documents and financial validation of last payment claim).

Concerning FIFG/EFF, the negative amount of EUR 90 million represents an adjustment of several financial corrections for Spain which were erroneously reported as implemented in 2010. The Member State did deduct the amounts in question from claims sent to the Commission in 2010, however these claims were part of the closure documents of this programme, and were still being processed by the Commission at 31.12.2010. According to the definition of implementation this adjustment is presented as a negative amount in the 2011 figures.

6.4.3   
  Financial corrections – cumulative figures and implementation rates

Financial corrections – cumulative figures and implementation rates

Financial corrections decided/confirmed – cumulative figures

Financial corrections decided/confirmed – cumulative figures

| EUR millions |
| --- |
| | 1994-1999 Period | 2000-2006 Period | 2007-2013 Period | Total as at end 2011 | Total as at end 2010 |
| ERDF | 1 769 | 4 575 | 4 | 6 348 | 5 924 |
| Cohesion Fund | 273 | 508 | 0 | 781 | 763 |
| ESF | 397 | 1 182 | 218 | 1 798 | 1 572 |
| FIFG/EFF | 100 | 99 | 0 | 198 | 195 |
| EAGGF Guidance | 125 | 41 | 0 | 166 | 165 |
| Total | 2 663 | 6 405 | 222 | 9 291 | 8 619 |

EUR millions

1994-1999 Period

2000-2006 Period

2007-2013 Period

Total as at end 2011

Total as at end 2010

ERDF

1 769

4 575

4

6 348

5 924

Cohesion Fund

273

508

0

781

763

ESF

397

1 182

218

1 798

1 572

FIFG/EFF

100

99

0

198

195

EAGGF Guidance

125

41

0

166

165

Total

2 663

6 405

222

9 291

8 619

A breakdown of the total amount per Member State is disclosed in Annex 4.

Financial corrections implemented – cumulative figures

Financial corrections implemented – cumulative figures

| EUR millions |
| --- |
| | 1994-1999 Period | 2000-2006 Period | 2007-2013 Period | Total as at end 2011 | Total as at end 2010 |
| ERDF | 1 766 | 2 359 | 3 | 4 128 | 3 709 |
| Cohesion Fund | 266 | 342 | 0 | 608 | 493 |
| ESF | 396 | 1 165 | 159 | 1 720 | 1 542 |
| FIFG/EFF | 100 | 4 | 0 | 104 | 194 |
| EAGGF Guidance | 125 | 41 | 0 | 166 | 165 |
| Total | 2 652 | 3 912 | 162 | 6 726 | 6 102 |

EUR millions

1994-1999 Period

2000-2006 Period

2007-2013 Period

Total as at end 2011

Total as at end 2010

ERDF

1 766

2 359

3

4 128

3 709

Cohesion Fund

266

342

0

608

493

ESF

396

1 165

159

1 720

1 542

FIFG/EFF

100

4

0

104

194

EAGGF Guidance

125

41

0

166

165

Total

2 652

3 912

162

6 726

6 102

A breakdown of the total amount per Member State is disclosed in Annex 5.

Included in the above table are financial corrections that are being challenged by certain Member States (noting that past experience has shown that the Commission has very rarely had to repay amounts following such cases). For more details see note 5.4.

5.4

Financial corrections decided/confirmed as at 31 December 2011 but not yet implemented and implementation rates as at 31 December 2011 (cumulative figures)

Financial corrections decided/confirmed as at 31 December 2011 but not yet implemented and implementation rates as at 31 December 2011 (cumulative figures)

| EUR millions |
| --- |
| | ERDF | CF | ESF | FIFG/EFF | EAGGF Guidance | Total 2011 | Total 2010 |
| Financial corrections 1994-1999 programmes |
| Financial corrections confirmed/decided | 1 769 | 273 | 397 | 100 | 125 | 2 663 | 2 652 |
| Financial corrections implemented | 1 766 | 266 | 396 | 100 | 125 | 2 652 | 2 621 |
| Financial corrections confirmed/decided but not yet implemented | 3 | 8 | 1 | 0 | 0 | 11 | 31 |
| Rate of implementation | 100 % | 97 % | 100 % | 100 % | 100 % | 100 % | 99 % |
| Financial corrections 2000-2006 programmes |
| Financial corrections confirmed/decided | 4 575 | 508 | 1 182 | 99 | 41 | 6 405 | 5 965 |
| Financial corrections implemented | 2 359 | 342 | 1 165 | 4 | 41 | 3 912 | 3 480 |
| Financial corrections confirmed/decided but not yet implemented | 2 216 | 166 | 17 | 94 | 0 | 2 493 | 2 485 |
| Rate of implementation | 52 % | 67 % | 99 % | 4 % | 100 % | 61 % | 58 % |
| Financial corrections 2007-2013 programmes |
| Financial corrections confirmed/decided | 4 | — | 217 | — | — | 222 | 2 |
| Financial corrections implemented | 3 | — | 159 | — | — | 162 | 2 |
| Financial corrections confirmed/decided but not yet implemented | 0 | — | 59 | — | — | 60 | 0 |
| Rate of implementation | 87 % | N/A | 73 % | N/A | N/A | 73 % | 84 % |
| Total financial corrections |
| Financial corrections confirmed/decided | 6 348 | 781 | 1 797 | 198 | 166 | 9 291 | 8 619 |
| Financial corrections implemented | 4 128 | 608 | 1 721 | 104 | 166 | 6 726 | 6 102 |
| Financial corrections confirmed/decided but not yet implemented | 2 220 | 173 | 76 | 94 | 0 | 2 565 | 2 516 |
| Rate of implementation | 65 % | 78 % | 96 % | 53 % | 100 % | 72 % | 71 % |

EUR millions

ERDF

CF

ESF

FIFG/EFF

EAGGF Guidance

Total 2011

Total 2010

Financial corrections 1994-1999 programmes

Financial corrections 1994-1999 programmes

Financial corrections confirmed/decided

1 769

273

397

100

125

2 663

2 663

2 652

2 652

Financial corrections implemented

1 766

266

396

100

125

2 652

2 652

2 621

2 621

Financial corrections confirmed/decided but not yet implemented

3

8

1

0

0

11

11

31

31

Rate of implementation

Rate of implementation

100 %

100 %

97 %

97 %

100 %

100 %

100 %

100 %

100 %

100 %

100 %

100 %

99 %

99 %

Financial corrections 2000-2006 programmes

Financial corrections 2000-2006 programmes

Financial corrections confirmed/decided

4 575

508

1 182

99

41

6 405

6 405

5 965

5 965

Financial corrections implemented

2 359

342

1 165

4

41

3 912

3 912

3 480

3 480

Financial corrections confirmed/decided but not yet implemented

2 216

166

17

94

0

2 493

2 493

2 485

2 485

Rate of implementation

Rate of implementation

52 %

52 %

67 %

67 %

99 %

99 %

4 %

4 %

100 %

100 %

61 %

61 %

58 %

58 %

Financial corrections 2007-2013 programmes

Financial corrections 2007-2013 programmes

Financial corrections confirmed/decided

4

—

217

—

—

222

222

2

2

Financial corrections implemented

3

—

159

—

—

162

162

2

2

Financial corrections confirmed/decided but not yet implemented

0

—

59

—

—

60

60

0

0

Rate of implementation

Rate of implementation

87 %

87 %

N/A

N/A

73 %

73 %

N/A

N/A

N/A

N/A

73 %

73 %

84 %

84 %

Total financial corrections

Total financial corrections

Financial corrections confirmed/decided

6 348

781

1 797

198

166

9 291

9 291

8 619

8 619

Financial corrections implemented

4 128

608

1 721

104

166

6 726

6 726

6 102

6 102

Financial corrections confirmed/decided but not yet implemented

2 220

173

76

94

0

2 565

2 565

2 516

2 516

Rate of implementation

Rate of implementation

65 %

65 %

78 %

78 %

96 %

96 %

53 %

53 %

100 %

100 %

72 %

72 %

71 %

71 %

Concerning the programming period 2000-2006, the low implementation rate is explained by the ongoing closure process whereby payment claims received at end 2010 are not yet authorised, and the related financial corrections cannot yet be taken into account in the 2011 implementation figures.

6.4.4   
  Recoveries

Recoveries

Recoveries confirmed in 2011

Recoveries confirmed in 2011

| EUR millions |
| --- |
| | 2011 | 2010 |
| Other management types | 50 | 24 |

EUR millions

2011

2010

Other management types

50

24

Recoveries implemented in 2011

Recoveries implemented in 2011

| EUR millions |
| --- |
| | 2011 | 2010 |
| Other management types | 48 | 25 |

EUR millions

2011

2010

Other management types

48

25

Please note that some amounts included in the above table were previously reported under note 6.5 in 2010.

6.5

6.4.5   
  Financial corrections in progress

Financial corrections in progress

| EUR millions |
| --- |
| | Financial corrections in progress as at 31.12.2010 | New financial corrections in progress in 2011 | Financial corrections decided in 2011 | Adjustments to financial corrections decided or in progress as at 31.12.2010 | Financial corrections in progress as at 31.12.2011 |
| Structural and Cohesion funds (1994-1999, 2000-2006 and 2007-2013 programmes) |
| ERDF | 197 | 91 | (85) | (43) | 160 |
| Cohesion Fund | 262 | 105 | (69) | (132) | 166 |
| ESF | 284 | 0 | (1) | 0 | 283 |
| FIFG/EFF | 0 | 6 | 0 | 0 | 6 |
| EAGGF Guidance | 4 | 24 | (1) | (3) | 24 |
| Total | 747 | 227 | (156) | (178) | 640 |

EUR millions

Financial corrections in progress as at 31.12.2010

New financial corrections in progress in 2011

Financial corrections decided in 2011

Adjustments to financial corrections decided or in progress as at 31.12.2010

Financial corrections in progress as at 31.12.2011

Structural and Cohesion funds (1994-1999, 2000-2006 and 2007-2013 programmes)

Structural and Cohesion funds (1994-1999, 2000-2006 and 2007-2013 programmes)

ERDF

197

91

(85)

(43)

160

Cohesion Fund

262

105

(69)

(132)

166

ESF

284

0

(1)

0

283

FIFG/EFF

0

6

0

0

6

EAGGF Guidance

4

24

(1)

(3)

24

Total

747

227

(156)

(178)

640

At the end of 2011, correction procedures were in progress at Commission level for approximately 140 programmes for ERDF and for the Cohesion Fund. The decrease in amounts compared to previous years reflects the phasing out of financial corrections previously reported as ‘in progress’ for the 2000-06 programmes and the initiation of fewer procedures at this stage of implementation for the current programming period.

Concerning the ESF, the decrease in the estimated amount of financial corections in progress is mainly caused by the closure of some procedures initiated in 2010 and related to five programmes of the 2007-13 period, one procedure for the 2000-06 period and one procedure for the 1994-99 period. It should be noted that in the situation where an estimate of potential amounts at stake during the audit cannot be calculated, mainly because the controls are not finished yet, they are reported in the above table for a EUR 1 value (prudent approach). This is the case for the current cases in relation to the 2007-13 period.

6.4.6   
  Interruptions and suspension of payments

Interruptions and suspension of payments

The breakdown of interruption cases and amounts per Member State for 2011 is as follows:

| EUR millions |
| --- |
| | ERDF / Cohesion Fund | ESF | EFF | Total |
| | Number of cases | Amount | Number of cases | Amount | Number of cases | Amount | Number of cases | Amount |
| Interruptions - closed cases as at 31.12.2011 |
| Czech Republic | 2 | 130 | | | | | 2 | 130 |
| Germany | 7 | 246 | | | | | 7 | 246 |
| Greece | 2 | 132 | | | | | 2 | 132 |
| Spain | 12 | 277 | 2 | 8 | | | 14 | 285 |
| Italy | 7 | 100 | 4 | 35 | 1 | 6 | 12 | 141 |
| Latvia | | | | | 1 | 0 | 1 | 0 |
| Lithuania | 1 | 32 | | | 1 | 1 | 2 | 33 |
| Hungary | 9 | 211 | | | | | 9 | 211 |
| Austria | | | 1 | 0 | | | 1 | 0 |
| Poland | | | 2 | 519 | | | 2 | 519 |
| Portugal | | | | | 1 | 10 | 1 | 10 |
| Romania | 2 | 42 | | | | | 2 | 42 |
| Slovakia | 1 | 30 | | | | | 1 | 30 |
| United Kingdom | 6 | 109 | 2 | 26 | | | 8 | 135 |
| Cross border | 6 | 22 | | | | | 6 | 22 |
| Subtotal closed cases | 55 | 1 331 | 11 | 588 | 4 | 17 | 70 | 1 936 |
| Interruptions - open cases as at 31.12.2011 |
| Denmark | | | | | 1 | 0 | 1 | 0 |
| Germany | 3 | 17 | | | 2 | 1 | 5 | 18 |
| Estonia | | | | | 1 | 0 | 1 | 0 |
| Spain | | | 2 | 10 | 1 | 62 | 3 | 72 |
| France | | | 2 | 25 | 2 | 3 | 4 | 28 |
| Italy | 10 | 303 | 4 | 53 | | | 14 | 356 |
| Slovakia | 2 | 71 | | | | | 2 | 71 |
| Finland | | | | | 1 | 0 | 1 | 0 |
| Sweden | | | | | 1 | 0 | 1 | 0 |
| United Kingdom | | | 2 | 234 | 1 | 34 | 3 | 268 |
| Subtotal open cases | 15 | 391 | 10 | 323 | 10 | 100 | 35 | 814 |
| Total interruptions in 2011 | 70 | 1 722 | 21 | 911 | 14 | 117 | 105 | 2 750 |
| Total interruptions in 2010 | 49 | 2 156 | 12 | 255 | 12 | 127 | 73 | 2 538 |

EUR millions

ERDF / Cohesion Fund

ESF

EFF

Total

Number of cases

Amount

Number of cases

Amount

Number of cases

Amount

Number of cases

Amount

Interruptions - closed cases as at 31.12.2011

Interruptions - closed cases as at 31.12.2011

Czech Republic

2

130

2

130

Germany

7

246

7

246

Greece

2

132

2

132

Spain

12

277

2

8

14

285

Italy

7

100

4

35

1

6

12

141

Latvia

1

0

1

0

Lithuania

1

32

1

1

2

33

Hungary

9

211

9

211

Austria

1

0

1

0

Poland

2

519

2

519

Portugal

1

10

1

10

Romania

2

42

2

42

Slovakia

1

30

1

30

United Kingdom

6

109

2

26

8

135

Cross border

6

22

6

22

Subtotal closed cases

55

1 331

11

588

4

17

70

1 936

Interruptions - open cases as at 31.12.2011

Interruptions - open cases as at 31.12.2011

Denmark

1

0

1

0

Germany

3

17

2

1

5

18

Estonia

1

0

1

0

Spain

2

10

1

62

3

72

France

2

25

2

3

4

28

Italy

10

303

4

53

14

356

Slovakia

2

71

2

71

Finland

1

0

1

0

Sweden

1

0

1

0

United Kingdom

2

234

1

34

3

268

Subtotal open cases

15

391

10

323

10

100

35

814

Total interruptions in 2011

70

1 722

21

911

14

117

105

2 750

Total interruptions in 2010

49

2 156

12

255

12

127

73

2 538

Concerning the ERDF and the Cohesion Fund, 70 interruption decisions for payment deadlines were taken in 2011 for a total amount of EUR 1 722 million. Payments were released for 55 cases representing EUR 1 331 million. 15 cases were still ongoing at year-end, covering an amount of EUR 391 million. Suspension procedures were initiated for ten programmes in 2011, and one suspension decision was formally taken in early 2012. The procedure was closed for four cases in 2011 based on actions taken and reported by the Member States. For the remaining five cases the procedures were still ongoing at year end.

Concerning the ESF, 21 interruption decisions for payment deadlines were taken in 2011 for a total amount of EUR 911 million, all relating to the 2007-2013 programming period. Payments were released before 31 December 2011 for 11 cases, representing EUR 588 million. 10 cases are still ongoing for an amount of EUR 323 million. Additionally, 3 suspension decisions were adopted in 2011 (Spain, France and Italy), all relating to the 2007-2013 period. Suspension was still ongoing for these 3 cases after 31 December 2011.

6.5   OTHER FINANCIAL CORRECTIONS AND RECOVERIES

OTHER FINANCIAL CORRECTIONS AND RECOVERIES

This heading concerns the financial corrections and recovery of amounts unduly paid because of errors or irregularities detected either by the Commission, Member States, the European Court of Auditors, or OLAF for the part of the budget which is not executed under shared management.

Other financial corrections decided/confirmed in 2011

Other financial corrections decided/confirmed in 2011

| EUR millions |
| --- |
| | 2011 | 2010 |
| European Refugee Fund II | 0 | — |

EUR millions

2011

2010

European Refugee Fund II

0

—

Other financial corrections implemented in 2011

Other financial corrections implemented in 2011

| EUR millions |
| --- |
| | 2011 | 2010 |
| European Refugee Fund II | 0 | — |

EUR millions

2011

2010

European Refugee Fund II

0

—

Financial corrections is a mechanism that starts to be also applied in the policy of Home Affairs. The amount of financial corrections decided and implemented in 2011 is EUR 0,4 million and is expected to increase in the coming years.

Other recoveries confirmed in 2011

Other recoveries confirmed in 2011

| EUR millions |
| --- |
| | 2011 | 2010 |
| Other management types: |
| — | external actions |

EUR millions

2011

2010

Other management types:

Other management types:

—

external actions

107

137

| — | internal policies |
| --- | --- |

—

internal policies

270

164

Total other recoveries confirmed

377

301

Other recoveries implemented in 2011

Other recoveries implemented in 2011

| EUR millions |
| --- |
| | 2011 | 2010 |
| Other management types: |
| — | external actions |

EUR millions

2011

2010

Other management types:

Other management types:

—

external actions

77

136

| — | internal policies |
| --- | --- |

—

internal policies

268

138

Total other recoveries implemented

346

274

Please note that some amounts previously reported in 2010 in the above tables under internal policies are now disclosed in note 6.4.4.

6.4.4

NOTE 6 – ANNEX 1

NOTE 6 – ANNEX 1

Total financial corrections and recoveries decided in 2011 for EAGF - Breakdown per Member State

Total financial corrections and recoveries decided in 2011 for EAGF - Breakdown per Member State

| EUR millions |
| --- |
| Member State | Financial clearance | Conformity clearance | Irregularities declared | Total 2011 | Total 2010 |
| Belgium | 0 | — | 9 | 9 | 4 |
| Bulgaria | 0 | 21 | 3 | 24 | 20 |
| Czech Republic | 0 | — | 1 | 1 | 1 |
| Denmark | 0 | 22 | 5 | 27 | 12 |
| Germany | (1) | 1 | 11 | 11 | 28 |
| Estonia | 0 | 0 | 0 | 0 | 0 |
| Ireland | (1) | — | 8 | 8 | 7 |
| Greece | 2 | 257 | 4 | 263 | 477 |
| Spain | 2 | 116 | 20 | 138 | 83 |
| France | 2 | 2 | 18 | 23 | 67 |
| Italy | (58) | 80 | 49 | 71 | 78 |
| Cyprus | 0 | 8 | 0 | 8 | 1 |
| Latvia | 0 | — | 1 | 1 | 0 |
| Lithuania | 0 | — | 1 | 1 | 2 |
| Luxembourg | 0 | — | 0 | 0 | 1 |
| Hungary | 0 | — | 2 | 3 | 8 |
| Malta | 0 | 0 | 0 | 0 | 0 |
| Netherlands | — | 25 | 4 | 29 | 51 |
| Austria | 0 | 1 | 3 | 5 | 2 |
| Poland | 0 | 46 | 2 | 49 | 52 |
| Portugal | 1 | 2 | 8 | 11 | 58 |
| Romania | 8 | 39 | 8 | 55 | 55 |
| Slovenia | 0 | — | 0 | 0 | 5 |
| Slovakia | 0 | — | 1 | 1 | 0 |
| Finland | 0 | 1 | 1 | 2 | 2 |
| Sweden | 0 | 72 | 2 | 74 | 5 |
| United Kingdom | (20) | 33 | 11 | 24 | 213 |
| Total decided | (63) | 728 | 174 | 839 | 1 233 |

EUR millions

Member State

Financial clearance

Conformity clearance

Irregularities declared

Total 2011

Total 2010

Belgium

0

—

9

9

4

Bulgaria

0

21

3

24

20

Czech Republic

0

—

1

1

1

Denmark

0

22

5

27

12

Germany

(1)

1

11

11

28

Estonia

0

0

0

0

0

Ireland

(1)

—

8

8

7

Greece

2

257

4

263

477

Spain

2

116

20

138

83

France

2

2

18

23

67

Italy

(58)

80

49

71

78

Cyprus

0

8

0

8

1

Latvia

0

—

1

1

0

Lithuania

0

—

1

1

2

Luxembourg

0

—

0

0

1

Hungary

0

—

2

3

8

Malta

0

0

0

0

0

Netherlands

—

25

4

29

51

Austria

0

1

3

5

2

Poland

0

46

2

49

52

Portugal

1

2

8

11

58

Romania

8

39

8

55

55

Slovenia

0

—

0

0

5

Slovakia

0

—

1

1

0

Finland

0

1

1

2

2

Sweden

0

72

2

74

5

United Kingdom

(20)

33

11

24

213

Total decided

(63)

728

174

839

1 233

NOTE 6 – ANNEX 2

NOTE 6 – ANNEX 2

Total financial corrections and recoveries implemented in 2011 for EAGF - Breakdown per Member State

Total financial corrections and recoveries implemented in 2011 for EAGF - Breakdown per Member State

| EUR millions |
| --- |
| Member State | Financial clearance and non-respected payment deadlines | Conformity clearance | Irregularities declared by Member States (repaid to EU) | Total 2011 | Total 2010 |
| Belgium | 0 | — | 10 | 10 | 3 |
| Bulgaria | 0 | 12 | 2 | 15 | 6 |
| Czech Republic | 0 | 1 | 1 | 2 | 1 |
| Denmark | 0 | 0 | 3 | 3 | 12 |
| Germany | (1) | 0 | 11 | 10 | 26 |
| Estonia | 0 | — | 0 | 0 | 0 |
| Ireland | (1) | — | 6 | 5 | 5 |
| Greece | 2 | 191 | 5 | 198 | 150 |
| Spain | 2 | 116 | 22 | 140 | 130 |
| France | 2 | 22 | 16 | 41 | 120 |
| Italy | (58) | 41 | 60 | 44 | 33 |
| Cyprus | 0 | — | 0 | 0 | 1 |
| Latvia | 0 | — | 1 | 1 | 0 |
| Lithuania | 0 | 0 | 2 | 2 | 4 |
| Luxembourg | 0 | — | 0 | 0 | 1 |
| Hungary | 0 | (3) | 2 | (1) | 26 |
| Malta | 0 | — | 0 | 0 | 0 |
| Netherlands | — | 52 | 4 | 56 | 51 |
| Austria | 0 | — | 1 | 1 | 3 |
| Poland | 0 | 1 | 2 | 3 | 97 |
| Portugal | 1 | 16 | 8 | 25 | 24 |
| Romania | 8 | 26 | 7 | 41 | 16 |
| Slovenia | 0 | 4 | 1 | 4 | 1 |
| Slovakia | 0 | — | 1 | 1 | 1 |
| Finland | 0 | — | 1 | 1 | 2 |
| Sweden | 0 | — | 2 | 2 | 5 |
| United Kingdom | (20) | 27 | 10 | 18 | 215 |
| Total implemented | –63 | 506 | 178 | 621 | 934 |

EUR millions

Member State

Financial clearance and non-respected payment deadlines

Conformity clearance

Irregularities declared by Member States (repaid to EU)

Total 2011

Total 2010

Belgium

0

—

10

10

3

Bulgaria

0

12

2

15

6

Czech Republic

0

1

1

2

1

Denmark

0

0

3

3

12

Germany

(1)

0

11

10

26

Estonia

0

—

0

0

0

Ireland

(1)

—

6

5

5

Greece

2

191

5

198

150

Spain

2

116

22

140

130

France

2

22

16

41

120

Italy

(58)

41

60

44

33

Cyprus

0

—

0

0

1

Latvia

0

—

1

1

0

Lithuania

0

0

2

2

4

Luxembourg

0

—

0

0

1

Hungary

0

(3)

2

(1)

26

Malta

0

—

0

0

0

Netherlands

—

52

4

56

51

Austria

0

—

1

1

3

Poland

0

1

2

3

97

Portugal

1

16

8

25

24

Romania

8

26

7

41

16

Slovenia

0

4

1

4

1

Slovakia

0

—

1

1

1

Finland

0

—

1

1

2

Sweden

0

—

2

2

5

United Kingdom

(20)

27

10

18

215

Total implemented

–63

506

178

621

934

NOTE 6 – ANNEX 3

NOTE 6 – ANNEX 3

Cumulated EAGF clearance of accounts amounts - decided - Breakdown per Member State

Cumulated EAGF clearance of accounts amounts - decided - Breakdown per Member State

| EUR millions |
| --- |
| Member State | EAGF Clearance of accounts Cumulated amount at end 2011 |
| Belgium | 33 |
| Bulgaria | 37 |
| Czech Republic | 1 |
| Denmark | 172 |
| Germany | 171 |
| Estonia | 0 |
| Ireland | 41 |
| Greece | 2 023 |
| Spain | 1 334 |
| France | 1 052 |
| Italy | 1 472 |
| Cyprus | 10 |
| Latvia | 0 |
| Lithuania | 2 |
| Luxembourg | 5 |
| Hungary | 24 |
| Malta | 0 |
| Netherlands | 163 |
| Austria | 7 |
| Poland | 66 |
| Portugal | 133 |
| Romania | 86 |
| Slovenia | 5 |
| Slovakia | 0 |
| Finland | 21 |
| Sweden | 95 |
| United Kingdom | 762 |
| Total decided | 7 717 |

EUR millions

Member State

EAGF Clearance of accounts Cumulated amount at end 2011

Belgium

33

Bulgaria

37

Czech Republic

1

Denmark

172

Germany

171

Estonia

0

Ireland

41

Greece

2 023

Spain

1 334

France

1 052

Italy

1 472

Cyprus

10

Latvia

0

Lithuania

2

Luxembourg

5

Hungary

24

Malta

0

Netherlands

163

Austria

7

Poland

66

Portugal

133

Romania

86

Slovenia

5

Slovakia

0

Finland

21

Sweden

95

United Kingdom

762

Total decided

7 717

NOTE 6 – ANNEX 4

NOTE 6 – ANNEX 4

Total financial corrections confirmed in 2011 for Structural Actions - Breakdown per Member State

Total financial corrections confirmed in 2011 for Structural Actions - Breakdown per Member State

| EUR millions |
| --- |
| Member State | Cumulative end 2010 | Financial corrections confirmed in 2011 | Cumulative end 2011 |
| ERDF | CF | ESF | FIFG/EFF | EAGGF Guidance | Total Year 2011 |
| 1994-1999 | 2 652 | 11 | 0 | 1 | 0 | 1 | 13 | 2 664 |
| Belgium | 5 | 0 | — | — | — | — | 0 | 5 |
| Denmark | 3 | 0 | — | — | — | — | 0 | 4 |
| Germany | 340 | (2) | — | — | 0 | 1 | (1) | 339 |
| Ireland | 42 | 1 | — | — | — | — | 1 | 43 |
| Greece | 528 | — | — | — | — | — | 0 | 528 |
| Spain | 664 | — | — | 0 | — | — | 0 | 665 |
| France | 88 | 6 | — | 1 | — | — | 8 | 95 |
| Italy | 505 | 2 | — | — | — | 0 | 2 | 507 |
| Luxembourg | 5 | — | — | — | — | — | 0 | 5 |
| Netherlands | 177 | 1 | — | — | — | — | 1 | 178 |
| Austria | 2 | — | — | — | — | 0 | 0 | 2 |
| Portugal | 141 | — | — | — | — | 0 | 0 | 141 |
| Finland | 1 | — | — | — | — | — | 0 | 1 |
| Sweden | 1 | — | — | — | — | — | 0 | 1 |
| United Kingdom | 138 | 2 | — | — | — | 0 | 2 | 140 |
| INTERREG | 10 | 0 | — | — | — | — | 0 | 10 |
| 2000-2006 | 5 965 | 411 | 17 | 9 | 3 | 0 | 440 | 6 405 |
| Belgium | 10 | 0 | — | — | — | — | 0 | 11 |
| Bulgaria | 21 | — | 1 | — | — | — | 1 | 22 |
| Czech Republic | 11 | — | 8 | — | — | — | 8 | 19 |
| Denmark | 0 | 0 | — | — | — | — | 0 | 0 |
| Germany | 13 | 0 | — | 0 | — | 0 | 1 | 13 |
| Estonia | 0 | — | 0 | — | — | — | 0 | 0 |
| Ireland | 44 | — | — | — | — | — | 0 | 44 |
| Greece | 961 | 221 | 1 | — | — | — | 223 | 1 183 |
| Spain | 2 865 | 104 | (5) | — | 0 | — | 98 | 2 963 |
| France | 287 | 0 | — | 0 | 1 | 0 | 2 | 288 |
| Italy | 930 | 25 | — | — | — | — | 25 | 954 |
| Cyprus | 0 | — | — | — | — | — | 0 | 0 |
| Latvia | 4 | — | — | — | — | — | 0 | 4 |
| Lithuania | 2 | — | 0 | — | — | — | 0 | 2 |
| Luxembourg | 2 | 0 | | — | — | — | 0 | 2 |
| Hungary | 52 | 0 | 3 | — | — | — | 3 | 55 |
| Malta | 0 | — | — | — | 0 | — | 0 | 0 |
| Netherlands | 2 | — | — | 0 | — | — | 0 | 2 |
| Austria | 0 | — | — | | — | — | 0 | 0 |
| Poland | 246 | 14 | 5 | 8 | — | — | 27 | 274 |
| Portugal | 157 | 40 | 4 | — | — | — | 44 | 201 |
| Romania | 12 | — | 0 | — | — | — | 0 | 12 |
| Slovenia | 2 | — | — | — | — | — | 0 | 2 |
| Slovakia | 41 | 4 | 1 | — | — | — | 5 | 45 |
| Finland | 1 | — | — | — | — | — | 0 | 1 |
| Sweden | 11 | 0 | — | 0 | — | — | 0 | 11 |
| United Kingdom | 283 | 5 | — | — | 1 | — | 6 | 289 |
| INTERREG | 10 | (2) | — | — | — | — | (2) | 8 |
| 2007-2013 | 2 | 3 | 0 | 218 | 0 | N/A | 219 | 221 |
| Belgium | — | — | — | 0 | — | | 0 | 0 |
| Bulgaria | — | — | — | 2 | — | | 2 | 2 |
| Czech Republic | — | — | — | — | — | | 0 | 0 |
| Denmark | 0 | — | — | — | — | | 0 | 0 |
| Germany | — | — | — | 3 | — | | 3 | 3 |
| Estonia | 0 | — | — | 0 | — | | 0 | 0 |
| Ireland | 0 | — | — | 2 | — | | 2 | 2 |
| Greece | — | — | — | — | — | | 0 | 0 |
| Spain | — | — | — | 87 | — | | 85 | 85 |
| France | 0 | 0 | — | — | — | | 0 | 0 |
| Italy | — | — | — | 1 | — | | 1 | 1 |
| Cyprus | — | — | — | — | — | | 0 | 0 |
| Latvia | — | — | — | — | — | | 0 | 0 |
| Lithuania | — | — | — | — | — | | 0 | 0 |
| Luxembourg | 0 | — | — | — | — | | 0 | 0 |
| Hungary | 1 | 2 | — | 25 | — | | 27 | 27 |
| Malta | — | — | — | — | — | | 0 | 0 |
| Netherlands | — | — | — | — | — | | 0 | 0 |
| Austria | — | — | — | — | — | | 0 | 0 |
| Poland | 0 | — | — | 92 | — | | 92 | 92 |
| Portugal | 1 | — | — | — | — | | 0 | 1 |
| Romania | — | — | — | — | — | | 0 | 0 |
| Slovenia | — | — | — | — | — | | 0 | 0 |
| Slovakia | — | — | — | — | — | | 0 | 0 |
| Finland | — | — | — | — | — | | 0 | 0 |
| Sweden | — | 0 | — | — | — | | 0 | 0 |
| United Kingdom | — | — | — | 6 | — | | 6 | 6 |
| INTERREG | — | 0 | — | — | — | | 0 | 0 |
| Total confirmed | 8 619 | 424 | 17 | 227 | 3 | 1 | 673 | 9 291 |

EUR millions

Member State

Cumulative end 2010

Financial corrections confirmed in 2011

Cumulative end 2011

ERDF

CF

ESF

FIFG/EFF

EAGGF Guidance

Total Year 2011

1994-1999

1994-1999

2 652

2 652

11

11

0

0

1

1

0

0

1

1

13

13

2 664

2 664

Belgium

5

0

—

—

—

—

0

5

Denmark

3

0

—

—

—

—

0

4

Germany

340

(2)

—

—

0

1

(1)

339

Ireland

42

1

—

—

—

—

1

43

Greece

528

—

—

—

—

—

0

528

Spain

664

—

—

0

—

—

0

665

France

88

6

—

1

—

—

8

95

Italy

505

2

—

—

—

0

2

507

Luxembourg

5

—

—

—

—

—

0

5

Netherlands

177

1

—

—

—

—

1

178

Austria

2

—

—

—

—

0

0

2

Portugal

141

—

—

—

—

0

0

141

Finland

1

—

—

—

—

—

0

1

Sweden

1

—

—

—

—

—

0

1

United Kingdom

138

2

—

—

—

0

2

140

INTERREG

10

0

—

—

—

—

0

10

2000-2006

2000-2006

5 965

5 965

411

411

17

17

9

9

3

3

0

0

440

440

6 405

6 405

Belgium

10

0

—

—

—

—

0

11

Bulgaria

21

—

1

—

—

—

1

22

Czech Republic

11

—

8

—

—

—

8

19

Denmark

0

0

—

—

—

—

0

0

Germany

13

0

—

0

—

0

1

13

Estonia

0

—

0

—

—

—

0

0

Ireland

44

—

—

—

—

—

0

44

Greece

961

221

1

—

—

—

223

1 183

Spain

2 865

104

(5)

—

0

—

98

2 963

France

287

0

—

0

1

0

2

288

Italy

930

25

—

—

—

—

25

954

Cyprus

0

—

—

—

—

—

0

0

Latvia

4

—

—

—

—

—

0

4

Lithuania

2

—

0

—

—

—

0

2

Luxembourg

2

0

—

—

—

0

2

Hungary

52

0

3

—

—

—

3

55

Malta

0

—

—

—

0

—

0

0

Netherlands

2

—

—

0

—

—

0

2

Austria

0

—

—

—

—

0

0

Poland

246

14

5

8

—

—

27

274

Portugal

157

40

4

—

—

—

44

201

Romania

12

—

0

—

—

—

0

12

Slovenia

2

—

—

—

—

—

0

2

Slovakia

41

4

1

—

—

—

5

45

Finland

1

—

—

—

—

—

0

1

Sweden

11

0

—

0

—

—

0

11

United Kingdom

283

5

—

—

1

—

6

289

INTERREG

10

(2)

—

—

—

—

(2)

8

2007-2013

2007-2013

2

2

3

3

0

0

218

218

0

0

N/A

N/A

219

219

221

221

Belgium

—

—

—

0

—

0

0

Bulgaria

—

—

—

2

—

2

2

Czech Republic

—

—

—

—

—

0

0

Denmark

0

—

—

—

—

0

0

Germany

—

—

—

3

—

3

3

Estonia

0

—

—

0

—

0

0

Ireland

0

—

—

2

—

2

2

Greece

—

—

—

—

—

0

0

Spain

—

—

—

87

—

85

85

France

0

0

—

—

—

0

0

Italy

—

—

—

1

—

1

1

Cyprus

—

—

—

—

—

0

0

Latvia

—

—

—

—

—

0

0

Lithuania

—

—

—

—

—

0

0

Luxembourg

0

—

—

—

—

0

0

Hungary

1

2

—

25

—

27

27

Malta

—

—

—

—

—

0

0

Netherlands

—

—

—

—

—

0

0

Austria

—

—

—

—

—

0

0

Poland

0

—

—

92

—

92

92

Portugal

1

—

—

—

—

0

1

Romania

—

—

—

—

—

0

0

Slovenia

—

—

—

—

—

0

0

Slovakia

—

—

—

—

—

0

0

Finland

—

—

—

—

—

0

0

Sweden

—

0

—

—

—

0

0

United Kingdom

—

—

—

6

—

6

6

INTERREG

—

0

—

—

—

0

0

Total confirmed

8 619

424

17

227

3

1

673

9 291

NOTE 6 – ANNEX 5

NOTE 6 – ANNEX 5

Total financial corrections implemented in 2011 for Structural Actions — Breakdown per Member State

Total financial corrections implemented in 2011 for Structural Actions — Breakdown per Member State

| EUR millions |
| --- |
| Member State | Cumulative end 2010 | Financial corrections implemented in 2011 | Cumulative end 2011 |
| ERDF | CF | ESF | FIFG/EFF | EAGGF Guidance | Total Year 2011 |
| 1994-1999 | 2 621 | 30 | 0 | 1 | 0 | 1 | 32 | 2 652 |
| Belgium | 6 | 0 | — | — | — | — | 0 | 6 |
| Denmark | 4 | 0 | — | — | — | — | 0 | 4 |
| Germany | 338 | (2) | — | — | 0 | 1 | (1) | 338 |
| Ireland | 40 | — | — | — | — | — | 0 | 40 |
| Greece | 525 | — | — | — | — | — | 0 | 525 |
| Spain | 658 | — | — | 0 | — | — | 0 | 658 |
| France | 89 | 6 | — | 1 | — | — | 8 | 97 |
| Italy | 504 | 0 | — | — | — | 0 | 0 | 505 |
| Luxembourg | 5 | | — | — | — | — | 0 | 5 |
| Netherlands | 177 | 1 | — | — | — | — | 1 | 178 |
| Austria | 2 | — | — | — | — | 0 | 0 | 2 |
| Portugal | 141 | — | — | — | — | 0 | 0 | 141 |
| Finland | 1 | — | — | — | — | — | 0 | 1 |
| Sweden | 1 | — | — | — | — | — | 0 | 1 |
| United Kingdom | 120 | 23 | — | — | — | 0 | 23 | 144 |
| INTERREG | 9 | 0 | — | — | — | — | 0 | 9 |
| 2000-2006 | 3 480 | 387 | 115 | 19 | –90 | 0 | 432 | 3 912 |
| Belgium | 8 | 0 | — | — | — | — | 0 | 8 |
| Bulgaria | 2 | — | 9 | — | — | — | 9 | 12 |
| Czech Republic | 0 | — | 5 | — | — | — | 5 | 5 |
| Denmark | 0 | — | — | — | — | — | 0 | 0 |
| Germany | 10 | 0 | — | 0 | — | 0 | 1 | 11 |
| Estonia | 0 | — | 0 | — | — | — | 0 | 0 |
| Ireland | 26 | — | 1 | — | — | — | 1 | 26 |
| Greece | 904 | 244 | 2 | — | — | — | 245 | 1 149 |
| Spain | 1 051 | 15 | 74 | — | (90) | — | 0 | 1 051 |
| France | 248 | 1 | — | — | — | 0 | 1 | 250 |
| Italy | 768 | 62 | — | 3 | — | — | 65 | 833 |
| Cyprus | 0 | — | — | — | — | — | 0 | 0 |
| Latvia | 4 | — | — | — | — | — | 0 | 4 |
| Lithuania | 1 | — | 0 | — | — | — | 0 | 1 |
| Luxembourg | 2 | — | — | — | — | — | 0 | 2 |
| Hungary | 41 | 4 | 2 | 8 | — | — | 14 | 55 |
| Malta | 0 | — | — | — | 0 | — | 0 | 0 |
| Netherlands | 1 | — | — | 0 | — | — | 0 | 1 |
| Austria | 0 | — | — | — | — | — | 0 | 0 |
| Poland | 90 | 41 | 11 | 8 | — | — | 61 | 151 |
| Portugal | 113 | 4 | 5 | — | — | — | 8 | 121 |
| Romania | 8 | — | 3 | — | — | — | 3 | 11 |
| Slovenia | 2 | — | — | 0 | — | — | 0 | 2 |
| Slovakia | 1 | 2 | 3 | — | — | — | 4 | 6 |
| Finland | 0 | 0 | — | — | — | — | 0 | 0 |
| Sweden | 11 | 0 | — | 0 | — | — | 0 | 11 |
| United Kingdom | 188 | 13 | — | — | — | — | 13 | 201 |
| INTERREG | 0 | 1 | — | — | — | — | 1 | 1 |
| 2007-2013 | 2 | 2 | 0 | 158 | 0 | N/A | 160 | 162 |
| Belgium | — | — | — | 0 | — | | 0 | 0 |
| Bulgaria | — | — | — | 1 | — | | 1 | 1 |
| Czech Republic | — | — | — | — | — | | 0 | 0 |
| Denmark | 0 | — | — | — | — | | 0 | 0 |
| Germany | — | — | — | 3 | — | | 3 | 3 |
| Estonia | 0 | — | — | — | — | | 0 | 0 |
| Ireland | 0 | — | — | 2 | — | | 2 | 2 |
| Greece | — | — | — | — | — | | 0 | 0 |
| Spain | — | — | — | 41 | — | | 41 | 41 |
| France | 0 | 0 | — | — | — | | 0 | 0 |
| Italy | — | — | — | — | — | | 0 | 0 |
| Cyprus | — | — | — | — | — | | 0 | 0 |
| Latvia | — | — | — | — | — | | 0 | 0 |
| Lithuania | — | — | — | — | — | | 0 | 0 |
| Luxembourg | — | — | — | 0 | — | | 0 | 0 |
| Hungary | 1 | 2 | — | 25 | — | | 27 | 28 |
| Malta | — | — | — | — | — | | 0 | 0 |
| Netherlands | — | — | — | — | — | | 0 | 0 |
| Austria | — | — | — | — | — | | 0 | 0 |
| Poland | 0 | — | — | 86 | — | | 86 | 86 |
| Portugal | 1 | 0 | — | 0 | — | | 0 | 1 |
| Romania | — | — | — | — | — | | 0 | 0 |
| Slovenia | — | — | — | — | — | | 0 | 0 |
| Slovakia | — | — | — | — | — | | 0 | 0 |
| Finland | — | — | — | — | — | | 0 | 0 |
| Sweden | — | — | — | — | — | | 0 | 0 |
| United Kingdom | — | — | — | — | — | | 0 | 0 |
| INTERREG | — | 0 | — | — | — | | 0 | 0 |
| Total implemented | 6 102 | 419 | 115 | 178 | (90) | 1 | 624 | 6 726 |

EUR millions

Member State

Cumulative end 2010

Financial corrections implemented in 2011

Cumulative end 2011

ERDF

CF

ESF

FIFG/EFF

EAGGF Guidance

Total Year 2011

1994-1999

1994-1999

2 621

2 621

30

30

0

0

1

1

0

0

1

1

32

32

2 652

2 652

Belgium

6

0

—

—

—

—

0

6

Denmark

4

0

—

—

—

—

0

4

Germany

338

(2)

—

—

0

1

(1)

338

Ireland

40

—

—

—

—

—

0

40

Greece

525

—

—

—

—

—

0

525

Spain

658

—

—

0

—

—

0

658

France

89

6

—

1

—

—

8

97

Italy

504

0

—

—

—

0

0

505

Luxembourg

5

—

—

—

—

0

5

Netherlands

177

1

—

—

—

—

1

178

Austria

2

—

—

—

—

0

0

2

Portugal

141

—

—

—

—

0

0

141

Finland

1

—

—

—

—

—

0

1

Sweden

1

—

—

—

—

—

0

1

United Kingdom

120

23

—

—

—

0

23

144

INTERREG

9

0

—

—

—

—

0

9

2000-2006

2000-2006

3 480

3 480

387

387

115

115

19

19

–90

–90

0

0

432

432

3 912

3 912

Belgium

8

0

—

—

—

—

0

8

Bulgaria

2

—

9

—

—

—

9

12

Czech Republic

0

—

5

—

—

—

5

5

Denmark

0

—

—

—

—

—

0

0

Germany

10

0

—

0

—

0

1

11

Estonia

0

—

0

—

—

—

0

0

Ireland

26

—

1

—

—

—

1

26

Greece

904

244

2

—

—

—

245

1 149

Spain

1 051

15

74

—

(90)

—

0

1 051

France

248

1

—

—

—

0

1

250

Italy

768

62

—

3

—

—

65

833

Cyprus

0

—

—

—

—

—

0

0

Latvia

4

—

—

—

—

—

0

4

Lithuania

1

—

0

—

—

—

0

1

Luxembourg

2

—

—

—

—

—

0

2

Hungary

41

4

2

8

—

—

14

55

Malta

0

—

—

—

0

—

0

0

Netherlands

1

—

—

0

—

—

0

1

Austria

0

—

—

—

—

—

0

0

Poland

90

41

11

8

—

—

61

151

Portugal

113

4

5

—

—

—

8

121

Romania

8

—

3

—

—

—

3

11

Slovenia

2

—

—

0

—

—

0

2

Slovakia

1

2

3

—

—

—

4

6

Finland

0

0

—

—

—

—

0

0

Sweden

11

0

—

0

—

—

0

11

United Kingdom

188

13

—

—

—

—

13

201

INTERREG

0

1

—

—

—

—

1

1

2007-2013

2007-2013

2

2

2

2

0

0

158

158

0

0

N/A

N/A

160

160

162

162

Belgium

—

—

—

0

—

0

0

Bulgaria

—

—

—

1

—

1

1

Czech Republic

—

—

—

—

—

0

0

Denmark

0

—

—

—

—

0

0

Germany

—

—

—

3

—

3

3

Estonia

0

—

—

—

—

0

0

Ireland

0

—

—

2

—

2

2

Greece

—

—

—

—

—

0

0

Spain

—

—

—

41

—

41

41

France

0

0

—

—

—

0

0

Italy

—

—

—

—

—

0

0

Cyprus

—

—

—

—

—

0

0

Latvia

—

—

—

—

—

0

0

Lithuania

—

—

—

—

—

0

0

Luxembourg

—

—

—

0

—

0

0

Hungary

1

2

—

25

—

27

28

Malta

—

—

—

—

—

0

0

Netherlands

—

—

—

—

—

0

0

Austria

—

—

—

—

—

0

0

Poland

0

—

—

86

—

86

86

Portugal

1

0

—

0

—

0

1

Romania

—

—

—

—

—

0

0

Slovenia

—

—

—

—

—

0

0

Slovakia

—

—

—

—

—

0

0

Finland

—

—

—

—

—

0

0

Sweden

—

—

—

—

—

0

0

United Kingdom

—

—

—

—

—

0

0

INTERREG

—

0

—

—

—

0

0

Total implemented

6 102

419

115

178

(90)

1

624

6 726

7.   BORROWING & LENDING ACTIVITIES OF THE EU

This note includes information previously reported under note 2, notes to the balance sheet.

2

7.1   BORROWING AND LENDING ACTIVITIES — OVERVIEW

BORROWING AND LENDING ACTIVITIES — OVERVIEW

Amounts at carrying value 31/12/2011

Amounts at carrying value 31/12/2011

| EUR millions |
| --- |
| | EFSM | BOP | MFA | Euratom | ECSC | Total |
| Loans (see note 2.5) | 28 344 | 11 625 | 595 | 451 | 266 | 41 281 |
| Borrowings (note 2.16) | 28 344 | 11 625 | 595 | 451 | 236 | 41 251 |
| The above amounts are at carrying value whereas the tables below are presented in nominal values. |

EUR millions

EFSM

BOP

MFA

Euratom

ECSC

Total

Loans (see note 2.5)

2.5

28 344

11 625

595

451

266

41 281

41 281

Borrowings (note 2.16)

2.16

28 344

11 625

595

451

236

41 251

41 251

The above amounts are at carrying value whereas the tables below are presented in nominal values.

The European Union (EU) is empowered by the EU Treaty to adopt borrowing programmes to mobilise the financial resources necessary to fulfill its mandate. The European Commission, acting on behalf of the EU, currently operates three main programmes under which it may grant loans and fund these by issuing debt instruments in the capital markets or with financial institutions:

| 1. | European Financial Stabilisation Mechanism (EFSM): support to Euro Area Member states, up to approximately EUR 60 billion, (EUR 28,3 billion outstanding at year-end) |
| --- | --- |

1.

European Financial Stabilisation Mechanism (EFSM): support to Euro Area Member states, up to approximately EUR 60 billion, (EUR 28,3 billion outstanding at year-end)

EFSM

| 2. | Balance-of-Payments (BOP) assistance: to Member States that have not yet adopted the euro; up to EUR 50 billion (EUR 11,6 billion outstanding at year-end) |
| --- | --- |

2.

Balance-of-Payments (BOP) assistance: to Member States that have not yet adopted the euro; up to EUR 50 billion (EUR 11,6 billion outstanding at year-end)

BOP

| 3. | Macro-Financial Assistance (MFA): financial aid programme to assist non-Member States (EUR 595 million outstanding at year-end) |
| --- | --- |

3.

Macro-Financial Assistance (MFA): financial aid programme to assist non-Member States (EUR 595 million outstanding at year-end)

MFA

The key points or characterisitics to note for these 3 instruments are:

| — | EU borrowing is raised on the capital markets or with financial institutions and not from the budget, as the EU is not permitted to borrow to finance its ordinary budgetary expenses or a budget deficit; |
| --- | --- |

—

EU borrowing is raised on the capital markets or with financial institutions and not from the budget, as the EU is not permitted to borrow to finance its ordinary budgetary expenses or a budget deficit;

| — | The size of the borrowings varies from small private placements of single or double digit EUR million amounts to benchmark-size operations in the context of the balance of payment loans and the EFSM. |
| --- | --- |

—

The size of the borrowings varies from small private placements of single or double digit EUR million amounts to benchmark-size operations in the context of the balance of payment loans and the EFSM.

| — | The funds raised are lent back-to-back to the beneficiary country, i.e. with the same coupon, maturity and amount. Notwithstanding the back-to-back methodology, the debt service of the bond is the obligation of the European Union, which will ensure that all bond payments are made in a timely manner. To this effect, BOP beneficiares are required to deposit reimbursements 7 days in advance of the due dates and EFSM beneficiaries 14 days in advance, which allows the Commission sufficient time to ensure timely payment in all circumstances. |
| --- | --- |

—

The funds raised are lent back-to-back to the beneficiary country, i.e. with the same coupon, maturity and amount. Notwithstanding the back-to-back methodology, the debt service of the bond is the obligation of the European Union, which will ensure that all bond payments are made in a timely manner. To this effect, BOP beneficiares are required to deposit reimbursements 7 days in advance of the due dates and EFSM beneficiaries 14 days in advance, which allows the Commission sufficient time to ensure timely payment in all circumstances.

| — | For each country programme, the Council and Commission Decisions determine the overall amount, the instalments to be paid and the maximum average maturity of the loan package. Subsequently, the Commission and the beneficiary country agree loan/funding parameters, including instalments and the payment of tranches. In addition, all but the first instalment of the loan depend on compliance with strict conditions, with agreed terms and conditions similar to IMF support, in the context of a joint EU/IMF financial assistance, which is another factor influencing the timing of funding. |
| --- | --- |

—

For each country programme, the Council and Commission Decisions determine the overall amount, the instalments to be paid and the maximum average maturity of the loan package. Subsequently, the Commission and the beneficiary country agree loan/funding parameters, including instalments and the payment of tranches. In addition, all but the first instalment of the loan depend on compliance with strict conditions, with agreed terms and conditions similar to IMF support, in the context of a joint EU/IMF financial assistance, which is another factor influencing the timing of funding.

| — | This implies that the timing and maturities of issuance are dependent on the related EU lending activity. |
| --- | --- |

—

This implies that the timing and maturities of issuance are dependent on the related EU lending activity.

| — | Funding is exclusively denominated in euro and the maturity spectrum is 5 to 30 years. |
| --- | --- |

—

Funding is exclusively denominated in euro and the maturity spectrum is 5 to 30 years.

| — | Borrowings are direct and unconditional obligations of the EU and guaranteed by the 27 Member States. |
| --- | --- |

—

Borrowings are direct and unconditional obligations of the EU and guaranteed by the 27 Member States.

| — | Should a beneficiary country default, the debt service will be drawn from the available treasury balance of the European Commission, if possible. If that would not be possible, the Commission would draw the funds necessary from the Member States. EU Member States are legally obliged, according to the EU own resources legislation (Article 12 of Council Regulation 1150/2000), to make available sufficient funds to meet the EU’s obligations. Thus investors are only exposed to the credit risk of the EU, not to that of the beneficiary of loans funded. |
| --- | --- |

—

Should a beneficiary country default, the debt service will be drawn from the available treasury balance of the European Commission, if possible. If that would not be possible, the Commission would draw the funds necessary from the Member States. EU Member States are legally obliged, according to the EU own resources legislation (Article 12 of Council Regulation 1150/2000), to make available sufficient funds to meet the EU’s obligations. Thus investors are only exposed to the credit risk of the EU, not to that of the beneficiary of loans funded.

| — | ‘Back-to-back’ lending ensures that the EU budget does not assume any interest rate or foreign exchange risk. |
| --- | --- |

—

‘Back-to-back’ lending ensures that the EU budget does not assume any interest rate or foreign exchange risk.

Additionally, the Euratom legal entity (represented by the Commission) borrows money to lend to both Member and non-Member States to finance projects relating to energy installations. Finally, the European Coal & Steel Community (ECSC) in liquidation has at the balance sheet date one loan granted from borrowed funds still outstanding, for a nominal amount of EUR 46 million. This loan was granted to a public-owned company based in France. ECSC has also in its loan portfolio loans granted from own funds to European institutions’ officials from the former ECSC in liquidation pension fund.

Euratom

ECSC

More details on each of these instruments are given below. The effective interest rates (expressed as a range of interest rates) were as follows:

| Loans | 31.12.2011 | 31.12.2010 |
| --- | --- | --- |
| EFSM | 2,375 %-3,50 % | N/A |
| BOP | 2,375 %-3,625 % | 2,375 %-3,625 % |
| Macro Financial Assistance (MFA) | 1,58513 %-4,54 % | 0,99 %-4,54 % |
| Euratom | 1,067 %-5,76 % | 0,96313 %-5,76 % |
| ECSC in liquidation | 1,158 %-5,8103 % | 0,556 %-5,8103 % |

Loans

31.12.2011

31.12.2010

EFSM

2,375 %-3,50 %

N/A

BOP

2,375 %-3,625 %

2,375 %-3,625 %

Macro Financial Assistance (MFA)

1,58513 %-4,54 %

0,99 %-4,54 %

Euratom

1,067 %-5,76 %

0,96313 %-5,76 %

ECSC in liquidation

1,158 %-5,8103 %

0,556 %-5,8103 %

| Borrowings | 31.12.2011 | 31.12.2010 |
| --- | --- | --- |
| EFSM | 2,375 %-3,50 % | N/A |
| BOP | 2,375 %-3,625 % | 2,375 %-3,625 % |
| Macro Financial Assustante (MFA) | 1,58513 %-4,54 % | 0,99 %-4,54 % |
| Euratom | 0,867 %-5,6775 % | 0,7613 %-5,6775 % |
| ECSC in liquidation | 1,158 %-9,2714 % | 0,556 %-9,2714 % |

Borrowings

31.12.2011

31.12.2010

EFSM

2,375 %-3,50 %

N/A

BOP

2,375 %-3,625 %

2,375 %-3,625 %

Macro Financial Assustante (MFA)

1,58513 %-4,54 %

0,99 %-4,54 %

Euratom

0,867 %-5,6775 %

0,7613 %-5,6775 %

ECSC in liquidation

1,158 %-9,2714 %

0,556 %-9,2714 %

7.2   EFSM

EFSM

EFSM NOMINAL VALUE

EFSM NOMINAL VALUE

| EUR millions |
| --- |
| | Ireland | Portugal | Total |
| Total loans granted | 22 500 | 26 000 | 48 500 |
| Loans disbursed at 31.12.2011 | 13 900 | 14 100 | 28 000 |
| Loans repaid at 31.12.2011 | 0 | 0 | 0 |
| Loans outstanding at 31.12.2011 | 13 900 | 14 100 | 28 000 |
| Undrawn amounts at 31.12.2011 | 8 600 | 11 900 | 20 500 |
| A table showing the reimbursement schedule for these loans is given at the end of this note. |

EUR millions

Ireland

Portugal

Total

Total loans granted

Total loans granted

22 500

26 000

48 500

Loans disbursed at 31.12.2011

13 900

14 100

28 000

Loans repaid at 31.12.2011

0

0

0

Loans outstanding at 31.12.2011

Loans outstanding at 31.12.2011

13 900

13 900

14 100

14 100

28 000

28 000

Undrawn amounts at 31.12.2011

8 600

11 900

20 500

A table showing the reimbursement schedule for these loans is given at the end of this note.

On 11 May 2010 the Council adopted a European Financial Stabilisation Mechanism (EFSM) to preserve financial stability in Europe (Council Regulation (EU) No 407/2010). The mechanism is based on Art. 122.2 of the Treaty and enables the granting of financial assistance to a Member State in difficulties or seriously threatened with severe difficulties caused by exceptional circumstances beyond its control. The assistance may take the form of a loan or credit line. The Commission borrows funds on the capital markets or with financial institutions on behalf of the EU and lends these funds to the beneficiary Member State. For each country receiving a loan under the EFSM, a quarterly assessment on the fulfilment of the policy conditions is carried out before an instalment is disbursed.

The ECOFIN Council conclusions of 9 May 2010 restrict the facility to EUR 60 billion but the legal limit is provided in Article 2.2 of the Council Regulation (EU) No 407/2010, which restricts the outstanding amount of loans or credit lines to the margin available under the own resources ceiling. Borrowings related to loans disbursed under the EFSM are guaranteed by the EU Budget – thus at 31 December 2011, the budget is exposed to a maximum possible risk of EUR 28 344 million regarding these loans (the EUR 28 billion above being the nominal value). As the borrowings under the EFSM are guaranteed by the EU budget, the European Parliament scrutinises the Commission's EFSM actions and exercises control in the context of the budget and discharge procedure.

The Council decided by Implementing decision in December 2010 on a loan to Ireland of maximum EUR 22,5 billion, and in May 2011 on a loan to Portugal of maximum EUR 26 billion. The initial Implementing decisions fixed interest with a margin to result in conditions similar to those of the IMF support. With the adoption of Council Implementing Decisions No 682/2011 and 683/2011 of 11 October 2011, the Council suppressed the interest margin retroactively and extended the maximum average maturity from 7,5 years to 12,5 years and the maturity of individual tranches up to 30 years.

In January 2012, a further EUR 1,5 billion was disbursed to both Ireland and Portugal (30 year maturity). Another EUR 3 billion was disbursed to Ireland in March (20 year maturity). EUR 1.8 billion and EUR 2,7 billion were disbursed to Portugal in April and May respectively (26 and 10 year maturities). EUR 2,3 billion was disbursed to Ireland in July (16 year maturity). Under EFSM, the EU intends to issue further bonds during 2012 for a total amount of EUR 3 billion, for loans to Ireland and Portugal.

7.3   BALANCE OF PAYMENTS (BOP)

BALANCE OF PAYMENTS (BOP)

The BOP facility, a policy based financial instrument, has been reactivated during the current economic and financial crisis to provide medium-term financial assistance to Member States of the EU. It enables the granting of loans to Member States which are experiencing, or are seriously threatened with, difficulties in their balance of payments or capital movements. Only Member States which have not adopted the Euro may benefit from this facility. The maximum outstanding amount of loans to be granted is EUR 50 billion. Borrowings related to these loans are guaranteed by the EU Budget – thus at 31 December 2011, the budget is exposed to a maximum possible risk of EUR 11 625 million regarding these loans (EUR 11,4 billion below being the nominal value).

BOP NOMINAL VALUE

BOP NOMINAL VALUE

| EUR millions |
| --- |
| | Hungary | Latvia | Romania | Total |
| Disbursed in 2008 | 2 000 | — | — | 2 000 |
| Disbursed in 2009 | 3 500 | 2 200 | 1 500 | 7 200 |
| Disbursed in 2010 | — | 700 | 2 150 | 2 850 |
| Disbursed in 2011 | — | — | 1 350 | 1 350 |
| Loans disbursed 31.12.2011 | 5 500 | 2 900 | 5 000 | 13 400 |
| Loans repaid at 31.12.2011 | (2 000) | — | — | (2 000) |
| Outstanding amount at 31.12.2011 | 3 500 | 2 900 | 5 000 | 11 400 |
| Total loans granted | 6 500 | 3 100 | 6 400 | 16 000 |
| Undrawn amounts 31.12.2011 | 0 | 200 | 1 400 | 1 600 |
| A table showing the reimbursement schedule for these loans is given at the end of this note. |

EUR millions

Hungary

Latvia

Romania

Total

Disbursed in 2008

2 000

—

—

2 000

Disbursed in 2009

3 500

2 200

1 500

7 200

Disbursed in 2010

—

700

2 150

2 850

Disbursed in 2011

—

—

1 350

1 350

Loans disbursed 31.12.2011

5 500

2 900

5 000

13 400

Loans repaid at 31.12.2011

(2 000)

—

—

(2 000)

Outstanding amount at 31.12.2011

Outstanding amount at 31.12.2011

3 500

3 500

2 900

2 900

5 000

5 000

11 400

11 400

Total loans granted

6 500

3 100

6 400

16 000

Undrawn amounts 31.12.2011

0

200

1 400

1 600

A table showing the reimbursement schedule for these loans is given at the end of this note.

Between November 2008 and end 2011, loans amounting to EUR 16 billion were granted to Hungary, Latvia and Romania, of which EUR 13.4 billion had been disbursed by the end of 2011. It should be noted that the BOP assistance programme for Hungary expired in November 2010 (with EUR 1 billion undrawn) and a first repayment of EUR 2 billion was received as scheduled in December 2011. Latvia still had EUR 200 million undrawn and available at the end of 2011, but the right to draw this expired unused in January 2012. The total of the new facility granted to Romania (below) was also undrawn at year-end.

In February 2011, Romania requested a follow-up precautionary financial assistance programme under the Balance of Payments Facility to support the re-launch of economic growth. On 12 May 2011 the Council decided to make available precautionary EU BOP assistance for Romania of up to EUR 1,4 billion (Council Decision 2011/288/EU). Currently, Romania does not intend to request the disbursement of any instalment under the precautionary financial assistance programme since the amounts would only be requested in case of unforeseen market deterioration in the economic and/or financial situation due to factors outside the control of the Romanian authorities, leading to the opening of an acute financing gap. Should the financial assistance be activated, it would be provided in form of a loan with a maximum maturity of seven years.

7.4   MFA, EURATOM & ECSC IN LIQUIDATION

MFA, EURATOM & ECSC IN LIQUIDATION

MFA is a policy-based financial instrument of untied and undesignated balance-of-payment and/or budget support to partner third-countries geographically close to the EU territory. It takes the form of medium/long term loans or grants or an appropriate combination of both and generally complements financing provided in the context of an IMF-supported adjustment and reform program. At 31 December 2011, a further EUR 239 million of loan agreements have been entered into by the Commission but not yet drawn down by the other party before the year-end. The Commission has not received third-party guarantees for these loans, but they are guaranteed by the Guarantee Fund (see note 2.4).

MFA

2.4

Euratom is a legal entity of the EU and is represented by the European Commission. It grants loans to Member States for the purpose of financing investment projects in the Member States relating to the industrial production of electricity in nuclear power stations and to industrial fuel cycle installations. It also grants loans to non-Member States for improving the level of safety and efficiency of nuclear power stations and installations in the nuclear fuel cycle which are in service or under construction. Guarantees from third-parties of EUR 447 million (2010: EUR 466 million) have been received covering these loans.

Euratom

ECSC loans are granted by the ECSC in liquidation on borrowed funds in accordance with articles 54 and 56 of the ECSC Treaty as well as three unquoted debt securities issued by the European Investment Bank (EIB) as substitute of a defaulted debtor. These debt securities will be held till their final maturity (2017 and 2019) in order to cover the service of related borrowings. The changes in carrying amount correspond to the change in accrued interests plus the amortisation of the year of premiums paid and transaction cost incurred at inception, calculated according to the effective interest rate method.

ECSC loans

7.5   INTER-GOVERMENTAL FINANCIAL STABILITY MECHANISMS

INTER-GOVERMENTAL FINANCIAL STABILITY MECHANISMS

7.5.1   
  European Financial Stability Facility (EFSF)

European Financial Stability Facility (EFSF)

The European Financial Stability Facility (‘EFSF’) was created by the euro area Member States following the decisions taken on 9 May 2010 by the Ecofin Council. Its mandate is to safeguard financial stability in Europe by providing financial assistance to euro area Member States. The EFSF is expected to no longer be available for new lending after 1 July 2013, in keeping with the current Framework Agreement. In accordance with an agreement by the Euro-area Heads of State/Governments reached in July 2011, the EFSF is authorised to use the following instruments linked to appropriate conditionality:

| — | Provide loans to countries in financial difficulties |
| --- | --- |

—

Provide loans to countries in financial difficulties

| — | Intervene in the debt primary and secondary markets. Intervention in the secondary market will be only on the basis of an ECB analysis recognising the existence of exceptional financial market circumstances and risks to financial stability |
| --- | --- |

—

Intervene in the debt primary and secondary markets. Intervention in the secondary market will be only on the basis of an ECB analysis recognising the existence of exceptional financial market circumstances and risks to financial stability

| — | Act on the basis of a precautionary programme |
| --- | --- |

—

Act on the basis of a precautionary programme

| — | Finance recapitalisations of financial institutions through loans to governments |
| --- | --- |

—

Finance recapitalisations of financial institutions through loans to governments

| — | Provide partial risk protection certificates alongside new issuances of vulnerable Member States |
| --- | --- |

—

Provide partial risk protection certificates alongside new issuances of vulnerable Member States

To fulfill its mission, EFSF issues bonds or other debt instruments on the capital markets. It is backed by guarantee commitments from the 17 euro-area Member States for a total of EUR 780 billion and has a lending capacity of EUR 440 billion. It is not guaranteed by the EU budget. The EFSF is a Luxembourg-registered commercial company owned by euro-area Member States outside the EU Treaty framework and thus is not an EU body and is entirely separate from and not consolidated in the EU accounts. Consequently it has no impact on the EU accounts, aside from the possible sanctions revenue described below. The EFSF is subject to statutory audit through external auditors under Luxembourgish legal provisions on auditing.

The Commission will be responsible for negotiating the policy conditionality attached to the financial assistance and the monitoring of compliance with that conditionality. Each country receiving financial assistance from the EFSF will be subject to regular assessments on the fulfilment of the policy conditionality before another instalment is disbursed. Such conditionality may range from a macro-economic adjustment programme (for regular loans) to continuous respect of pre-established eligibility criteria (for precautionary assistance). In principle, the European Commission, in liaison with the ECB, negotiates with the Euro Area Member State concerned a memorandum of understanding (an ‘MoU’) detailing the conditionality attached to the financial assistance facility. The content of the MoU shall reflect the severity of the weaknesses to be addressed and the financial assistance instrument chosen.

In parallel with the EFSM loans granted to Ireland and Portugal, a loan facility from the EFSF with an aggregate net disbursement amount of EUR 17,7 billion for Ireland and EUR 26 billion for Portugal was initiated (in addition to assistance from the International Monetary Fund of respectively SDR 19,5 billion (approximately EUR 22,5 billion based on the rate in force at the time of the agreement) and SDR 23,7 billion (approximately EUR 26 billion) under an Extended Fund Facility).

Regulation (EU) No 1173/2011 of the Parliament and Council allows for the imposition of sanctions in the form of fines on Member States whose currency is the Euro. These fines, being 0,2 % of the Member State's GDP in the preceding year, can be applied in cases where a Member State has not taken appropriate actions to correct an excessive budget deficit, or where there has been manipulation of statistics. Similarly, Regulation (EU) No 1174/2011 on macroeconomic imbalances makes provision for an annual fine on a Eurozone Member State of 0,1 % of GDP in the cases where a Member State has not taken the requested corrective action or in case an insufficient corrective action plan has been submitted. Regulation (EU) No 1177/2011 updated Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure. This updated Regulation also foresees the possibility of issuing fines to Eurozone Member States (equal to 0,2 % of GDP plus a variable component). According to all three Regulations, any fines collected by the Commission shall be passed to the EFSF, or its successor mechanism. Presently, it is foreseen that such fines will transit through the EU Budget and then be transferred to the EFSF. This would mean that such monies would appear as both a budget revenue and expense, thus having no impact on the overall budget result. Likewise they would have no impact on the economic result as presented in the EU financial statements.

7.5.2   
  European Stability Mechanism (ESM)

European Stability Mechanism (ESM)

The European Council agreed on 17 December 2010 on the need for euro area Member States to establish a permanent stability mechanism: the European Stability Mechanism (‘ESM’), an intergovernmental organisation under public international law outside the EU Treaty framework. The ESM Treaty was signed by the 17 euro area Member States on the 2nd of February 2012 and is currently undergoing ratification procedures in the participating Member States before it can become operational. Ultimately, the ESM will assume the tasks currently fulfilled by the EFSF and EFSM in providing, where needed, financial assistance to euro area Member States. There will, however, be a period of overlap of all three mechanisms, but loans that have already been granted under the EFSM will continue to be disbursed and repaid under EFSM rules and so the related borrowings will still be guaranteed by the EU budget and will remain on the EU balance sheet. The creation of the ESM will thus not have an impact on the existing commitments under the EFSM. It must also be noted that the EU budget will not guarantee ESM borrowings.

The ESM will be backed by a robust capital structure, with a total subscribed capital of EUR 700 billion, of which EUR 80 billion will be in the form of paid-in capital provided by the euro-area Member States. With such capital, its lending capacity in principle should reach EUR 500 billion. The adequacy of the combined capacity with EFSF was recently reviewed. On 30 March, the Eurogroup agreed to increase the cumulative lending ceiling of the EFSF/ESM to EUR 700 bn, and allow both mechanisms to coexist until 30 June 2013. The audit process of the ESM has been developed with the supreme audit institutions, and an external independent audit, as well as an audit by an independent board of auditors, will be implemented.

The assistance provided under the ESM will be accompanied by conditionality, appropriate to the assistance instrument chosen. Loans to beneficiary Member States will be conditional on the implementation of a strict economic and fiscal adjustment programme, in line with existing arrangements. As this mechanism will have its own legal personality and will be funded directly by the euro area Member States, it is not an EU body and there is no impact on either the EU accounts or the EU budget, aside from the possible sanctions revenue described below. The Commission will be responsible for negotiating the policy conditionality attached to the financial assistance and the monitoring of compliance with that conditionality (as with the EFSF above). Each country receiving financial assistance from the ESM will be subject to regular assessments on the fulfilment of the policy conditionality before another instalment is disbursed.

As stated above, fines collected under Regulations (EU) No 1173/2011, (EU) No 1174/2011 and (EU) No 1177/2011 will pass through the EU Budget and be transferred to the ESM once the EFSF is no longer operational. Furthermore, the Treaty on Stability, Coordination and Governance signed by 25 Member States (excluding the UK and Czech Republic) foresees penalty payments on any of the ‘Contracting Parties’ where that Member State has not taken necessary measures to address a breach of deficit criterion. Penalties imposed (which cannot exceed 0,1 % of GDP) will be payable to the ESM if applied to Eurozone Member States (thus with no impact on the EU budget outturn, as with the EFSF above), or to the EU Budget for non-Euro Member States – see Article 8 paragraph 2 of the Treaty. In the latter case, the sanction amount will be revenue for the EU budget and reflected as such in its accounts.

Reimbursement schedule for outstanding EFSM & BOP loan amounts at 17 July 2012

Reimbursement schedule for outstanding EFSM & BOP loan amounts at 17 July 2012

| EUR Billions |
| --- |
| Loan/Country | Instalment | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2021 | 2022 | 2025 | 2026 | 2028 | 2032 | 2038 | 2042 | Total |
| BOP |
| Hungary | 2nd | 2,0 | | | | | | | | | | | | | | |
| | 3rd | | | | 1,5 | | | | | | | | | | | |
| Latvia | 1st | 1,0 | | | | | | | | | | | | | | |
| | 2nd | | 1,2 | | | | | | | | | | | | | |
| | 3rd | | | | | | | 0,5 | | | | | | | | |
| | 4th | | | | | | | | | | 0,2 | | | | | |
| Romania | 1st | | 1,5 | | | | | | | | | | | | | |
| | 2nd | | | | | | | 1,0 | | | | | | | | |
| | 3rd | | | | | 1,15 | | | | | | | | | | |
| | 4th | | | | | | 1,2 | | | | | | | | | |
| | 5th | | | | | | 0,15 | | | | | | | | | |
| Total BOP | | 3,0 | 2,7 | 1,5 | 1,15 | 1,35 | 1,5 | 0,0 | 0,0 | 0,2 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 11,4 |
| EFSM |
| Ireland | 1st (T1) | | 5,0 | | | | | | | | | | | | | |
| | 1st (T2) | | | | | | 3,4 | | | | | | | | | |
| | 2nd | | | | | | | | 3,0 | | | | | | | |
| | 3rd (T1) | | | | | | | | | | | 2,0 | | | | |
| | 3rd (T2) | | | | | | 0,5 | | | | | | | | | |
| | 4th (6) | | | | | | | | | | | | | | | 1,5 |
| | 5th (6) | | | | | | | | | | | | | 3,0 | | |
| | 6th (6) | | | | | | | | | | | | 2,3 | | | |
| Portugal | 1st (T1) | | | | | | | | 1,75 | | | | | | | |
| | 1st (T2) | | | | 4,75 | | | | | | | | | | | |
| | 2nd (T1) | | | | | | | | 5,0 | | | | | | | |
| | 2nd (T2) | | | | | | | | | | | 2,0 | | | | |
| | 2nd (T3) | | | | | | 0,6 | | | | | | | | | |
| | 3rd (6) | | | | | | | | | | | | | | | 1,5 |
| | 4th (T1) (6) | | | | | | | | | | | | | | 1,8 | |
| | 4th (T2) (6) | | | | | | | | | 2,7 | | | | | | |
| Total EFSM | | 0,0 | 5,0 | 4,75 | 0,0 | 4,5 | 0,0 | 9,75 | 2,7 | 0,0 | 4,0 | 2,3 | 3,0 | 1,8 | 3,0 | 40,8 |
| Overall total | | 3,0 | 7,7 | 6,25 | 1,15 | 5,85 | 1,5 | 9,75 | 2,7 | 0,2 | 4,0 | 2,3 | 3,0 | 1,8 | 3,0 | 52,2 |

EUR Billions

Loan/Country

Instalment

2014

2015

2016

2017

2018

2019

2021

2022

2025

2026

2028

2032

2038

2042

Total

BOP

BOP

Hungary

2nd

2,0

3rd

1,5

Latvia

1st

1,0

2nd

1,2

3rd

0,5

4th

0,2

Romania

1st

1,5

2nd

1,0

3rd

1,15

4th

1,2

5th

0,15

Total BOP

3,0

2,7

1,5

1,15

1,35

1,5

0,0

0,0

0,2

0,0

0,0

0,0

0,0

0,0

11,4

EFSM

EFSM

Ireland

1st (T1)

5,0

1st (T2)

3,4

2nd

3,0

3rd (T1)

2,0

3rd (T2)

0,5

4th (6)

6

1,5

5th (6)

6

3,0

6th (6)

6

2,3

Portugal

1st (T1)

1,75

1st (T2)

4,75

2nd (T1)

5,0

2nd (T2)

2,0

2nd (T3)

0,6

3rd (6)

6

1,5

4th (T1) (6)

6

1,8

4th (T2) (6)

6

2,7

Total EFSM

0,0

5,0

4,75

0,0

4,5

0,0

9,75

2,7

0,0

4,0

2,3

3,0

1,8

3,0

40,8

Overall total

3,0

7,7

6,25

1,15

5,85

1,5

9,75

2,7

0,2

4,0

2,3

3,0

1,8

3,0

52,2

8.   FINANCIAL RISK MANAGEMENT

The following disclosures with regard to the financial risk management of the European Union (EU) relate to:

| — | lending and borrowing activities carried out by the European Commission through: European Financial Stabilty Mechanism (EFSM), Balance of Payments (BOP), Macro Financial Assistance (MFA), Euratom actions and the European Coal & Steel Community (in Liquidation); |
| --- | --- |

—

lending and borrowing activities carried out by the European Commission through: European Financial Stabilty Mechanism (EFSM), Balance of Payments (BOP), Macro Financial Assistance (MFA), Euratom actions and the European Coal & Steel Community (in Liquidation);

| — | the treasury operations carried out by the European Commission in order to implement the EU budget, including the receipt of fines; and |
| --- | --- |

—

the treasury operations carried out by the European Commission in order to implement the EU budget, including the receipt of fines; and

| — | the Guarantee Fund for external actions. |
| --- | --- |

—

the Guarantee Fund for external actions.

8.1   TYPES OF RISK

TYPES OF RISK

Market risk is the risk that the fair value or future cashflows of a financial instrument will fluctuate, because of changes in market prices. Market risk embodies not only the potential for loss, but also the potential for gain. It comprises currency risk, interest rate risk and other price risk (the EU has no significant other price risk).

Market risk

| 1. | Currency risk is the risk that the EU's operations or its investments' value will be affected by changes in exchange rates. This risk arises from the change in price of one currency against another. |
| --- | --- |

1.

Currency risk is the risk that the EU's operations or its investments' value will be affected by changes in exchange rates. This risk arises from the change in price of one currency against another.

Currency risk

| 2. | Interest rate risk is the possibility of a reduction in the value of a security, especially a bond, resulting from an increase in interest rates. In general, higher interest rates will lead to lower prices of fixed rate bonds, and vice versa. |
| --- | --- |

2.

Interest rate risk is the possibility of a reduction in the value of a security, especially a bond, resulting from an increase in interest rates. In general, higher interest rates will lead to lower prices of fixed rate bonds, and vice versa.

Interest rate risk

Credit risk is the risk of loss due to a debtor's/borrower's non-payment of a loan or other line of credit (either the principal or interest or both) or other failure to meet a contractual obligation. The default events include a delay in repayments, restructuring of borrower repayments and bankruptcy.

Credit risk

Liquidity risk is the risk that arises from the difficulty of selling an asset, for example, the risk that a given security or asset cannot be traded quickly enough in the market to prevent a loss or meet an obligation.

Liquidity risk

8.2   RISK MANAGEMENT POLICIES

RISK MANAGEMENT POLICIES

Borrowing & Lending activities:

Borrowing & Lending activities:

The lending and borrowing transactions, as well as related treasury management, are carried out by the EU according to the respective Council Decisions, if applicable, and internal guidelines. Written procedure manuals covering specific areas such as borrowings, loans and treasury management have been developed and are used by the relevant operating units. As a general rule, there are no activities to compensate interest rate variations or foreign currency variations (‘hedging’ activities) carried-out as lending operations are generally financed by ‘back-to-back’ borrowings, which thus do not generate open interest rate or currency positions. The application of the ‘back-to-back’ character is checked regularly.

The European Commission manages the liquidation of the liabilities and no new loans or corresponding funding is foreseen for the ECSC in liquidation. New ECSC borrowings are restricted to refinancing with the aim of reducing the cost of funds. As far as treasury operations are concerned, the principles of prudent management with a view to limiting financial risks are applied.

Treasury:

Treasury:

The rules and principles for the management of the Commission's treasury operations are laid down in the Council Regulation (EC, Euratom) No 1150/2000 (amended by Council Regulations (EC, Euratom) No 2028/2004 and (EC, Euratom) No 105/2009) and in the Financial Regulation (Council Regulation (EC, Euratom) No 1605/2002, amended by Council Regulations (EC, Euratom) No 1995/2006, (EC) No 1525/2007 and (EU, Euratom) No 1081/2010) and its Implementing Rules (Commission Regulation (EC, Euratom) No 2342/2002, amended by Commission Regulations (EC, Euratom) No 1261/2005, (EC, Euratom) No 1248/2006 and (EC, Euratom) No 478/2007).

As a result of the above regulations the following main principles apply:

| — | Own resources are paid by the Member States in accounts opened for this purpose in the name of the Commission with the Treasury or the body appointed by each Member State. The Commission may draw on the above accounts solely to cover its cash requirements. |
| --- | --- |

—

Own resources are paid by the Member States in accounts opened for this purpose in the name of the Commission with the Treasury or the body appointed by each Member State. The Commission may draw on the above accounts solely to cover its cash requirements.

| — | Own Resources are paid by Member States in their own national currencies, while the Commission's payments are mostly denominated in EUR. |
| --- | --- |

—

Own Resources are paid by Member States in their own national currencies, while the Commission's payments are mostly denominated in EUR.

| — | Bank accounts opened in the name of the Commission may not be overdrawn. This restriction does not apply to the Commission's own resource accounts in case of a default on loans contracted or guaranteed pursuant to EU Council regulations and decision. |
| --- | --- |

—

Bank accounts opened in the name of the Commission may not be overdrawn. This restriction does not apply to the Commission's own resource accounts in case of a default on loans contracted or guaranteed pursuant to EU Council regulations and decision.

| — | Funds held in bank accounts denominated in other currencies than EUR are either used for payments in the same currencies or periodically converted in EUR. |
| --- | --- |

—

Funds held in bank accounts denominated in other currencies than EUR are either used for payments in the same currencies or periodically converted in EUR.

In addition to the own resources accounts, other bank accounts are opened by the Commission, with central banks and commercial banks, for the purpose of executing payments and receiving receipts other than the Member State contributions to the budget.

Treasury and payment operations are highly automated and rely on modern information systems. Specific procedures are applied to guarantee system security and to ensure segregation of duties in line with the Financial Regulation, the Commission’s internal control standards, and audit principles.

A written set of guidelines and procedures regulates the management of the Commission's treasury and payment operations with the objective of limiting operational and financial risk and ensuring an adequate level of control. They cover the different areas of operation (for example: payment execution and cash management, cashflow forecasting, business continuity, etc.), and compliance with the guidelines and procedures is checked regularly. Additionally, information is exchanged between DG BUDGET and DG ECFIN on risk management and best exposures.

Provisionally cashed fines: portfolio (BUFI)

Provisionally cashed fines: portfolio (BUFI)

From 2010 onwards provisionally cashed fines amounts are invested in a specifically created fund, BUFI, managed by DG ECFIN. Fines amounts received before 2010 remain in specific bank accounts. The asset management for provisionally cashed fines is carried out by the Commission in accordance with internal guidelines and the asset management guidelines which are included in the SLA signed in December 2009 between DG BUDG and DG ECFIN. Procedural manuals covering specific areas such as treasury management have been developed and are used by the relevant operating units. Financial and operational risks are identified and evaluated and compliance with internal guidelines and procedures is checked regularly.

The objectives of the asset management activities are to invest the fines paid to the Commission in such a way as to:

| (a) | ensure that the funds are easily available when needed, while |
| --- | --- |

(a)

ensure that the funds are easily available when needed, while

| (b) | aiming at delivering under normal circumstances a return which on average is equal to the return of the BUFI Benchmark minus costs incurred. |
| --- | --- |

(b)

aiming at delivering under normal circumstances a return which on average is equal to the return of the BUFI Benchmark minus costs incurred.

Investments are restricted basically to the following categories: term deposits with euro-zone Central Banks, euro-zone sovereign debt agencies, fully state-owned or state-guaranteed banks or supranational institutions; bonds, bills and Certificates of Deposit issued by sovereign entities creating a direct euro-zone sovereign exposure or which are issued by supranational institutions.

Guarantee Fund

Guarantee Fund

The rules and principles for the asset management of the Guarantee Fund (see note 2.4) are laid out in the Convention between the European Commission and the European Investment Bank (EIB) dated 25 November 1994 and the subsequent amendments dated 17/23 September 1996, 8 May 2002, 25 February 2008 and 9 November 2010. The Guarantee Fund operates only in EUR. It exclusively invests in this currency in order to avoid any foreign currency risk. Management of the assets is based upon the traditional rules of prudence adhered to for financial activities. It is required to pay particular attention to reducing the risks and to ensuring that the managed assets can be sold or transferred without significant delay, taking into account the commitments covered.

2.4

8.3   CURRENCY RISKS

CURRENCY RISKS

Borrowing & Lending activities

Borrowing & Lending activities

Most financial assets and liabilities are in EUR, so in these cases the EU has no foreign currency risk. However, the EU does give loans in USD through the financial instrument Euratom, which are financed by borrowings with an equivalent amount in USD (back-to-back operation). At the balance sheet date the EU has no foreign currency risk with regard to Euratom. The ECSC in liquidation has a small foreign currency net exposure of EUR equivalent 1,3 million arising from EUR equivalent 1,26 million housing loans and EUR equivalent 0,04 million current account balances.

Treasury:

Treasury:

Own resources paid by Member States in currencies other than EUR are kept on the own resources accounts, in accordance with the Own Resources Regulation. They are converted into EUR when they are needed to cover for the execution of payments. The procedures applied for the management of these funds are dictated by the above Regulation. In a limited number of cases these funds are directly used for payments to be executed in the same currencies.

A number of accounts in EU currencies other than EUR, and in USD and CHF, are held by the Commission with commercial banks, for the purpose of executing payments denominated in these same currencies. These accounts are replenished depending on the amount of payments to be executed, as a consequence their balances do not represent exposure to currency risk.

When miscellaneous receipts (other than own resources) are received in currencies other than EUR, they are either transferred to Commission's accounts held in the same currencies, if they are needed to cover for the execution of payments, or converted into EUR and transferred to accounts held in EUR. Imprest accounts held in currencies other than EUR are replenished depending on the estimated short term local payments needs in the same currencies. Balances on these accounts are kept within their respective ceilings.

Provisionally cashed fines: portfolio (BUFI)

Provisionally cashed fines: portfolio (BUFI)

Since all fines are imposed and paid in EUR, there is no foreign currency risk.

Guarantee Fund

Guarantee Fund

The financial assets are in EUR so there is no currency risk.

8.4   INTEREST RATE RISK

INTEREST RATE RISK

Borrowing & Lending activities

Borrowing & Lending activities

Borrowings and loans with variable interest rates

Borrowings and loans with variable interest rates

Due to the nature of its borrowing and lending activities, the EU has significant interest-bearing assets and liabilities. MFA and Euratom borrowings issued at variable rates expose the EU to interest rate risk. However, the interest rate risks that arise from borrowings are offset by equivalent loans in terms and conditions (back-to-back). At the balance sheet date, the EU has loans (expressed in nominal amounts) with variable rates of EUR 0,8 billion (2010: EUR 0,86 billion), with a re-pricing taking place every 6 months.

Borrowings and loans with fixed interest rates

Borrowings and loans with fixed interest rates

The EU also has MFA and Euratom loans with fixed rates totalling EUR 236 million in 2011 (2010: EUR 110 million) and which have a final maturity date between one and five years (EUR 25 million) and more than five years (EUR 211 million). More significantly, the EU has eleven loans under the financial instrument BOP with fixed interest rates totalling EUR 11,4 billion in 2011 (2010: EUR 12,05 billion) and with a final maturity between one and five years (EUR 7,2 billion) and more than five years (EUR 4.2 billion). Under the financial instrument EFSM, the EU has ten loans with fixed interest rates totalling EUR 28 billion in 2011 and with a final maturity between one and five years (EUR 9,75 billion) and more than five years (EUR 18,25 billion).

Due to the nature of its activities, the ECSC in liquidation is exposed to interest rate risk. The interest rate risks that arise from borrowings are generally offset by equivalent loans in terms and conditions. As regards asset management operations, there are no bonds with variable interest rates in the ECSC portfolio. Zero coupon bonds represented 15 % of the bond portfolio at the balance sheet date.

Treasury:

Treasury:

The Commission's treasury does not borrow any money; as a consequence it is not exposed to interest rate risk. It does, however, earn interest on balances it holds on its different banks accounts. The Commission has therefore put in place measures to ensure that interest earned on its bank accounts regularly reflects market interest rates, as well as their possible fluctuation.

Accounts opened with Member States Treasuries or National Central Banks for own resources receipts are non-interest bearing and free of charges. For all other accounts held with National Central Banks the remuneration depends on the specific conditions offered by each bank; interest rates applied are variable and adjusted to market fluctuations.

Overnight balances held on commercial bank accounts earn interest on a daily basis. This is based on variable market rates to which a contractual margin (positive or negative) is applied. For most of the accounts the interest calculation is linked to the EONIA (Euro over night index average), and is adjusted to reflect any fluctuations of this rate. For some other accounts the interest calculation is linked to the ECB marginal rate for its main refinancing operations. As a result no risk exists that the Commission earns interest at rates lower than market rates.

Provisionally cashed fines: portfolio (BUFI)

Provisionally cashed fines: portfolio (BUFI)

There are no bonds with variable interest rates in the BUFI portfolio. Zero coupon bonds represented 34 % of the bond portfolio at the balance sheet date.

Guarantee Fund

Guarantee Fund

Debt securities within the Guarantee Fund issued at variable interest rates are subject to the volatility effects of these rates, whereas debt securities at fixed rates have a risk with regard to their fair value. Fixed rate bonds represent approximately 83 % of the investment portfolio at the balance sheet date (2010: 93 %).

8.5   CREDIT RISK

CREDIT RISK

Borrowing & Lending activities

Borrowing & Lending activities

Exposure to credit risk is managed firstly by obtaining country guarantees in the case of Euratom, then through the Guarantee Fund (MFA & Euratom), then by the possibility of drawing the necessary funds from the Commission's own resource accounts with the Member States and ultimately through the Budget of the EU. The Own Resource legislation fixes the ceiling for own resource payments at 1,23 % of Member States' GNI and during 2011 0,93 % was actually used to cover payment appropriations. This means that at 31 December 2011 there existed an available margin of 0,3 % to cover these guarantees. The Guarantee Fund for external actions was set up in 1994 to cover default risks related to borrowings which finance loans to countries outside the European Union. In any case, the exposure to credit risk is mitigated by the possibility to draw on the Commission's own resource accounts with Member States in excess of the assets on those accounts in case a debtor would be unable to reimburse the amounts due in full. To this end the EU is entitled to call upon all the Member States to ensure compliance with the EU's legal obligation towards its lenders.

As far as treasury operations are concerned, guidelines on the choice of counterparties must be applied. Accordingly, the operating unit will be able to enter into deals only with eligible banks having sufficient counterparty limits.

ECSC's exposure to credit risk is managed through regular analysis of the ability of borrowers to meet interest and capital repayment obligations. Exposure to credit risk is also managed by obtaining collateral as well as country, corporate and personal guarantees. 61 % of the total amount of outstanding loans is covered by guarantees from a Member State or equivalent bodies (e.g. public institutions). 30 % of loans outstanding have been granted to banks or have been guaranteed by banks. As far as treasury operations are concerned, guidelines on the choice of counterparties must be applied. The operating unit is only allowed to enter into deals with eligible banks having sufficient counterparty limits.

Treasury:

Treasury:

Most of the Commission's treasury resources are kept, in accordance with Council Regulation (EC, Euratom) No 1150/2000 on own resources, in the accounts opened by Member States for the payment of their contributions (own resources). All such accounts are held with Member States' treasuries or national central banks. These institutions carry the lowest credit (or counterparty) risk for the Commission as the exposure is with its Member States. For the part of the Commission's treasury resources kept with commercial banks in order to cover the execution of payments, replenishment of these accounts is instructed on a just-in-time basis and is automatically managed by the treasury cash management system. Minimum cash levels, proportional to the average amount of daily payments executed from it, are kept on each account. As a consequence the amounts kept overnight on these accounts remain constantly at low levels (overall between EUR 20 million and EUR 100 million on average, spread over more than 20 accounts) and so ensure the Commission's risk exposure is limited. These amounts should be viewed with regard to the overall treasury balances which fluctuate between EUR 1 billion and EUR 35 billion, and with an overall amount of payments executed in 2011 that exceeded EUR 128 billion.

In addition, specific guidelines are applied for the selection of commercial banks in order to further minimise counterparty risk to which the Commission is exposed:

| — | All commercial banks are selected by call for tenders. The minimum short term credit rating required for admission to the tendering procedures is Moody's P-1 or equivalent (S&P A-1 or Fitch F1). A lower level may be accepted in specific and duly justified circumstances. |
| --- | --- |

—

All commercial banks are selected by call for tenders. The minimum short term credit rating required for admission to the tendering procedures is Moody's P-1 or equivalent (S&P A-1 or Fitch F1). A lower level may be accepted in specific and duly justified circumstances.

| — | For commercial banks that have been specifically selected for the deposit of provisionally cashed fines (restricted cash), a minimum long-term rating AA in one rating agency is also required as a general rule and specific measures are applied in case banks in this group are subject to downgrade. In addition the amount deposited with each bank is limited to a certain percentage of its own funds; the calculation of such limit also takes into account the amount of outstanding guarantees issued to the Commission by the same institution. |
| --- | --- |

—

For commercial banks that have been specifically selected for the deposit of provisionally cashed fines (restricted cash), a minimum long-term rating AA in one rating agency is also required as a general rule and specific measures are applied in case banks in this group are subject to downgrade. In addition the amount deposited with each bank is limited to a certain percentage of its own funds; the calculation of such limit also takes into account the amount of outstanding guarantees issued to the Commission by the same institution.

| — | Imprest accounts are held with local banks selected by a simplified tendering procedure. Rating requirements depend on the local situation and may significantly differ from one country to another. In order to limit risk exposure, balances on these accounts are kept at the lowest possible levels (taking into account operational needs); they are regularly replenished, and the applied ceilings are reviewed on a yearly basis. |
| --- | --- |

—

Imprest accounts are held with local banks selected by a simplified tendering procedure. Rating requirements depend on the local situation and may significantly differ from one country to another. In order to limit risk exposure, balances on these accounts are kept at the lowest possible levels (taking into account operational needs); they are regularly replenished, and the applied ceilings are reviewed on a yearly basis.

| — | The credit ratings of the commercial banks where the Commission has accounts are reviewed at least on a monthly basis, or with higher frequency if and when needed. Intensified monitoring measures and daily reviews of commercial banks' ratings were adopted in the context of the financial crisis, and kept in place during 2011. |
| --- | --- |

—

The credit ratings of the commercial banks where the Commission has accounts are reviewed at least on a monthly basis, or with higher frequency if and when needed. Intensified monitoring measures and daily reviews of commercial banks' ratings were adopted in the context of the financial crisis, and kept in place during 2011.

Significant amounts of guarantees issued by financial institutions are also held by the Commission in relation to the fines it imposes to companies breaching EU competition rules (see note 2.11.1). These guarantees are provided by fined companies as an alternative to making provisional payments. The risk management policy applied for the acceptance of such guarantees has been reviewed in the early months of 2012 and a new combination of credit rating requirements and limited percentages per counterpart (proportional to each counterpart's own funds) has been defined in the light of the current financial environment in the EU. It continues to ensure a high credit quality for the Commission. The compliance of the outstanding guarantees with the applicable policy requirements is reviewed regularly.

2.11.1

Provisionally cashed fines: portfolio (BUFI)

Provisionally cashed fines: portfolio (BUFI)

For investments from provisionally cashed fines the Commission takes on exposure to credit risk which is the risk that a counterparty will be unable to pay amounts in full when due. The highest concentration of exposure is towards France and Germany as each of these countries represents respectively 62 % and 25 % of the total volume of the portfolio.

Guarantee Fund

Guarantee Fund

In accordance with the agreement between the EU and the EIB on the management of the Guarantee Fund, all interbank investments should have a minimum rating from Moody's or equivalent of P-1. As at 31 December 2011 fixed term deposits (EUR 300 million) were made with such counterparties (2010: EUR 124 million). As at 31 December 2011, the fund has no investments in short-term discount papers. For the same period the previous year, the fund invested in four short-term financial instruments and all such investments (EUR 69 million) were made with counterparties having a minimum rating of P-1 Moody's or equivalent. All the securities held in the available for sale portfolio are in line with the management guidelines.

8.6   LIQUIDITY RISK

LIQUIDITY RISK

Borrowing & Lending activities

Borrowing & Lending activities

The liquidity risk that arises from borrowings is generally offset by equivalent loans in terms and conditions (back-to-back operations). For MFA and Euratom, the Guarantee Fund serves as a liquidity reserve (or safety net) in case of payment default and payment delays of borrowers. For BOP, the Council Regulation (EC) No 431/2009 provides for a procedure allowing sufficient time to mobilise funds through the Commission's own resource accounts with the Member States. For EFSM, the Council Regulation (EU) No 407/2010 provides for a similar procedure.

For the asset and liability management of ECSC in liquidation, the Commission manages liquidity requirements based on disbursement forecasts obtained through consultations with the responsible Commission services.

Treasury:

Treasury:

EU budget principles ensure that overall cash resources for the year are always sufficient for the execution of all payments. In fact, the total Member States contributions equal the amount of payment appropriations for the budgetary year. Member States contributions, however, are received in twelve monthly instalments throughout the year, while payments are subject to certain seasonality. In order to ensure that treasury resources are always sufficient to cover the payments to be executed in any given month, procedures regarding regular cash forecasting are in place, and own resources or additional funding can be called up in advance from Member States if needed, and under certain conditions. In addition to the above, in the context of the Commission's daily treasury operations, automated cash management tools ensure that sufficient liquidity is available on each of the Commission's bank accounts, on a daily basis.

Guarantee Fund

Guarantee Fund

The fund is managed according to the principle that the assets shall have a sufficient degree of liquidity and mobilisation in relation to the relevant commitments. The fund must maintain a minimum of EUR 100 million in a portfolio with a maturity of < 12 months which is to be invested in monetary instruments. As at 31 December 2011 these investments amounted to EUR 300 million. Furthermore a minimum of 20 % of the fund's nominal value shall comprise monetary instruments, fixed-rate bonds with a remaining maturity of no more than one year and floating-rate bonds. As at 31 December 2011 this ratio stood at 45 %.

9.   RELATED PARTY DISCLOSURES

9.1   RELATED PARTIES

RELATED PARTIES

The related parties of the Commission are the other EU consolidated entities and the key management personnel of these entities. Transactions between these entities take place as part of the normal operations of the EU and as this is the case, no specific disclosure requirements are necessary for these transactions in accordance with the EU accounting rules.

9.2   KEY MANAGEMENT ENTITLEMENTS

KEY MANAGEMENT ENTITLEMENTS

For the purposes of presenting information on related party transactions concerning the key management of the European Commission, such persons are shown here under five categories:

Category 1: the Presidents of the European Council, the Commission and the Court of Justice

Category 2: the Vice-president of the Commission and High Representative of the European Union for Foreign Affairs and Security Policy and the other Vice-presidents of the Commission

Category 3: the Secretary-General of the Council, the Members of the Commission, the Judges and Advocates General of the Court of Justice, the President and Members of the General Court, the President and Members of the European Civil Service Tribunal, the Ombudsman and the European Data Protection Supervisor

Category 4: the President and Members of the Court of Auditors

Category 5: the highest ranking civil servants of the Institutions and Agencies

A summary of their entitlements are given below – further information can be found in the Official Journal of the European Union (187, 8.8.1967 last modified by Council Regulation (EC, Euratom) No 202/2005 of 18.1.2005 (L 33, 5.2.2005) and L 268, 20.10.1977 last modified by Council Regulation (EC, Euratom) No 1293/2004 of 30.4.2004 (L 243, 15.7.2004)). Other information is also available in the Staff Regulations published on the Europa website which is the official document describing the rights and obligations of all officials of the EU. Key management personnel have not received any preferential loans from the EU.

Official Journal of the European Union

KEY MANAGEMENT FINANCIAL ENTITLEMENTS

KEY MANAGEMENT FINANCIAL ENTITLEMENTS

| EUR |
| --- |
| Entitlement (per employee) | Category 1 | Category 2 | Category 3 | Category 4 | Category 5 |
| Basic salary (per month) | 25 351,76 | 22 963,55 – 23 882,09 | 18 370,84 – 20 667,20 | 19 840,51 – 21 126,47 | 11 681,17 – 18 370,84 |
| Residential/Expatriation allowance | 15 % | 15 % | 15 % | 15 % | 16 % |
| Family allowances: |
| Household (% salary) | 2 % + 170,52 | 2 % + 170,52 | 2 % + 170,52 | 2 % + 170,52 | 2 % + 170,52 |
| Dependent child | 372,61 | 372,61 | 372,61 | 372,61 | 372,61 |
| Pre-school | 91,02 | 91,02 | 91,02 | 91,02 | 91,02 |
| Education, or | 252,81 | 252,81 | 252,81 | 252,81 | 252,81 |
| Education outside place of work | 505,39 | 505,39 | 505,39 | 505,39 | 505,39 |
| Presiding judges allowance | N/A | N/A | 500 - 810,74 | N/A | N/A |
| Representation allowance | 1 418,07 | 0 - 911,38 | 500 - 607,71 | N/A | N/A |
| Annual travel costs | N/A | N/A | N/A | N/A | Yes |
| Transfers to Member State: |
| Education allowance (7) | Yes | Yes | Yes | Yes | Yes |
| % of salary (7) | 5 % | 5 % | 5 % | 5 % | 5 % |
| % of salary with no cc | max 25 % | max 25 % | max 25 % | max 25 % | max 25 % |
| Representation expenses | reimbursed | reimbursed | reimbursed | N/A | N/A |
| Taking up duty: |
| Installation expenses | 50 703,52 | 45 927,10 – 47 764,18 | 36 741,68 – 41 334,40 | 39 681,02 – 42 252,94 | reimbursed |
| Family travel expenses | reimbursed | reimbursed | reimbursed | reimbursed | reimbursed |
| Moving expenses | reimbursed | reimbursed | reimbursed | reimbursed | reimbursed |
| Leaving office: |
| Resettlement expenses | 25 351,76 | 22 963,55 – 23 882,09 | 18 370,84 – 20 667,20 | 19 840,51 – 21 126,47 | reimbursed |
| Family travel expenses | reimbursed | reimbursed | reimbursed | reimbursed | reimbursed |
| Moving expenses | reimbursed | reimbursed | reimbursed | reimbursed | reimbursed |
| Transition (% salary) (8) | 40 % - 65 % | 40 % - 65 % | 40 % - 65 % | 40 % - 65 % | N/A |
| Sickness insurance | covered | covered | covered | covered | optional |
| Pension (% salary, before tax) | Max 70 % | Max 70 % | Max 70 % | Max 70 % | Max 70 % |
| Deductions: |
| Community tax | 8 % - 45 % | 8 % - 45 % | 8 % - 45% | 8 % - 45 % | 8 % - 45 % |
| Sickness insurance (% salary) | 1,8 % | 1,8 % | 1,8 % | 1,8 % | 1,8 % |
| Special levy on salary | 5,5 % | 5,5 % | 5,5 % | 5,5 % | 5,5 % |
| Pension deduction | N/A | N/A | N/A | N/A | 11,6 % |
| Number of persons at year-end | 3 | 8 | 90 | 27 | 97 |

EUR

Entitlement (per employee)

Category 1

Category 2

Category 3

Category 4

Category 5

Basic salary (per month)

Basic salary

25 351,76

22 963,55 – 23 882,09

18 370,84 – 20 667,20

19 840,51 – 21 126,47

11 681,17 – 18 370,84

Residential/Expatriation allowance

Residential/Expatriation allowance

15 %

15 %

15 %

15 %

16 %

Family allowances:

Family allowances:

Household (% salary)

2 % + 170,52

2 % + 170,52

2 % + 170,52

2 % + 170,52

2 % + 170,52

Dependent child

372,61

372,61

372,61

372,61

372,61

Pre-school

91,02

91,02

91,02

91,02

91,02

Education, or

252,81

252,81

252,81

252,81

252,81

Education outside place of work

505,39

505,39

505,39

505,39

505,39

Presiding judges allowance

Presiding judges allowance

N/A

N/A

500 - 810,74

N/A

N/A

Representation allowance

Representation allowance

1 418,07

0 - 911,38

500 - 607,71

N/A

N/A

Annual travel costs

Annual travel costs

N/A

N/A

N/A

N/A

Yes

Transfers to Member State:

Transfers to Member State:

Education allowance (7)

7

Yes

Yes

Yes

Yes

Yes

% of salary (7)

7

5 %

5 %

5 %

5 %

5 %

% of salary with no cc

max 25 %

max 25 %

max 25 %

max 25 %

max 25 %

Representation expenses

Representation expenses

reimbursed

reimbursed

reimbursed

N/A

N/A

Taking up duty:

Taking up duty:

Installation expenses

50 703,52

45 927,10 – 47 764,18

36 741,68 – 41 334,40

39 681,02 – 42 252,94

reimbursed

Family travel expenses

reimbursed

reimbursed

reimbursed

reimbursed

reimbursed

Moving expenses

reimbursed

reimbursed

reimbursed

reimbursed

reimbursed

Leaving office:

Leaving office:

Resettlement expenses

25 351,76

22 963,55 – 23 882,09

18 370,84 – 20 667,20

19 840,51 – 21 126,47

reimbursed

Family travel expenses

reimbursed

reimbursed

reimbursed

reimbursed

reimbursed

Moving expenses

reimbursed

reimbursed

reimbursed

reimbursed

reimbursed

Transition (% salary) (8)

8

40 % - 65 %

40 % - 65 %

40 % - 65 %

40 % - 65 %

N/A

Sickness insurance

covered

covered

covered

covered

optional

Pension (% salary, before tax)

Pension

Max 70 %

Max 70 %

Max 70 %

Max 70 %

Max 70 %

Deductions:

Deductions:

Community tax

8 % - 45 %

8 % - 45 %

8 % - 45%

8 % - 45 %

8 % - 45 %

Sickness insurance (% salary)

1,8 %

1,8 %

1,8 %

1,8 %

1,8 %

Special levy on salary

5,5 %

5,5 %

5,5 %

5,5 %

5,5 %

Pension deduction

N/A

N/A

N/A

N/A

11,6 %

Number of persons at year-end

Number of persons at year-end

3

3

8

8

90

90

27

27

97

97

10.   EVENTS AFTER THE BALANCE SHEET DATE

At the date of signing of these accounts, aside from the information presented below, no material issues had come to the attention of the Accounting Officer of the Commission or were reported to him that would require separate disclosure under this section. The annual accounts and related notes were prepared using the most recently available information and this is reflected in the information presented.

Additional requests for financial assistance within the Eurozone

Additional requests for financial assistance within the Eurozone

The Eurogroup welcomed on 25 June 2012 the Spanish Government's formal application for financial assistance. On the 9 July, it reached a political understanding on a programme designed to help Spain recapitalise and restructure its financial institutions. Once the memorandum of understanding is adopted, it will allow the first disbursement. The financial assistance for recapitalisation will be provided via the European Financial Stability Facility (EFSF) until the European Stability Mechanism (ESM) becomes available and takes over this task.

The Eurogroup also welcomed on 27 June the request of the Cypriot authorities for financial assistance from euro area Member States in view of the challenges that Cyprus is facing, in particular due to distress in the banking sector and the presence of macroeconomic imbalances. Based on an assessment of the financial needs, the euro area financial support would be provided in the framework of a comprehensive adjustment programme. The financial assistance package shall be provided by the EFSF or the ESM on the basis of its financing instruments.

For more information on both the EFSF and the ESM, as well as EU financial assistance programmes, please see Note 7.

7

11.   SCOPE OF CONSOLIDATION

11.1   CONSOLIDATED ENTITIES

CONSOLIDATED ENTITIES

A.   CONTROLLED ENTITIES

CONTROLLED ENTITIES

1.   Institutions and consultative bodies

Institutions and consultative bodies

| | Committee of the Regions |
| --- | --- |

Committee of the Regions

| | Council of the European Union |
| --- | --- |

Council of the European Union

| | Court of Justice of the European Union |
| --- | --- |

Court of Justice of the European Union

| | European Commission |
| --- | --- |

European Commission

| | European Court of Auditors |
| --- | --- |

European Court of Auditors

| | European External Action Service (9) |
| --- | --- |

European External Action Service (9)

9

| | European Data Protection Supervisor |
| --- | --- |

European Data Protection Supervisor

| | European Economic and Social Committee |
| --- | --- |

European Economic and Social Committee

| | European Ombudsman |
| --- | --- |

European Ombudsman

| | European Parliament |
| --- | --- |

European Parliament

| | European Council |
| --- | --- |

European Council

2.   EU Agencies

EU Agencies

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

European Agency for Safety and Health at Work

| | European Aviation Safety Agency |
| --- | --- |

European Aviation Safety Agency

| | European Centre for Disease Prevention and Control |
| --- | --- |

European Centre for Disease Prevention and Control

| | European Centre for the Development of Vocational Training |
| --- | --- |

European Centre for the Development of Vocational Training

| | European Environment Agency |
| --- | --- |

European Environment Agency

| | European Food Safety Authority |
| --- | --- |

European Food Safety Authority

| | European Foundation for the Improvement of Living and Working Conditions |
| --- | --- |

European Foundation for the Improvement of Living and Working Conditions

| | European Maritime Safety Agency |
| --- | --- |

European Maritime Safety Agency

| | European Medicines Agency |
| --- | --- |

European Medicines Agency

| | European Chemicals Agency |
| --- | --- |

European Chemicals Agency

| | Fusion for Energy (European Joint Undertaking for ITER and the Development of Fusion Energy) |
| --- | --- |

Fusion for Energy (European Joint Undertaking for ITER and the Development of Fusion Energy)

| | Eurojust |
| --- | --- |

Eurojust

| | European Institute for Gender Equality |
| --- | --- |

European Institute for Gender Equality

| | Executive Agency for Competitiveness and Innovation |
| --- | --- |

Executive Agency for Competitiveness and Innovation

| | Education, Audiovisual & Culture Executive Agency |
| --- | --- |

Education, Audiovisual & Culture Executive Agency

| | European Research Council Executive Agency |
| --- | --- |

European Research Council Executive Agency

| | European Agency for Cooperation of Energy Regulators (9) |
| --- | --- |

European Agency for Cooperation of Energy Regulators (9)

9

| | European Banking Authority (10) |
| --- | --- |

European Banking Authority (10)

10

| | Office for the Body of European Regulators for Electronic Communications (10) |
| --- | --- |

Office for the Body of European Regulators for Electronic Communications (10)

10

| | European Union Agency for Fundamental Rights |
| --- | --- |

European Union Agency for Fundamental Rights

| | European Network and Information Security Agency |
| --- | --- |

European Network and Information Security Agency

| | European Training Foundation |
| --- | --- |

European Training Foundation

| | European Agency for the Management of Operational Co-operation at External Borders of the Member States of the EU |
| --- | --- |

European Agency for the Management of Operational Co-operation at External Borders of the Member States of the EU

| | Translation Centre for the Bodies of the European Union |
| --- | --- |

Translation Centre for the Bodies of the European Union

| | European GNSS Supervisory Authority |
| --- | --- |

European GNSS Supervisory Authority

| | Office for Harmonisation in the Internal Market (Trade Marks and Designs) |
| --- | --- |

Office for Harmonisation in the Internal Market (Trade Marks and Designs)

| | European Railway Agency |
| --- | --- |

European Railway Agency

| | Community Plant Variety Office |
| --- | --- |

Community Plant Variety Office

| | European Fisheries Control Agency |
| --- | --- |

European Fisheries Control Agency

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

European Monitoring Centre for Drugs and Drug Addiction

| | European Police College (CEPOL) |
| --- | --- |

European Police College (CEPOL)

| | European Police Office (EUROPOL) |
| --- | --- |

European Police Office (EUROPOL)

| | Executive Agency for Health and Consumers |
| --- | --- |

Executive Agency for Health and Consumers

| | Trans-European Transport Network Executive Agency |
| --- | --- |

Trans-European Transport Network Executive Agency

| | Research Executive Agency |
| --- | --- |

Research Executive Agency

| | European Insurance and Occupational Pensions Authority (10) |
| --- | --- |

European Insurance and Occupational Pensions Authority (10)

10

| | European Securities and Markets Authority (10) |
| --- | --- |

European Securities and Markets Authority (10)

10

| | European Institute of Innovation and Technology (10) |
| --- | --- |

European Institute of Innovation and Technology (10)

10

3.   Other controlled entities

Other controlled entities

European Coal and Steel Community (in liquidation)

B.   JOINT VENTURES

JOINT VENTURES

| | ITER International Fusion Energy Organisation |
| --- | --- |

ITER International Fusion Energy Organisation

| | SESAR Joint Undertaking |
| --- | --- |

SESAR Joint Undertaking

| | FCH Joint Undertaking |
| --- | --- |

FCH Joint Undertaking

| | Galileo Joint Undertaking in liquidation |
| --- | --- |

Galileo Joint Undertaking in liquidation

| | IMI Joint Undertaking |
| --- | --- |

IMI Joint Undertaking

C.   ASSOCIATES

ASSOCIATES

| | European Investment Fund |
| --- | --- |

European Investment Fund

| | Clean Sky Joint Undertaking |
| --- | --- |

Clean Sky Joint Undertaking

| | ARTEMIS Joint Undertaking |
| --- | --- |

ARTEMIS Joint Undertaking

| | ENIAC Joint Undertaking |
| --- | --- |

ENIAC Joint Undertaking

11.2   NON-CONSOLIDATED ENTITIES

NON-CONSOLIDATED ENTITIES

Although the EU manages the assets of the below mentioned entities, they do not meet the requirements to be consolidated and so are not included in the European Union accounts.

11.2.1   
  The European Development Fund (EDF)

The European Development Fund (EDF)

The European Development Fund (EDF) is the main instrument for providing European Union aid for development cooperation to the African, Caribbean and Pacific (ACP) States and Overseas Countries and Territories (OCTs). The 1957 Treaty of Rome made provision for its creation with a view to granting technical and financial assistance, initially limited to African countries with which some Member States had historical links.

The EDF is not funded from the European Union's budget but from direct contributions from the Member States, which are agreed in negotiations at intergovernmental level. The Commission and the EIB manage the resources of the EDF. Each EDF is usually concluded for a period of around five years. Since the conclusion of the first partnership convention in 1964, the EDF programming cycles have generally followed the partnership agreement/convention cycles.

The EDF is governed by its own Financial Regulation (OJ L 78, of 19.3.2008) which foresees the presentation of its own financial statements, separately from those of the EU. The EDF annual accounts and resource management are subject to the external control of the Court of Auditors and the Parliament. For information purposes, the balance sheet and the economic outturn account of the 8th, 9th and 10th EDFs are shown below:

Balance sheet – 8th, 9th and 10th EDFs

Balance sheet – 8th, 9th and 10th EDFs

| EUR millions |
| --- |
| | 31.12.2011 | 31.12.2010 |
| NON-CURRENT ASSETS | 380 | 353 |
| CURRENT ASSETS | 2 510 | 2 151 |
| Total assets | 2 890 | 2 504 |
| CURRENT LIABILITIES | (1 033) | (1 046) |
| Total liabilities | (1 033) | (1 046) |
| Net assets | 1 857 | 1 458 |
| FUNDS & RESERVES |
| Called fund capital | 26 979 | 23 879 |
| Other reserves | 2 252 | 2 252 |
| Economic outturn carried forward from previous years | (24 674) | (21 908) |
| Economic outturn of the year | (2 700) | (2 765) |
| Net assets | 1 857 | 1 458 |

EUR millions

31.12.2011

31.12.2010

NON-CURRENT ASSETS

380

353

CURRENT ASSETS

2 510

2 151

Total assets

2 890

2 504

CURRENT LIABILITIES

(1 033)

(1 046)

Total liabilities

(1 033)

(1 046)

Net assets

Net assets

1 857

1 857

1 458

1 458

FUNDS & RESERVES

Called fund capital

26 979

23 879

Other reserves

2 252

2 252

Economic outturn carried forward from previous years

(24 674)

(21 908)

Economic outturn of the year

(2 700)

(2 765)

Net assets

Net assets

1 857

1 857

1 458

1 458

Economic outturn account – 8th, 9th and 10th EDFs

Economic outturn account – 8th, 9th and 10th EDFs

| EUR millions |
| --- |
| | 2011 | 2010 |
| OPERATING REVENUE | 99 | 140 |
| OPERATING EXPENSES | (2 778) | (3 000) |
| DEFICIT FROM OPERATING ACTIVITIES | (2 679) | (2 860) |
| FINANCIAL ACTIVITIES | (21) | 95 |
| ECONOMIC OUTTURN OF THE YEAR | (2 700) | (2 765) |

EUR millions

2011

2010

OPERATING REVENUE

99

140

OPERATING EXPENSES

(2 778)

(3 000)

DEFICIT FROM OPERATING ACTIVITIES

DEFICIT FROM OPERATING ACTIVITIES

(2 679)

(2 679)

(2 860)

(2 860)

FINANCIAL ACTIVITIES

(21)

95

ECONOMIC OUTTURN OF THE YEAR

ECONOMIC OUTTURN OF THE YEAR

(2 700)

(2 700)

(2 765)

(2 765)

11.2.2   
  The Sickness Insurance Scheme

The Sickness Insurance Scheme

The Sickness Insurance Scheme is the scheme that provides medical assurance to the staff of the various European Union bodies. The funds of the Scheme are its own property and are not controlled by the European Union, although its financial assets are managed by the Commission. The Scheme is funded by contributions from its members (staff) and from the employers (the Institutions/Agencies/bodies.) Any surplus remains within the Scheme.

The scheme has four separate entities – the main scheme covering staff of the Institutions, Agencies of the European Union, and three smaller schemes covering staff in the European University of Florence, the European schools and staff working outside the EU such as staff in the EU delegations. The total assets of the Scheme at 31 December 2011 totalled EUR 294 million (2010: EUR 286 million).

11.2.3   
  The Participants Guarantee Fund (PGF)

The Participants Guarantee Fund (PGF)

Certain pre-financing amounts paid out under the 7th Research Framework Programme for research and technological development (FP7) are effectively covered by a Participants Guarantee Fund (PGF).

This is a mutual benefit instrument set up to cover the financial risks incurred by the EU and the participants during the implementation of the indirect actions of FP7, its capital and interests constituting a performance security. All participants of indirect actions taking the form of a grant contribute 5 % of the total EU contribution to the PGF's capital for the duration of the action. As such the participants are the owners of the PGF, the EU (represented by the Commission) acting as their executive agent. At the end of an indirect action, participants shall recover their contribution to the capital in full, except where the PGF incurs losses due to defaulting beneficiaries – in this case participants shall recover, at a minimum, 80 % of their contribution. The PGF thus guarantees the financial interest of both the EU and the participants.

As at 31 December 2011 the PGF had total assets of EUR 1 171 million (2010: EUR 879 million). The funds of the PGF are its own property and are not controlled by the European Union, even if its financial assets are managed by the Commission.

PART II

Consolidated reports on implementation of the budget and explanatory notes

Consolidated reports on implementation of the budget and explanatory notes

CONTENTS

CONTENTS

Consolidated reports on implementation of the budget:

Consolidated reports on implementation of the budget:

| 1. | EU Budget outturn |
| --- | --- |

1.

| 2. | Statement of Comparison of Budget and Actual Amounts |
| --- | --- |

2.

Revenue:

Revenue:

| 3. | Summary of the implementation of budget revenue |
| --- | --- |

3.

Expenditure:

Expenditure:

| 4. | Breakdown and changes in commitment and payment appropriations by financial framework heading |
| --- | --- |

4.

| 5. | Implementation of commitment appropriations by financial framework heading |
| --- | --- |

5.

| 6. | Implementation of payment appropriations by financial framework heading |
| --- | --- |

6.

| 7. | Movement in commitments outstanding by financial framework heading |
| --- | --- |

7.

| 8. | Breakdown of commitments outstanding by year of origin by financial framework heading |
| --- | --- |

8.

| 9. | Breakdown and changes in commitment and payment appropriations by policy area |
| --- | --- |

9.

| 10. | Implementation of commitment appropriations by policy area |
| --- | --- |

10.

| 11. | Implementation of payment appropriations by policy area |
| --- | --- |

11.

| 12. | Movement in commitments outstanding by policy area |
| --- | --- |

12.

| 13. | Breakdown of commitments outstanding by year of origin by policy area |
| --- | --- |

13.

Institutions:

Institutions:

| 14. | Summary of the implementation of budget revenue by Institution |
| --- | --- |

14.

| 15. | Implementation of commitment and payment appropriations by Institution |
| --- | --- |

15.

Agencies:

Agencies:

| 16. | Agency income: budget forecasts, entitlements and amounts received |
| --- | --- |

16.

| 17. | Commitment and payment appropriations by Agency |
| --- | --- |

17.

| 18. | Budget outturn including Agencies |
| --- | --- |

18.

Explanatory notes to the consolidated reports on implementation of the budget:

Explanatory notes to the consolidated reports on implementation of the budget:

| 1. | Budgetary principles, structure and appropriations |
| --- | --- |

1.

| 2. | Explanation of the consolidated reports on the implementation of the budget |
| --- | --- |

2.

CONSOLIDATED REPORTS ON THE IMPLEMENTATION OF THE BUDGET
   (11)

CONSOLIDATED REPORTS ON THE IMPLEMENTATION OF THE BUDGET

11

RESULT OF IMPLEMENTATION OF THE EU BUDGET

RESULT OF IMPLEMENTATION OF THE EU BUDGET

1.   EU BUDGET OUTTURN

| EUR millions |
| --- |
| EUROPEAN UNION | 2011 | 2010 |
| Revenue for the financial year | 130 000 | 127 795 |
| Payments against current year appropriations | (128 043) | (121 213) |
| Payment appropriations carried over to year N+1 | (1 019) | (2 797) |
| Cancellation of unused payment appropriations carried over from year N-1 | 457 | 741 |
| Exchange differences for the year | 97 | 23 |
| Budget Outturn
   (12) | 1 492 | 4 549 |

EUR millions

EUROPEAN UNION

2011

2010

Revenue for the financial year

130 000

130 000

127 795

127 795

Payments against current year appropriations

(128 043)

(128 043)

(121 213)

(121 213)

Payment appropriations carried over to year N+1

(1 019)

(1 019)

(2 797)

(2 797)

Cancellation of unused payment appropriations carried over from year N-1

457

457

741

741

Exchange differences for the year

97

97

23

23

Budget Outturn
   (12)

Budget Outturn

12

1 492

1 492

4 549

4 549

The budget surplus for the European Union is returned to the Member States during the following year through deduction of their amounts due for that year.

2.   STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS

REVENUE

| EUR millions |
| --- |
| Title | Original Budget | Final Budget | Entitlements established | Revenue | Difference Final–Actual | Receipts as % of budget | Outstanding |
| 1 | 2 | 3 | 4 | 5 = 2 – 4 | 6 = 4/2 | 7 = 3 – 4 |
| 1. | Own resources |

EUR millions

Title

Original Budget

Final Budget

Entitlements established

Revenue

Difference Final–Actual

Receipts as % of budget

Outstanding

1

2

3

4

5 = 2 – 4

6 = 4/2

7 = 3 – 4

1.

Own resources

125 106

118 289

118 193

118 164

125

99,89 %

29

| 3. | Surpluses, balances and adjustments |
| --- | --- |

3.

Surpluses, balances and adjustments

0

6 354

6 472

6 370

(16)

100,25 %

102

| 4. | Revenue accruing from persons working with the institutions and with other Union bodies |
| --- | --- |

4.

Revenue accruing from persons working with the institutions and with other Union bodies

1 182

1 182

1 213

1 207

(25)

102,12 %

6

| 5. | Revenue accruing from the administrative operation of the institutions |
| --- | --- |

5.

Revenue accruing from the administrative operation of the institutions

56

56

609

587

(531)

1 048,48 %

22

| 6. | Contributions and refunds in connection with Union/Community agreements and programmes |
| --- | --- |

6.

Contributions and refunds in connection with Union/Community agreements and programmes

30

82

2 745

2 454

(2 372)

2 993,28 %

291

| 7. | Interest on late payments and fines |
| --- | --- |

7.

Interest on late payments and fines

123

733

13 943

1 183

(450)

161,37 %

12 761

| 8. | Borrowing and lending operations |
| --- | --- |

8.

Borrowing and lending operations

0

0

159

1

0

159

| 9. | Miscellaneous revenue |
| --- | --- |

9.

Miscellaneous revenue

30

30

44

34

(4)

111,86 %

11

Total

126 527

126 727

143 380

130 000

(3 273)

102,58 %

13 380

EXPENDITURE – BY FINANCIAL FRAMEWORK HEADING

| EUR millions |
| --- |
| Financial Framework Heading | Original Budget | Final Budget (13) | Payments made | Difference Final–Actual | % | Appropriations carried over | Appropriations lapsing |
| 1 | 2 | 3 | 4 = 2 – 3 | 5 = 3/2 | 6 | 7 = 2 – 3 – 6 |
| 1. | Sustainable growth |

EUR millions

Financial Framework Heading

Original Budget

Final Budget (13)

13

Payments made

Difference Final–Actual

%

Appropriations carried over

Appropriations lapsing

1

2

3

4 = 2 – 3

5 = 3/2

6

7 = 2 – 3 – 6

1.

Sustainable growth

53 280

56 982

54 732

2 251

96,05 %

2 051

199

| 2. | Preservation & management of natural resources |
| --- | --- |

2.

Preservation & management of natural resources

56 379

58 887

57 374

1 513

97,43 %

1 416

97

| 3. | Citizenship, freedom, security and justice |
| --- | --- |

3.

Citizenship, freedom, security and justice

1 459

2 008

1 827

181

91,00 %

144

37

| 4. | The EU as a global player |
| --- | --- |

4.

The EU as a global player

7 238

7 366

7 102

264

96,42 %

145

118

| 5. | Administration |
| --- | --- |

5.

Administration

8 172

9 716

8 359

1 357

86,03 %

1 012

345

| 6. | Compensations |
| --- | --- |

6.

Compensations

Total

126 527

134 960

129 395

5 565

95,88 %

4 768

797

EXPENDITURE — BY POLICY AREA

| EUR millions |
| --- |
| Policy Area | Original Budget | Final Budget (14) | Payments made | Difference Final-Actual | % | Appropriations carried over | Appropriations lapsing |
| 1 | 2 | 3 | 4 = 2 – 3 | 5 = 3/2 | 6 | 7 = 2 – 3 – 6 |
| 01 | Economic and financial affairs |

EUR millions

Policy Area

Original Budget

Final Budget (14)

14

Payments made

Difference Final-Actual

%

Appropriations carried over

Appropriations lapsing

1

2

3

4 = 2 – 3

5 = 3/2

6

7 = 2 – 3 – 6

01

Economic and financial affairs

341

443

389

54

87,76 %

9

46

| 02 | Enterprise |
| --- | --- |

02

Enterprise

1 210

1 485

1 336

149

89,99 %

123

25

| 03 | Competition |
| --- | --- |

03

Competition

93

104

94

10

90,73 %

9

1

| 04 | Employment and social affairs |
| --- | --- |

04

Employment and social affairs

9 163

10 498

10 392

106

98,99 %

75

30

| 05 | Agriculture and rural development |
| --- | --- |

05

Agriculture and rural development

55 269

57 784

56 342

1 442

97,50 %

1 406

35

| 06 | Mobility and transport |
| --- | --- |

06

Mobility and transport

1 142

1 217

1 114

103

91,53 %

77

26

| 07 | Environment and Climate action |
| --- | --- |

07

Environment and Climate action

390

379

332

47

87,54 %

24

23

| 08 | Research |
| --- | --- |

08

Research

4 117

5 476

4 604

872

84,08 %

861

10

| 09 | Information society and media |
| --- | --- |

09

Information society and media

1 334

1 741

1 489

252

85,51 %

250

2

| 10 | Direct research |
| --- | --- |

10

Direct research

396

832

441

391

53,01 %

384

6

| 11 | Maritime affairs and Fisheries |
| --- | --- |

11

Maritime affairs and Fisheries

771

812

772

40

95,08 %

5

35

| 12 | Internal market |
| --- | --- |

12

Internal market

93

104

95

9

91,52 %

8

1

| 13 | Regional policy |
| --- | --- |

13

Regional policy

33 317

33 052

32 995

57

99,83 %

51

5

| 14 | Taxation and customs union |
| --- | --- |

14

Taxation and customs union

115

133

123

10

92,20 %

9

1

| 15 | Education and culture |
| --- | --- |

15

Education and culture

1 996

2 725

2 414

310

88,62 %

305

5

| 16 | Communication |
| --- | --- |

16

Communication

253

279

259

21

92,61 %

17

4

| 17 | Health and consumer protection |
| --- | --- |

17

Health and consumer protection

596

659

623

37

94,40 %

27

10

| 18 | Area of freedom, security and justice |
| --- | --- |

18

Area of freedom, security and justice

885

1 014

944

70

93,10 %

40

30

| 19 | External relations |
| --- | --- |

19

External relations

3 385

3 462

3 313

148

95,72 %

66

82

| 20 | Trade |
| --- | --- |

20

Trade

104

113

104

8

92,51 %

8

1

| 21 | Development and relations with ACP States |
| --- | --- |

21

Development and relations with ACP States

1 480

1 583

1 513

71

95,54 %

43

27

| 22 | Enlargement |
| --- | --- |

22

Enlargement

1 013

970

928

42

95,63 %

38

4

| 23 | Humanitarian aid |
| --- | --- |

23

Humanitarian aid

839

1 090

1 068

22

97,96 %

10

12

| 24 | Fight against fraud |
| --- | --- |

24

Fight against fraud

75

83

71

12

85,96 %

7

4

| 25 | Commission's policy coordination & legal advice |
| --- | --- |

25

Commission's policy coordination & legal advice

191

221

197

24

89,07 %

21

4

| 26 | Commission’s administration |
| --- | --- |

26

Commission’s administration

1 017

1 274

1 063

211

83,45 %

196

15

| 27 | Budget |
| --- | --- |

27

Budget

69

73

60

13

82,01 %

12

1

| 28 | Audit |
| --- | --- |

28

Audit

11

13

12

1

91,58 %

1

0

| 29 | Statistics |
| --- | --- |

29

Statistics

124

159

134

25

84,26 %

19

6

| 30 | Pensions and related expenditure |
| --- | --- |

30

Pensions and related expenditure

1 278

1 273

1 257

16

98,75 %

0

16

| 31 | Language Services |
| --- | --- |

31

Language Services

393

501

442

60

88,11 %

56

3

| 32 | Energy |
| --- | --- |

32

Energy

1 535

1 087

963

123

88,63 %

44

79

| 40 | Reserves |
| --- | --- |

40

Reserves

100

0

0

0

0,00 %

0

0

| 90 | Other Institutions |
| --- | --- |

90

Other Institutions

3 428

4 321

3 512

809

81,27 %

565

245

Total

126 527

134 960

129 395

5 565

95,88 %

4 768

797

3.   SUMMARY OF THE IMPLEMENTATION OF BUDGET REVENUE

| EUR millions |
| --- |
| Title | Income appropriations | Entitlements established | Revenue | Receipts as % of budget | Outstanding |
| Initial | Final | Current year | Carried over | Total | On entitlements current year | On entitlements carried over | Total |
| 1. | Own resources |

EUR millions

Title

Income appropriations

Entitlements established

Revenue

Receipts as % of budget

Outstanding

Initial

Final

Current year

Carried over

Total

On entitlements current year

On entitlements carried over

Total

1.

Own resources

125 106

118 289

118 111

81

118 193

118 121

43

118 164

99,89 %

29

| 3. | Surpluses, balances and adjustments |
| --- | --- |

3.

Surpluses, balances and adjustments

0

6 354

6 308

164

6 472

6 308

62

6 370

100,25 %

102

| 4. | Revenue accruing from persons working with the institutions & with other EU bodies |
| --- | --- |

4.

Revenue accruing from persons working with the institutions & with other EU bodies

1 182

1 182

1 206

7

1 213

1 201

6

1 207

102,12 %

6

| 5. | Revenue from administrative operations of institutions |
| --- | --- |

5.

Revenue from administrative operations of institutions

56

56

591

18

609

573

14

587

1 048,48 %

22

| 6. | Contributions and refunds in connection with community agreements & programmes |
| --- | --- |

6.

Contributions and refunds in connection with community agreements & programmes

30

82

2 470

275

2 745

2 313

141

2 454

2 993,28 %

291

| 7. | Interest on late payments and fines |
| --- | --- |

7.

Interest on late payments and fines

123

733

50

13 893

13 943

(172)

1 355

1 183

161,37 %

12 761

| 8. | Borrowing and lending operations |
| --- | --- |

8.

Borrowing and lending operations

0

0

37

122

159

1

0

1

195,64 %

159

| 9. | Miscellaneous revenue |
| --- | --- |

9.

Miscellaneous revenue

30

30

34

10

44

30

4

34

111,86 %

11

Total

126 527

126 727

128 808

14 572

143 380

128 374

1 626

130 000

102,58 %

13 380

Detail Title 1:   Own resources

Detail Title 1:

Own resources

| Chapter | Income appropriations | Entitlements established | Revenue | Receipts as % of budget | Outstanding |
| --- | --- | --- | --- | --- | --- |
| Initial | Final | Current year | Carried over | Total | On entitlements current year | On entitlements carried over | Total |
| 11. | Sugar levies |

Chapter

Income appropriations

Entitlements established

Revenue

Receipts as % of budget

Outstanding

Initial

Final

Current year

Carried over

Total

On entitlements current year

On entitlements carried over

Total

11.

Sugar levies

123

123

132

0

132

132

0

132

106,75 %

0

| 12. | Customs duties |
| --- | --- |

12.

Customs duties

16 654

16 544

16 593

81

16 675

16 603

43

16 646

100,62 %

29

| 13. | VAT |
| --- | --- |

13.

VAT

13 787

14 126

14 077

0

14 077

14 077

0

14 077

99,65 %

0

| 14. | GNI |
| --- | --- |

14.

GNI

94 542

87 497

87 259

0

87 259

87 259

0

87 259

99,73 %

0

| 15. | Correction of budgetary imbalances |
| --- | --- |

15.

Correction of budgetary imbalances

0

0

52

0

52

52

0

52

0

| 16. | Reduction GNI-based contributions NL, S |
| --- | --- |

16.

Reduction GNI-based contributions NL, S

0

0

(1)

0

(1)

(1)

0

(1)

0

Total

125 106

118 289

118 111

81

118 193

118 121

43

118 164

99,89 %

29

Detail Title 3:   Surpluses, balances and adjustments

Detail Title 3:

Surpluses, balances and adjustments

| Chapter | Income appropriations | Entitlements established | Revenue | Receipts as % of budget | Outstanding |
| --- | --- | --- | --- | --- | --- |
| Initial | Final | Current year | Carried over | Total | On entitlements current year | On entitlements carried over | Total |
| 30. | Surplus from previous year |

Chapter

Income appropriations

Entitlements established

Revenue

Receipts as % of budget

Outstanding

Initial

Final

Current year

Carried over

Total

On entitlements current year

On entitlements carried over

Total

30.

Surplus from previous year

0

4 539

4 539

0

4 539

4 539

0

4 539

100,00 %

0

| 31. | VAT balances |
| --- | --- |

31.

VAT balances

0

673

680

37

717

680

14

694

103,11 %

23

| 32. | GNI balances |
| --- | --- |

32.

GNI balances

0

1 142

1 135

128

1 263

1 135

48

1 183

103,64 %

80

| 34. | Adjustment for non-participation in JHAP |
| --- | --- |

34.

Adjustment for non-participation in JHAP

0

0

0

0

0

0

0

0

0

| 35. | United Kingdom correction-adjustments |
| --- | --- |

35.

United Kingdom correction-adjustments

0

0

(46)

0

(46)

(46)

0

(46)

0

Total

0

6 354

6 308

164

6 472

6 308

62

6 370

100,25 %

102

4.   BREAKDOWN & CHANGES IN COMMITMENT & PAYMENT APPROPRIATIONS BY FINANCIAL FRAMEWORK HEADING

| EUR millions |
| --- |
| | Commitment appropriations | Payment appropriations |
| Financial Framework Heading | Appropriations adopted | Modifications
  (Transfers & AB) | Carried over | Assigned revenue | Total additional | Total authorised | Appropriations adopted | Modifications
  (Transfers & AB) | Carried over | Assigned revenue | Total additional | Total authorised |
| 1 | 2 | 3 | 4 | 5 = 3 + 4 | 6 = 1 + 2 + 5 | 7 | 8 | 9 | 10 | 11 = 9 + 10 | 12 = 7 + 8 + 11 |
| 1 | Sustainable growth |

EUR millions

Commitment appropriations

Payment appropriations

Financial Framework Heading

Appropriations adopted

Modifications

(Transfers & AB)

Carried over

Assigned revenue

Total additional

Total authorised

Appropriations adopted

Modifications

(Transfers & AB)

Carried over

Assigned revenue

Total additional

Total authorised

1

2

3

4

5 = 3 + 4

6 = 1 + 2 + 5

7

8

9

10

11 = 9 + 10

12 = 7 + 8 + 11

1

Sustainable growth

64 501

3

182

2 308

2 490

66 995

53 280

714

281

2 707

2 989

56 982

| 2 | Preservation and management of natural resources |
| --- | --- |

2

Preservation and management of natural resources

58 659

0

2

2 680

2 682

61 341

56 379

(585)

419

2 675

3 093

58 887

| 3 | Citizenship, freedom, security and justice |
| --- | --- |

3

Citizenship, freedom, security and justice

1 822

276

24

169

193

2 291

1 459

255

98

196

294

2 008

| 4 | The EU as global player |
| --- | --- |

4

The EU as global player

8 754

5

42

287

329

9 088

7 238

(184)

38

274

313

7 366

| 5 | Administration |
| --- | --- |

5

Administration

8 173

0

9

785

794

8 967

8 172

1

745

799

1 544

9 716

| 6 | Compensations |
| --- | --- |

6

Compensations

Total

141 909

284

259

6 228

6 488

148 681

126 527

200

1 582

6 651

8 233

134 960

5.   IMPLEMENTATION OF COMMITMENT APPROPRIATIONS BY FINANCIAL FRAMEWORK HEADING

| EUR millions |
| --- |
| Financial Framework Heading | Commitment appropriations authorised | Commitments made | Appropriations carried over | Appropriations lapsing |
| From the year’s appropriations | From carry-overs | From assigned revenue | Total | % | Assigned revenue | Carry-overs by decision | Total | % | From the year’s budget appropriations | From carry overs | Assigned revenue | Total | % |
| 1 | 2 | 3 | 4 | 5 = 2 + 3 + 4 | 6 = 5/1 | 7 | 8 | 9 = 7 + 8 | 10 = 9/1 | 11 | 12 | 13 | 14 = 11 + 12 + 13 | 15 = 14/1 |
| 1 | Sustainable growth |

EUR millions

Financial Framework Heading

Commitment appropriations authorised

Commitments made

Appropriations carried over

Appropriations lapsing

From the year’s appropriations

From carry-overs

From assigned revenue

Total

%

Assigned revenue

Carry-overs by decision

Total

%

From the year’s budget appropriations

From carry overs

Assigned revenue

Total

%

1

2

3

4

5 = 2 + 3 + 4

6 = 5/1

7

8

9 = 7 + 8

10 = 9/1

11

12

13

14 = 11 + 12 + 13

15 = 14/1

1

Sustainable growth

66 995

64 065

182

991

65 238

97,38 %

1 317

36

1 353

2,02 %

403

0

0

404

0,60 %

| 2 | Preservation and management of natural resources |
| --- | --- |

2

Preservation and management of natural resources

61 341

58 577

2

1 328

59 907

97,66 %

1 352

23

1 375

2,24 %

59

0

0

59

0,10 %

| 3 | Citizenship, freedom, security and justice |
| --- | --- |

3

Citizenship, freedom, security and justice

2 291

2 048

24

92

2 165

94,50 %

76

41

117

5,12 %

9

0

0

9

0,38 %

| 4 | The EU as a global player |
| --- | --- |

4

The EU as a global player

9 088

8 572

42

194

8 808

96,91 %

94

178

272

2,99 %

8

0

0

8

0,09 %

| 5 | Administration |
| --- | --- |

5

Administration

8 967

7 941

9

504

8 454

94,28 %

281

22

303

3,38 %

210

0

0

210

2,34 %

| 6 | Compensations |
| --- | --- |

6

Compensations

Total

148 681

141 204

259

3 108

144 572

97,24 %

3 120

301

3 420

2,30 %

689

0

0

689

0,46 %

6.   IMPLEMENTATION OF PAYMENT APPROPRIATIONS BY FINANCIAL FRAMEWORK HEADING

| EUR millions |
| --- |
| Financial Framework Heading | Payment Appropriations authorised | Payments made | Appropriations carried over | Appropriations lapsing |
| From the year’s appropriations | From carry-overs | From assigned revenue | Total | % | Automatic carry-overs | Carry-overs by decision | Assigned revenue | Total | % | From the year’s appropriations | From carryovers | Assigned revenue | Total | % |
| 1 | 2 | 3 | 4 | 5 = 2 + 3 + 4 | 6 = 5/1 | 7 | 8 | 9 | 10 = 7 + 8 + 9 | 11 = 10/1 | 12 | 13 | 14 | 15 = 12 + 13 + 14 | 16 = 15/1 |
| 1 | Sustainable growth |

EUR millions

Financial Framework Heading

Payment Appropriations authorised

Payments made

Appropriations carried over

Appropriations lapsing

From the year’s appropriations

From carry-overs

From assigned revenue

Total

%

Automatic carry-overs

Carry-overs by decision

Assigned revenue

Total

%

From the year’s appropriations

From carryovers

Assigned revenue

Total

%

1

2

3

4

5 = 2 + 3 + 4

6 = 5/1

7

8

9

10 = 7 + 8 + 9

11 = 10/1

12

13

14

15 = 12 + 13 + 14

16 = 15/1

1

Sustainable growth

56 982

53 658

235

839

54 732

96,05 %

131

53

1 868

2 051

3,60 %

153

47

0

199

0,35 %

| 2 | Preservation & management of natural resources |
| --- | --- |

2

Preservation & management of natural resources

58 887

55 646

391

1 337

57 374

97,43 %

32

46

1 338

1 416

2,40 %

70

27

0

97

0,16 %

| 3 | Citizenship, freedom, security & justice |
| --- | --- |

3

Citizenship, freedom, security & justice

2 008

1 636

92

99

1 827

91,00 %

9

38

97

144

7,17 %

31

6

0

37

1,83 %

| 4 | The EU as a global player |
| --- | --- |

4

The EU as a global player

7 366

6 902

19

181

7 102

96,42 %

27

25

93

145

1,97 %

99

19

0

118

1,61 %

| 5 | Administration |
| --- | --- |

5

Administration

9 716

7 304

614

442

8 359

86,03 %

637

22

352

1 012

10,41 %

209

131

5

345

3,55 %

| 6 | Compensations |
| --- | --- |

6

Compensations

Total

134 960

125 145

1 352

2 898

129 395

95,88 %

835

185

3 748

4 768

3,53 %

562

230

5

797

0,59 %

7.   MOVEMENTS IN COMMITMENTS OUTSTANDING - BY FINANCIAL FRAMEWORK HEADING

| EUR millions |
| --- |
| | Commitments outstanding at the end of the previous year | Commitments of the year | |
| Financial Framework Heading | Commitments carried forward from previous year | Decommitments/Revaluations/Cancellations | Payments | Commitments outstanding at year-end | Commitments made during the year | Payments | Cancellation of commitments which cannot be carried over | Commitments outstanding at year-end | Total Commitments outstanding at year-end |
| 1 | Sustainable growth |

EUR millions

Commitments outstanding at the end of the previous year

Commitments of the year

Financial Framework Heading

Commitments carried forward from previous year

Decommitments/Revaluations/Cancellations

Payments

Commitments outstanding at year-end

Commitments made during the year

Payments

Cancellation of commitments which cannot be carried over

Commitments outstanding at year-end

Total Commitments outstanding at year-end

1

Sustainable growth

150 467

(1 262)

(48 945)

100 259

65 238

(5 786)

(3)

59 448

159 707

| 2 | Preservation and management of natural resources |
| --- | --- |

2

Preservation and management of natural resources

22 963

(193)

(11 687)

11 083

59 907

(45 687)

0

14 220

25 302

| 3 | Citizenship, freedom, security and justice |
| --- | --- |

3

Citizenship, freedom, security and justice

1 911

(118)

(555)

1 237

2 165

(1 272)

0

893

2 130

| 4 | The EU as a global player |
| --- | --- |

4

The EU as a global player

18 332

(469)

(4 740)

13 123

8 808

(2 363)

(1)

6 444

19 567

| 5 | Administration |
| --- | --- |

5

Administration

722

(77)

(631)

14

8 454

(7 728)

(4)

722

737

| 6 | Compensations |
| --- | --- |

6

Compensations

Total

194 395

(2 120)

(66 559)

125 717

144 572

(62 836)

(9)

81 727

207 443

8.   BREAKDOWN OF COMMITMENTS OUTSTANDING BY YEAR OF ORIGIN — BY FINANCIAL FRAMEWORK HEADING

| EUR millions |
| --- |
| Financial Framework Heading | <2005 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | Total |
| 1 | Sustainable growth |

EUR millions

Financial Framework Heading

<2005

2005

2006

2007

2008

2009

2010

2011

Total

1

Sustainable growth

820

998

10 089

984

7 997

29 501

49 870

59 448

159 707

| 2 | Preservation & management of natural resources |
| --- | --- |

2

Preservation & management of natural resources

42

32

928

91

180

1 237

8 573

14 220

25 302

| 3 | Citizenship, freedom, security and justice |
| --- | --- |

3

Citizenship, freedom, security and justice

16

14

21

80

172

401

534

893

2 130

| 4 | The EU as a global player |
| --- | --- |

4

The EU as a global player

783

357

986

1 093

2 097

3 180

4 627

6 444

19 567

| 5 | Administration |
| --- | --- |

5

Administration

0

0

0

0

0

0

14

722

737

Total

1 661

1 401

12 024

2 247

10 446

34 319

63 618

81 727

207 443

9.   BREAKDOWN AND CHANGES IN COMMITMENT AND PAYMENT APPROPRIATIONS BY POLICY AREA

| EUR millions |
| --- |
| Policy Area | Commitment appropriations | Payment appropriations |
| Approps adopted | Modifications
  (Transfer /AB) | Carried over | Assigned revenue | Total additional | Total authorised | Approps adopted | Modifications
  (Transfer/AB) | Carried over | Assigned revenue | Total additional | Total authorised |
| 1 | 2 | 3 | 4 | 5 = 3 + 4 | 6 = 1 + 2 + 5 | 7 | 8 | 9 | 10 | 11 = 9 + 10 | 12 = 7 + 8 + 11 |
| 01 | Economic and financial affairs |

EUR millions

Policy Area

Commitment appropriations

Payment appropriations

Approps adopted

Modifications

(Transfer /AB)

Carried over

Assigned revenue

Total additional

Total authorised

Approps adopted

Modifications

(Transfer/AB)

Carried over

Assigned revenue

Total additional

Total authorised

1

2

3

4

5 = 3 + 4

6 = 1 + 2 + 5

7

8

9

10

11 = 9 + 10

12 = 7 + 8 + 11

01

Economic and financial affairs

524

(122)

0

13

13

416

341

26

54

22

76

443

| 02 | Enterprise |
| --- | --- |

02

Enterprise

1 056

(1)

0

119

119

1 174

1 210

95

33

146

180

1 485

| 03 | Competition |
| --- | --- |

03

Competition

93

(2)

0

5

5

96

93

(2)

8

5

13

104

| 04 | Employment and social affairs |
| --- | --- |

04

Employment and social affairs

11 398

255

19

16

35

11 689

9 163

1 283

36

15

51

10 498

| 05 | Agriculture and rural development |
| --- | --- |

05

Agriculture and rural development

57 292

0

0

2 667

2 667

59 960

55 269

(510)

357

2 667

3 024

57 784

| 06 | Mobility and transport |
| --- | --- |

06

Mobility and transport

1 547

1

0

115

115

1 663

1 142

(110)

66

119

185

1 217

| 07 | Environment and Climate action |
| --- | --- |

07

Environment and Climate action

471

0

0

21

21

492

390

(44)

17

16

33

379

| 08 | Research |
| --- | --- |

08

Research

5 335

0

0

849

849

6 184

4 117

130

29

1 199

1 228

5 476

| 09 | Information society and media |
| --- | --- |

09

Information society and media

1 539

(3)

0

248

248

1 784

1 334

101

17

289

305

1 741

| 10 | Direct research |
| --- | --- |

10

Direct research

395

0

0

484

484

879

396

(7)

39

403

443

832

| 11 | Maritime affairs and Fisheries |
| --- | --- |

11

Maritime affairs and Fisheries

1 001

23

2

2

4

1 028

771

0

38

2

40

812

| 12 | Internal market |
| --- | --- |

12

Internal market

95

2

0

3

3

100

93

2

6

3

9

104

| 13 | Regional policy |
| --- | --- |

13

Regional policy

40 383

141

21

4

25

40 549

33 317

(346)

77

4

81

33 052

| 14 | Taxation and customs union |
| --- | --- |

14

Taxation and customs union

142

(3)

0

4

4

143

115

6

8

4

12

133

| 15 | Education and culture |
| --- | --- |

15

Education and culture

2 429

(6)

0

514

514

2 937

1 996

145

20

563

583

2 725

| 16 | Communication |
| --- | --- |

16

Communication

273

1

0

6

6

280

253

8

13

5

18

279

| 17 | Health and consumer protection |
| --- | --- |

17

Health and consumer protection

692

(23)

0

36

36

705

596

(8)

35

36

71

659

| 18 | Area of freedom, security and justice |
| --- | --- |

18

Area of freedom, security and justice

1 210

42

24

62

86

1 339

885

24

31

75

106

1 014

| 19 | External relations |
| --- | --- |

19

External relations

4 315

45

31

118

149

4 508

3 385

(75)

43

109

152

3 462

| 20 | Trade |
| --- | --- |

20

Trade

105

0

0

3

3

109

104

0

5

3

8

113

| 21 | Development & relations ACP States |
| --- | --- |

21

Development & relations ACP States

1 542

81

6

121

127

1 749

1 480

(47)

31

119

150

1 583

| 22 | Enlargement |
| --- | --- |

22

Enlargement

1 123

(5)

0

44

44

1 163

1 013

(94)

7

44

52

970

| 23 | Humanitarian aid |
| --- | --- |

23

Humanitarian aid

878

256

0

14

14

1 149

839

234

5

12

17

1 090

| 24 | Fight against fraud |
| --- | --- |

24

Fight against fraud

82

0

0

0

0

81

75

1

7

0

7

83

| 25 | Commission’s policy coordination and legal advice |
| --- | --- |

25

Commission’s policy coordination and legal advice

191

2

0

10

10

203

191

2

18

10

28

221

| 26 | Commission’s administration |
| --- | --- |

26

Commission’s administration

1 019

4

0

108

108

1 131

1 017

10

134

112

246

1 274

| 27 | Budget |
| --- | --- |

27

Budget

69

(12)

0

6

6

64

69

(12)

8

6

15

73

| 28 | Audit |
| --- | --- |

28

Audit

11

0

0

1

1

12

11

0

1

1

2

13

| 29 | Statistics |
| --- | --- |

29

Statistics

145

(5)

0

17

17

157

124

10

7

18

25

159

| 30 | Pensions and related expenditure |
| --- | --- |

30

Pensions and related expenditure

1 278

(5)

0

0

0

1 273

1 278

(5)

0

0

0

1 273

| 31 | Language Services |
| --- | --- |

31

Language Services

393

(2)

0

83

83

474

393

(2)

28

83

110

501

| 32 | Energy |
| --- | --- |

32

Energy

700

1

146

42

188

889

1 535

(518)

15

54

70

1 087

| 40 | Reserves |
| --- | --- |

40

Reserves

754

(383)

0

0

0

371

100

(100)

0

0

0

0

| 90 | Other Institutions |
| --- | --- |

90

Other Institutions

3 428

0

9

493

502

3 930

3 428

0

388

504

893

4 321

Total

141 909

284

259

6 228

6 488

148 681

126 527

200

1 582

6 651

8 233

134 960

10.   IMPLEMENTATION OF COMMITMENT APPROPRIATIONS BY POLICY AREA

| EUR millions |
| --- |
| Policy Area | Commitment appropriations authorised | Commitments made | Appropriations carried over | Appropriations lapsing |
| From the year’s approps | From carry-overs | Assigned revenue | Total | % | Assigned revenue | Carry-overs: decision | Total | % | From year’s budget approps | From carry-overs | Assigned revenue | Total | % |
| 1 | 2 | 3 | 4 | 5 = 2 + 3 + 4 | 6 = 5/1 | 7 | 8 | 9 = 7 + 8 | 10 = 9/1 | 11 | 12 | 13 | 14 = 11 + 12 + 13 | 15 = 14/1 |
| 01 | Economic and financial affairs |

EUR millions

Policy Area

Commitment appropriations authorised

Commitments made

Appropriations carried over

Appropriations lapsing

From the year’s approps

From carry-overs

Assigned revenue

Total

%

Assigned revenue

Carry-overs: decision

Total

%

From year’s budget approps

From carry-overs

Assigned revenue

Total

%

1

2

3

4

5 = 2 + 3 + 4

6 = 5/1

7

8

9 = 7 + 8

10 = 9/1

11

12

13

14 = 11 + 12 + 13

15 = 14/1

01

Economic and financial affairs

416

403

0

11

414

99,55 %

2

0

2

0,41 %

0

0

0

0

0,05 %

| 02 | Enterprise |
| --- | --- |

02

Enterprise

1 174

1 053

0

61

1 113

94,87 %

58

0

58

4,94 %

2

0

0

2

0,19 %

| 03 | Competition |
| --- | --- |

03

Competition

96

91

0

3

94

97,65 %

2

0

2

2,28 %

0

0

0

0

0,07 %

| 04 | Employment and social affairs |
| --- | --- |

04

Employment and social affairs

11 689

11 612

19

7

11 638

99,57 %

9

34

42

0,36 %

8

0

0

8

0,07 %

| 05 | Agriculture and rural development |
| --- | --- |

05

Agriculture and rural development

59 960

57 257

0

1 322

58 579

97,70 %

1 345

0

1 345

2,24 %

36

0

0

36

0,06 %

| 06 | Mobility and transport |
| --- | --- |

06

Mobility and transport

1 663

1 545

0

64

1 609

96,79 %

51

0

51

3,08 %

2

0

0

2

0,12 %

| 07 | Environment & Climate action |
| --- | --- |

07

Environment & Climate action

492

466

0

11

478

97,08 %

10

0

10

2,02 %

4

0

0

4

0,90 %

| 08 | Research |
| --- | --- |

08

Research

6 184

5 334

0

396

5 730

92,67 %

453

0

453

7,33 %

0

0

0

0

0,01 %

| 09 | Information society and media |
| --- | --- |

09

Information society and media

1 784

1 535

0

102

1 637

91,75 %

146

0

146

8,21 %

1

0

0

1

0,04 %

| 10 | Direct research |
| --- | --- |

10

Direct research

879

395

0

79

474

53,90 %

405

0

405

46,09 %

0

0

0

0

0,01 %

| 11 | Maritime affairs and Fisheries |
| --- | --- |

11

Maritime affairs and Fisheries

1 028

996

2

1

999

97,13 %

1

23

24

2,35 %

5

0

0

5

0,51 %

| 12 | Internal market |
| --- | --- |

12

Internal market

100

96

0

2

98

98,21 %

1

0

1

1,47 %

0

0

0

0

0,32 %

| 13 | Regional policy |
| --- | --- |

13

Regional policy

40 549

40 472

21

2

40 495

99,87 %

2

40

41

0,10 %

12

0

0

12

0,03 %

| 14 | Taxation and customs union |
| --- | --- |

14

Taxation and customs union

143

139

0

2

141

98,01 %

3

0

3

1,78 %

0

0

0

0

0,21 %

| 15 | Education and culture |
| --- | --- |

15

Education and culture

2 937

2 422

0

297

2 720

92,58 %

217

0

217

7,40 %

0

0

0

0

0,02 %

| 16 | Communication |
| --- | --- |

16

Communication

280

271

0

3

274

97,71 %

3

0

3

0,96 %

4

0

0

4

1,32 %

| 17 | Health & consumer protection |
| --- | --- |

17

Health & consumer protection

705

653

0

21

674

95,61 %

15

0

15

2,12 %

16

0

0

16

2,27 %

| 18 | Freedom, security and justice |
| --- | --- |

18

Freedom, security and justice

1 339

1 244

24

40

1 308

97,74 %

22

3

25

1,86 %

5

0

0

5

0,40 %

| 19 | External relations |
| --- | --- |

19

External relations

4 508

4 312

31

72

4 415

97,93 %

46

44

90

2,00 %

3

0

0

3

0,07 %

| 20 | Trade |
| --- | --- |

20

Trade

109

105

0

2

106

98,01 %

1

0

1

1,22 %

1

0

0

1

0,77 %

| 21 | Development & relations ACP |
| --- | --- |

21

Development & relations ACP

1 749

1 495

6

111

1 612

92,16 %

10

127

136

7,80 %

1

0

0

1

0,04 %

| 22 | Enlargement |
| --- | --- |

22

Enlargement

1 163

1 110

0

9

1 119

96,29 %

35

8

43

3,70 %

0

0

0

0

0,01 %

| 23 | Humanitarian aid |
| --- | --- |

23

Humanitarian aid

1 149

1 131

0

8

1 139

99,19 %

6

0

6

0,55 %

3

0

0

3

0,26 %

| 24 | Fight against fraud |
| --- | --- |

24

Fight against fraud

81

77

0

0

77

95,16 %

0

0

0

0,02 %

4

0

0

4

4,82 %

| 25 | Policy coord and legal advice |
| --- | --- |

25

Policy coord and legal advice

203

193

0

5

198

97,72 %

4

0

4

2,09 %

0

0

0

0

0,20 %

| 26 | Commission’s administration |
| --- | --- |

26

Commission’s administration

1 131

1 020

0

61

1 081

95,61 %

47

0

47

4,16 %

3

0

0

3

0,23 %

| 27 | Budget |
| --- | --- |

27

Budget

64

57

0

4

61

94,91 %

3

0

3

4,17 %

1

0

0

1

0,92 %

| 28 | Audit |
| --- | --- |

28

Audit

12

11

0

0

12

96,94 %

0

0

0

2,74 %

0

0

0

0

0,32 %

| 29 | Statistics |
| --- | --- |

29

Statistics

157

137

0

9

146

93,06 %

7

0

7

4,58 %

4

0

0

4

2,37 %

| 30 | Pensions + related expenditure |
| --- | --- |

30

Pensions + related expenditure

1 273

1 257

0

0

1 257

98,75 %

0

0

0

0,00 %

16

0

0

16

1,25 %

| 31 | Language Services |
| --- | --- |

31

Language Services

474

390

0

50

440

92,98 %

33

0

33

6,89 %

1

0

0

1

0,13 %

| 32 | Energy |
| --- | --- |

32

Energy

889

698

146

16

860

96,75 %

26

0

26

2,96 %

3

0

0

3

0,29 %

| 40 | Reserves |
| --- | --- |

40

Reserves

371

0

0

0

0

0,00 %

0

0

0

0,00 %

371

0

0

371

100,00 %

| 90 | Other Institutions |
| --- | --- |

90

Other Institutions

3 930

3 225

9

336

3 570

90,83 %

156

22

178

4,53 %

182

0

0

182

4,64 %

Total

148 681

141 204

259

3 108

144 572

97,24 %

3 120

301

3 420

2,30 %

689

0

0

689

0,46 %

11.   IMPLEMENTATION OF PAYMENT APPROPRIATIONS BY BUDGET POLICY AREA

| EUR millions |
| --- |
| Policy Area | Payment Appro-priations authorised | Payments made | Appropriations carried over | Appropriations lapsing |
| From the year's approps | From carry-overs | Assigned revenue | Total | % | Automatic carry-overs | Carry-overs by decision | Assigned revenue | Total | % | From the year's approps | From carry-overs | Assigned revenue | Total | % |
| 1 | 2 | 3 | 4 | 5 = 2 + 3 + 4 | 6 = 5/1 | 7 | 8 | 9 | 10 = 7 + 8 + 9 | 11 = 10/1 | 12 | 13 | 14 | 15 = 12 + 13 + 14 | 16 = 15/1 |
| 01 | Economic and financial affairs |

EUR millions

Policy Area

Payment Appro-priations authorised

Payments made

Appropriations carried over

Appropriations lapsing

From the year's approps

From carry-overs

Assigned revenue

Total

%

Automatic carry-overs

Carry-overs by decision

Assigned revenue

Total

%

From the year's approps

From carry-overs

Assigned revenue

Total

%

1

2

3

4

5 = 2 + 3 + 4

6 = 5/1

7

8

9

10 = 7 + 8 + 9

11 = 10/1

12

13

14

15 = 12 + 13 + 14

16 = 15/1

01

Economic and financial affairs

443

330

40

20

389

87,76 %

6

0

2

9

1,92 %

31

14

0

46

10,32 %

| 02 | Enterprise |
| --- | --- |

02

Enterprise

1 485

1 271

22

43

1 336

89,99 %

20

0

103

123

8,29 %

14

12

0

25

1,71 %

| 03 | Competition |
| --- | --- |

03

Competition

104

85

7

2

94

90,73 %

6

0

3

9

8,53 %

0

1

0

1

0,74 %

| 04 | Employment and social affairs |
| --- | --- |

04

Employment and social affairs

10 498

10 354

32

7

10 392

98,99 %

17

50

8

75

0,72 %

26

4

0

30

0,29 %

| 05 | Agriculture & rural development |
| --- | --- |

05

Agriculture & rural development

57 784

54 663

349

1 330

56 342

97,50 %

25

45

1 337

1 406

2,43 %

27

8

0

35

0,06 %

| 06 | Mobility and transport |
| --- | --- |

06

Mobility and transport

1 217

1 001

64

48

1 114

91,53 %

6

0

71

77

6,33 %

25

1

0

26

2,15 %

| 07 | Environment & Climate action |
| --- | --- |

07

Environment & Climate action

379

307

14

10

332

87,54 %

18

0

6

24

6,33 %

21

2

0

23

6,13 %

| 08 | Research |
| --- | --- |

08

Research

5 476

4 217

23

364

4 604

84,08 %

26

0

835

861

15,73 %

4

7

0

10

0,19 %

| 09 | Information society and media |
| --- | --- |

09

Information society and media

1 741

1 422

15

52

1 489

85,51 %

13

0

236

250

14,35 %

1

2

0

2

0,14 %

| 10 | Direct research |
| --- | --- |

10

Direct research

832

343

35

63

441

53,01 %

44

0

341

384

46,22 %

2

4

0

6

0,77 %

| 11 | Maritime affairs and Fisheries |
| --- | --- |

11

Maritime affairs and Fisheries

812

750

21

1

772

95,08 %

3

1

1

5

0,64 %

18

17

0

35

4,28 %

| 12 | Internal market |
| --- | --- |

12

Internal market

104

89

5

1

95

91,52 %

6

0

2

8

7,56 %

0

1

0

1

0,92%

| 13 | Regional policy |
| --- | --- |

13

Regional policy

33 052

32 917

76

2

32 995

99,83 %

11

38

2

51

0,16 %

4

1

0

5

0,02 %

| 14 | Taxation and customs union |
| --- | --- |

14

Taxation and customs union

133

114

7

1

123

92,20 %

7

0

3

9

7,03 %

0

1

0

1

0,77%

| 15 | Education and culture |
| --- | --- |

15

Education and culture

2 725

2 126

15

273

2 414

88,62 %

15

0

290

305

11,21 %

0

5

0

5

0,18 %

| 16 | Communication |
| --- | --- |

16

Communication

279

246

11

2

259

92,61 %

14

0

3

17

6,09 %

2

2

0

4

1,30 %

| 17 | Health and consumer protection |
| --- | --- |

17

Health and consumer protection

659

572

31

20

623

94,40 %

11

0

16

27

4,07 %

5

5

0

10

1,53 %

| 18 | Freedom, security and justice |
| --- | --- |

18

Freedom, security and justice

1 014

876

25

43

944

93,10 %

8

0

31

40

3,95 %

24

6

0

30

2,95 %

| 19 | External relations |
| --- | --- |

19

External relations

3 462

3 243

12

59

3 313

95,72 %

10

6

50

66

1,91 %

51

32

0

82

2,37 %

| 20 | Trade |
| --- | --- |

20

Trade

113

99

4

1

104

92,51 %

4

2

2

8

6,69 %

0

1

0

1

0,80 %

| 21 | Development and relations ACP |
| --- | --- |

21

Development and relations ACP

1 583

1 393

11

108

1 513

95,54 %

16

17

11

43

2,73 %

7

20

0

27

1,74 %

| 22 | Enlargement |
| --- | --- |

22

Enlargement

970

914

3

10

928

95,63 %

4

0

34

38

3,95 %

0

4

0

4

0,43 %

| 23 | Humanitarian aid |
| --- | --- |

23

Humanitarian aid

1 090

1 054

5

9

1 068

97,96 %

6

0

3

10

0,90 %

12

0

0

12

1,14 %

| 24 | Fight against fraud |
| --- | --- |

24

Fight against fraud

83

66

5

0

71

85,96 %

6

1

0

7

8,93 %

3

2

0

4

5,11 %

| 25 | Commission’s policy coordination and legal advice |
| --- | --- |

25

Commission’s policy coordination and legal advice

221

178

15

4

197

89,07 %

15

0

5

21

9,28 %

0

3

0

4

1,65 %

| 26 | Commission’s administration |
| --- | --- |

26

Commission’s administration

1 274

893

122

47

1 063

83,45 %

130

2

65

196

15,37 %

3

12

0

15

1,18 %

| 27 | Budget |
| --- | --- |

27

Budget

73

49

8

3

60

82,01 %

8

0

4

12

16,29 %

1

1

0

1

1,71 %

| 28 | Audit |
| --- | --- |

28

Audit

13

11

1

0

12

91,58 %

1

0

0

1

7,29 %

0

0

0

0

1,13 %

| 29 | Statistics |
| --- | --- |

29

Statistics

159

125

5

4

134

84,26 %

5

0

14

19

12,19 %

4

2

0

6

3,55 %

| 30 | Pensions and related expenses |
| --- | --- |

30

Pensions and related expenses

1 273

1 257

0

0

1 257

98,75 %

0

0

0

0

0,00 %

16

0

0

16

1,25 %

| 31 | Language Services |
| --- | --- |

31

Language Services

501

373

25

43

442

88,11 %

17

0

39

56

11,23 %

1

3

0

3

0,67 %

| 32 | Energy |
| --- | --- |

32

Energy

1 087

934

14

16

963

88,63 %

6

0

39

44

4,08 %

78

2

0

79

7,28 %

| 40 | Reserves |
| --- | --- |

40

Reserves

0

0

0

0

0

0,00 %

0

0

0

0

0,00 %

0

0

0

0

0,00 %

| 90 | Other Institutions |
| --- | --- |

90

Other Institutions

4 321

2 873

330

308

3 512

81,27 %

351

22

192

565

13,07 %

182

58

5

245

5,66 %

Total

134 960

125 145

1 352

2 898

129 395

95,88 %

835

185

3 748

4 768

3,53 %

562

230

5

797

0,59 %

12.   MOVEMENTS IN COMMITMENTS OUTSTANDING BY POLICY AREA

| EUR millions |
| --- |
| Policy Area | Commitments outstanding at end of the previous year | Commitments of the year | Total commitments outstanding at year-end |
| Commitments carried forward from previous year | Decommitments/Revaluations/Cancellations | Payments | Commitments outstanding at year-end | Commitments made during the year | Payments | Cancellation commitments which cannot be carried over | Commitments outstanding at year-end |
| 01 | Economic & financial affairs |

EUR millions

Policy Area

Commitments outstanding at end of the previous year

Commitments of the year

Total commitments outstanding at year-end

Commitments carried forward from previous year

Decommitments/Revaluations/Cancellations

Payments

Commitments outstanding at year-end

Commitments made during the year

Payments

Cancellation commitments which cannot be carried over

Commitments outstanding at year-end

01

Economic & financial affairs

581

(24)

(175)

382

414

(214)

0

200

582

| 02 | Enterprise |
| --- | --- |

02

Enterprise

2 414

(36)

(963)

1 415

1 113

(373)

0

740

2 155

| 03 | Competition |
| --- | --- |

03

Competition

8

(1)

(7)

0

94

(87)

0

7

7

| 04 | Employment & social affairs |
| --- | --- |

04

Employment & social affairs

28 673

(250)

(9 999)

18 424

11 638

(394)

0

11 245

29 669

| 05 | Agriculture rural development |
| --- | --- |

05

Agriculture rural development

20 197

(76)

(10 833)

9 288

58 579

(45 509)

0

13 070

22 358

| 06 | Mobility and transport |
| --- | --- |

06

Mobility and transport

2 468

(154)

(894)

1 420

1 609

(220)

0

1 389

2 809

| 07 | Environment & Climate action |
| --- | --- |

07

Environment & Climate action

783

(30)

(199)

554

478

(133)

0

344

898

| 08 | Research |
| --- | --- |

08

Research

8 222

(147)

(2 910)

5 165

5 730

(1 694)

(2)

4 035

9 200

| 09 | Information society & media |
| --- | --- |

09

Information society & media

2 157

(35)

(767)

1 355

1 637

(722)

0

914

2 269

| 10 | Direct research |
| --- | --- |

10

Direct research

163

(12)

(93)

58

474

(348)

0

125

184

| 11 | Maritime affairs and Fisheries |
| --- | --- |

11

Maritime affairs and Fisheries

1 877

(42)

(521)

1 314

999

(251)

0

748

2 062

| 12 | Internal market |
| --- | --- |

12

Internal market

20

(1)

(16)

3

98

(80)

0

19

22

| 13 | Regional policy |
| --- | --- |

13

Regional policy

101 474

(561)

(31 994)

68 919

40 495

(1 001)

0

39 494

108 413

| 14 | Taxation and customs union |
| --- | --- |

14

Taxation and customs union

76

(2)

(51)

22

141

(71)

0

69

92

| 15 | Education and culture |
| --- | --- |

15

Education and culture

1 698

(82)

(707)

909

2 720

(1 708)

0

1 012

1 921

| 16 | Communication |
| --- | --- |

16

Communication

123

(16)

(83)

24

274

(176)

0

98

122

| 17 | Health and consumer protection |
| --- | --- |

17

Health and consumer protection

724

(58)

(312)

355

674

(311)

0

363

718

| 18 | Freedom, security & justice |
| --- | --- |

18

Freedom, security & justice

1 282

(51)

(267)

964

1 308

(678)

0

631

1 595

| 19 | External relations |
| --- | --- |

19

External relations

9 380

(249)

(2 229)

6 901

4 415

(1 085)

0

3 330

10 232

| 20 | Trade |
| --- | --- |

20

Trade

19

(1)

(12)

6

106

(93)

0

13

20

| 21 | Development/relations ACP |
| --- | --- |

21

Development/relations ACP

3 276

(94)

(971)

2 211

1 612

(542)

0

1 070

3 281

| 22 | Enlargement |
| --- | --- |

22

Enlargement

2 766

(93)

(766)

1 907

1 119

(162)

0

957

2 864

| 23 | Humanitarian aid |
| --- | --- |

23

Humanitarian aid

621

(24)

(369)

229

1 139

(699)

0

441

670

| 24 | Fight against fraud |
| --- | --- |

24

Fight against fraud

32

(4)

(16)

12

77

(56)

0

22

34

| 25 | Commission's policy coordination & legal advice |
| --- | --- |

25

Commission's policy coordination & legal advice

20

(3)

(17)

1

198

(180)

0

18

19

| 26 | Commission’s administration |
| --- | --- |

26

Commission’s administration

179

(14)

(156)

10

1 081

(907)

0

174

184

| 27 | Budget |
| --- | --- |

27

Budget

8

(1)

(8)

0

61

(52)

0

9

9

| 28 | Audit |
| --- | --- |

28

Audit

1

0

(1)

0

12

(11)

0

1

1

| 29 | Statistics |
| --- | --- |

29

Statistics

108

(5)

(50)

53

146

(84)

0

62

115

| 30 | Pensions & related expenditure |
| --- | --- |

30

Pensions & related expenditure

0

0

0

0

1 257

(1 257)

0

0

0

| 31 | Language Services |
| --- | --- |

31

Language Services

28

(3)

(25)

0

440

(417)

0

24

24

| 32 | Energy |
| --- | --- |

32

Energy

4 672

(47)

(820)

3 805

860

(143)

0

717

4 522

| 90 | Other Institutions |
| --- | --- |

90

Other Institutions

344

(2)

(330)

12

3 570

(3 181)

(3)

385

397

Total

194 395

(2 120)

(66 559)

125 717

144 572

(62 836)

(9)

81 727

207 443

13.   BREAKDOWN OF COMMITMENTS OUTSTANDING BY YEAR OF ORIGIN BY POLICY AREA

| EUR millions |
| --- |
| Policy Area | < 2005 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | Total |
| 01 | Economic and financial affairs |

EUR millions

Policy Area

< 2005

2005

2006

2007

2008

2009

2010

2011

Total

01

Economic and financial affairs

0

11

43

10

5

113

200

200

582

| 02 | Enterprise |
| --- | --- |

02

Enterprise

9

9

10

27

179

222

959

740

2 155

| 03 | Competition |
| --- | --- |

03

Competition

0

0

0

0

0

0

0

7

7

| 04 | Employment and social affairs |
| --- | --- |

04

Employment and social affairs

109

333

2 029

62

984

5 209

9 697

11 245

29 669

| 05 | Agriculture and rural development |
| --- | --- |

05

Agriculture and rural development

6

1

631

0

30

828

7 790

13 070

22 358

| 06 | Mobility and transport |
| --- | --- |

06

Mobility and transport

24

21

45

161

152

400

618

1 389

2 809

| 07 | Environment & Climate action |
| --- | --- |

07

Environment & Climate action

3

13

23

78

111

156

172

344

898

| 08 | Research |
| --- | --- |

08

Research

157

96

204

370

736

1 413

2 189

4 035

9 200

| 09 | Information society and media |
| --- | --- |

09

Information society and media

12

13

20

75

196

363

676

914

2 269

| 10 | Direct research |
| --- | --- |

10

Direct research

0

1

5

2

11

15

24

125

184

| 11 | Maritime affairs and Fisheries |
| --- | --- |

11

Maritime affairs and Fisheries

33

18

275

10

28

302

649

748

2 062

| 12 | Internal market |
| --- | --- |

12

Internal market

0

0

0

0

0

0

3

19

22

| 13 | Regional policy |
| --- | --- |

13

Regional policy

681

579

8 004

159

5 532

20 317

33 647

39 494

108 413

| 14 | Taxation and customs union |
| --- | --- |

14

Taxation and customs union

0

0

0

0

2

5

16

69

92

| 15 | Education and culture |
| --- | --- |

15

Education and culture

4

3

4

78

177

238

405

1 012

1 921

| 16 | Communication |
| --- | --- |

16

Communication

0

0

0

0

1

3

20

98

122

| 17 | Health and consumer protection |
| --- | --- |

17

Health and consumer protection

11

2

10

14

50

92

175

363

718

| 18 | Area of freedom, security and justice |
| --- | --- |

18

Area of freedom, security and justice

1

9

7

57

142

345

403

631

1 595

| 19 | External relations |
| --- | --- |

19

External relations

406

135

421

750

1 149

1 658

2 382

3 330

10 232

| 20 | Trade |
| --- | --- |

20

Trade

0

0

0

0

0

2

4

13

20

| 21 | Development and relations ACP States |
| --- | --- |

21

Development and relations ACP States

118

87

118

145

344

586

812

1 070

3 281

| 22 | Enlargement |
| --- | --- |

22

Enlargement

45

42

116

185

385

453

682

957

2 864

| 23 | Humanitarian aid |
| --- | --- |

23

Humanitarian aid

0

0

1

2

12

41

172

441

670

| 24 | Fight against fraud |
| --- | --- |

24

Fight against fraud

0

0

0

1

1

3

6

22

34

| 25 | Commission's policy coordination & legal advice |
| --- | --- |

25

Commission's policy coordination & legal advice

0

0

0

0

0

0

1

18

19

| 26 | Commission’s administration |
| --- | --- |

26

Commission’s administration

0

0

0

0

1

0

9

174

184

| 27 | Budget |
| --- | --- |

27

Budget

0

0

0

0

0

0

0

9

9

| 28 | Audit |
| --- | --- |

28

Audit

0

0

0

0

0

0

0

1

1

| 29 | Statistics |
| --- | --- |

29

Statistics

2

1

3

3

2

10

31

62

115

| 30 | Pensions and related expenditure |
| --- | --- |

30

Pensions and related expenditure

0

0

0

0

0

0

0

0

0

| 31 | Language Services |
| --- | --- |

31

Language Services

0

0

0

0

0

0

0

24

24

| 32 | Energy |
| --- | --- |

32

Energy

42

28

56

55

216

1 545

1 863

717

4 522

| 90 | Other Institutions |
| --- | --- |

90

Other Institutions

0

0

0

0

0

0

12

385

397

Total

1 661

1 401

12 024

2 247

10 446

34 319

63 618

81 727

207 443

14.   SUMMARY OF THE IMPLEMENTATION OF BUDGET REVENUE BY INSTITUTION

| EUR millions |
| --- |
| Institution | Income appropriations | Entitlements established | Revenue | Receipts as % of budget | Outstanding |
| Initial | Final | Current year | Carried | Total | On entitlements of current year | On entitlements Carried | Total |
| European Parliament | 125 | 125 | 170 | 29 | 200 | 169 | 4 | 173 | 139,02 % | 26 |
| European Council and Council | 49 | 49 | 121 | 8 | 129 | 111 | 7 | 118 | 240,35 % | 11 |
| Commission | 126 236 | 126 436 | 128 119 | 14 535 | 142 654 | 127 697 | 1 615 | 129 312 | 102,27 % | 13 342 |
| Court of Justice | 44 | 44 | 45 | 0 | 45 | 44 | 0 | 44 | 102,26 % | 0 |
| Court of Auditors | 21 | 21 | 20 | 0 | 20 | 20 | 0 | 20 | 94,14 % | 0 |
| Economic and Social Committee | 11 | 11 | 16 | 0 | 16 | 16 | 0 | 16 | 138,47 % | 0 |
| Committee of the Regions | 8 | 8 | 21 | 0 | 21 | 21 | 0 | 21 | 262,06 % | 0 |
| Ombudsman | 1 | 1 | 1 | 0 | 1 | 1 | 0 | 1 | 99,52 % | 0 |
| European Data Protection Supervisor | 1 | 1 | 1 | 0 | 1 | 1 | 0 | 1 | 69,15 % | 0 |
| European External Action Service | 32 | 32 | 295 | 0 | 295 | 295 | 0 | 295 | 917,61 % | 0 |
| Total | 126 527 | 126 727 | 128 808 | 14 572 | 143 380 | 128 374 | 1 626 | 130 000 | 102,58 % | 13 380 |

EUR millions

Institution

Income appropriations

Entitlements established

Revenue

Receipts as % of budget

Outstanding

Initial

Final

Current year

Carried

Total

On entitlements of current year

On entitlements Carried

Total

European Parliament

125

125

170

29

200

169

4

173

139,02 %

26

European Council and Council

49

49

121

8

129

111

7

118

240,35 %

11

Commission

126 236

126 436

128 119

14 535

142 654

127 697

1 615

129 312

102,27 %

13 342

Court of Justice

44

44

45

0

45

44

0

44

102,26 %

0

Court of Auditors

21

21

20

0

20

20

0

20

94,14 %

0

Economic and Social Committee

11

11

16

0

16

16

0

16

138,47 %

0

Committee of the Regions

8

8

21

0

21

21

0

21

262,06 %

0

Ombudsman

1

1

1

0

1

1

0

1

99,52 %

0

European Data Protection Supervisor

1

1

1

0

1

1

0

1

69,15 %

0

European External Action Service

32

32

295

0

295

295

0

295

917,61 %

0

Total

126 527

126 727

128 808

14 572

143 380

128 374

1 626

130 000

102,58 %

13 380

15.   IMPLEMENTATION OF COMMITMENT AND PAYMENT APPROPRIATIONS BY INSTITUTION

Commitment appropriations

Commitment appropriations

| EUR millions |
| --- |
| Institution | Commitment appropriations authorised | Commitments made | Appropriations carried over | Appropriations lapsing |
| From the year's approps | From carry-overs | From assigned revenue | Total | % | From assigned revenue | Carry-overs by decision | Total | % | From the year's budget approps | From carry-overs | Assigned revenue | Total | % |
| 1 | 2 | 3 | 4 | 5 = 2 + 3 + 4 | 6=5/1 | 7 | 8 | 9 = 7 + 8 | 10 = 9/1 | 11 | 12 | 13 | 14 = 11 + 12 + 13 | 15 = 14/1 |
| European Parliament | 1 820 | 1 570 | 9 | 24 | 1 603 | 88,11 % | 101 | 22 | 123 | 6,74 % | 94 | 0 | 0 | 94 | 5,15 % |
| European Council and Council | 647 | 507 | 0 | 47 | 554 | 85,51 % | 37 | 0 | 37 | 5,77 % | 56 | 0 | 0 | 56 | 8,71 % |
| Commission | 144 751 | 137 979 | 250 | 2 772 | 141 002 | 97,41 % | 2 964 | 279 | 3 242 | 2,24 % | 507 | 0 | 0 | 507 | 0,35 % |
| Court of Justice | 344 | 336 | 0 | 2 | 338 | 98,11 % | 1 | 0 | 1 | 0,34 % | 5 | 0 | 0 | 5 | 1,55 % |
| Court of Auditors | 145 | 134 | 0 | 0 | 135 | 92,81 % | 0 | 0 | 0 | 0,30 % | 10 | 0 | 0 | 10 | 6,89 % |
| Economic & Social Committee | 132 | 123 | 0 | 3 | 125 | 95,20 % | 0 | 0 | 0 | 0,30 % | 6 | 0 | 0 | 6 | 4,50 % |
| Committee of the Regions | 96 | 82 | 0 | 12 | 94 | 97,76 % | 0 | 0 | 0 | 0,02 % | 2 | 0 | 0 | 2 | 2,22 % |
| Ombudsman | 9 | 9 | 0 | 0 | 9 | 92,54 % | 0 | 0 | 0 | 0,00 % | 1 | 0 | 0 | 1 | 7,46 % |
| European Data Protection Supervisor | 8 | 7 | 0 | 0 | 7 | 89,31 % | 0 | 0 | 0 | 0,00 % | 1 | 0 | 0 | 1 | 10,69 % |
| European External Action Service | 729 | 457 | 0 | 249 | 706 | 96,82 % | 16 | 0 | 16 | 2,19 % | 7 | 0 | 0 | 7 | 0,99 % |
| Total | 148 681 | 141 204 | 259 | 3 108 | 144 572 | 97,24 % | 3 120 | 301 | 3 420 | 2,30 % | 689 | 0 | 0 | 689 | 0,46 % |

EUR millions

Institution

Commitment appropriations authorised

Commitments made

Appropriations carried over

Appropriations lapsing

From the year's approps

From carry-overs

From assigned revenue

Total

%

From assigned revenue

Carry-overs by decision

Total

%

From the year's budget approps

From carry-overs

Assigned revenue

Total

%

1

2

3

4

5 = 2 + 3 + 4

6=5/1

7

8

9 = 7 + 8

10 = 9/1

11

12

13

14 = 11 + 12 + 13

15 = 14/1

European Parliament

1 820

1 570

9

24

1 603

88,11 %

101

22

123

6,74 %

94

0

0

94

5,15 %

European Council and Council

647

507

0

47

554

85,51 %

37

0

37

5,77 %

56

0

0

56

8,71 %

Commission

144 751

137 979

250

2 772

141 002

97,41 %

2 964

279

3 242

2,24 %

507

0

0

507

0,35 %

Court of Justice

344

336

0

2

338

98,11 %

1

0

1

0,34 %

5

0

0

5

1,55 %

Court of Auditors

145

134

0

0

135

92,81 %

0

0

0

0,30 %

10

0

0

10

6,89 %

Economic & Social Committee

132

123

0

3

125

95,20 %

0

0

0

0,30 %

6

0

0

6

4,50 %

Committee of the Regions

96

82

0

12

94

97,76 %

0

0

0

0,02 %

2

0

0

2

2,22 %

Ombudsman

9

9

0

0

9

92,54 %

0

0

0

0,00 %

1

0

0

1

7,46 %

European Data Protection Supervisor

8

7

0

0

7

89,31 %

0

0

0

0,00 %

1

0

0

1

10,69 %

European External Action Service

729

457

0

249

706

96,82 %

16

0

16

2,19 %

7

0

0

7

0,99 %

Total

148 681

141 204

259

3 108

144 572

97,24 %

3 120

301

3 420

2,30 %

689

0

0

689

0,46 %

Payment appropriations

Payment appropriations

| EUR millions |
| --- |
| Institution | Payment appropriations authorised | Payments made | Appropriations carried over | Appropriations lapsing |
| From year's approps | From carryovers | From assigned revenue | Total | % | Automatic carry-overs | Carry-overs by decision | From assigned revenue | Total | % | From year's approps | From carry-overs | Assigned revenue | Total | % |
| 1 | 2 | 3 | 4 | 5=2 + 3 + 4 | 6=5/1 | 7 | 8 | 9 | 10=7 + 8 + 9 | 11=10/1 | 12 | 13 | 14 | 15=12 + 13 + 14 | 16=15/1 |
| European Parliament | 2 060 | 1 348 | 207 | 25 | 1 580 | 76,72 % | 223 | 22 | 109 | 353 | 17,14 % | 94 | 33 | 0 | 126 | 6,14 % |
| European Council and Council | 699 | 465 | 40 | 41 | 547 | 78,26 % | 41 | 0 | 44 | 86 | 12,29 % | 56 | 10 | 0 | 66 | 9,45 % |
| Commission | 130 639 | 122 272 | 1 021 | 2 590 | 125 883 | 96,36 % | 484 | 163 | 3 557 | 4 203 | 3,22 % | 380 | 172 | 0 | 552 | 0,42 % |
| Court of Justice | 361 | 318 | 15 | 2 | 334 | 92,62 % | 18 | 0 | 1 | 19 | 5,36 % | 5 | 2 | 0 | 7 | 2,02 % |
| Court of Auditors | 161 | 121 | 15 | 0 | 137 | 84,64 % | 13 | 0 | 0 | 14 | 8,41 % | 10 | 1 | 0 | 11 | 6,95 % |
| Economic & Social Committee | 142 | 115 | 7 | 3 | 126 | 88,83 % | 7 | 0 | 1 | 8 | 5,71 % | 6 | 2 | 0 | 8 | 5,46 % |
| Committee of the Regions | 103 | 73 | 6 | 12 | 91 | 88,39 % | 9 | 0 | 0 | 9 | 8,51 % | 2 | 1 | 0 | 3 | 3,10 % |
| Ombudsman | 10 | 8 | 0 | 0 | 9 | 85,89 % | 1 | 0 | 0 | 1 | 6,55 % | 1 | 0 | 0 | 1 | 7,56 % |
| European Data protection Supervisor | 9 | 6 | 1 | 0 | 7 | 74,86 % | 1 | 0 | 0 | 1 | 10,49 % | 1 | 1 | 0 | 1 | 14,65 % |
| European External Action Service | 777 | 419 | 38 | 225 | 682 | 87,80 % | 38 | 0 | 36 | 74 | 9,56 % | 7 | 9 | 5 | 21 | 2,65 % |
| Total | 134 960 | 125 145 | 1 352 | 2 898 | 129 395 | 95,88 % | 835 | 185 | 3 748 | 4 768 | 3,53 % | 562 | 230 | 5 | 797 | 0,59 % |

EUR millions

Institution

Payment appropriations authorised

Payments made

Appropriations carried over

Appropriations lapsing

From year's approps

From carryovers

From assigned revenue

Total

%

Automatic carry-overs

Carry-overs by decision

From assigned revenue

Total

%

From year's approps

From carry-overs

Assigned revenue

Total

%

1

2

3

4

5=2 + 3 + 4

6=5/1

7

8

9

10=7 + 8 + 9

11=10/1

12

13

14

15=12 + 13 + 14

16=15/1

European Parliament

2 060

1 348

207

25

1 580

76,72 %

223

22

109

353

17,14 %

94

33

0

126

6,14 %

European Council and Council

699

465

40

41

547

78,26 %

41

0

44

86

12,29 %

56

10

0

66

9,45 %

Commission

130 639

122 272

1 021

2 590

125 883

96,36 %

484

163

3 557

4 203

3,22 %

380

172

0

552

0,42 %

Court of Justice

361

318

15

2

334

92,62 %

18

0

1

19

5,36 %

5

2

0

7

2,02 %

Court of Auditors

161

121

15

0

137

84,64 %

13

0

0

14

8,41 %

10

1

0

11

6,95 %

Economic & Social Committee

142

115

7

3

126

88,83 %

7

0

1

8

5,71 %

6

2

0

8

5,46 %

Committee of the Regions

103

73

6

12

91

88,39 %

9

0

0

9

8,51 %

2

1

0

3

3,10 %

Ombudsman

10

8

0

0

9

85,89 %

1

0

0

1

6,55 %

1

0

0

1

7,56 %

European Data protection Supervisor

9

6

1

0

7

74,86 %

1

0

0

1

10,49 %

1

1

0

1

14,65 %

European External Action Service

777

419

38

225

682

87,80 %

38

0

36

74

9,56 %

7

9

5

21

2,65 %

Total

134 960

125 145

1 352

2 898

129 395

95,88 %

835

185

3 748

4 768

3,53 %

562

230

5

797

0,59 %

16.   AGENCIES INCOME: BUDGET FORECASTS, ENTITLEMENTS AND AMOUNTS RECEIVED

| EUR millions |
| --- |
| Agency | Forecasted income budget | Entitlements established | Amounts received | Outstanding | Funding Commission Policy Area |
| European Agency for the Cooperation of Energy Regulators | 4 | 4 | 4 | 0 | 06 |
| European Aviation Safety Agency | 139 | 111 | 111 | 0 | 06 |
| Frontex | 118 | 119 | 119 | 0 | 18 |
| European Centre for the Development of Vocational Training | 19 | 19 | 18 | 1 | 15 |
| European Police College | 8 | 9 | 9 | 0 | 18 |
| European Chemicals Agency | 35 | 38 | 38 | 0 | 02 |
| European Centre for Disease prevention and control | 57 | 57 | 57 | 0 | 17 |
| European Monitoring Centre for Drugs and Drug Addiction | 16 | 16 | 16 | 0 | 18 |
| European Banking Authority | 13 | 13 | 13 | 0 | 12 |
| European Insurance and Occupational Pensions Authority | 11 | 9 | 9 | 0 | 12 |
| European Environment Agency | 62 | 45 | 44 | 0 | 07 |
| European Police office | 85 | 85 | 85 | 0 | 18 |
| European Securities and Markets Authority | 17 | 17 | 17 | 0 | 12 |
| Community Fisheries Control Agency | 12 | 12 | 12 | 0 | 11 |
| European Food Safety Authority | 76 | 76 | 76 | 0 | 17 |
| European Institute for Gender Equality | 8 | 8 | 8 | 0 | 04 |
| European GNSS supervisory authority | 8 | 39 | 39 | 0 | 06 |
| Fusion for Energy | 242 | 279 | 243 | 36 | 08 |
| Eurojust | 32 | 31 | 31 | 0 | 18 |
| European Maritime Safety Agency | 57 | 53 | 53 | 0 | 06 |
| Office For Harmonisation in the Internal Market | 166 | 176 | 176 | 0 | 12 |
| European Medicines Agency | 209 | 220 | 199 | 21 | 17 |
| European Network and Information Security Agency | 8 | 8 | 8 | 0 | 09 |
| European Regulators for Electronic Communications office | 1 | 1 | 1 | 0 | 09 |
| European Union Agency for Fundamental Rights | 22 | 22 | 22 | 0 | 18 |
| European Railway Agency | 26 | 25 | 25 | 0 | 06 |
| European Agency for Safety and Health at Work | 15 | 15 | 15 | 0 | 04 |
| European Institute of Innovation and Technology | 16 | 10 | 10 | 0 | 15 |
| Translation Centre for the Bodies of the EU | 51 | 47 | 43 | 4 | 15 |
| European Training Foundation | 20 | 20 | 20 | 0 | 15 |
| Community Plant Variety Office | 13 | 13 | 13 | 0 | 17 |
| European Foundation for the Improvement of Living and Working Conditions | 21 | 21 | 21 | 0 | 04 |
| Education, Audiovisual & Culture Executive Agency | 50 | 50 | 50 | 0 | 15 |
| Executive Agency for Competitiveness and Innovation | 16 | 16 | 16 | 0 | 06 |
| European Research Council Executive Agency | 36 | 36 | 36 | 0 | 08 |
| Research Executive Agency | 39 | 39 | 39 | 0 | 08 |
| Executive Agency for Health and Consumers | 7 | 7 | 7 | 0 | 17 |
| Trans-European Transport Network Executive Agency | 10 | 10 | 10 | 0 | 06 |
| Total | 1 744 | 1 773 | 1 710 | 63 | |

EUR millions

Agency

Forecasted income budget

Entitlements established

Amounts received

Outstanding

Funding Commission Policy Area

European Agency for the Cooperation of Energy Regulators

4

4

4

0

06

European Aviation Safety Agency

139

111

111

0

06

Frontex

118

119

119

0

18

European Centre for the Development of Vocational Training

19

19

18

1

15

European Police College

8

9

9

0

18

European Chemicals Agency

35

38

38

0

02

European Centre for Disease prevention and control

57

57

57

0

17

European Monitoring Centre for Drugs and Drug Addiction

16

16

16

0

18

European Banking Authority

13

13

13

0

12

European Insurance and Occupational Pensions Authority

11

9

9

0

12

European Environment Agency

62

45

44

0

07

European Police office

85

85

85

0

18

European Securities and Markets Authority

17

17

17

0

12

Community Fisheries Control Agency

12

12

12

0

11

European Food Safety Authority

76

76

76

0

17

European Institute for Gender Equality

8

8

8

0

04

European GNSS supervisory authority

8

39

39

0

06

Fusion for Energy

242

279

243

36

08

Eurojust

32

31

31

0

18

European Maritime Safety Agency

57

53

53

0

06

Office For Harmonisation in the Internal Market

166

176

176

0

12

European Medicines Agency

209

220

199

21

17

European Network and Information Security Agency

8

8

8

0

09

European Regulators for Electronic Communications office

1

1

1

0

09

European Union Agency for Fundamental Rights

22

22

22

0

18

European Railway Agency

26

25

25

0

06

European Agency for Safety and Health at Work

15

15

15

0

04

European Institute of Innovation and Technology

16

10

10

0

15

Translation Centre for the Bodies of the EU

51

47

43

4

15

European Training Foundation

20

20

20

0

15

Community Plant Variety Office

13

13

13

0

17

European Foundation for the Improvement of Living and Working Conditions

21

21

21

0

04

Education, Audiovisual & Culture Executive Agency

50

50

50

0

15

Executive Agency for Competitiveness and Innovation

16

16

16

0

06

European Research Council Executive Agency

36

36

36

0

08

Research Executive Agency

39

39

39

0

08

Executive Agency for Health and Consumers

7

7

7

0

17

Trans-European Transport Network Executive Agency

10

10

10

0

06

Total

1 744

1 773

1 710

63

| EUR millions |
| --- |
| Type of revenue | Forecasted income budget | Entitlements established | Amounts received | Outstanding |
| Commission Subsidy | 1 119 | 1 137 | 1 137 | 0 |
| Fee income | 441 | 457 | 437 | 19 |
| Other income | 184 | 180 | 136 | 44 |
| Total | 1 744 | 1 773 | 1 710 | 63 |

EUR millions

Type of revenue

Forecasted income budget

Entitlements established

Amounts received

Outstanding

Commission Subsidy

1 119

1 137

1 137

0

Fee income

441

457

437

19

Other income

184

180

136

44

Total

1 744

1 773

1 710

63

17.   COMMITMENT & PAYMENT APPROPRIATIONS BY AGENCY

| EUR millions |
| --- |
| Agency | Commitment appropriations | Payment appropriations |
| Appropriations | Commitments made | Carried over | Appropriations | Payments made | Carried over |
| European Agency for the Cooperation of Energy Regulators | 5 | 3 | 0 | 6 | 4 | 1 |
| European Aviation Safety Agency | 150 | 122 | 26 | 162 | 103 | 55 |
| Frontex | 121 | 119 | 0 | 145 | 100 | 39 |
| European Centre for the Development of Vocational Training | 21 | 21 | 0 | 21 | 18 | 2 |
| European Police College | 10 | 10 | 0 | 11 | 8 | 2 |
| European Chemicals Agency | 93 | 89 | 0 | 105 | 85 | 15 |
| European Centre for Disease prevention and control | 57 | 55 | 0 | 72 | 58 | 11 |
| European Monitoring Centre for Drugs and Drug Addiction | 17 | 16 | 0 | 17 | 16 | 1 |
| European Banking Authority | 13 | 9 | 0 | 13 | 7 | 2 |
| European Insurance and Occupational Pensions Authority | 11 | 7 | 0 | 11 | 6 | 0 |
| European Environment Agency | 71 | 46 | 25 | 75 | 43 | 31 |
| European Police Office | 87 | 82 | 0 | 107 | 84 | 17 |
| European Securities & Markets Authority | 17 | 13 | 0 | 17 | 11 | 2 |
| Community Fisheries Control Agency | 13 | 13 | 0 | 13 | 12 | 1 |
| European Food Safety Authority | 78 | 77 | 0 | 87 | 72 | 13 |
| European Institute for Gender Equality | 8 | 7 | 0 | 10 | 5 | 3 |
| European GNSS supervisory authority | 77 | 33 | 44 | 56 | 21 | 34 |
| Fusion for Energy | 649 | 647 | 1 | 298 | 255 | 40 |
| Eurojust | 35 | 31 | 2 | 41 | 31 | 7 |
| European Maritime Safety Agency | 58 | 55 | 1 | 59 | 50 | 2 |
| Office For Harmonisation in the Internal Market | 387 | 151 | 0 | 422 | 149 | 32 |
| European Medicines Agency | 212 | 202 | 3 | 254 | 205 | 39 |
| European Network and Information Security Agency | 8 | 8 | 0 | 10 | 9 | 1 |
| European Regulators for Electronic Communications Office | 1 | 1 | 0 | 1 | 1 | 0 |
| European Union Agency for Fundamental Rights | 21 | 20 | 1 | 28 | 21 | 7 |
| European Railway Agency | 26 | 25 | 0 | 32 | 26 | 4 |
| European Agency for Safety & Health at Work | 16 | 14 | 1 | 20 | 14 | 4 |
| European Institute of Innovation and Technology | 26 | 24 | 0 | 16 | 7 | 5 |
| Translation Centre for the Bodies of the EU | 51 | 42 | 0 | 55 | 43 | 4 |
| European Training Foundation | 21 | 20 | 0 | 21 | 20 | 1 |
| Community Plant Variety Office | 14 | 13 | 0 | 14 | 12 | 0 |
| European Foundation for the Improvement of Living and Working Conditions | 21 | 20 | 0 | 24 | 20 | 4 |
| Education, Audiovisual & Culture Executive Agency | 50 | 50 | 0 | 56 | 50 | 6 |
| Executive Agency for Competitiveness and Innovation | 16 | 15 | 0 | 18 | 15 | 1 |
| European Research Council Executive Agency | 36 | 35 | 0 | 37 | 34 | 2 |
| Research Executive Agency | 39 | 38 | 0 | 43 | 37 | 3 |
| Executive Agency for Health and Consumers | 7 | 7 | 0 | 8 | 7 | 1 |
| Trans-European Transport Network Executive Agency | 10 | 10 | 0 | 11 | 10 | 1 |
| Total | 2 553 | 2 149 | 107 | 2 397 | 1 670 | 394 |

EUR millions

Agency

Commitment appropriations

Payment appropriations

Appropriations

Commitments made

Carried over

Appropriations

Payments made

Carried over

European Agency for the Cooperation of Energy Regulators

5

3

0

6

4

1

European Aviation Safety Agency

150

122

26

162

103

55

Frontex

121

119

0

145

100

39

European Centre for the Development of Vocational Training

21

21

0

21

18

2

European Police College

10

10

0

11

8

2

European Chemicals Agency

93

89

0

105

85

15

European Centre for Disease prevention and control

57

55

0

72

58

11

European Monitoring Centre for Drugs and Drug Addiction

17

16

0

17

16

1

European Banking Authority

13

9

0

13

7

2

European Insurance and Occupational Pensions Authority

11

7

0

11

6

0

European Environment Agency

71

46

25

75

43

31

European Police Office

87

82

0

107

84

17

European Securities & Markets Authority

17

13

0

17

11

2

Community Fisheries Control Agency

13

13

0

13

12

1

European Food Safety Authority

78

77

0

87

72

13

European Institute for Gender Equality

8

7

0

10

5

3

European GNSS supervisory authority

77

33

44

56

21

34

Fusion for Energy

649

647

1

298

255

40

Eurojust

35

31

2

41

31

7

European Maritime Safety Agency

58

55

1

59

50

2

Office For Harmonisation in the Internal Market

387

151

0

422

149

32

European Medicines Agency

212

202

3

254

205

39

European Network and Information Security Agency

8

8

0

10

9

1

European Regulators for Electronic Communications Office

1

1

0

1

1

0

European Union Agency for Fundamental Rights

21

20

1

28

21

7

European Railway Agency

26

25

0

32

26

4

European Agency for Safety & Health at Work

16

14

1

20

14

4

European Institute of Innovation and Technology

26

24

0

16

7

5

Translation Centre for the Bodies of the EU

51

42

0

55

43

4

European Training Foundation

21

20

0

21

20

1

Community Plant Variety Office

14

13

0

14

12

0

European Foundation for the Improvement of Living and Working Conditions

21

20

0

24

20

4

Education, Audiovisual & Culture Executive Agency

50

50

0

56

50

6

Executive Agency for Competitiveness and Innovation

16

15

0

18

15

1

European Research Council Executive Agency

36

35

0

37

34

2

Research Executive Agency

39

38

0

43

37

3

Executive Agency for Health and Consumers

7

7

0

8

7

1

Trans-European Transport Network Executive Agency

10

10

0

11

10

1

Total

2 553

2 149

107

2 397

1 670

394

| Type of expenditure | Commitment appropriations | Payment appropriations |
| --- | --- | --- |
| Appropriations | Commitments made | Carried over | Appropriations | Payments made | Carried over |
| Staff | 757 | 727 | 4 | 773 | 720 | 21 |
| Administrative expenses | 274 | 260 | 4 | 361 | 265 | 76 |
| Operational expenses | 1 522 | 1 162 | 99 | 1 263 | 684 | 297 |
| Total | 2 553 | 2 149 | 107 | 2 397 | 1 670 | 394 |

Type of expenditure

Commitment appropriations

Payment appropriations

Appropriations

Commitments made

Carried over

Appropriations

Payments made

Carried over

Staff

757

727

4

773

720

21

Administrative expenses

274

260

4

361

265

76

Operational expenses

1 522

1 162

99

1 263

684

297

Total

2 553

2 149

107

2 397

1 670

394

18.   BUDGET OUTTURN INCLUDING AGENCIES

| EUR millions |
| --- |
| | European Union | Agencies | Elimination of subsidies to agencies | Total |
| Revenue for the financial year | 130 000 | 1 710 | (1 137) | 130 573 |
| Payments against current year appropriations | (128 043) | (1 451) | 1 137 | (128 357) |
| Payment appropriations carried over to year N+1 | (1 020) | (394) | 0 | (1 413) |
| Cancellation of unused appropriations carried over from year N-1 | 457 | 167 | 0 | 624 |
| Exchange differences for the year | 97 | (2) | 0 | 96 |
| Budget Outturn | 1 492 | 31 | 0 | 1 523 |

EUR millions

European Union

Agencies

Elimination of subsidies to agencies

Total

Revenue for the financial year

130 000

1 710

(1 137)

130 573

130 573

Payments against current year appropriations

(128 043)

(1 451)

1 137

(128 357)

(128 357)

Payment appropriations carried over to year N+1

(1 020)

(394)

0

(1 413)

(1 413)

Cancellation of unused appropriations carried over from year N-1

457

167

0

624

624

Exchange differences for the year

97

(2)

0

96

96

Budget Outturn

1 492

31

0

1 523

EXPLANATORY NOTES TO THE CONSOLIDATED REPORTS ON THE IMPLEMENTATION OF THE BUDGET

EXPLANATORY NOTES TO THE CONSOLIDATED REPORTS ON THE IMPLEMENTATION OF THE BUDGET

1.   BUDGETARY PRINCIPLES, STRUCTURE & APPROPRIATIONS

1.1   LEGAL BASIS AND THE FINANCIAL REGULATION

LEGAL BASIS AND THE FINANCIAL REGULATION

The budgetary accounts are kept in accordance with Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 (OJ L 248, of 16.9.2002) on the Financial Regulation applicable to the general budget of the European Union and Commission Regulation (EC, Euratom) No 2342/2002 of 23 December 2002 laying down detailed rules for the implementation of this Financial Regulation. The general budget, the main instrument of the Union's financial policy, is the instrument which provides for and authorises the Union's revenue and expenditure every year.

Every year, the Commission estimates all the Institutions' revenue and expenditure for the year and draws up a draft budget which it sends to the budgetary authority. On the basis of this draft budget, the Council draws its position which is then the subject of negotiations between the two arms of the budgetary authority. The President of Parliament declares that the joint draft has been finally adopted making the budget enforceable. The task of executing the budget is mainly the responsibility of the Commission.

1.2   BUDGETARY PRINCIPLES

BUDGETARY PRINCIPLES

The general budget of the European Union is governed by a number of basic principles:

—   Unity and budget accuracy: all expenditure and revenue must be in a single budget, booked on a budget line and expenditure may not exceed authorised appropriations;

—   universality: this principle comprises two rules

the rule of non-assignment, meaning that budget revenue must not be earmarked for specific items of expenditure (total revenue must cover total expenditure);

the gross budget rule, meaning that revenue and expenditure are entered in full in the budget without any adjustment against each other;

—   annuality: appropriations are authorised for a single year so must be used during that year;

—   equilibrium: the revenue and expenditure shown in the budget must be in balance (estimated revenue must equal payment appropriations);

—   specification: each appropriation is assigned to a specific purpose and a specific objective;

—   unit of account: the budget is drawn up and implemented in euros, as are the accounts;

—   sound financial management: budget appropriations are used in accordance with the principle of sound financial management, i.e. economy, efficiency and effectiveness;

—   transparency: the budget and amending budgets and final accounts are published in the Official Journal of the European Union.

1.3   BUDGET STRUCTURE

BUDGET STRUCTURE

The budget consists of:

| (a) | a general statement of revenue; |
| --- | --- |

(a)

a general statement of revenue;

| (b) | separate sections giving the statements of revenue and expenditure of each Institution: Section I: Parliament; Section II: Council; Section III: Commission; Section IV: Court of Justice; Section V: Court of Auditors; Section VI: Economic and Social Committee; Section VII: Committee of the Regions; Section VIII: Ombudsman; Section IX: European Data Protection Supervisor; Section X: European External Action Service. |
| --- | --- |

(b)

separate sections giving the statements of revenue and expenditure of each Institution: Section I: Parliament; Section II: Council; Section III: Commission; Section IV: Court of Justice; Section V: Court of Auditors; Section VI: Economic and Social Committee; Section VII: Committee of the Regions; Section VIII: Ombudsman; Section IX: European Data Protection Supervisor; Section X: European External Action Service.

Each Institution's items of revenue and expenditure are classified according to their type or the use to which they are assigned under titles, chapters, articles and items.

1.4   STRUCTURE OF THE BUDGETARY ACCOUNTS

STRUCTURE OF THE BUDGETARY ACCOUNTS

1.4.1   
  General overview

General overview

Only the Commission budget contains administrative appropriations and operating appropriations. The other Institutions have only administrative appropriations. Furthermore, the budget distinguishes between two types of appropriation: non-differentiated appropriations and differentiated appropriations.

Non-differentiated appropriations are used to finance operations of an annual nature (which comply with the principle of annuality). They cover all the administrative chapters of the budget of the Commission Section and the whole of every other section, EAGF appropriations of an annual nature and certain technical appropriations (repayments, borrowing and lending guarantees, etc.) In the case of non-differentiated appropriations, the amount of commitment appropriations is the same as that of payment appropriations.

Differentiated appropriations were introduced in order to reconcile the principle of annuality with the need to manage multi-annual operations. They are intended to cover multi-annual operations and comprise all the other appropriations in all Chapters except Chapter 1 of the Commission Section. Differentiated appropriations are split into commitment and payment appropriations:

—   commitment appropriations: cover the total cost of the legal obligations entered into for the current financial year for operations extending over a number of years. However, budgetary commitments for actions extending over more than one financial year may, in accordance with Article 76(3) of the Financial Regulation, be broken down over several years into annual instalments where the basic act so provides.

—   payment appropriations: cover expenditure arising from commitments entered into in the current financial year and/or earlier financial years.

1.4.2   
  Origin of Appropriations

Origin of Appropriations

The main source of appropriations is the Union's budget for the current year. However, there are other types of appropriations resulting from the provisions of the Financial Regulation. They come from previous financial years or outside sources:

| — | Initial budget appropriations adopted for the current year can be supplemented with transfers between lines in accordance with the rules laid down in Articles 22 to 24 of the Financial Regulation (No 1605/2002 of 25 June 2002) and by amending budgets (covered by Articles 37 and 38 of the Financial Regulation). |
| --- | --- |

—

Initial budget appropriations adopted for the current year can be supplemented with transfers between lines in accordance with the rules laid down in Articles 22 to 24 of the Financial Regulation (No 1605/2002 of 25 June 2002) and by amending budgets (covered by Articles 37 and 38 of the Financial Regulation).

Initial budget appropriations

transfers

| — | Appropriations carried over from previous year or made available again also supplement the current budget. These are (i) non-differentiated payment appropriations which may be carried over automatically for one financial year only in accordance with Article 9(4) of the Financial Regulation; (ii) appropriations carried over by decision of the Institutions in one of two cases: if the preparatory stages have been completed (Article 9(2)(a) of the Financial Regulation) or if the legal base is adopted late (Article 9(2)(b)). Both commitment and payment appropriations may be carried over (Article 9(3)) and (iii) appropriations made available again as a result of decommitments: This involves the re-entry of commitment appropriations concerning structural funds which have been decommitted. Amounts can be re-entered by way of exception in the event of error by the Commission or if they are indispensable for completion of the programme (Article 157 of the Financial Regulation). |
| --- | --- |

—

Appropriations carried over from previous year or made available again also supplement the current budget. These are (i) non-differentiated payment appropriations which may be carried over automatically for one financial year only in accordance with Article 9(4) of the Financial Regulation; (ii) appropriations carried over by decision of the Institutions in one of two cases: if the preparatory stages have been completed (Article 9(2)(a) of the Financial Regulation) or if the legal base is adopted late (Article 9(2)(b)). Both commitment and payment appropriations may be carried over (Article 9(3)) and (iii) appropriations made available again as a result of decommitments: This involves the re-entry of commitment appropriations concerning structural funds which have been decommitted. Amounts can be re-entered by way of exception in the event of error by the Commission or if they are indispensable for completion of the programme (Article 157 of the Financial Regulation).

Appropriations carried over

| — | Assigned revenue which is made up of (i) refunds where the amounts are assigned revenue on the budget line which incurred the initial expenditure and may be carried over without limit; (ii) EFTA appropriations: The agreement on the European Economic Area provides for financial contribution by its members to certain activities in the EU budget. The budget lines concerned and the amounts projected are published in Annex III of the EU budget. The lines concerned are increased by the EFTA contribution. Appropriations not used at the year-end are cancelled and returned to the EEA countries; (iii) Revenue from third parties/ other countries that have concluded agreements with the European Union involving a financial contribution to EU activities. The amounts received are considered to be revenue from third parties which is allocated to the budget lines concerned (often in the field of research) and may be carried over without limit (Article 10 and Article 18(1)(a) and (d) of the Financial Regulation); (iv) Work for third parties: As part of their research activities, the EU research centres may work for outside bodies, (Article 161(2) of the Financial Regulation). Like the revenue from third parties, the work for third parties is assigned to specific budget lines and may be carried over without limit (Article 10 and Article 18(1)(d) of the Financial Regulation); and (v) Appropriations made available again as a result of repayment of payments on account: These are EU funds which have been repaid by the beneficiaries and may be carried over without limit. In the area of Structural Funds the re-inscription is based on a Commission Decision (Article 18(2) of the Financial Regulation and Article 228 of its Implementing Rules). |
| --- | --- |

—

Assigned revenue which is made up of (i) refunds where the amounts are assigned revenue on the budget line which incurred the initial expenditure and may be carried over without limit; (ii) EFTA appropriations: The agreement on the European Economic Area provides for financial contribution by its members to certain activities in the EU budget. The budget lines concerned and the amounts projected are published in Annex III of the EU budget. The lines concerned are increased by the EFTA contribution. Appropriations not used at the year-end are cancelled and returned to the EEA countries; (iii) Revenue from third parties/ other countries that have concluded agreements with the European Union involving a financial contribution to EU activities. The amounts received are considered to be revenue from third parties which is allocated to the budget lines concerned (often in the field of research) and may be carried over without limit (Article 10 and Article 18(1)(a) and (d) of the Financial Regulation); (iv) Work for third parties: As part of their research activities, the EU research centres may work for outside bodies, (Article 161(2) of the Financial Regulation). Like the revenue from third parties, the work for third parties is assigned to specific budget lines and may be carried over without limit (Article 10 and Article 18(1)(d) of the Financial Regulation); and (v) Appropriations made available again as a result of repayment of payments on account: These are EU funds which have been repaid by the beneficiaries and may be carried over without limit. In the area of Structural Funds the re-inscription is based on a Commission Decision (Article 18(2) of the Financial Regulation and Article 228 of its Implementing Rules).

Assigned revenue

1.4.3   
  Composition of Appropriations Available

Composition of Appropriations Available

—   Final budget appropriations= initial budget appropriations adopted + amending budget appropriations + transfers;

—   Additional appropriations= assigned revenue (see above) + appropriations carried over from the previous financial year or made available again following decommitments;

—   Total appropriations authorised= final budget appropriations + additional appropriations;

—   Appropriations for the year (as used to calculate the budgetary result)= final budget appropriations + assigned revenue.

(as used to calculate the budgetary result)

1.5   BUDGET IMPLEMENTATION

BUDGET IMPLEMENTATION

The implementation of the budget is governed by the Financial Regulation, Article 48(1) of which states: ‘The Commission shall implement ... the budget in accordance with this Regulation, on its own responsibility and within the limits of the appropriations authorised.’ Article 50 states that the Commission shall confer on the Institutions the requisite powers for the implementation of the sections of the budget relating to them.

1.6   OUTSTANDING COMMITMENTS (RAL)

OUTSTANDING COMMITMENTS (RAL)

With the introduction of differentiated appropriations, a gap developed between commitments entered into and payments made: this gap, corresponding to outstanding commitments, represents the time-lag between when the commitments are entered into and when the corresponding payments are made.

2.   EXPLANATION OF THE CONSOLIDATED REPORTS ON THE IMPLEMENTATION OF THE BUDGET

2.1   BUDGET OUTTURN FOR THE YEAR (Table 1)

BUDGET OUTTURN FOR THE YEAR (Table 1)

2.1.1   
  General

General

The amounts of own resources entered in the accounts are those credited in the course of the year to the accounts opened in the Commission's name by the governments of the Member States. Revenue comprises also, in the case of a surplus, the budget outturn for the previous financial year. The other revenue entered in the accounts is the amount actually received in the course of the year.

For the purposes of calculating the budget outturn for the year, expenditure comprises payments made against the year's appropriations for payments plus any of the appropriations for that year that are carried over to the following year. Payments made against the year's appropriations for payments means payments that are made by the accounting officer by 31 December of the financial year. In the case of the European Agricultural Guarantee Fund, the payments are those effected by the Member States between 16 October N-1 and 15 October N, provided that the accounting officer was notified of the commitment and authorisation by 31 January N+1. EAGF expenditure may be subject to a conformity decision following controls in the Member States.

The budget outturn comprises two elements: the result of the European Union and the result of the participation of the EFTA countries belonging to the EEA. In accordance with Article 15 of Regulation No 1150/2000 on own resources, this outturn represents the difference between:

| — | total revenue received for that year; |
| --- | --- |

—

total revenue received for that year;

| — | and total payments made against that year's appropriations plus the total amount of that year's appropriations carried over to the following year. |
| --- | --- |

—

and total payments made against that year's appropriations plus the total amount of that year's appropriations carried over to the following year.

The following are added to or deducted from the resulting figure:

| — | the net balance of cancellations of payment appropriations carried over from previous years and any payments which, because of fluctuations in the euro rate, exceed non-differentiated appropriations carried over from the previous year; |
| --- | --- |

—

the net balance of cancellations of payment appropriations carried over from previous years and any payments which, because of fluctuations in the euro rate, exceed non-differentiated appropriations carried over from the previous year;

| — | the balance of exchange-rate gains and losses recorded during the year. |
| --- | --- |

—

the balance of exchange-rate gains and losses recorded during the year.

The budget outturn is returned to the Member States the following year through deduction of their amounts due for that financial year.

The budget outturn is returned to the Member States the following year through deduction of their amounts due for that financial year.

Appropriations carried over from the previous financial year in respect of contributions by and work for third parties, which by definition never lapse, are included with the additional appropriations for the financial year. This explains the difference between carryovers from the previous year in the 2011 budget implementation statements and those carried over to the following year in the 2010 budget implementation statements. The payment appropriations for re-use and appropriations made available again following the repayment of payments on account are disregarded when calculating the outturn for the year.

The payment appropriations carried over include: automatic carryovers and carryovers by decision. The cancellation of unused payment appropriations carried over from the previous year shows the cancellations on appropriations carried over automatically and by decision. It also includes the decrease in assigned revenue appropriations carried over to the next year in comparison with 2010.

2.1.2   
  Reconciliation of the budget outturn with the economic outturn

Reconciliation of the budget outturn with the economic outturn

The economic outturn for the year is calculated on the basis of accrual accounting principles. The budget outturn is however based on modified cash accounting rules, in accordance with the Financial Regulation. As both are the result of the same underlying transactions, it is a useful control to ensure that they are reconcilable. The table below shows this reconciliation, highlighting the key reconciling amounts, split between revenue and expenditure items.

RECONCILIATION: ECONOMIC OUTTURN – BUDGET OUTTURN

RECONCILIATION: ECONOMIC OUTTURN – BUDGET OUTTURN

| EUR millions |
| --- |
| | 2011 | 2010 |
| ECONOMIC OUTTURN FOR THE YEAR | (1 789) | 17 232 |
| Revenues |
| Entitlements established in current year but not yet collected | (371) | (3 132) |
| Entitlements established in previous years and collected in current year | 2 072 | 1 346 |
| Accrued revenue (net) | (236) | (371) |
| Expenditure |
| Accrued expenses (net) | 3 410 | (7 426) |
| Expenses prior year paid in current year | (936) | (386) |
| Net-effect pre-financing | 1 131 | (678) |
| Payment appropriations carried over to next year | (1 211) | (2 798) |
| Payments made from carry-overs & cancellation of unused payment appropriations | 2 000 | 1 760 |
| Movement in provisions | (2 109) | (323) |
| Other | (378) | (257) |
| Economic outturn Agencies & ECSC | (91) | (418) |
| Budget outturn for the year | 1 492 | 4 549 |

EUR millions

2011

2010

ECONOMIC OUTTURN FOR THE YEAR

ECONOMIC OUTTURN FOR THE YEAR

(1 789)

(1 789)

17 232

17 232

Revenues

Revenues

Entitlements established in current year but not yet collected

(371)

(3 132)

Entitlements established in previous years and collected in current year

2 072

1 346

Accrued revenue (net)

(236)

(371)

Expenditure

Expenditure

Accrued expenses (net)

3 410

(7 426)

Expenses prior year paid in current year

(936)

(386)

Net-effect pre-financing

1 131

(678)

Payment appropriations carried over to next year

(1 211)

(2 798)

Payments made from carry-overs & cancellation of unused payment appropriations

2 000

1 760

Movement in provisions

(2 109)

(323)

Other

(378)

(257)

Economic outturn Agencies & ECSC

Economic outturn Agencies & ECSC

(91)

(418)

Budget outturn for the year

Budget outturn for the year

1 492

1 492

4 549

4 549

Reconciling items — Revenue

Reconciling items — Revenue

The actual budgetary revenue for a financial year corresponds to the revenue collected from entitlements established in the course of the year and amounts collected from entitlements established in previous years. Therefore the entitlements established in the current year but not yet collected are to be deducted from the economic outturn for reconciliation purposes as they do not form part of budgetary revenue. On the contrary the entitlements established in previous years and collected in current year must be added to the economic outturn for reconciliation purposes.

entitlements established in the current year but not yet collected

entitlements established in previous years and collected in current year

The net accrued revenue mainly consists of accrued revenue for agricultural levies, own resources and interests and dividends. Only the net-effect, i.e. accrued revenue for current year minus reversal accrued revenue from previous year, is taken into consideration.

net accrued revenue

Reconciling items — Expenditure

Reconciling items — Expenditure

The net accrued expenses mainly consist of accruals made for year-end cut-off purposes, i.e. eligible expenses incurred by beneficiaries of Community funds but not yet reported to the Commission.

net accrued expenses

While accrued expenses are not considered as budgetary expenditure, the payments made in the current year relating to invoices registered in prior years are part of current year's budgetary expenditure.

current year relating to invoices registered in prior years

The net effect of pre-financing is the combination of (1) the new pre-financing amounts paid in the current year and recognised as budgetary expenditure of the year and (2) the clearing of the pre-financing paid in current year or previous years through the acceptance of eligible costs. The latter represent an expense in accrual terms but not in the budgetary accounts since the payment of the initial pre-financing had already been considered as a budgetary expenditure at the time of its payment.

net effect of pre-financing

Besides the payments made against the year's appropriations, the appropriations for that year that are carried to the next year also need to be taken into account in calculating the budget outturn for the year (in accordance with Article 15 of Regulation (EC, Euratom) No 1150/2000). The same applies for the budgetary payments made in the current year from carry-overs and the cancellation of unused payment appropriations.

carried to the next year

carry-overs and the cancellation of unused payment appropriations

The movement in provisions relate to year-end estimates made in the accrual accounts (employee benefits mainly) that do not impact the budgetary accounts. Other reconciling amounts comprise different elements such as asset depreciation, asset acquisitions, capital lease payments and financial participations for which the budgetary and accrual accounting treatments differ.

movement in provisions

Other reconciling amounts

2.2   COMPARISON OF BUDGET AND ACTUAL AMOUNTS (Table 2)

COMPARISON OF BUDGET AND ACTUAL AMOUNTS (Table 2)

In the initial adopted budget, signed by the President of the European Parliament on 15 December 2010, the amount of payment appropriations was EUR 126 527 million and the amount to be financed by own resources totalled EUR 125 106 million. The revenue and expenditure estimates in the initial budget are typically adjusted during the budgetary year, such modifications being presented in amending budgets. Adjustments in the GNI-based own resources ensure that budgeted revenue matches exactly budgeted expenditure. In accordance with the principle of equilibrium, budget revenue and expenditure (payment appropriations) must be in balance.

Revenue:

Revenue:

During 2011 seven amending budgets were adopted. Taking them into account, the total final revenue in the 2011 budget amounted to EUR 126 727 million. This was financed by own resources totalling EUR 118 289 million (thus EUR 6 816 million less than initially forecasted) and the remainder by other revenue. The reduced need for own resources stemmed mainly from the inclusion of EUR 4 539 million relating to the surplus of the previous year. Finally the changes in the revenue forecast in the Amending Budget No 6/2011 resulted in a supplementary reduction.

As far as the own resources outturn is concerned, the collection of traditional own resources matched almost the forecasted amounts. Namely because the budget estimates that were modified at the time the Amending Budget No 4/2011 was established (they were increased by EUR 1 090 million according to the new macroeconomic forecasts of spring 2011), were once again amended in the Amending Budget No 6/2011 to take into account the actual rhythm of collection. Thus they were decreased by EUR 1 200 re-establishing almost the original amount.

The final Member States' VAT and GNI payments also correspond closely to the final budgetary estimate. The differences between the forecasted amounts and the amounts actually paid are due to the differences between the euro rates used for budgetary purposes and the rates in force at the time when the Member States outside the EMU actually made their payments.

Expenditure:

Expenditure:

The year 2011 was the fifth year of the current programming period, with many major programmes seeing an acceleration in the implementation of payments. Given the general context of fiscal consolidation in the Member States, however, the increase of payment appropriations in the budget had been limited, and proved insufficient to meet the payment needs during the course of the year. It was also below a level, which would have had an affect on reducing the volume of outstanding commitments (RAL = reste à liquider).

For commitments, the authorised budget, and hence the political targets set, were fully implemented (99,6 %) Adjustments during the year concerned EUR 240 million for the European Solidarity Fund, unforeseeable expenditure by its very nature, and EUR 41 million for Title 18 Area of freedom, security and justice (mainly for FRONTEX). The total implementation of EUR 141 204 million left EUR 617 million unused. After the carryover to 2012, an amount of EUR 316 million lapses, as well as the un-mobilised reserve for European Globalisation fund of EUR 371 million and unused provisional appropriations of EUR 2 million.

The total implementation of payment appropriations, EUR 125 145 million, represents an implementation rate of 98,8 %. The total appropriations were amended in course of the year, with an additional EUR 200 million authorised in Amending Budget 6/2011 for the European Social Fund (ESF). A further amount of EUR 253 million was redeployed from Rural Development to the ESF in this amending budget, and the budgetary authority transfer DEC 52/2011 provided another EUR 601 million for this Fund. Despite these measures, a surge in payment requests in the last three weeks of the year, and an absence of the necessary payment appropriations, meant that some EUR 11 billion in claims will only be met in 2012.

The unused voted appropriations excluding the reserves amounted to EUR 1 580 million (2010: EUR 3 243 million) and after the carryover to 2012, a total of EUR 560 million (2010: EUR 1 730 million) lapses, mainly in Headings 2 and 4. EUR 2 million of provisional payment appropriations remained unused.

A more detailed analysis of budgetary adjustments, their relevant context, their justification and their impact is presented in Commission's Report on Budgetary and Financial Management 2011, Part A ‘Overview at budget level’ and Part B dealing with each heading of the multi-annual financial framework.

2.3   REVENUE (Table 3)

REVENUE (Table 3)

The revenue of the general budget of the European Union can be divided into two main categories: own resources and other revenue. This is laid down in Article 311 of the Treaty on the Functioning of the European Union, which states that: ‘Without prejudice to other revenue, the budget shall be financed wholly from own resources.’ The main bulk of budgetary expenditure is financed by own resources. Other revenue represents only a minor part of total financing.

There are three categories of own resources: traditional own resources, the VAT resource and the GNI resource. Traditional own resources, in turn, comprise sugar levies and customs duties. A correction mechanism in favour of the United Kingdom as well as a gross reduction in the annual GNI-based contribution of Netherlands and Sweden are also part of the own resources system.

The allocation of own resources is made in accordance with the rules laid down in the Council Decision No 2007/436/EC, Euratom of 7 June 2007 on the system of the European Communities' own resources (ORD 2007). On 1 March 2009 the ORD 2007 entered into force. However it took effect on 1 January 2007. Consequently the retroactive effects have been taken in account in the budgetary year 2009.

2.3.1   
  Traditional own resources

Traditional own resources

Traditional own resources: All established amounts of traditional own resources must be entered in one or other of the accounts kept by the competent authorities.

| — | In the ordinary account provided for in Article 6(3)(a) of Regulation (EC) No 1150/2000: all amounts recovered or guaranteed. |
| --- | --- |

—

In the ordinary account provided for in Article 6(3)(a) of Regulation (EC) No 1150/2000: all amounts recovered or guaranteed.

| — | In the separate account provided for in Article 6(3)(b) of Regulation (EC) No 1150/2000: all amounts not yet recovered and/or not guaranteed; amounts guaranteed but challenged may also be entered in this account. |
| --- | --- |

—

In the separate account provided for in Article 6(3)(b) of Regulation (EC) No 1150/2000: all amounts not yet recovered and/or not guaranteed; amounts guaranteed but challenged may also be entered in this account.

For the separate account, the Member States quarterly statement to the Commission includes:

| — | the balance to be recovered during the previous quarter, |
| --- | --- |

—

the balance to be recovered during the previous quarter,

| — | the established entitlements during the quarter in question, |
| --- | --- |

—

the established entitlements during the quarter in question,

| — | rectifications of the base (corrections/cancellations) during the quarter in question, |
| --- | --- |

—

rectifications of the base (corrections/cancellations) during the quarter in question,

| — | amounts written off (which cannot be made available according to Article 17(2) of Regulation (EC) No 1150/2000), |
| --- | --- |

—

amounts written off (which cannot be made available according to Article 17(2) of Regulation (EC) No 1150/2000),

| — | the amounts recovered during the quarter in question, |
| --- | --- |

—

the amounts recovered during the quarter in question,

| — | the balance to be recovered at the end of the quarter in question. |
| --- | --- |

—

the balance to be recovered at the end of the quarter in question.

Traditional own resources must be entered in the Commission's account with the Treasury or the body appointed by the Member State at the latest on the first working day following the 19th day of the second month following the month during which the entitlement was established (or recovered in the case of the separate account). Member States retain, by way of collection costs, 25 % of traditional own resources. The contingent own resources entitlements are adjusted on the basis of the likelihood of their recovery.

2.3.2   
  VAT-based resources and GNI-based resources

VAT-based resources and GNI-based resources

VAT-based own resource derive from the application of a uniform rate, for all Member States, to the harmonised VAT base determined in accordance with the rules of Article 2(1)(b) of the ORD 2007. The uniform rate is fixed at 0,30 % except for the period 2007-2013 in which the rate of call for Austria is fixed at 0.225, for Germany at 0,15 % and for Netherlands and Sweden at 0,10 %. The VAT base is capped at 50 % of GNI for all Member States.

The GNI-based resource is a variable resource intended to supply the revenue required, in any given year, to cover expenditure exceeding the amount collected from traditional own resources, VAT resources and miscellaneous revenue. The revenue derives from the application of a uniform rate to the aggregate GNI of all the Member States. VAT and GNI-based resources are determined on the basis of forecasts of VAT and GNI bases made when the preliminary draft budget is being prepared. These forecasts are subsequently revised; the figures are updated during the budget year in question by means of an amending budget.

The actual figures for the VAT and GNI bases are available in the course of the year following the budget year in question. The Commission calculates the differences between the amounts due by the Member States by reference to the actual bases and the sums actually paid on the basis of the (revised) forecasts. These VAT and GNI balances, either positive or negative, are called in by the Commission from the Member States for the first working day of December of the year following the budget year in question. Corrections may still be made to the actual VAT and GNI bases during the subsequent four years, unless a reservation is issued. The balances calculated earlier are adjusted and the difference is called in at the same time as the VAT and GNI balances for the previous budget year.

When conducting controls of VAT statements and GNI data, the Commission may notify reservations to the Member States regarding certain points which may have consequences to their own resources contributions. These points, for example, may result from an absence of acceptable data, or a need to develop a suitable methodology. These reservations have to be seen as potential claims on the Member States for uncertain amounts as their financial impact cannot be estimated with accuracy. When the exact amount can be determined, the corresponding VAT and GNI-based resources are called either in connection with VAT and GNI balances or by individual calls for funds.

2.3.3   
  UK correction

UK correction

This mechanism reduces the own resources payments of the UK in proportion to what is known as its ‘budgetary imbalance’ and increases the own resources payments of the other Member States correspondingly. The budgetary imbalance correction mechanism in favour of the United Kingdom was instituted by the European Council in Fontainebleau (June 1984) and the resulting Own Resources Decision of 7 May 1985. The purpose of the mechanism was to reduce the budgetary imbalance of the UK through a reduction in its payments to the EU. Germany, Austria, Sweden and Netherlands benefit from a reduced financing of the correction (restricted to one fourth of their normal share).

2.3.4   
  Gross reduction

Gross reduction

The European Council of 15 and 16 December 2005 concluded that the Netherlands and Sweden shall benefit from gross reductions in their annual GNI-based contributions during the period 2007-2013. Thus this mechanism of compensation stipulates that the Netherlands shall benefit from a gross reduction in its annual GNI contribution of EUR 605 million and Sweden from a gross reduction in its annual GNI contribution of EUR 150 million, measured in 2004 prices.

2.4   EXPENDITURE (Tables 4 to 13)

EXPENDITURE (Tables 4 to 13)

2.4.1   
  Financial Framework 2007-2013

Financial Framework 2007-2013

| EUR millions |
| --- |
| | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 |
| 1. | Sustainable Growth |

EUR millions

2007

2008

2009

2010

2011

2012

2013

1.

Sustainable Growth

53 979

57 653

61 696

63 555

63 974

67 614

70 147

| 2. | Preservation & management of natural resources |
| --- | --- |

2.

Preservation & management of natural resources

55 143

59 193

56 333

59 955

59 888

60 810

61 289

| 3. | Citizenship, freedom, security & justice |
| --- | --- |

3.

Citizenship, freedom, security & justice

1 273

1 362

1 518

1 693

1 889

2 105

2 376

| 4. | EU as a global player |
| --- | --- |

4.

EU as a global player

6 578

7 002

7 440

7 893

8 430

8 997

9 595

| 5. | Administration |
| --- | --- |

5.

Administration

7 039

7 380

7 525

7 882

8 091

8 523

9 095

| 6. | Compensations |
| --- | --- |

6.

Compensations

445

207

210

0

0

0

0

Commitment appropriations:

Commitment appropriations:

124 457

124 457

132 797

132 797

134 722

134 722

140 978

140 978

142 272

142 272

148 049

148 049

152 502

152 502

Total payment appropriations:

122 190

129 681

120 445

134 289

133 700

141 360

143 911

This section describes the main categories of EU expenditure, classified by heading of the financial framework 2007-2013. The 2011 financial year was the fifth covered by the financial framework 2007-2013. The overall ceiling on commitments appropriations for 2011 comes to EUR 142 272 million, equivalent to 1,15 % of GNI. The corresponding ceiling on the appropriations for payments comes to EUR 133 700 million, i.e. 1,08 % of GNI. The above table shows the financial framework at current prices.

Heading 1 –   Sustainable growth

Heading 1 –

Sustainable growth

This Heading divided into two separate, but interlinked components:

| — | 1a. Competitiveness for growth and employment, encompassing expenditure on research and innovation, education and training, trans-European networks, social policy, the internal market and accompanying policies. |
| --- | --- |

—

1a. Competitiveness for growth and employment, encompassing expenditure on research and innovation, education and training, trans-European networks, social policy, the internal market and accompanying policies.

| — | 1b. Cohesion for growth and employment, designed to enhance convergence of the least developed Member States and regions, to complement the EU strategy for sustainable development outside the less prosperous regions and to support inter regional cooperation. |
| --- | --- |

—

1b. Cohesion for growth and employment, designed to enhance convergence of the least developed Member States and regions, to complement the EU strategy for sustainable development outside the less prosperous regions and to support inter regional cooperation.

Heading 2 –   Preservation and management of natural resources

Heading 2 –

Preservation and management of natural resources

Heading 2 includes the common agricultural and fisheries policies, rural development and environmental measures, in particular Natura 2000. The amount earmarked for the common agricultural policy reflects the agreement reached at the European Council in October 2002.

Heading 3 –   Citizenship, freedom, security and justice

Heading 3 –

Citizenship, freedom, security and justice

The new heading 3 (Citizenship, freedom, security and justice) reflects the growing importance attached to certain fields where the EU has been assigned new tasks – justice and home affairs, border protection, immigration and asylum policy, public health and consumer protection, culture, youth, information and dialogue with citizens. It is split in two components:

| — | 3a. Freedom, Security and Justice |
| --- | --- |

—

3a. Freedom, Security and Justice

| — | 3b. Citizenship |
| --- | --- |

—

3b. Citizenship

Heading 4 –   The EU as a global player

Heading 4 –

The EU as a global player

Heading 4 covers all external action, including pre-accession instruments. Whereas the Commission had proposed to integrate the European Development Fund (EDF) into the financial framework, the European Council and the European Parliament agreed to leave it outside.

Heading 5 –   Administration

Heading 5 –

Administration

This heading covers administrative expenditure for all institutions, pensions and the European Schools. For the Institutions other than the Commission, these costs make up the total of their expenditure, but the Agencies and other bodies make both administrative and operational expenditure.

Heading 6 –   Compensations

Heading 6 –

Compensations

In accordance with the political agreement that the new Member States should not become net-contributors to the budget at the very beginning of their membership, compensation was foreseen under this heading. This amount was available as transfers to them to balance their budgetary receipts and contributions.

2.4.2   
  Policy areas

Policy areas

As part of its use of Activity Based Management (ABM) the Commission implements Activity Based Budgeting (ABB) in its planning and management processes. ABB involves a budget structure where budget titles correspond to policy areas and budget chapters to activities. ABB aims to provide a clear framework for translating the Commission's policy objectives into action, either through legislative, financial or any other public policy means. By structuring the Commission's work in terms of activities, a clear picture is obtained of the Commission's undertakings and simultaneously a common framework is established for priority setting. Resources are allocated to priorities during the budget procedure, using the activities as the building blocks for budgeting purposes. By establishing such a link between activities and the resources allocated to them, ABB aims to increase efficiency and effectiveness in the use of resources in the Commission.

A policy area may be defined as a homogeneous grouping of Activities constituting parts of the Commission's work, which are relevant for the decision-making process. Each policy area corresponds, in general, to a DG, and encompassing an average of about 6 or 7 individual activities. Policy areas are mainly operational, since their core activities aim at benefiting a third-party beneficiary within their respective domains of activity. The operational budget is completed with the necessary administrative expenditure for each policy area.

2.5   INSTITUTIONS AND AGENCIES (Tables 14 to 18)

INSTITUTIONS AND AGENCIES (Tables 14 to 18)

The consolidated reports on the implementation of the general budget of the European Union include, as in previous years, the budget implementation of all Institutions since within the EU budget a separate budget for each Institution is established. Agencies do not have a separate budget inside the EU budget and they are partially financed by a Commission budget subsidy.

Concerning the EEAS, it should be noted that, in addition to its own budget, it also receives contributions from the Commission (EUR 202 million) and the EDF (EUR 50 million). These budget credits are put at the disposal of the EEAS (as assigned revenue) so as to cover primarily the costs of Commission staff working in the EU delegations, these delegations being administratively managed by the EEAS.

In order to provide all relevant budgetary data for the Agencies, the budgetary part of the consolidated annual accounts include separate reports on the implementation of the individual budgets of the traditional agencies consolidated.

---

(1)  It should be noted that due to the rounding of figures into millions of euros, some financial data in the tables below may appear not to add-up.

1

(2)  The European Parliament has adopted a budget on 1 December 2011 which provides for the payment of the Union's short-term liabilities from own resources to be collected by, or called up from, the Member States in 2012. Additionally, under Article 83 of the Staff Regulations (Council Regulation (EEC, Euratom, ECSC) No 259/68 of 29 February 1968 as amended), the Member States shall jointly guarantee the liability for pensions.

2

(3)  After elimination of the EFSM bonds and the provisioned contribution from EU paid in February 2012.

3

(4)  The Guarantee Fund holds EFSM bonds issued by the Commission, so these need to be eliminated.

4

(5)  EFF: the European Fisheries Fund (EFF) replaced the Financial Instrument for Fisheries Guidance (FIFG) for the programming period 2007-2013.

5

(6)  Disbursed in 2012 so not inlcuded on EU balance sheet at 31 December 2011.

6

(7)  With correction coefficient (‘cc’) applied.

7

(8)  Paid for the first 3 years following departure.

8

(9)  Consolidated for the first time in 2011.

9

(10)  Consolidated for the first time in 2011.

10

(11)  It should be noted that due to the rounding of figures into millions of euros, some financial data in these budgetary tables may appear not to add-up.

11

(12)  Of which EFTA amounts total EUR (5) million in 2011 and EUR 9 million in 2010.

12

(13)  Including appropriations carried over and assigned revenue.

13

(14)  Including appropriations carried over and assigned revenue.

14

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| 14.11.2012 | EN | Official Journal of the European Union | C 348/130 |
| --- | --- | --- | --- |

14.11.2012

EN

Official Journal of the European Union

C 348/130

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THE COURT’S STATEMENT OF ASSURANCE PROVIDED TO THE EUROPEAN PARLIAMENT AND THE COUNCIL — INDEPENDENT AUDITOR’S REPORT

2012/C 348/02

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






  (a) | the consolidated accounts of the European Union which comprise the consolidated financial statements (1) and the consolidated reports on implementation of the budget (2) for the financial year ended 31 December 2011; and |
| --- | --- | --- |

I.

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

(a)

the consolidated accounts of the European Union which comprise the consolidated financial statements (1) and the consolidated reports on implementation of the budget (2) for the financial year ended 31 December 2011; and

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

(b)

the legality and regularity of the transactions underlying those accounts.

Management's responsibility

| II. | In accordance with Articles 310 to 325 of the TFEU and the Financial Regulation, management is responsible for the preparation and fair presentation of the consolidated accounts of the European Union and the legality and regularity of the transactions underlying them:






  (a) | Management's responsibility in respect of the consolidated accounts of the European Union includes: designing, implementing and maintaining internal control 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 (3); and making accounting estimates that are reasonable in the circumstances. According to Article 129 of the Financial Regulation, the Commission approves the consolidated accounts of the European Union after the Commission's accounting officer has consolidated them on the basis of the information presented by the other institutions and bodies and established a note, accompanying the consolidated accounts, declaring, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the European Union in all material aspects. |
| --- | --- | --- |

II.

In accordance with Articles 310 to 325 of the TFEU and the Financial Regulation, management is responsible for the preparation and fair presentation of the consolidated accounts of the European Union and the legality and regularity of the transactions underlying them:

(a)

Management's responsibility in respect of the consolidated accounts of the European Union includes: designing, implementing and maintaining internal control 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 (3); and making accounting estimates that are reasonable in the circumstances. According to Article 129 of the Financial Regulation, the Commission approves the consolidated accounts of the European Union after the Commission's accounting officer has consolidated them on the basis of the information presented by the other institutions and bodies and established a note, accompanying the consolidated accounts, declaring, inter alia, that he has reasonable assurance that they present a true and fair view of the financial position of the European Union in all material aspects.

| (b) | The way in which management exercises its responsibility for ensuring the legality and regularity of underlying transactions depends on the method of implementation of the budget foreseen in the Financial Regulation. Implementation tasks have to comply with the principle of sound financial management, requiring designing, implementing and maintaining effective and efficient internal control including adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. Regardless of the method of implementation applied, the Commission bears the ultimate responsibility for the legality and regularity of the transactions underlying the accounts of the European Union (Article 317 of the TFEU). |
| --- | --- |

(b)

The way in which management exercises its responsibility for ensuring the legality and regularity of underlying transactions depends on the method of implementation of the budget foreseen in the Financial Regulation. Implementation tasks have to comply with the principle of sound financial management, requiring designing, implementing and maintaining effective and efficient internal control including adequate supervision and appropriate measures to prevent irregularities and fraud and, if necessary, legal proceedings to recover funds wrongly paid or used. Regardless of the method of implementation applied, the Commission bears the ultimate responsibility for the legality and regularity of the transactions underlying the accounts of the European Union (Article 317 of the TFEU).

Auditor's responsibility

| III. | The Court's responsibility is to provide, on the basis of its audit, the European Parliament and the Council with a statement of assurance as to the reliability of the accounts and the legality and regularity of the transactions underlying them. The Court conducted 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 that the Court plans and performs the audit to obtain reasonable assurance whether the consolidated accounts of the European Union are free from material misstatement and the transactions underlying them are legal and regular. |
| --- | --- |

III.

The Court's responsibility is to provide, on the basis of its audit, the European Parliament and the Council with a statement of assurance as to the reliability of the accounts and the legality and regularity of the transactions underlying them. The Court conducted 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 that the Court plans and performs the audit to obtain reasonable assurance whether the consolidated accounts of the European Union are free from material misstatement and the transactions underlying them are legal and regular.

| IV. | An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated accounts and the legality and the regularity of the transactions underlying them. The procedures are selected based on the auditor's judgment, including an assessment of the risks of material misstatement of the consolidated accounts and of material non-compliance of the underlying transactions with the requirements of the legal framework of the European Union, whether due to fraud or error. In assessing those risks, the auditor considers internal control relevant to the preparation and fair presentation of the consolidated accounts and supervisory and control systems implemented to ensure legality and regularity of underlying transactions, in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated accounts and the annual activity reports. |
| --- | --- |

IV.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated accounts and the legality and the regularity of the transactions underlying them. The procedures are selected based on the auditor's judgment, including an assessment of the risks of material misstatement of the consolidated accounts and of material non-compliance of the underlying transactions with the requirements of the legal framework of the European Union, whether due to fraud or error. In assessing those risks, the auditor considers internal control relevant to the preparation and fair presentation of the consolidated accounts and supervisory and control systems implemented to ensure legality and regularity of underlying transactions, in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated accounts and the annual activity reports.

| V. | In the context of revenue, the Court’s audit of value added tax and gross national Iicome-based own resources takes as its starting point the receipt by the Commission of the macroeconomic aggregates prepared by the Member States, and then assesses the Commission's systems for processing the data until they are included in the consolidated accounts and the contributions by the Member States have been received. For traditional own resources, the Court examines the accounts of the customs authorities and analyses the flow of duties until the amounts are recorded in the accounts and received by the Commission. |
| --- | --- |

V.

In the context of revenue, the Court’s audit of value added tax and gross national Iicome-based own resources takes as its starting point the receipt by the Commission of the macroeconomic aggregates prepared by the Member States, and then assesses the Commission's systems for processing the data until they are included in the consolidated accounts and the contributions by the Member States have been received. For traditional own resources, the Court examines the accounts of the customs authorities and analyses the flow of duties until the amounts are recorded in the accounts and received by the Commission.

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

VI.

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

Reliability of the accounts

Opinion on the reliability of the accounts

| VII. | In the Court's opinion, the consolidated accounts of the European Union present fairly, in all material respects, the financial position of the Union as of 31 December 2011, and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of the Financial Regulation and the accounting rules adopted by the Commission's accounting officer. |
| --- | --- |

VII.

In the Court's opinion, the consolidated accounts of the European Union present fairly, in all material respects, the financial position of the Union as of 31 December 2011, and the results of its operations and its cash flows for the year then ended, in accordance with the provisions of the Financial Regulation and the accounting rules adopted by the Commission's accounting officer.

Legality and regularity of the transactions underlying the accounts

Revenue

Opinion on the legality and regularity of revenue underlying the accounts

| VIII. | In the Court’s opinion, revenue underlying the accounts for the year ended 31 December 2011 is legal and regular in all material respects. |
| --- | --- |

VIII.

In the Court’s opinion, revenue underlying the accounts for the year ended 31 December 2011 is legal and regular in all material respects.

Commitments

Opinion on the legality and regularity of commitments underlying the accounts

| IX. | In the Court’s opinion, commitments underlying the accounts for the year ended 31 December 2011 are legal and regular in all material respects. |
| --- | --- |

IX.

In the Court’s opinion, commitments underlying the accounts for the year ended 31 December 2011 are legal and regular in all material respects.

Payments

Basis for adverse opinion on the legality and regularity of payments underlying the accounts

| X. | The Court concludes that the examined supervisory and control systems are partially effective in ensuring the legality and regularity of payments underlying the accounts. The policy groups agriculture: market and direct support; rural development, environment, fisheries and health; regional policy, energy and transport; employment and social affairs as well as research and other internal policies are materially affected by error. The Court’s estimate for the most likely error rate for payments underlying the accounts is 3,9 %. |
| --- | --- |

X.

The Court concludes that the examined supervisory and control systems are partially effective in ensuring the legality and regularity of payments underlying the accounts. The policy groups agriculture: market and direct support; rural development, environment, fisheries and health; regional policy, energy and transport; employment and social affairs as well as research and other internal policies are materially affected by error. The Court’s estimate for the most likely error rate for payments underlying the accounts is 3,9 %.

Adverse opinion on the legality and regularity of payments underlying the accounts

| XI. | In the Court’s opinion, because of the significance of the matters described in the basis for adverse opinion on the legality and regularity of payments underlying the accounts paragraph, the payments underlying the accounts for the year ended 31 December 2011 are materially affected by error. |
| --- | --- |

XI.

In the Court’s opinion, because of the significance of the matters described in the basis for adverse opinion on the legality and regularity of payments underlying the accounts paragraph, the payments underlying the accounts for the year ended 31 December 2011 are materially affected by error.

6 September 2012.

Vítor Manuel da SILVA CALDEIRA

President

European Court of Auditors

12, rue Alcide De Gasperi, 1615 Luxembourg, LUXEMBOURG

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(1)  The consolidated financial statements comprise the balance sheet, the economic outturn account, the cash flow table, the statement of changes in net assets and a summary of significant accounting policies and other explanatory notes (including segment reporting).

1

(2)  The consolidated reports on implementation of the budget comprise the consolidated reports on implementation of the budget and a summary of budgetary principles and other explanatory notes.

2

(3)  The accounting rules adopted by the Commission's accounting officer are derived from International Public Sector Accounting Standards (IPSAS) issued by the International Federation of Accountants or, in their absence, International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board. In accordance with the Financial Regulation, the consolidated financial statements for the 2011 financial year were prepared (as they have been since the 2005 financial year) on the basis of these accounting rules adopted by the Commission's accounting officer, which adapt accruals based accounting principles to the specific environment of the European Union, while the consolidated reports on implementation of the budget continue to be primarily based on cash movements.

3

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