# C_2007309EN.01006701.xml

| 19.12.2007 | EN | Official Journal of the European Union | C 309/67 |
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19.12.2007

EN

Official Journal of the European Union

C 309/67

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REPORT

REPORT

on the annual accounts of the European Railway Agency for the financial year 2006 together with the Agency's replies

(2007/C 309/12)

CONTENTS

| 1-2 | INTRODUCTION |
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1-2

| 3-6 | STATEMENT OF ASSURANCE |
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3-6

| 7-10 | OBSERVATIONS |
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7-10

Tables 1 to 4

The Agency's replies

The Agency's replies

INTRODUCTION

| 1. | The European Railway Agency (hereinafter referred to as ‘the Agency’) was created by Regulation (EC) No 881/2004 of the European Parliament and of the Council of 29 April 2004 (1). It became autonomous on 1 January 2006. The Agency's aim is to enhance the level of interoperability of railway systems and to develop a common approach to safety in order to contribute to creating a more competitive European railway sector with a high level of safety. |
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1.

The European Railway Agency (hereinafter referred to as ‘the Agency’) was created by Regulation (EC) No 881/2004 of the European Parliament and of the Council of 29 April 2004 (1). It became autonomous on 1 January 2006. The Agency's aim is to enhance the level of interoperability of railway systems and to develop a common approach to safety in order to contribute to creating a more competitive European railway sector with a high level of safety.

1

| 2. | Table 1 summarises the Agency's competences and activities. Key data summarised from the financial statements drawn up by the Agency for the financial year 2006 is presented in Tables 2, 3 and 4 for information purposes. |
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2.

Table 1 summarises the Agency's competences and activities. Key data summarised from the financial statements drawn up by the Agency for the financial year 2006 is presented in Tables 2, 3 and 4 for information purposes.

Table 1

Tables 2, 3 and 4

STATEMENT OF ASSURANCE

| 3. | This Statement is addressed to the European Parliament and the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 (2); it was drawn up following an examination of the Agency's accounts, as required by Article 248 of the Treaty establishing the European Community. |
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3.

This Statement is addressed to the European Parliament and the Council in accordance with Article 185(2) of Council Regulation (EC, Euratom) No 1605/2002 of 25 June 2002 (2); it was drawn up following an examination of the Agency's accounts, as required by Article 248 of the Treaty establishing the European Community.

2

| 4. | The Agency's accounts for the financial year ended 31 December 2006 (3) were drawn up by its Executive Director, pursuant to Article 39 of Regulation (EC) No 881/2004, and sent to the Court, which is required to give a statement of assurance on their reliability and on the legality and regularity of the underlying transactions. |
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4.

The Agency's accounts for the financial year ended 31 December 2006 (3) were drawn up by its Executive Director, pursuant to Article 39 of Regulation (EC) No 881/2004, and sent to the Court, which is required to give a statement of assurance on their reliability and on the legality and regularity of the underlying transactions.

3

| 5. | The Court conducted its audit in accordance with the IFAC and INTOSAI International Auditing Standards and Codes of Ethics, insofar as these are applicable in the European Community context. The audit was planned and performed to obtain reasonable assurance that the accounts are reliable and that the underlying transactions are legal and regular. |
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5.

The Court conducted its audit in accordance with the IFAC and INTOSAI International Auditing Standards and Codes of Ethics, insofar as these are applicable in the European Community context. The audit was planned and performed to obtain reasonable assurance that the accounts are reliable and that the underlying transactions are legal and regular.

| 6. | The Court has thus obtained a reasonable basis for the Statement set out below.

  Reliability of the accountsThe Agency's accounts for the financial year ended 31 December 2006 are, in all material respects, reliable.Legality and regularity of the underlying transactionsExcept for the cases referred in paragraph 10, the transactions underlying the Agency's annual accounts, taken as a whole, are legal and regular. |
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6.

The Court has thus obtained a reasonable basis for the Statement set out below.

Reliability of the accountsThe Agency's accounts for the financial year ended 31 December 2006 are, in all material respects, reliable.Legality and regularity of the underlying transactionsExcept for the cases referred in paragraph 10, the transactions underlying the Agency's annual accounts, taken as a whole, are legal and regular.

Reliability of the accountsThe Agency's accounts for the financial year ended 31 December 2006 are, in all material respects, reliable.Legality and regularity of the underlying transactionsExcept for the cases referred in paragraph 10, the transactions underlying the Agency's annual accounts, taken as a whole, are legal and regular.

OBSERVATIONS

| 7. | In its first year of financial autonomy the Agency implemented 72 % of its commitment appropriations. The levels of carryover for administrative expenditure (Title II) and operating expenditure (Title III) were of 37,5 % and 85 % respectively. Thus, the budgetary principle of annuality was not strictly observed. |
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7.

In its first year of financial autonomy the Agency implemented 72 % of its commitment appropriations. The levels of carryover for administrative expenditure (Title II) and operating expenditure (Title III) were of 37,5 % and 85 % respectively. Thus, the budgetary principle of annuality was not strictly observed.

| 8. | The Agency is located in two cities: its administrative seat is in Valenciennes whereas its meetings have to be held in Lille. The Agency has not yet found ways of offsetting the costs resulting from its obligation to be located on two sites. |
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8.

The Agency is located in two cities: its administrative seat is in Valenciennes whereas its meetings have to be held in Lille. The Agency has not yet found ways of offsetting the costs resulting from its obligation to be located on two sites.

| 9. | The internal control system showed weaknesses. Subdelegations were not granted according to the rules. There were inconsistencies between delegation decisions and access rights to the budgetary management system SI2. The Agency did not adopt implementing rules for its financial regulation. |
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9.

The internal control system showed weaknesses. Subdelegations were not granted according to the rules. There were inconsistencies between delegation decisions and access rights to the budgetary management system SI2. The Agency did not adopt implementing rules for its financial regulation.

| 10. | An examination of the tendering procedures showed various anomalies: use of expired contracts (4) and irregular extensions of existing contracts (5). Thus the Agency must launch procurement procedures for those areas currently covered by contracts which had not been the subject of regular procedures. |
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10.

An examination of the tendering procedures showed various anomalies: use of expired contracts (4) and irregular extensions of existing contracts (5). Thus the Agency must launch procurement procedures for those areas currently covered by contracts which had not been the subject of regular procedures.

4

5

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 27 September 2007.

For the Court of Auditors

Hubert WEBER

President

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(1)  OJ L 220, 21.6.2004, p. 3.

1

(2)  OJ L 248, 16.9.2002, p. 1.

2

(3)  These accounts were drawn up on 19 June 2007 and received by the Court on 2 July 2007.

3

(4)  One case identified: 49 000 euro.

4

(5)  Two cases identified: 630 000 euro.

5

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Table 1

European Railway Agency (Lille/Valenciennes)

| Areas of Community competence deriving from the Treaty | Competences of the Agency as defined in Regulation (EC) No 881/2004 | Governance | Resources available to the Agency in 2006 | Products and services provided in 2006 |
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| Common Transport Policy

  For the purpose of implementing Article 70, and taking into account the distinctive features of transport, the Council shall, acting in accordance with the procedure referred to in Article 251 and after consulting the Economic and Social Committee and the Committee of the Regions, lay down:






  (a) | common rules applicable to international transport to or from the territory of a Member State or passing across the territory of one or more Member States; |

Areas of Community competence deriving from the Treaty

Competences of the Agency as defined in Regulation (EC) No 881/2004

Governance

Resources available to the Agency in 2006

Products and services provided in 2006

Common Transport Policy

For the purpose of implementing Article 70, and taking into account the distinctive features of transport, the Council shall, acting in accordance with the procedure referred to in Article 251 and after consulting the Economic and Social Committee and the Committee of the Regions, lay down:

(a)

common rules applicable to international transport to or from the territory of a Member State or passing across the territory of one or more Member States;

| (b) | the conditions under which non-resident carriers may operate transport services within a Member State; |
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(b)

the conditions under which non-resident carriers may operate transport services within a Member State;

| (c) | measures to improve transport safety; |
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(c)

measures to improve transport safety;

| (d) | any other appropriate provisions. |
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(d)

any other appropriate provisions.

(Article 71)

Objectives

To contribute, on technical matters, to the implementation of the Community legislation aimed at:

| 1. | improving the competitive position of the railway sector |
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1.

improving the competitive position of the railway sector

| 2. | developing a common approach to safety on the European railway system, |
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2.

developing a common approach to safety on the European railway system,

in order to contribute to creating a European railway area without frontiers and guaranteeing a high level of safety.

Tasks:

| 1. | Address recommendations to the Commission on:






  — | the common safety methods (CSMs) and common safety targets (CSTs) provided for in the Railway Safety Directive (2004/49/EC); |
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1.

Address recommendations to the Commission on:

—

the common safety methods (CSMs) and common safety targets (CSTs) provided for in the Railway Safety Directive (2004/49/EC);

| — | safety certificates and measures in the field of safety; |
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—

safety certificates and measures in the field of safety;

| — | the development, implementation and monitoring of rail interoperability; |
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—

the development, implementation and monitoring of rail interoperability;

| — | monitoring interoperability; |
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—

monitoring interoperability;

| — | the certification of maintenance workshops; |
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—

the certification of maintenance workshops;

| — | vocational competences; |
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—

vocational competences;

| — | the registration of rolling stock. |
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—

the registration of rolling stock.

| 2. | Issue opinions on:






  — | national safety rules; |
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2.

Issue opinions on:

—

national safety rules;

| — | monitoring the quality of the work of notified bodies; |
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—

monitoring the quality of the work of notified bodies;

| — | the interoperability of the trans-European network. |
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—

the interoperability of the trans-European network.

| 3. | Coordination of national bodies:






  — | coordination of national safety authorities and national investigation bodies (as described in Directive 2004/49/EC, Articles 17 and 21). |
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3.

Coordination of national bodies:

—

coordination of national safety authorities and national investigation bodies (as described in Directive 2004/49/EC, Articles 17 and 21).

| 4. | Publications and databases:






  — | report on safety performance (every two years); |
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4.

Publications and databases:

—

report on safety performance (every two years);

| — | report on progress with interoperability (every two years); |
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—

report on progress with interoperability (every two years);

| — | public database of safety documents; |
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—

public database of safety documents;

| — | public register of documents on interoperability. |
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—

public register of documents on interoperability.

1.   Administrative Board

Comprises one representative from each Member State, four representatives from the Commission and six representatives, without the right to vote, from the professional sectors concerned.

2.   Executive Director

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

3.   External audit

Court of Auditors.

4.   Discharge Authority

The Parliament following a recommendation from the Council.

Final Budget:

14,4 million euro

Staff at 31 December 2006:

posts listed in the establishment plan: 95

posts occupied: 80

Other staff: 5 p.

Total staff: 85

Responsible for:

| — | operational tasks: 58,5 |
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—

operational tasks: 58,5

| — | administrative tasks: 26,5 |
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—

administrative tasks: 26,5

Safety:

Recommendation to the Commission on harmonised formats for safety certificates and harmonised application forms to be used by railway undertakings and national safety authorities.

Recommendation to the Commission on notification of national safety rules following a request from the Commission related to other measures in the field of safety.

Annual progress reports to the Commission for:

Interoperability:

Recommendation on registration of rolling stock and report on specifications on the National Vehicle Register.

ERTMS (European Rail Traffic Management System):

Recommendation to the Commission to update Annex A of the technical specifications for interoperability, Control Command and Signalling for high speed and conventional rail systems.

Economic Evaluation:

Methodology Guidelines for impact assessment, applicable to all Agency Recommendations, have been supplied to the Commission. Applied guidelines have been derived for various draft recommendations. Impact assessments are being prepared in parallel with recommendations.

At the request of the Commission, an impact assessment for improved cross-acceptance of rolling stock (locomotives) has been provided.

Source: Information supplied by the Agency.

Source: Data supplied by the Agency. This table summarises the data provided by the Agency in its annual accounts: these accounts are drawn up on a accrual basis.

Table 2

European Railway Agency (Lille/Valenciennes) — Implementation of the budget for the financial year 2006

| (1000 euro) |
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| Revenue | Expenditure |
| Origin of revenue | Revenue entered in the final budget for the financial year | Revenue collected | Allocation of expenditure | Final budget appropriations | Appropriations carried over from previous year(s) |
| entered | committed | paid | carried over | cancelled | entered | committed | paid | cancelled |
| Community subsidies | 14 398 | 12 385 | Title I
  Staff | 9 649 | 6 816 | 6 688 | 129 | 2 833 | 12 | 4 | 4 | 8 |
| Other revenue | | 20 | Title II
  Administration | 1 349 | 1 062 | 664 | 398 | 287 | 1 048 | 347 | 337 | 711 |
| | | | Title III
  Operating activities | 3 400 | 2 543 | 390 | 2 153 | 857 | 2 245 | 1 389 | 1 157 | 1 089 |
| Total | 14 398 | 12 406 | Total | 14 398 | 10 422 | 7 742 | 2 680 | 3 976 | 3 305 | 1 741 | 1 498 | 1 807 |
| Source: Data supplied by the Agency. This table summarises the data provided by the Agency in its annual accounts. Revenue collected and payments are estimated on a cash basis. |

(1000 euro)

Revenue

Expenditure

Origin of revenue

Revenue entered in the final budget for the financial year

Revenue collected

Allocation of expenditure

Final budget appropriations

Appropriations carried over from previous year(s)

entered

committed

paid

carried over

cancelled

entered

committed

paid

cancelled

Community subsidies

14 398

12 385

Title I

Staff

9 649

6 816

6 688

129

2 833

12

4

4

8

Other revenue

20

Title II

Administration

1 349

1 062

664

398

287

1 048

347

337

711

Title III

Operating activities

3 400

2 543

390

2 153

857

2 245

1 389

1 157

1 089

Total

14 398

12 406

Total

14 398

10 422

7 742

2 680

3 976

3 305

1 741

1 498

1 807

Source: Data supplied by the Agency. This table summarises the data provided by the Agency in its annual accounts. Revenue collected and payments are estimated on a cash basis.

Table 3

European Railway Agency (Lille/Valenciennes) — Economic outturn account for the financial year 2006

| (1000 euro) |
| --- |
| | 2006 |
| Operating revenue |
| Community subsidies | 11 920 |
| Other subsidies | 364 |
| Total (a) | 12 284 |
| Operating expenses |
| Staff expenses | 6 694 |
| Fixed asset related expenses | 168 |
| Other administrative expenses | 1 322 |
| Operational expenses | 1 330 |
| Total (b) | 9 514 |
| Surplus/(deficit) from operating activities (c = a – b) | 2 770 |
| Financial operations revenue (e) | 3 |
| Financial operations expenses (f) | 2 |
| Surplus/(deficit) from non-operating activities (g = e – f) | 1 |
| Economic result for the year (h = c + g) | 2 771 |

(1000 euro)

2006

Operating revenue

Community subsidies

11 920

Other subsidies

364

Total (a)

12 284

Operating expenses

Staff expenses

6 694

Fixed asset related expenses

168

Other administrative expenses

1 322

Operational expenses

1 330

Total (b)

9 514

Surplus/(deficit) from operating activities (c = a – b)

2 770

Financial operations revenue (e)

3

Financial operations expenses (f)

2

Surplus/(deficit) from non-operating activities (g = e – f)

1

Economic result for the year (h = c + g)

2 771

Table 4

European Railway Agency (Lille/Valenciennes) — Balance sheet at 31 December 2006

| (1000 euro) |
| --- |
| | 2006 |
| Non-current assets |
| Intangible fixed assets | 506 |
| Tangible fixed assets | 378 |
| Current assets |
| Short-term pre-financing | 18 |
| Short-term receivables | 188 |
| Cash and cash equivalents | 3 299 |
| Total assets | 4 389 |
| Current liabilities |
| Accounts payable | 1 618 |
| Total liabilities | 1 618 |
| Net assets |
| Economic result for the year | 2 771 |
| Total net assets | 2 771 |
| Total liabilities and net assets | 4 389 |

(1000 euro)

2006

Non-current assets

Intangible fixed assets

506

Tangible fixed assets

378

Current assets

Short-term pre-financing

18

Short-term receivables

188

Cash and cash equivalents

3 299

Total assets

4 389

Current liabilities

Accounts payable

1 618

Total liabilities

1 618

Net assets

Economic result for the year

2 771

Total net assets

2 771

Total liabilities and net assets

4 389

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THE AGENCY'S REPLIES

| 7. | During 2006 the programmed activities were not fully implemented as the Agency was still in its start-up phase. In 2007, the Agency shall proceed to an in-depth analysis of the programming of its activities, the resources required and the budget to be allocated together with a plan for calls for tenders. |
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7.

During 2006 the programmed activities were not fully implemented as the Agency was still in its start-up phase. In 2007, the Agency shall proceed to an in-depth analysis of the programming of its activities, the resources required and the budget to be allocated together with a plan for calls for tenders.

| 8. | The Agency is at the moment negotiating with the host state authorities the possibility of entering into a Seat Agreement. In this context the host state has agreed to make a substantial contribution to the rent of the future new building in Valenciennes. This will partly offset the annual costs (estimated at 450 000 euros) that result from the Agency's double location. |
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8.

The Agency is at the moment negotiating with the host state authorities the possibility of entering into a Seat Agreement. In this context the host state has agreed to make a substantial contribution to the rent of the future new building in Valenciennes. This will partly offset the annual costs (estimated at 450 000 euros) that result from the Agency's double location.

| 9. | At the beginning of 2007, the Agency has put a security function in place to check the consistency between delegations and sub-delegations contained in the budgetary management system and the corresponding signed acts. The Agency plans to submit its implementing rules for adoption by the Administrative Board before the end of 2007. |
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9.

At the beginning of 2007, the Agency has put a security function in place to check the consistency between delegations and sub-delegations contained in the budgetary management system and the corresponding signed acts. The Agency plans to submit its implementing rules for adoption by the Administrative Board before the end of 2007.

| 10. | The situations described by the Court were as a result of a shortage of personnel during the Agency's start-up phase. In order to prevent this happening in future a procurement function has been created in June 2007. Its task is to coordinate and supervise the procurement procedures. |
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10.

The situations described by the Court were as a result of a shortage of personnel during the Agency's start-up phase. In order to prevent this happening in future a procurement function has been created in June 2007. Its task is to coordinate and supervise the procurement procedures.

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