# C_2007309EN.01008001.xml

| 19.12.2007 | EN | Official Journal of the European Union | C 309/80 |
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19.12.2007

EN

Official Journal of the European Union

C 309/80

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REPORT

REPORT

on the annual accounts of the European Food Safety Authority for the financial year 2006 together with the Authority's replies

(2007/C 309/14)

CONTENTS

| 1-2 | INTRODUCTION |
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1-2

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

| 7-11 | OBSERVATIONS |
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7-11

Tables 1 to 4

The Authority's replies

The Authority's replies

INTRODUCTION

| 1. | The European Food Safety Authority (hereinafter referred to as ‘the Authority’) was established by Regulation (EC) No 178/2002 of the European Parliament and of the Council of 28 January 2002 (1). Its main tasks are to supply the scientific information needed for Community legislation to be drawn up, to collect and analyse data that allow risks to be identified and monitored and to provide independent information on these risks. |
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1.

The European Food Safety Authority (hereinafter referred to as ‘the Authority’) was established by Regulation (EC) No 178/2002 of the European Parliament and of the Council of 28 January 2002 (1). Its main tasks are to supply the scientific information needed for Community legislation to be drawn up, to collect and analyse data that allow risks to be identified and monitored and to provide independent information on these risks.

1

| 2. | Table 1 summarises the Authority's competences and activities. Key data summarised from the financial statements drawn up by the Authority 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 Authority's competences and activities. Key data summarised from the financial statements drawn up by the Authority 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 (2); it was drawn up following an examination of the Authority'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 (2); it was drawn up following an examination of the Authority's accounts, as required by Article 248 of the Treaty establishing the European Community.

2

| 4. | The Authority's accounts for the financial year ended 31 December 2006 (3) were drawn up by its Executive Director, pursuant to Article 44 of Regulation (EC) No 178/2002, 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 Authority's accounts for the financial year ended 31 December 2006 (3) were drawn up by its Executive Director, pursuant to Article 44 of Regulation (EC) No 178/2002, 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 ad 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 ad 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 Authority's accounts for the financial year ended 31 December 2006 are, in all material respects, reliable.Legality and regularity of the underlying transactionsThe transactions underlying the Authority's annual accounts, taken as a whole, are legal and regular.The observations which follow do not call the Court's Statement into question. |
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6.

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

Reliability of the accountsThe Authority's accounts for the financial year ended 31 December 2006 are, in all material respects, reliable.Legality and regularity of the underlying transactionsThe transactions underlying the Authority's annual accounts, taken as a whole, are legal and regular.The observations which follow do not call the Court's Statement into question.

Reliability of the accountsThe Authority's accounts for the financial year ended 31 December 2006 are, in all material respects, reliable.Legality and regularity of the underlying transactionsThe transactions underlying the Authority's annual accounts, taken as a whole, are legal and regular.The observations which follow do not call the Court's Statement into question.

OBSERVATIONS

| 7. | In 2006, payment rates were of 56 % of appropriations for administrative expenditure (Title II) and of 50 % of those for operational activities (Title III). 20 % of appropriations carried over from 2005 were cancelled at the end of 2006. A large number of transfers were made with a high concentration of them at the year-end (4). Thus, the budgetary principles of annuality and specification were not strictly observed. |
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7.

In 2006, payment rates were of 56 % of appropriations for administrative expenditure (Title II) and of 50 % of those for operational activities (Title III). 20 % of appropriations carried over from 2005 were cancelled at the end of 2006. A large number of transfers were made with a high concentration of them at the year-end (4). Thus, the budgetary principles of annuality and specification were not strictly observed.

4

| 8. | The Authority did neither make a comprehensive risk assessment and define appropriate performance indicators, nor documented the systems and internal control procedures governing its activities. This situation precluded the implementation of an effective risk-management policy, which is essential to activity-based budget management. |
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8.

The Authority did neither make a comprehensive risk assessment and define appropriate performance indicators, nor documented the systems and internal control procedures governing its activities. This situation precluded the implementation of an effective risk-management policy, which is essential to activity-based budget management.

| 9. | Final payments (5) were made in spite of insufficient supporting documentation. Moreover, it was difficult to assess the adequacy of the checks carried out to verify the correctness and completeness of the financial information submitted by the supplier. |
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9.

Final payments (5) were made in spite of insufficient supporting documentation. Moreover, it was difficult to assess the adequacy of the checks carried out to verify the correctness and completeness of the financial information submitted by the supplier.

5

| 10. | The Authority did neither set realistic recruitment objectives, nor define priorities with regard to vacancies nor fix deadlines for each recruitment procedure. Only two-thirds of the 250 posts available under the Authority's 2006 establishment plan had been filled by the end of the year. |
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10.

The Authority did neither set realistic recruitment objectives, nor define priorities with regard to vacancies nor fix deadlines for each recruitment procedure. Only two-thirds of the 250 posts available under the Authority's 2006 establishment plan had been filled by the end of the year.

| 11. | With regard to procurement procedures, the following irregularities were observed (6): the selection criteria not stated, or not applied; the price-evaluation method not defined until the evaluation procedure was under way; too vague description of the quality criteria. The composition of the evaluation committee did not comply with the principle of hierarchical independence of its members. This situation resulted mainly from the fact that the Authority did not apply clear procurement procedures. |
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11.

With regard to procurement procedures, the following irregularities were observed (6): the selection criteria not stated, or not applied; the price-evaluation method not defined until the evaluation procedure was under way; too vague description of the quality criteria. The composition of the evaluation committee did not comply with the principle of hierarchical independence of its members. This situation resulted mainly from the fact that the Authority did not apply clear procurement procedures.

6

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 31, 1.2.2002, p. 1.

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 27 June 2007.

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(4)  31 of the 49 transfers effected by the Authority were made during the last quarter.

4

(5)  Value of the cases detected: approximately 500 000 euro.

5

(6)  Seven cases of an approximate total value of: 670 000 euro.

6

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Table 1

European Food Safety Authority (Parma)

| Areas of Community competence deriving from the Treaty | Competences of the Authority
  (Regulation (EC) No 178/2002 of the European Parliament and of the Council) | Governance | Resources made available to the Authority in 2006

  (2005) | Products and services supplied |
| --- | --- | --- | --- | --- |
| Free movement of goods

  (Article 37 of the Treaty)

  Contribution to a high level of protection of health, safety and protection of the environment and of consumers, taking account of any new development based on scientific facts

  (Article 95 of the Treaty)

  Common trade policy

  (Article 133 of the Treaty)

  Public health

  (Article 152(4)(b) of the Treaty) | Objectives







  — | To provide scientific opinions and scientific and technical support for the Community's legislation and policies which have a direct or indirect impact on food and feed safety |

Areas of Community competence deriving from the Treaty

Competences of the Authority

(Regulation (EC) No 178/2002 of the European Parliament and of the Council)

Governance

Resources made available to the Authority in 2006

(2005)

Products and services supplied

Free movement of goods

(Article 37 of the Treaty)

Contribution to a high level of protection of health, safety and protection of the environment and of consumers, taking account of any new development based on scientific facts

(Article 95 of the Treaty)

Common trade policy

(Article 133 of the Treaty)

Public health

(Article 152(4)(b) of the Treaty)

Objectives

—

To provide scientific opinions and scientific and technical support for the Community's legislation and policies which have a direct or indirect impact on food and feed safety

| — | To provide independent information on risks relating to food safety |
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—

To provide independent information on risks relating to food safety

| — | To contribute to the achievement of a high level of protection of human life and health |
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—

To contribute to the achievement of a high level of protection of human life and health

| — | To collect and analyse data needed to allow characterisation and monitoring of risks |
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—

To collect and analyse data needed to allow characterisation and monitoring of risks

Tasks

| — | To issue scientific opinions and studies |
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—

To issue scientific opinions and studies

| — | To promote uniform risk-assessment methodologies |
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—

To promote uniform risk-assessment methodologies

| — | To assist the Commission |
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—

To assist the Commission

| — | To search for, analyse and summarise the requisite scientific and technical data |
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—

To search for, analyse and summarise the requisite scientific and technical data

| — | To identify and characterise emerging risks |
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—

To identify and characterise emerging risks

| — | To establish a network of organisations operating in similar fields |
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—

To establish a network of organisations operating in similar fields

| — | To provide scientific and technical assistance in crisis management |
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—

To provide scientific and technical assistance in crisis management

| — | To improve international cooperation |
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—

To improve international cooperation

| — | To provide the public and interested parties with reliable, objective and easily comprehensible information |
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—

To provide the public and interested parties with reliable, objective and easily comprehensible information

| — | To take part in the Commission's rapid alert system |
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—

To take part in the Commission's rapid alert system

1.   Management Board

Composition

14 members appointed by the Council (in cooperation with the European Parliament and the Commission) and one representative of the Commission

Duties

To adopt the work programme and the budget and ensure that they are implemented

2.   Executive Director

Appointed by the Management Board on the basis of a list of candidates proposed by the Commission, following a hearing before the European Parliament

3.   Advisory Forum

Composition

One representative per Member State

Duties

To advise the Executive Director

4.   Scientific Committee and scientific panels:

To draw up the Authority's scientific opinions

5.   External audit

Court of Auditors

6.   Discharge authority

Parliament, on the Council's recommendation

Final budget

40,2 million euro (36,9 million euro); Community contribution: 100 % (100%)

Staff numbers as at 31 December 2006

Number of posts in establishment plan: 250 (194)

Posts occupied: 173 (124)

+57 (36) other posts (auxiliary contracts, seconded national experts, local staff)

Total staff: 230 (160)

Assigned to the following duties:

| — | operational: 150 (104) |
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—

operational: 150 (104)

| — | administrative: 80 (56) |
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—

administrative: 80 (56)

Following the 323 requests for scientific opinions made to the EFSA in 2006, 132 opinions and four reports were adopted and published. They covered many areas dealt with by the nine scientific panels, including aromatic plants, genetically modified organisms (with the WHO), bovine spongiform encephalopathy (BSE) or transmissible spongiform encephalopathy (TSE).

EFSA's communication of risks to the public and its activities in general have been broadly acknowledged as a result of 4 600 articles covering the Authority's scientific work. Consultation of EFSA's website also increased, with 1,33 million hits, and there were 12 200 subscribers to EFSA Highlights. The coordination of the communication of risks was stepped up through the Advisory Forum and the workshops organised.

EFSA's networking with interested parties, national authorities and institutional counterparts intensified through the activities of, inter alia, a forum for interested parties and programmes aimed at the new Member States or candidate countries. The Advisory Forum met five times with a view to networking with national authorities on specific topics, such as coordination in the event of a crisis scenario and increasing the use of the extranet linking national authorities, the Commission and EFSA.

With regard to the assessment of EFSA in 2005, the Management Board submitted its recommendations in the summer of 2006 and their implementation has been ongoing since then.

Source: Information supplied by the Authority.

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

Table 2

European Food Safety Authority (Parma) — Implementation of the budget for the financial year 2006

| (1000 euro) |
| --- |
| Revenue | Expenditure |
| Source 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 financial year(s) |
| entered | committed | paid | carried over | cancelled | entered | committed | paid | cancelled |
| Community subsidies | 40 249 | 37 520 | Title I
  Staff | 18 505 | 17 722 | 17 238 | 483 | 783 | 546 | 546 | 480 | 66 |
| Other revenue | 0 | 23 | Title II
  Administration | 7 375 | 7 037 | 4 144 | 2 894 | 338 | 2 285 | 2 285 | 2 100 | 185 |
| | | | Title III
  Operating activities | 14 369 | 11 649 | 7 137 | 4 512 | 2 720 | 3 476 | 3 476 | 2 464 | 1 012 |
| Total | 40 249 | 37 543 | Total | 40 249 | 36 408 | 28 519 | 7 889 | 3 841 | 6 308 | 6 308 | 5 044 | 1 264 |
| NB: Variations in totals are due to the effects of rounding.

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

(1000 euro)

Revenue

Expenditure

Source 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 financial year(s)

entered

committed

paid

carried over

cancelled

entered

committed

paid

cancelled

Community subsidies

40 249

37 520

Title I

Staff

18 505

17 722

17 238

483

783

546

546

480

66

Other revenue

0

23

Title II

Administration

7 375

7 037

4 144

2 894

338

2 285

2 285

2 100

185

Title III

Operating activities

14 369

11 649

7 137

4 512

2 720

3 476

3 476

2 464

1 012

Total

40 249

37 543

Total

40 249

36 408

28 519

7 889

3 841

6 308

6 308

5 044

1 264

NB: Variations in totals are due to the effects of rounding.

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

Table 3

European Food Safety Authority (Parma) — Economic outturn account for the financial years 2006 and 2005

| (1000 euro) |
| --- |
| | 2006 | 2005 |
| Operating revenue |
| Own resources | | |
| Community subsidies | 35 117 | 27 405 |
| Other subsidies | | |
| Other revenue | 23 | 0 |
| Total (a) | 35 140 | 27 405 |
| Operating expenditure |
| Staff expenditure | 16 014 | 13 012 |
| Fixed asset related expenditure | 771 | 603 |
| Other administrative expenditure | 8 303 | 5 833 |
| Operational expenditure | 8 950 | 8 718 |
| Total (b) | 34 038 | 28 166 |
| Surplus/(deficit) from operating activities (c = a – b) | 1 102 | – 761 |
| Financial operations revenue (e) | 3 | 0 |
| Financial operations expenditure (f) | 4 | 7 |
| Surplus/(deficit) from non-operating activities (g = e – f) | –1 | –7 |
| Economic result for the year (h = c + g) | 1 101 | – 768 |

(1000 euro)

2006

2005

Operating revenue

Own resources

Community subsidies

35 117

27 405

Other subsidies

Other revenue

23

0

Total (a)

35 140

27 405

Operating expenditure

Staff expenditure

16 014

13 012

Fixed asset related expenditure

771

603

Other administrative expenditure

8 303

5 833

Operational expenditure

8 950

8 718

Total (b)

34 038

28 166

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

1 102

– 761

Financial operations revenue (e)

3

0

Financial operations expenditure (f)

4

7

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

–1

–7

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

1 101

– 768

Table 4

European Food Safety Authority (Parma) — Balance sheet at 31 December 2006 and 2005

| (1000 euro) |
| --- |
| | 2006 | 2005 |
| Non-current assets |
| Intangible fixed assets | 687 | 615 |
| Tangible fixed assets | 950 | 972 |
| Current assets |
| Short-term pre-financing | 224 | 171 |
| Short-term receivables | 43 | 100 |
| Other receivables | 112 | 28 |
| Cash and cash equivalents | 10 607 | 10 879 |
| Total assets | 12 624 | 12 766 |
| Current liabilities |
| Provision for risks and charges | 388 | 0 |
| Accounts payable | 7 451 | 9 082 |
| Total liabilities | 7 839 | 9 082 |
| Net assets |
| Accumulated surplus/deficit | 3 684 | 4 452 |
| Economic result for the year | 1 101 | – 768 |
| Total net assets | 4 785 | 3 684 |
| Total liabilities and net assets | 12 624 | 12 766 |

(1000 euro)

2006

2005

Non-current assets

Intangible fixed assets

687

615

Tangible fixed assets

950

972

Current assets

Short-term pre-financing

224

171

Short-term receivables

43

100

Other receivables

112

28

Cash and cash equivalents

10 607

10 879

Total assets

12 624

12 766

Current liabilities

Provision for risks and charges

388

0

Accounts payable

7 451

9 082

Total liabilities

7 839

9 082

Net assets

Accumulated surplus/deficit

3 684

4 452

Economic result for the year

1 101

– 768

Total net assets

4 785

3 684

Total liabilities and net assets

12 624

12 766

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THE AUTHORITY'S REPLIES

| 7. | The payment rate in 2006, mainly under Title Ill reflects the increased multi-annual nature of the operations. In 2007 the Authority will improve its budget forecasting and monitoring to reduce transfers in number nd volume. Increased control on carry over will be implemented for the 2007 closing of accounts. |
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7.

The payment rate in 2006, mainly under Title Ill reflects the increased multi-annual nature of the operations. In 2007 the Authority will improve its budget forecasting and monitoring to reduce transfers in number nd volume. Increased control on carry over will be implemented for the 2007 closing of accounts.

| 8. | To increase awareness for internal control within the Authority, an internal control action plan was implemented. Moreover internal control self assessment as well as high level corporate risk assessment are part of the 2007 work plan. |
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8.

To increase awareness for internal control within the Authority, an internal control action plan was implemented. Moreover internal control self assessment as well as high level corporate risk assessment are part of the 2007 work plan.

| 9. | The final payments audited were processed during the first part of 2006, nevertheless, in order to assess the correctness and completeness of the financial information submitted by the supplier, the Authority reinforced the financial verification team by two additional staff members during the first quarter of 2007 and implemented check-lists during the second quarter of 2007. |
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9.

The final payments audited were processed during the first part of 2006, nevertheless, in order to assess the correctness and completeness of the financial information submitted by the supplier, the Authority reinforced the financial verification team by two additional staff members during the first quarter of 2007 and implemented check-lists during the second quarter of 2007.

| 10. | In November 2006 a precise recruitment plan 2007 has been adopted by the Authority's management in order to enable the Authority to recruit the number of staff members as foreseen in its establishment plan. |
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10.

In November 2006 a precise recruitment plan 2007 has been adopted by the Authority's management in order to enable the Authority to recruit the number of staff members as foreseen in its establishment plan.

| 11. | Procurement procedures in question are not recent some were launched as early as 2004, for others contracts were awarded in 2005 and 2006. The Authority continues to improve compliance with applicable procurement rules, in particular through a reinforced central support unit, update of guidance documents and, since 2007, by the recruitment of a new staff member devoted to the support of tendering procedures. Moreover, the Authority made an important effort to train its staff in procurement matters (various general and topical training sessions were organised in 2006 and 2007 — over 100 staff members participated). |
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11.

Procurement procedures in question are not recent some were launched as early as 2004, for others contracts were awarded in 2005 and 2006. The Authority continues to improve compliance with applicable procurement rules, in particular through a reinforced central support unit, update of guidance documents and, since 2007, by the recruitment of a new staff member devoted to the support of tendering procedures. Moreover, the Authority made an important effort to train its staff in procurement matters (various general and topical training sessions were organised in 2006 and 2007 — over 100 staff members participated).

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